SERVICING AGREEMENT among BABCOCK & BROWN AIRCRAFT MANAGEMENT LLC, BABCOCK & BROWN AIRCRAFT MANAGEMENT (EUROPE) LIMITED, BABCOCK & BROWN AIR FUNDING I LIMITED and AMBAC ASSURANCE CORPORATION

Exhibit 10.3

 

SERVICING AGREEMENT

among

▇▇▇▇▇▇▇ & ▇▇▇▇▇ AIRCRAFT MANAGEMENT LLC,

▇▇▇▇▇▇▇ & ▇▇▇▇▇ AIRCRAFT MANAGEMENT (EUROPE) LIMITED,

▇▇▇▇▇▇▇ & ▇▇▇▇▇ AIR FUNDING I LIMITED

and

AMBAC ASSURANCE CORPORATION

 

---

TABLE OF CONTENTS

 

 

 

i

 

---

TABLE OF CONTENTS

(continued)

 

 

 

ii

 

---

TABLE OF CONTENTS

(continued)

 

 

 

iii

 

---

TABLE OF CONTENTS

(continued)

 

 

 

iv

 

---

TABLE OF CONTENTS

 

 

 

v

 

---

 

 

SERVICING AGREEMENT dated as of [           ] [   ], 2007, among ▇▇▇▇▇▇▇ & ▇▇▇▇▇ AIRCRAFT MANAGEMENT LLC, , a Delaware limited liability company (“BBAM(US)”), ▇▇▇▇▇▇▇ & ▇▇▇▇▇ AIRCRAFT MANAGEMENT (EUROPE) LIMITED, a company incorporated under the laws of Ireland (“BBAM(Ireland)” and, together with BBAM(US), the “Servicer”), ▇▇▇▇▇▇▇ & ▇▇▇▇▇ AIR FUNDING I LIMITED, a limited liability company incorporated under the laws of Bermuda and having its principal place of business at ▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ (the “Company”), and AMBAC ASSURANCE CORPORATION, a Wisconsin stock insurance company (the “Policy Provider”). For the consideration set forth herein and other good and valuable consideration, the receipt of which is hereby acknowledged, the Servicer, the Company and the Policy Provider agree as follows:

ARTICLE I

Definitions

Section 1.01. Definitions. Unless otherwise defined herein, all capitalized terms used but not defined herein have the meanings assigned to such terms in Appendix A.

Section 1.02. Construction and Usage. The conventions of construction and usage set forth in Appendix A are incorporated by reference herein.

ARTICLE II

 

Appointment; Services

Section 2.01. Appointment. (a) The Company appoints the Servicer as the exclusive provider of the Services (as defined in Section 2.02(a)) to (1) the Company, (2) Subsidiaries of the Company and (3) Affiliates of the Company in which the Company or any of its Subsidiaries has a direct or indirect ownership interest (collectively, the “Company Group”, and which term, for purposes of clarification, does not include Affiliates of the Company which are not direct or indirect Subsidiaries of the Company) in respect of the Aircraft Assets on the terms and subject to the conditions set forth in this Agreement. In furtherance of the foregoing, the parties hereto acknowledge and agree that, notwithstanding any other provision of this Agreement, without the consent of the Servicer, the Company shall not, and shall not permit any Person within the Company Group or any agent of any thereof, including the Administrative Agent (if not a Servicer) or the Cash Manager, to, contact directly or otherwise have any direct dealings with any Lessee or any relevant third party with respect to any Aircraft Asset (which, as provided in the definition of “Aircraft Assets”, the parties understand shall not include any Aircraft Asset (x) that shall have ceased to be an Aircraft Asset in accordance with the provisions of Sections 2.04(b) or 3.02(d), but shall include any former Aircraft Asset that shall have become an Aircraft Asset pursuant to Section 6.07 of the Servicing Agreement or (y) in respect of which the obligation of the Servicer to provide Services shall have been terminated in accordance with Article X) (such contact or other direct dealing, a “Lessee Contact”) to the extent that such Lessee Contact constitutes, or involves taking any action that constitutes, the provision or performance of any Services (to such extent, a “Restricted Lessee Contact”). Notwithstanding the foregoing, in the event that the Company or any other member of the Company Group or, in the case of clause (iv) or (v) below only, ▇▇▇▇▇▇▇ & ▇▇▇▇▇ Air Limited, reasonably believes that it shall be necessary or, in the case of clause (iv) or (v) below only, desirable, for there to be a Restricted Lessee Contact under circumstances in which one of the following clauses is applicable:

(i) during the period (x) commencing on the occurrence of an Event of Default under Section 4.01 of the Indenture in respect of the payment of interest on any Note (as defined in the Indenture) due to an insufficiency of funds in the Collection Account on the relevant date, which Event of Default (1) shall have occurred on a date on which no amount is

 

 

---

available for drawing under any Eligible Credit Facility (as defined in the Indenture) in respect thereof and (2) shall have continued unremedied for 60 days after the date of the occurrence of such Event of Default and (y) ending after such date upon the remedying of such Event of Default;

(ii) following the occurrence and during the continuance of an Event of Default (other than one referred to in clause (i) of this Section 2.01(a)) under the Indenture and, other than in respect of an Event of Default under Sections 4.01(e) or 4.01(f) of the Indenture, the issuance of a Default Notice (pursuant to which the Outstanding Principal Balance of the Notes and all accrued and unpaid interest thereon shall become due and payable) in accordance with the terms of the Indenture, and provided that at the time of such Event of Default at least 15% of the number of Aircraft Assets shall not be subject to Leases and each such Aircraft Asset shall have been off-lease and reasonably available for re-lease (which, for purposes of clarification, shall mean that such Aircraft Asset shall be in the possession or under the unfettered control of the Servicer, together with the related Aircraft Documents, shall be free of any legal prohibition on the re-leasing thereof, shall be free of Liens which would economically restrict such re-leasing (other than Liens, if any, created pursuant to the “Related Documents” as defined in the Indenture or created by or at the instruction of the Servicer) and shall be in a condition which should be reasonably acceptable to a potential lessee) during the three-month period ending on the date of such Event of Default;

(iii) in respect of any claim for indemnification made by the Servicer under this Agreement in respect of a Loss incurred by the Servicer related to a Lessee;

(iv) to discharge the Company’s, or ▇▇▇▇▇▇▇ & ▇▇▇▇▇ Air Limited’s, or any of their officer’s or director’s as the case may be, obligations under Applicable Law (including under United States’ securities laws and under United States and European “know your customer” laws) including any requirement to obtain information, to file any report with any governmental authority, to fulfill their fiduciary duties or other obligations under Applicable Laws or to respond to any court order or to prosecute or defend any suit;

(v) to respond to requests from the Company’s or ▇▇▇▇▇▇▇ & ▇▇▇▇▇ Air Limited’s , as the case may be, auditors reasonably related to the filing of any tax return or the conduct of any audit of the Company or ▇▇▇▇▇▇▇ & ▇▇▇▇▇ Air Limited and/or their Subsidiaries;

(vi) to enable the Company to discharge its obligations under Article VII;

(vii) to enable the Cash Manager to monitor the Servicer’s performance under this Agreement in accordance with the express terms of the Cash Management Agreement;

(viii) to enable the Company to perform its express obligations under the Indenture and Security Trust Agreement including, without limitation, the Company’s obligations under Sections 5.02 and 5.03 of the Indenture and Sections 2.06 and 3.01 of the Security Trust Agreement; or

(ix) the Servicer’s material failure to perform a Service which involves a Lessee and necessitates a Lessee Contact, which material failure continues unremedied for 30 days after the Servicer’s receipt of written notice of such material failure from the Company (a copy of which shall be provided by the Company to the Policy Provider) or the Policy Provider (a copy of which shall be provided by the Servicer to the Company) and which if left unremedied would have a Material Adverse Effect on the Company Group taken as a whole;

 

 

2

 

---

then the Company or another Person within the Company Group, or in the case of clause (iv) or (v) above, ▇▇▇▇▇▇▇ & ▇▇▇▇▇ Air Limited, shall deliver a written notice to the Servicer setting forth in reasonable detail the reasons for such Restricted Lessee Contact (including which of the foregoing clauses (i) through (ix) is applicable thereto) and the specifics of such Restricted Lessee Contact. In the case of clauses (i) and (ii) and (iv) through (viii) above, after receipt of such notice, the Servicer shall promptly notify the Company whether the Servicer will itself make such Restricted Lessee Contact, or whether a Person within the Company Group or agent of any thereof, including the Administrative Agent or the Cash Manager, should make such Restricted Lessee Contact. In the case of clauses (iii) and (ix) above, after delivering such notice to the Servicer, any Person within the Company Group shall be permitted to make such Restricted Lessee Contact directly itself or through any agent, including the Administrative Agent or the Cash Manager. In making any Restricted Lessee Contact, the Company shall not, and shall not permit any Person within the Company Group or any agent of any thereof, including the Administrative Agent or the Cash Manager, to interfere with the Servicer’s performance of any Services. For purposes of clarification, the parties agree that the Company or any agent thereof, including the Administrative Agent or the Cash Manager, may contact a Lessee for the purpose of purchasing from such Lessee Aircraft that are not Aircraft Assets hereunder, and such contact shall not be considered a Restricted Lessee Contact, so long as in no event shall the Company or any agent thereof, including the Administrative Agent or the Cash Manager, interfere with the Servicer’s performance of any Services.

(b) The Servicer hereby accepts its appointment pursuant to the first sentence of Section 2.01(a) and agrees to perform the Services on the terms and subject to the conditions set forth in this Agreement.

Section 2.02. Aircraft Asset Services. (a) The Services to be provided by the Servicer in respect of the Aircraft Assets are as set forth in Schedule 2.02(a) (the “Services”), the provisions of which Schedule 2.02(a) are hereby incorporated herein by reference.

(b) The Company has advised the Servicer that each Person within the Company Group has appointed the Company to act as its representative with respect to any matter in respect of which the Company or any other Person within the Company 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, the Servicer shall in all cases be entitled to rely on the instructions (or other actions) of the Company as representative of each Person within the Company Group. The Servicer shall not be liable to any Person within the Company Group or any other Person for any act taken or omission to act in accordance with such instructions (or other actions), except to the extent otherwise provided in Section 3.03 and Article XI. The Servicer shall in all cases be entitled to rely upon the instructions (or other actions) of the Company and upon notices, reports or other communications (whether written or oral) made by any Lessee or any other Person (other than any Affiliate of the Servicer) in or concerning any Aircraft Assets, Aircraft Assets Related Document or any document in connection therewith and shall not be responsible for the accuracy or completeness of any such notices, reports or other communications.

(c) The Company has advised the Servicer that it has appointed the Administrative Agent and the Cash Manager, on a revocable basis, to, among other things, act on its behalf in connection with any actions required or permitted to be taken by the Company on its own behalf or on behalf of any other Person within the Company Group (including as provided in Section 2.02(b)) pursuant to the terms of this Agreement. Accordingly, in connection with the performance of the Services, unless earlier notified in writing by the Company that the Administrative Agent’s or Cash Manager’s appointment to act on behalf of the Company has been revoked or terminated, or by the Security Trustee that all of the Company Group’s rights hereunder shall be exercisable by the Security Trustee as provided in Section 12.01, the Servicer shall in all cases be entitled to rely on the instructions (or other actions) of the Administrative Agent and of the Cash Manager. The Servicer hereby acknowledges and consents to the appointment of ▇▇▇▇▇▇▇ & ▇▇▇▇▇ Air Management Co Limited as the initial Administrative Agent and to

 

 

3

 

---

Deutsche Bank Trust Company Americas as initial Cash Manager. The appointment of the Administrative Agent and of the Cash Manager to act on behalf of the Company shall in no way limit or otherwise derogate from the Servicer’s right to rely on the instructions (or other actions) of the Company as set forth in Section 2.02(b). Without limiting the foregoing, until such time as the Servicer has been notified in writing by the Company acting through its Board of Directors that the Administrative Agent’s or the Cash Manager’s, as the case may be, appointment has been revoked or terminated, or by the Security Trustee that all of the Company Group’s rights hereunder shall be exercisable by the Security Trustee as provided in Section 12.01, in all circumstances requiring the direction, consent or approval of, or the delivery of any notices or other communications to, the Company hereunder, the Servicer shall only be required to seek the direction, consent or approval of, or deliver any such notices or other communications to, the Administrative Agent or the Cash Manager, as the case may be, unless otherwise notified by the Board of Directors of the Company. The Servicer shall not be liable to any Person within the Company Group or any other Person for any act taken or omission to act in accordance with the instructions (or other actions) of the Administrative Agent or the Cash Manager, as the case may be, except to the extent otherwise provided in Section 3.03 and Article XI. The Company agrees with the Servicer that the Administrative Agency Agreement and the Cash Management Agreement shall not be amended by the parties thereto in any manner that may, directly or indirectly, affect the Servicer’s rights, obligations or liabilities (or potential liabilities) under this Agreement or with respect to the Administrative Agency Agreement or the Cash Management Agreement or otherwise without the Servicer’s prior written consent.

(d) Except as otherwise provided in Sections 2.04(b), 3.02(c), 3.02(d) and 10.04, the Company agrees not to (and not to permit any other Person within the Company Group to) appoint any third party service provider (whether an Affiliate or otherwise) with respect to any Aircraft Asset without the prior written consent of the Servicer; provided that the Servicer’s prior written consent is not required with respect to the appointment by any Person within the Company Group of any legal, accounting, insurance, valuation or other similar service providers to perform services not included within the Services.

(e) The Servicer shall in all cases be entitled to rely on the instructions (or other actions) of any Person that the Servicer reasonably believes to be authorized to act on behalf of the Company (or any other Person within the Company Group) or, unless otherwise notified in writing by the Board of Directors of the Company, the Administrative Agent or the Cash Manager and shall not be liable to any Person within the Company Group for any act taken or omission to act in accordance with such instructions (or other actions), except to the extent otherwise provided in Section 3.03 and Article XI.

(f) Notwithstanding anything contained in this Agreement to the contrary, the Servicer shall not be required to perform any Service (or any other service) with respect to any Aircraft Asset unless and until a true and complete copy of all Aircraft Assets Related Documents has been delivered to the Servicer or other written notice thereof has been provided to the Servicer. Without limiting the foregoing, the Servicer acknowledges that, in connection with its provision of services with respect to the Original Aircraft, it is in possession of various Aircraft Assets Related Documents that were received by the Servicer prior to the date hereof.

(g) The Company agrees not to (and not to permit any other Person within the Company Group to) enter into any agency, finders’ or brokerage agreements (whether with an Affiliate or otherwise) relating to the procurement of lessees or purchasers for the Aircraft Assets (or agreements similar thereto) without the prior written consent of the Servicer.

Section 2.03. [Reserved]

 

 

4

 

---

Section 2.04. Compliance with Applicable Laws . (a) Notwithstanding anything to the contrary in this Agreement, the Servicer shall not be obligated to take or refrain from taking any action at any time that the Servicer believes, in good faith, is reasonably likely to (i) violate any Applicable Law with respect to the Servicer or its Affiliates or (ii) lead to an investigation by any Governmental Authority, directly or indirectly, of or relating to the Servicer, any of its Affiliates or the Services.

(b) If pursuant to paragraph (a) above, the Servicer shall have determined not to take any action with respect to any transaction or potential transaction (whether or not any such transaction or a similar transaction has previously been entered into) relating to any Aircraft Asset and as a consequence thereof any Person within the Company Group shall be denied the opportunity to participate in any transaction or potential transaction in which it would otherwise be able to participate in accordance with Applicable Law, then, notwithstanding the provisions of Section 2.01, the Servicer, on behalf of any such Person within the Company Group and at the Servicer’s expense, may enter into, or engage an Independent Representative to arrange on behalf of such Person within the Company Group, such transaction or potential transaction with respect to such Aircraft Asset; provided that such Person within the Company Group may not enter into any such transaction or potential transaction if at or about the same time a substantially similar transaction (with at least as favorable or the same economic terms) could be arranged by the Servicer with respect to such Aircraft Asset in a manner that is not reasonably likely to lead to an investigation by any Governmental Authority, directly or indirectly, of or relating to the Servicer, any of its Affiliates or the Services.

(c) Notwithstanding anything to the contrary set forth in paragraph (b) above, no Person within the Company Group shall be entitled to enter into, or engage any other Person to arrange on its behalf, any transaction or potential transaction with respect to any Aircraft Asset if the Servicer shall have made a determination regarding that transaction or potential transaction pursuant to paragraph (a) above because it reasonably believed that a party to such transaction or potential transaction is an OFAC Designated Person or that such transaction or potential transaction was reasonably likely to violate the United States Foreign Corrupt Practices Act (or any similar or successor statute), any of the Anti-Terrorism laws or any similar or successor statutes or orders applicable to entities organized under the laws of the United States (or any state or political subdivision thereof) or applicable to any Person within the Company Group or otherwise applicable to such transaction or potential transaction.

Section 2.05. Limitations. (a) Notwithstanding any other provision of this Agreement which could be construed to the contrary, neither the Servicer nor any of its Affiliates shall assume any Indebtedness of any Person within the Company Group or of ▇▇▇▇▇▇▇ & ▇▇▇▇▇ Air Limited or any of its other Affiliates (whether consisting of the Notes, under the Indenture or otherwise) nor shall any provision of this Agreement or any other Operative Agreement be construed so as to imply that the parties intended any such assumption.

(b) In addition to Section 2.04, the Servicer shall not, and shall not be obligated to, act in a manner inconsistent with the rights, obligations or undertakings of the “Lessor” under any Lease, the “seller” under a sale contract or any other Person party to any other contract for the benefit of any Person in the Company Group or otherwise in any manner that is illegal or prohibited by Applicable Law or any applicable contract.

(c) 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 Company Group or any of its Representatives or ▇▇▇▇▇▇▇ & ▇▇▇▇▇ Air Limited or any of its other Affiliates 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 information regarding any Person within the Company Group, whose assets it manages from time to time.

 

 

5

 

---

(d) The Servicer shall not be liable or accountable for (i) the failure by a Lessee, any buyer or any other Person to perform any of its obligations under any Lease, sale contract or any other contract including the payment of amounts payable under any Lease or any other contract or (ii) the accuracy or completeness of any notices, reports or other communications (whether written or oral) made by any Lessee, any buyer or any Person other than the Servicer in or concerning any Lease or any other contract or any document in connection therewith and shall be entitled to rely upon all such notices, reports and communications except to the extent that the Servicer has actual notice of any matter to the contrary or to the extent that such notice, report or communication contains a manifest error.

(e) The Servicer may rely on any Adviser, Broker, law firm or other professional adviser appointed by the Servicer or the Company and shall not be liable for any claim by any Person within the Company Group or any other Person to the extent that it was acting in good faith upon the advice of such Adviser, Broker, law firm or other professional adviser.

(f) The relationship between the Servicer and the Company is an independent agency relationship, however, except in relation to any money erroneously received by the Servicer or any of its Affiliates into any of the Servicer’s or any of its Affiliates’ bank accounts on behalf of any Person within the Company Group, which the Servicer will hold in trust for such Person and deposit into the Collection Account as soon as reasonably practicable, neither the Servicer nor any of its Representatives shall be under any fiduciary duty or other implied obligation or duty to any Person within the Company Group or to ▇▇▇▇▇▇▇ & ▇▇▇▇▇ Air Limited or any Affiliate of any such Person or any holder of any equity or debt security issued by or lender to any Person within the Company Group or by ▇▇▇▇▇▇▇ & ▇▇▇▇▇ Air Limited or any of its Affiliates, or to any Lessee, the Administrative Agent, Cash Manager, the Policy Provider, or any other Person arising out of this Agreement; it being agreed that the rights and obligations of the parties hereto shall only be those expressly provided for in this Agreement.

(g) Without prejudice to the Standard of Care, the Servicer shall not be imputed with the knowledge of any of its employees other than its managers, directors, officers and those employees involved in the performance of the Services relevant to such knowledge responsible for the day-to-day administration of this Agreement. The Servicer shall be deemed to have actual notice of any matter only upon the receipt of written notice describing any such matter in reasonable detail or to the extent that one of the foregoing Persons has actual knowledge of any such matter or which one of such Persons ought to have known if the Servicer had acted in accordance with the Standard of Care.

(h) The Servicer shall not be obligated to assume, or engage in activities which could reasonably be expected to subject the Servicer to, any liability as a related company or shadow director of any Person within the Company Group or under any similar legal concept. The Company and each other party hereto understands, acknowledges and agrees that the intent of the parties hereunder is that the Servicer will not be subject to any obligations or liabilities whatsoever other than as and to the extent that any obligations or liabilities arise pursuant to the express terms of this Agreement.

ARTICLE III

Standard of Care; Conflicts of Interest; Standard of Liability

Section 3.01. Standard of Care. Subject to the provisions of this Agreement and the Indenture, the Servicer shall use reasonable care and diligence at all times in the performance of the Services consistent with (i) the customary commercial practice of major international aircraft lessors in the management, servicing and marketing of commercial jet aircraft and related assets and (ii) no less reasonable care and diligence as the Servicer would use in providing the Services with respect to other aircraft that are owned or managed by the Servicer (the “Standard of Care”).

 

 

6

 

---

Section 3.02. Conflicts of Interest. (a) The Company, Policy Provider and each other party hereto acknowledges and agrees that (i) in addition to managing the Aircraft Assets under this Agreement, the Servicer may manage, and shall be entitled to manage, from time to time the separate assets and businesses of (r) the U.S. and oversees investors or vehicles for which they manage aircraft as of the date hereof , (s) ▇▇▇▇▇▇▇ & ▇▇▇▇▇ Air Limited and its Affiliates, (t) the Servicer and its Affiliates, and (u) other third parties (the assets of the parties described in clauses (r), (s), (t) and (u) are collectively hereinafter referred to as the “Other Assets”); (ii) in the course of conducting such activities, the Servicer may from time to time have conflicts of interest in performing its duties on behalf of the various entities to whom it provides management services and with respect to the various assets in respect of which it provides management services; and (iii) Policy Provider, ▇▇▇▇▇▇▇ & ▇▇▇▇▇ Air Limited and the board of directors of the Company have approved the transactions contemplated by this Agreement and the other Operative Agreements and desire that such transactions be consummated and in giving such approval Policy Provider, ▇▇▇▇▇▇▇ & ▇▇▇▇▇ Air Limited and the board of directors of the Company have expressly recognized that such conflicts of interest may arise and that when such conflicts of interest arise the Servicer shall perform the Services hereunder in accordance with the Standard of Care and, to the extent applicable, the Conflicts Standard.

(b) If conflicts of interest arise regarding the management of any Aircraft Asset, on the one hand, and any Other Asset, on the other hand, the Servicer shall perform the Services in good faith and, without prejudice to the generality of the foregoing, to the extent 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 between such Aircraft Asset and such Other Asset, respectively, on an unreasonable basis (the standard set forth in this Section 3.02(b) shall be referred to collectively as the “Conflicts Standard”). The Servicer shall provide notice to the Company and the Policy Provider of any actual material conflict of interest known to it regarding the management of any Aircraft, on the one hand, and any Other Asset, on the other hand.

(c) Notwithstanding any provision herein to the contrary, if, in connection with the provision of Services with respect to an Aircraft Asset or Lease, a conflict of interest shall exist that, in the good faith opinion of the Servicer, requires an arm’s-length negotiation between the Servicer or an Affiliate of the Servicer, on the one hand, and any Person within the Company Group, on the other hand, and the Servicer believes it would not be appropriate for the Servicer to act on behalf of such Person within the Company Group in connection with such negotiation (whether or not the Servicer shall propose to act on behalf of itself or one of its Affiliates in connection with such negotiation), then the Servicer shall withdraw from acting as Servicer with respect to such Aircraft Asset or Lease in connection with the negotiation of the issue giving rise to such conflict of interest. The Servicer shall provide written notice to the Company not more than ten Business Days after it has made a determination that an arm’s-length negotiation is necessary with respect to such conflict of interest and it would not be appropriate for the Servicer to act on behalf of such Person within the Company Group in connection with such negotiation. Not more than seven Business Days after receipt of such notice from the Servicer, the Servicer shall appoint an Independent Representative to act on behalf of such Person within the Company Group to which such Aircraft Asset or Lease and conflict of interest relates. “Independent Representative” shall mean any Person that engages in the business of an operating lessor or the manger or servicer of a portfolio of at least 75 commercial jet aircraft. Any such Independent Representative so appointed shall act on behalf of the relevant Person within the Company Group for purposes of such negotiation relating to such Aircraft Asset or Lease and the Servicer shall have no responsibility or liability to any Person within the Company Group with respect to such negotiation relating to such Aircraft Asset or Lease. In any event, if an Independent Representative is acting on behalf on any Person within the Company Group, the Servicer shall be entitled to act on behalf of itself or its Affiliate with respect to such negotiation. During the period of such Independent Representative’s appointment, the Servicer shall continue to perform its ordinary functions as Servicer with respect to such Aircraft Asset or Lease to the extent that the performance of the Servicer does not directly or indirectly affect the negotiation of the issue giving

 

 

7

 

---

rise to such conflict of interest. To the extent, if any, the Servicer cannot continue to perform any Services with respect to such Aircraft Asset or Lease during such negotiation, such Services shall be performed by the Independent Representative or any other designee of such Person within the Company Group. Except as provided in Section 3.02(d) below, any such Aircraft Asset or any Aircraft Assets subject to any such Lease shall continue to be included as an Aircraft Asset for purposes of calculating the Servicing Fees pursuant to Article IX during the appointment of an Independent Representative and the fees, if any, of any such Independent Representative shall be paid by the Servicer.

(d) If (i) the Servicer reasonably determines that directions given by any Person to the Servicer in accordance with this Agreement or Services required to be performed under this Agreement (other than any Service involving an arm’s-length negotiation between the Servicer or an Affiliate of the Servicer, on the one hand, and any Person within the Company Group, on the other hand) would, in either case, if carried out, place the Servicer in a conflict of interest with respect to which, in the Servicer’s good faith opinion, the Servicer cannot continue to perform its obligations hereunder within the requirements set forth in Section 3.02 with respect to all Aircraft Assets or any affected Aircraft Assets, as the case may be, or (ii) there is a conflict of interest of the type described in Section 3.02(c) above which results in the Independent Representative being required to perform substantially all of the Services described in Sections 1 through 3 of Schedule 2.02(a) of this Agreement on a long-term basis in respect of an affected Aircraft Asset, the Servicer shall give the Company (and the Company shall thereupon give the Policy Provider) prompt written notice thereof and thereafter the Servicer may resign as Servicer with respect to the affected Aircraft Assets or Aircraft Asset, or the Company or the Policy Provider may elect to remove the Servicer with regard to the affected Aircraft Assets or Aircraft Asset, as provided in Article X, with the result that each affected Aircraft Asset shall cease to be an Aircraft Asset hereunder.

Section 3.03. Standard of Liability; Servicer Indemnification.

(a) Notwithstanding any other provision of this Agreement which could be construed to the contrary, the Servicer shall not be liable or accountable to any Person including, without limitation, the Company or any Subsidiary or Affiliate of the Company (other than the Company to the extent set forth in the next following sentence), Policy Provider or ▇▇▇▇▇▇▇ & ▇▇▇▇▇ Air Limited or any Affiliate thereof or any other Person, under any circumstances for any Losses directly or indirectly arising out of, in connection with or related to, the management by the Servicer of Aircraft Assets or Other Assets. The Servicer shall not be liable or accountable to the Company or any other Person in the Company Group, ▇▇▇▇▇▇▇ & ▇▇▇▇▇ Air Limited or any Affiliate thereof, Policy Provider or any other Person under any circumstances for, and the Company shall indemnify the Servicer on an After-Tax Basis in accordance with the provisions of Article XI for, any Losses, directly or indirectly, arising out of, in connection with or related to, the management by the Servicer of Aircraft Assets or Other Assets, unless such Losses are finally adjudicated to have resulted directly from (x) the Servicer’s or its director’s, officer’s or employee’s (or any Servicer Delegate’s) fraud, deceit, gross negligence or willful misconduct in respect of its obligation to apply the Standard of Care or the Conflicts Standard in respect of its performance of the Services or (y) any representation or warranty by the Servicer to such Person set forth in Sections 4.10 or 4.11 having proven to be false on the date hereof (the liability standards set forth in this Section 3.03, the “Standard of Liability”). For the avoidance of doubt, but without limiting the provisions of Section 9.07, the provisions of this Section 3.03 shall not give rise to any obligation on the part of the Servicer to indemnify the Company for any Taxes. Subject only to the Standard of Liability, the Servicer shall not be directly or indirectly liable or accountable to the Company or any Person in the Company Group or ▇▇▇▇▇▇▇ & ▇▇▇▇▇ Air Limited or any of its other Affiliates or the Policy Provider under any circumstances for any Losses directly or indirectly arising out of, in connection with or related to, (i) the direct or indirect transfer of any Aircraft Assets or Leases related thereto or any other assets to any Person within or outside the Company Group, (ii) the adequacy of the terms of any Lease or other contract relating to any Aircraft Assets, (iii) the reliability or creditworthiness of any Lessee or other party to a contract with respect to its obligations under any Lease or any other contract relating to the Aircraft

 

 

8

 

---

Assets, (iv) the adequacy of the lease payments derived from the Leases related to any Aircraft Assets to support various obligations of the Persons within the Company Group or of ▇▇▇▇▇▇▇ & ▇▇▇▇▇ Air Limited, (v) the adequacy of any utilization, supplemental or additional rents or other payments or security deposits relating to the Aircraft Assets, (vi) the terms and conditions of the Notes or other securities or instruments being offered and sold by the Company or any of its Affiliates as of the Closing Date (or thereafter) or pursuant to any Offering, (vii) the ability of the Company or any other Person to comply with the terms and conditions of such Notes or such securities or other instruments and (viii) the structuring and implementation of any aspect of the various transactions contemplated by any Offering, including the Final Prospectus.

(b) The Servicer shall indemnify the Company on an After-Tax Basis for, any Losses of the Company, directly or indirectly, arising out of, in connection with or related to the Servicer’s or its director’s, officer’s or employee’s (or any Servicer Delegate’s) finally adjudicated fraud, deceit, gross negligence or willful misconduct in respect of its obligation to apply the Standard of Care or the Conflicts Standard in respect of its performance of the Services or any representation or warranty by the Servicer to such Person set forth in Sections 4.10 or 4.11 having proven to be false on the date hereof. The parties agree that under no circumstances shall the foregoing provisions provide for or permit any duplicative payment to or recovery by the Company.

Section 3.04. Waiver of Implied Standard. Except as expressly stated above in this Article III, ALL OTHER WARRANTIES, CONDITIONS AND REPRESENTATIONS, EXPRESS OR IMPLIED, STATUTORY OR OTHERWISE, ARISING UNDER U.S. FEDERAL, DELAWARE, IRISH, AUSTRALIAN, BERMUDAN OR OTHER LAW IN RELATION TO 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 OR MERCHANTABILITY OF ANY GOODS ARE HEREBY EXCLUDED AND WAIVED BY THE COMPANY AND EACH OTHER PERSON IN THE COMPANY GROUP, THE POLICY PROVIDER, ▇▇▇▇▇▇▇ & ▇▇▇▇▇ AIR LIMITED, THE ADMINISTRATIVE AGENT, THE CASH MANAGER AND THE SERVICER SHALL NOT BE LIABLE TO THE COMPANY OR ANY OTHER PERSON WITHIN THE COMPANY GROUP, THE POLICY PROVIDER, ▇▇▇▇▇▇▇ & ▇▇▇▇▇ AIR LIMITED, THE ADMINISTRATIVE AGENT, THE CASH MANAGER OR ANY OTHER PERSON IN CONTRACT, TORT OR OTHERWISE UNDER U.S. FEDERAL, DELAWARE, IRISH, AUSTRALIAN, BERMUDAN OR OTHER LAW FOR ANY LOSS, DAMAGE, EXPENSE OR INJURY OF ANY KIND WHATSOEVER, CONSEQUENTIAL OR OTHERWISE, ARISING OUT OF OR IN CONNECTION WITH EITHER THE SERVICES TO BE SUPPLIED PURSUANT TO THIS AGREEMENT OR ANY GOODS TO BE PROVIDED OR SOLD IN CONJUNCTION WITH SUCH SERVICES OR ANY DEFECT IN EITHER SUCH GOODS OR FROM ANY OTHER CAUSE. Nothing in this Article III should be taken as in any way limiting or excluding any liability which the Servicer may have to the Company under Section 2 of the Irish Liability for Defective Products Act, 1991.

THE CONTRACTUAL RIGHTS, IF ANY, WHICH THE COMPANY GROUP ENJOYS BY VIRTUE OF SECTIONS 12, 13, 14 AND 15 OF THE SALE OF GOODS ACT, 1893 (AS AMENDED) AND SECTION 39 OF THE SALE OF GOODS AND SUPPLY OF SERVICES ACT, 1980 ARE IN NO WAY PREJUDICED BY ANYTHING CONTAINED IN THIS AGREEMENT SAVE TO THE EXTENT PERMITTED BY LAW.

ARTICLE IV

Representations and Warranties

The Company represents and warrants to, and agrees with, the Servicer as follows:

 

 

9

 

---

Section 4.01. Aircraft Assets. Schedule 4.01 contains a true and complete list of all Aircraft Assets constituting Aircraft Assets as of the Closing Date and each Person within the Company Group, if any, that owns such Aircraft Assets as of the Closing Date. Except as otherwise set forth therein, on the Delivery of each Aircraft Asset listed in Schedule 4.01, each Person within the Company Group listed as an owner of an Aircraft Asset on such Schedule will have such title to such Aircraft Asset as was conveyed to such Person on its Delivery, free and clear of all Liens created by or through such Person.

Section 4.02. Aircraft Assets Related Documents. (a) The Servicer shall not be required to perform any service provided for in or in connection with any Aircraft Assets Related Documents not in its possession (all such Aircraft Assets Related Documents listed in Schedule 4.02 being in its possession) or delivered to it.

(b) Each Aircraft Assets Related Document is a legal, valid and binding agreement of the Person within the Company Group that is a party thereto (including by way of assignment or novation) and is enforceable against such Person within the Company Group that is a party thereto in accordance with its terms. No Person within the Company Group has modified, amended or waived any provision of or terminated any Aircraft Assets Related Document referred to in Schedule 4.02 except as disclosed therein.

Section 4.03. Accounts and Cash Flow. Schedule 4.03 sets forth a true and complete list of all bank or other similar accounts and any other accounts relating to the Aircraft Assets, including wire transfer instructions, with respect to which any Person within the Company Group, the Security Trustee, the Administrative Agent, the Cash Manager or any other agent of any of the foregoing has authority, and Article III of the Indenture as in effect as of the date of this Agreement sets forth in reasonable detail a written description of all material arrangements and procedures relating to the flow of cash related to the Aircraft Assets.

Section 4.04. Organization and Standing.

(a) The Company is a limited liability company duly created under the laws of Bermuda, and each other Person within the Company Group is a corporation duly incorporated, a trust duly created or a limited liability company duly formed and validly existing and, if relevant, in good standing under the laws of the jurisdiction in which it is legally incorporated, created or formed, respectively, and possesses all franchises, licenses, permits, authorizations and approvals necessary to enable it to use its corporate or trust 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 franchises, licenses, permits, authorizations and approvals the failure of which to obtain could not, individually or in the aggregate, have a Material Adverse Effect on the Persons within the Company Group, taken as a whole, or on the Servicer. Each of the Company and each other Person within the Company Group is in compliance in all material respects with all terms and conditions of such franchises, licenses, permits, authorizations and approvals. Schedule 4.04(a) sets forth a true and complete list of each Person within the Company Group and the jurisdiction in which each such Person within the Company Group is legally organized.

(b) Each of the Company and each other Person within the Company Group is duly qualified to do business as a foreign corporation 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 Persons within the Company Group, taken as a whole, or on the Servicer.

Section 4.05. Authority. (a)  Each of the Company and each other Person within the Company Group which is a party to an Operative Agreement has all requisite power and authority to execute each

 

 

10

 

---

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 the Company 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 contemplated thereby have been or on or before the date of entering into the relevant Operative Agreements will have been duly and properly taken.

(b) Each of the Operative Agreements to which any Person within the Company Group is or will be a party has been or will be duly and 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, enforceable against it in accordance with its terms.

Section 4.06. No Conflicts. Neither the execution and delivery of any Operative Agreement to which any Person within the Company Group is a party nor the consummation of the transactions contemplated thereby nor performance by any Person within the Company Group of any of its obligations thereunder will (i) violate any provision of the constituent documents of any such Person within the Company Group, (ii) violate any order, writ, injunction, judgment or decree applicable to any Person within the Company 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 of the terms, conditions or provisions of any note, bond, mortgage, indenture, warrant or other similar instrument or any license, permit, material agreement or other material obligation to which any Person within the Company Group is a party or by which any Person within the Company Group or any of their respective properties or assets may be bound. No action, consent or approval by, or filing with, any Governmental Authority or any other regulatory or self regulatory body, or any other Person, is required in connection with the execution, delivery or performance by any Person within the Company Group of the Operative Agreements to which it is a party or the consummation by any Person within the Company Group of the transactions contemplated thereby.

Section 4.07. Compliance with Applicable Laws. Each of the Company and each other Person within the Company Group is in compliance in all material respects with all Applicable Laws and any filing requirements relating thereto.

Section 4.08. Litigation; Decrees. (a) Other than in the case of subclause (i) as may exist with respect to the Original Aircraft on the Closing Date, or other Aircraft Assets which in good faith are believed by the Company to be fully covered by insurance, there are no claims, actions, suits, arbitrations or other proceedings or investigations (i) pending or, to the best knowledge of each of the Company and each other Person within the Company Group, threatened, by or against or affecting the Company or any other Person within the Company Group, which in any case involves a potential loss exceeding $1,000,000 and (ii) pending, or to the best knowledge of each of the Company and each other Person within the Company Group, threatened, by or against or affecting the Company or any other Person within the Company Group, related to the transactions contemplated by the Operative Agreements.

(b) Each of the Company and each other Person within the Company Group is in compliance in all material respects with each outstanding judgment, order or decree (other than as may exist with respect to the Aircraft Assets) of any Governmental Authority or arbitrator applicable to the Company or any other Person within the Company Group, as the case may be, and no such judgment, order or decree has or could have a Material Adverse Effect on the Company or any other Person within the Company Group, or on the Servicer.

 

 

11

 

---

Section 4.09. Appointments. (a) Each Person within the Company Group has appointed the Company, and the Company has accepted such appointment, to act as representative of each such Person with respect to any matter in respect of which the Company or any other Person within the Company Group is required or permitted to take any action pursuant to the terms of this Agreement.

(b) The Company has appointed the Administrative Agent to act on its behalf and on behalf of each Person within the Company Group pursuant to the terms of the Administrative Agency Agreement, and, in addition to any action directed by the Board of Directors of the Company, the Company has appointed the Administrative Agent, on a revocable basis, to act on its behalf in connection with any action required or permitted to be taken by the Company on its own behalf or on behalf of any other Person within the Company Group pursuant to the terms of this Agreement.

Each of BBAM(US) and BBAM(Ireland) represents and warrants to the Company as follows:

Section 4.10. Authority. (a) Such Servicer is, in the case of BBAM(US) a Delaware limited liability company, and, in the case of BBAM(Ireland), a company duly created under the laws of Ireland, and, to the extent applicable in such jurisdiction, in good standing under the laws of its jurisdiction of organization, and possesses all franchises, licenses, permits, authorizations and approvals necessary under the laws of its jurisdiction of organization to enable it to use its corporate 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 franchises, licenses, permits, authorizations and approvals the failure of which to obtain could not, individually or in the aggregate, have a Material Adverse Effect on the Persons within the Company Group, taken as a whole, or on such Servicer. Such Servicer 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 such Servicer 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 contemplated thereby have been or on or before the date of entering into the relevant Operative Agreements will have been duly and properly taken.

(b) Each of the Operative Agreements to which such Servicer is or will be a party has been or will be duly and validly executed and delivered by such Servicer, as applicable, and each such Operative Agreement is or upon such execution and delivery will be a legal, valid and binding obligation of such Servicer, enforceable against it in accordance with its terms.

Section 4.11. No Conflicts. Neither the execution and delivery of any Operative Agreement to which such Servicer is a party nor the consummation of the transactions contemplated thereby nor performance by such Servicer of any of its obligations thereunder will (i) violate any provision of the constituent documents of such Servicer, (ii) violate any order, writ, injunction, judgment or decree applicable to such Servicer or any of its 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 of the terms, conditions or provisions of any note, bond, mortgage, indenture, warrant or other similar instrument or any license, permit, material agreement or other material obligation to which the Servicer is a party or by which such Servicer or any of its properties or assets may be bound. No action, consent or approval by, or filing with, any Governmental Authority or any other regulatory or self-regulatory body, or any other Person, is required in connection with the execution, delivery or performance by such Servicer of the Operative Agreements to which it is a party or the consummation by the Servicer of the transactions contemplated thereby.

Section 4.12. Compliance with Applicable Laws of Its Jurisdiction of Organization . Such Servicer is in compliance in all material respects with all Applicable Laws of its jurisdiction of

 

 

12

 

---

organization and any filing requirements in such jurisdiction relating thereto necessary to perform its obligations under this Agreement.

Section 4.13. Litigation; Decrees. (a) There are no claims, actions, suits, arbitrations or other proceedings or investigations pending, or to the best knowledge of such Servicer, threatened, by or against or affecting such Servicer related to the transactions contemplated by this Agreement.

(b) Such Servicer is in compliance in all material respects with each judgment, order or decree (other than may exist with respect to the Aircraft Assets) of any Governmental Authority or arbitrator applicable to such Servicer, and no such judgment, order or decree has or could reasonably be expected to have a Material Adverse Effect on the Company or any Person within the Company Group, or on such Servicer.

ARTICLE V

Servicer Undertakings

Section 5.01. Access.

(a) The Servicer at such times as the Company may reasonably request shall grant, and shall cause any Servicer Delegate to grant, to the Persons within the Company Group and their agents (including the Administrative Agent and auditors), to the extent party to confidentiality agreements acceptable to the Servicer, access to the documents and other records generated by the Servicer (and in its possession) as part of its performance of the Services (exclusive of internal correspondence, approval materials, internal evaluations and similar documents or other records developed by the Servicer or any of its Affiliates for their own use) or by a Lessee and delivered to the Servicer, and related to the Aircraft Assets (copies of which the Company shall (at its expense) be entitled to take), to enable the Persons within the Company Group and ▇▇▇▇▇▇▇ & ▇▇▇▇▇ Air Limited to monitor the performance by the Servicer under this Agreement or to otherwise discharge their respective obligations under Applicable Law (including applicable securities laws). Upon reasonable prior written notice and at reasonable times (in any event not more than an aggregate, with respect to the Company Group and ▇▇▇▇▇▇▇ & ▇▇▇▇▇ Air Limited taken as a whole, of four (4) times per Year), the Servicer shall make one or more (such number to be determined by the Servicer in good faith but sole discretion) members of its staff available to attend (including by telephone) meetings of the board of directors of the Company. In addition, the Servicer will make one or more members of its management available to participate in additional meetings of such board of directors either, in the Servicer’s sole discretion, by participating in person or by teleconference. Any out-of-pocket expenses incurred by the Servicer in connection with any such attendance shall be reimbursed by the Company. In addition to the foregoing, the Servicer shall provide, subject to Section 13.04, to the Policy Provider the reports described in Section 9 of Schedule 2.02(a) as to be provided to the Policy Provider.

(b) The Servicer at such times as the Policy Provider may reasonably request (in any event not more than an aggregate of one (1) time per Year prior to an Event of Default, and four (4) times per Year after and during the continuance of an Event of Default) shall grant, and shall cause any Servicer Delegate to grant, to the Policy Provider and its agents to the extent party to confidentiality agreements reasonably acceptable to the Servicer, access to the documents and other records generated by the Servicer (and in its possession) as part of its performance of the Services (exclusive of internal correspondence, approval materials, internal evaluations and similar documents or other records developed by the Servicer or any of its Affiliates for their own use) or by a Lessee and delivered to the Servicer, and related to the Aircraft Assets (copies of which the Policy Provider shall (at its expense) be entitled to take), to enable the Policy Provider and its agents to monitor the performance by the Servicer under this Agreement or to otherwise discharge the Policy Provider’s obligations under Applicable Law.

 

13

 

---

Prior to the occurrence of an Event of Default, the Policy Provider shall pay its own costs and expenses incurred pursuant to this Section 5.01(b). After the occurrence and during the continuance of an Event of Default, the Company shall promptly pay the Policy Provider’s out-of-pocket costs and expenses incurred pursuant to this Section 5.01(b) upon receipt of a written invoice therefore from the Policy Provider. In addition to the foregoing, the Servicer shall provide, subject to Section 13.04, to the Policy Provider the reports described in Section 9 of Schedule 2.02(a) as to be provided to the Policy Provider. Upon reasonable prior written notice and at reasonable times (in any event not more than an aggregate of one (1) time per Year prior to an Event of Default, and four (4) times per Year after and during the continuance of an Event of Default), the Servicer shall make one or more (such number to be determined by the Servicer in good faith but sole discretion) members of its staff (including one or more members of its senior management) available to attend (including by telephone) meetings with representatives of the Policy Provider.

(c) In addition to the rights of the Policy Provider under Section 5.01(b), the Policy Provider shall have the right to conduct an operational review and inspection by an independent third party (the “Auditor”) of the reports, documents and other records relating to the Aircraft Assets (including any Aircraft Related Documents) and to meet with members of its staff (including one or more members of its senior management) and shall have access to the documents and other records generated by the Servicer (and in its possession) as part of its performance of the Services (exclusive of internal correspondence, approval materials, internal evaluations and similar documents or other records developed by the Servicer or any of its Affiliates for their own use) or by a Lessee and delivered to the Servicer, and related to the Aircraft Assets (copies of which the Policy Provider shall be entitled to take) to enable the Policy Provider and its agents to monitor the performance by the Servicer under this Agreement. The right of the Policy Provider set forth in the immediately preceding sentence is referred to herein as a “Reimbursable Audit.” The Company shall pay the out-of-pocket costs and expenses of the Policy Provider and the Auditor incurred pursuant to this Section 5.01(c) promptly upon receipt of a written invoice therefore from the Policy Provider; provided that the amount reimbursed by the Company to the Policy Provider shall not exceed $40,000 for each Reimbursable Audit conducted on or prior to the fifth anniversary of the Closing Date and $65,000 for each Reimbursable Audit conducted thereafter. The Policy Provider shall have the right to conduct the first Reimbursable Audit no earlier than the end of the eighteen-month period commencing on the Closing Date. Thereafter, until the fifth anniversary of the Closing Date, Reimbursable Audits shall occur no more frequently than 24 months after the previous Reimbursable Audit. After the fifth anniversary of the Closing Date, Reimbursable Audits shall occur no more frequently than 12 months following the previous Reimbursable Audit. Notwithstanding the foregoing, the Policy Provider shall have the right to conduct a Reimbursable Audit (i) at any time after the occurrence and during continuance of an Event of Default under the Indenture or (ii) annually during the five-year period immediately following the Closing Date if the Outstanding Principal Balance of the Class G-1 Notes has exceeded the Minimum Target Principal Balance thereof for six consecutive Payment Dates.

Section 5.02. Compliance with Law. The Servicer shall, in connection with the performance of the Services, comply in all material respects with all laws, rules and regulations applicable to the Servicer.

Section 5.03. Commingling. The Servicer shall not commingle, with its own funds, or the funds of other Persons for which it acts as lease servicer or manager, any funds of any Person within the Company Group from time to time in its possession.

Section 5.04. Restrictions on Exercise of Certain Rights. Without limiting the Servicer’s rights under the Security Trust Agreement, the Servicer shall not take any steps for the purpose of procuring the appointment of an administrative receiver or the making of any administrative order or for instituting any bankruptcy, reorganization, arrangement, insolvency, winding up, liquidation, composition or any similar

 

14

 

---

proceeding under the laws of any jurisdiction with respect to any Person within the Company Group or any of the Aircraft Assets.

Section 5.05. Coordination with the Company Group. The Servicer shall designate an individual who shall be an employee of the Servicer and who shall be primarily responsible for coordinating with the Company and any other Person within the Company Group regarding the Services, and the Servicer may from time to time change such designation by providing written notice to the Company of such change.

Section 5.06. Corporate Formalities. The Servicer will observe all corporate formalities necessary to remain a legal entity separate and distinct from, and independent of, each member of the Company Group and will maintain its assets, liabilities, funds, records, books and accounts separate and distinct from those of each member of the Company Group.

Section 5.07. Separateness Covenants. In connection with providing the Services hereunder, the Servicer shall; (i) pay its obligations in the ordinary course of its business as a legal entity separate from each Company Group Member; (ii) keep its funds separate and distinct from the funds of each Company Group Member; (iii) conduct its business in its own name and not in the name of any Company Group Member; (iv) not pay or agree to pay or become liable for any debt of any Company Group Member; (v) not hold itself out as a division of any Company Group Member or as any Company Group Member being a division of it; (vi) not induce any third party to rely on the creditworthiness of any Company Group Member in order that such third party will be induced into contract with the Servicer; and (vii) not enter into any agreement between the Servicer and any Company Group Member that is materially more favorable to either party than agreements the parties would have been able to enter into at such time on an arm’s-length basis with a non-affiliated third party (it being understood that the parties hereto do not intend this covenant to ratify any self-dealing transactions).

Section 5.08. Funds Held in Trust. If the Servicer receives any money that belongs to any Company Group Member, the Cash Manager or the Security Trustee or is to be paid to any Company Group Member, the Cash Manager or the Security Trustee or into any account pursuant to the Indenture or this Agreement, the Servicer shall hold such money in trust for such Company Group Member, the Cash Manager or the Security Trustee, as the case may be, and shall within five Business Days after identification of the owner of such money pay the same into the relevant account in accordance with the terms of the Indenture or this Agreement without exercising any right of set-off.

ARTICLE VI

Undertakings of the Company

Section 6.01. Cooperation. The Company shall, and shall cause each other Person within the Company Group and their respective agents (including the Administrative Agent and the Cash Manager) to, at all times cooperate with the Servicer to enable the Servicer to provide the Services, including providing the Servicer with all powers of attorney as may be reasonably necessary or appropriate for the Servicer to perform the Services.

Section 6.02. No Representation with Respect to Third Parties. The Company agrees that as between the Servicer, on the one hand, and each of the Company and the other Persons within the Company Group and ▇▇▇▇▇▇▇ & ▇▇▇▇▇ Air Limited and its Affiliates, 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 or any other Person party to a contract with the Servicer or any Person within the Company Group in connection with Servicer’s performance of the Services.

 

15

 

---

 

 

Section 6.03. Related Document Amendments. The Company shall not take, and shall not permit any other Person within the Company Group or ▇▇▇▇▇▇▇ & ▇▇▇▇▇ Air Limited or any of its Affiliates to take, any action that would increase in any respect the scope, nature or level of the Services to be provided under this Agreement without the Servicer’s express prior written consent, including by entering into, amending, modifying or supplementing any Aircraft Assets Related Document (it being understood that (i) the Servicer shall have no liability to any Person directly or indirectly arising out of, in connection with or related to, the Servicer’s failure to perform such increased Service prior to any such amendment, modification or supplement being consented to in writing by the Servicer and (ii) no Person within the Company Group or ▇▇▇▇▇▇▇ & ▇▇▇▇▇ Air Limited or any of its Affiliates shall be permitted to engage another Person to perform the affected Service without the prior written consent of the Servicer).

Section 6.04. Exclusivity. Except as otherwise expressly provided in Sections 2.04(b), 3.02(c) and 10.04 of this Agreement, the Company shall not, and shall not permit any other Person within the Company Group or any agent of any Person thereof (including the Administrative Agent or the Cash Manager) or ▇▇▇▇▇▇▇ & ▇▇▇▇▇ Air Limited or any of its Affiliates to, enter into, or cause or permit any Person (other than the Servicer or any Person acting for or on its behalf) to enter into on its behalf, (a) any transaction for the lease or sale of any Aircraft Asset in respect of which the Servicer is at such time performing Services or (b) any agreement for the performance by any Person other than the Servicer of some or all of the Services, in the case of (a) and (b) without the prior written consent of the Servicer.

Section 6.05. Communications. The Company shall, and shall cause each other Person within the Company Group and the Administrative Agent and the Cash Manager to, forward promptly to the Servicer a copy (or, if such communication is oral and from a Lessee in respect of an Aircraft Asset or Aircraft Asset purchaser, notify the Servicer by prompt oral or written notice and, if oral notice, confirmed in writing upon request) of any written communication received from any Person (including any Person under any Aircraft Assets Related Document) in relation to any Aircraft Asset or oral communication received from a Lessee in respect of an Aircraft Asset or Aircraft Asset purchaser in relation to any Aircraft Asset.

Section 6.06. Ratification. The Company hereby ratifies and confirms and agrees to ratify and confirm (and shall cause each other Person within the Company Group to do the same) (and shall furnish written evidence thereof upon request of the Servicer) whatever the Servicer does in accordance and compliance with this Agreement in the exercise of any of the powers or authorities conferred upon the Servicer under the terms of this Agreement.

Section 6.07. Additional Aircraft Assets. If any Aircraft Asset shall become a Former Aircraft Asset pursuant to the provisions of Section 2.04 and thereafter the condition which caused such Former Aircraft Asset to cease to be an Aircraft Asset shall no longer exist or the transaction entered into as contemplated by Section 2.04(b) shall terminate, then the Company shall, and shall require each other Person within the Company Group, as appropriate, to, cause, as and to the extent commercially feasible, such Former Aircraft Asset to become an Aircraft Asset and the Servicer shall accept such Aircraft Asset as an Aircraft Asset, such action to be confirmed by an exchange of correspondence to such effect.

Section 6.08. Execution, Amendment, Modification or Termination of Aircraft Assets Related Documents. (a) In connection with the acquisition of any Aircraft (other than any Former Aircraft Asset) which becomes an Aircraft Asset other than pursuant to the Asset Purchase Agreement, no later than ten Business Days prior to such Aircraft becoming an Aircraft Asset, the Company shall deliver a written notice thereof to the Servicer setting forth the model type and manufacturer’s serial number of such Aircraft and the Person within the Company Group which will become the owner of such Aircraft upon its acquisition, together with (x) a true and complete list all documents related to such Aircraft which will become Aircraft Assets Related Documents upon the acquisition of such Aircraft and (y) a true and complete copy of each document which will become an Aircraft Assets Related Document upon the

 

16

 

---

acquisition of such Aircraft or, to the extent it has yet to be executed, the most current draft of such document (with a final executed copy to be delivered as promptly as practicable thereafter). The Company will be deemed to represent and warrant to, and agree with, the Servicer on the date such Aircraft becomes an Aircraft Asset that (i) the Person within the Company Group listed as the owner of such Aircraft in the written notice provided by the Company will have such title to such Aircraft as was conveyed to such Person on its acquisition free and clear of all Liens created by or through such Person, (ii) each Aircraft Assets Related Document related to such Aircraft is a legal, valid and binding agreement of the Person within the Company Group that is a party thereto (including by way of assignment or novation) and is enforceable against such Person within the Company Group that is a party thereto in accordance with its terms and (iii) no Person within the Company Group has modified, amended or waived any provision of or terminated any Aircraft Assets Related Document referred to in such written notice provided by the Company except as disclosed therein. The Servicer shall not be required to perform any services provided for in or in connection with any Aircraft Assets Related Documents not delivered to it, and, to the extent that the failure to provide such service results in any Losses to the Servicer, the Company shall indemnify the Servicer for such Losses on an After-Tax Basis, in accordance with the provisions of Article XI.

(b) No later than five Business Days after the date that (i) any agreement, instrument or other document becomes an Aircraft Assets Related Document (other than as contemplated in Section 6.08(a)) or (ii) any Aircraft Assets Related Document shall have been amended, modified or terminated, the Company shall deliver written notice thereof to the Servicer together with (x) 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 (y) in the case of any amendment, modification or termination, a true and complete copy of any related agreement, instrument or other document; provided that such notice or such document shall not be required to be delivered, but shall be delivered if the Servicer does not have possession of such notice or document, delivery is so requested by the Servicer and the Company has possession of such notice or document, if the Servicer was substantially involved in the preparation and execution of such new, amended, modified or terminated agreement, instrument or other document.

Section 6.09. Access to the Company Group Information. At all such times as the Servicer may reasonably request, the Company shall cause each other Person within the Company Group and the Administrative Agent to grant, access to the Servicer and its agents to the books of account, documents and other records of such Person (including “read only” and reporting access to the management information systems used by such Persons), and to officers, directors (or trustees, as applicable) and employees of each Person within the Company Group, ▇▇▇▇▇▇▇ & ▇▇▇▇▇ Air Limited or any such agent for the purposes of the Servicer’s performance of its obligations in respect of Aircraft Assets under this Agreement; provided that ▇▇▇▇▇▇▇ & ▇▇▇▇▇ Air Limited and its Affiliates that are not Persons within the Company Group shall have no obligation to provide information that does not relate to an Aircraft Asset and is confidential or proprietary. The Company will provide the Servicer with copies of the minutes of the board of directors of the Company and any written materials presented to the board by any Person, including the Administrative Agent.

Section 6.10. The Company Group Accounts and Cash Arrangements. (a) The Company shall not, and shall not permit any other Person within the Company Group or any agent thereof to, establish any new bank or similar account relating to the Aircraft Assets or close any bank or similar account relating to the Aircraft Assets other than in accordance with the terms of the Indenture, the Security Trust Agreement or the Cash Management Agreement.

(b) No Person within the Company 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

 

17

 

---

accordance with the terms of the Indenture, the Security Trust Agreement or the Cash Management Agreement.

Section 6.11. [Reserved].

Section 6.12. Further Assurances. The Company agrees and shall cause each other Person within the Company Group and their respective agents (including the Administrative Agent and the Cash Manager) to agree, that, at any time and from time to time, upon the written request of the Servicer, it will execute and deliver such further documents and do such further acts and things, after a reasonable period for review thereof, as the Servicer may reasonably request in order to effect the purposes of this Agreement.

Section 6.13. Guarantees. The Company represents, warrants and agrees that it has full power and authority to bind each of the Persons within the Company Group to this Agreement and that each of such Persons is bound by this Agreement and will perform its obligations hereunder. In furtherance of the foregoing, but not in limitation thereof, the Company agrees that it shall cause each other Person within the Company Group with respect to which the Servicer so request to execute and deliver an accession agreement, in form or substance reasonably acceptable to the parties hereto, pursuant to which such Person becomes a party hereto or to execute and deliver a Company Group Guarantee in favor of the Servicer in the form attached hereto as Appendix B.

Section 6.14. Transfers of Funds. The Company agrees and shall cause each other Person within the Company Group and their respective agents (including the Administrative Agent and the Cash Manager), to cooperate with the Servicer to the extent necessary to cause funds to be transferred into or out of the various Bank Accounts in order for the various payments from Lessees to be applied, or to Lessees to be made, on a basis consistent with the instructions of such Lessees, subject in each case to the terms of the Leases and the rights and obligations of the lessors thereunder.

ARTICLE VII

The Company Group Responsibility

Section 7.01. The Company 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 the Company and each other Person within the Company Group shall continue to have and exercise through its board of directors or trustees, as the case may be, as applicable, real and effective central control and management of all matters related to its ongoing business, operations, assets and liabilities, subject to matters that are expressly the responsibility of the Servicer in accordance with the terms of this Agreement, and each of the Company and each other Person within the Company Group shall at all times conduct its separate ongoing business in such a manner that the same shall at all times be readily identifiable from the separate business of the Servicer. Matters with respect to which responsibility is not being delegated to the Servicer shall include but are not limited to the matters set forth in Schedule 7.01. Without limiting the generality of the foregoing, each of the Company and each other Person within the Company Group agrees as follows:

(a) it will observe all corporate formalities necessary to remain a legal entity separate and distinct from, and independent of, the Servicer, and any of its Affiliates;

(b) it will maintain its assets and liabilities separate and distinct from those of the Servicer;

 

18

 

---

(c) it will maintain records, books, accounts, and minutes separate from those of the Servicer;

(d) it will pay its obligations in the ordinary course of business as a legal entity separate from the Servicer;

(e) it will keep its funds separate and distinct from any funds of the Servicer, and it will receive, deposit, withdraw and disburse such funds separately from any funds of the Servicer;

(f) it will conduct its business in its own name, and not in the name of the Servicer;

(g) it will not agree to pay or become liable for any debt of the Servicer, other than to make payments in the form of indemnity as required by the express terms of this Agreement;

(h) it will not hold out that it is a division of the Servicer, or that the Servicer is a division of it;

(i) it will not induce any third party to rely on the creditworthiness of the Servicer in order that such third party will be induced to contract with it;

(j) it will not enter into any transactions between it and the Servicer that are more favorable to either party than transactions that the parties would have been able to enter into at such time on an arm’s-length basis with a non-affiliated third party, other than any agreements in effect on the date hereof (it being understood that the parties hereto do not intend by this covenant to ratify any self-dealing transactions);

(k) it will observe all corporate or other procedures required under Applicable Law and under its constitutive documents; and

(l) it will observe all corporate formalities necessary to keep its business separate and readily identifiable from, and independent of, each other Person within the Company Group, including keeping the funds, assets and liabilities of each such Person separate and distinct from those of each other Person within the Company Group and by maintaining separate records, books, accounts and minutes for each Person within the Company Group.

Section 7.02. Performance with Respect to Aircraft Assets. The Company has directed the Servicer to, and the Servicer will, perform the Services in a manner that is intended to be consistent with maximizing the cash flows derived from the leases relating to the Aircraft Assets 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 term lengths), 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 Company understands and acknowledges the inherent uncertainty in determining market conditions at any point in time as well as the inherent limitations in anticipating market conditions from time to time. It is expressly understood that this Section 7.02 does not impose any higher or different standard of care or liability than is set forth in Article III.

Section 7.03. Lease Operating Budget; Aircraft Asset Expenses Budget. (a) The Company shall adopt with respect to each year during the term of this Agreement, in accordance with Sections 7.03(b), (c) and (d), (i) a single lease operating budget with respect to all Aircraft Assets (the “Lease Operating Budget”) and (ii) a single budget with respect to the Aircraft Asset expenses related to all Aircraft Assets (the “Aircraft Asset Expenses Budget”); provided that, with respect to the Year

 

19

 

---

commencing January 1, 2007, the Company shall have adopted the Lease Operating Budget and the Aircraft Asset Expenses Budget for such Year that are attached to a certificate delivered by the Company to the Servicer on the Closing Date.

(b) In respect of each Year during the term of this Agreement, it is understood that the Administrative Agent shall prepare on behalf of the Company Group, and not later than the [November 30] immediately preceding the commencement of such Year deliver to the Servicer (other than with respect to the fiscal year commencing January 1, 2007), a proposed Lease Operating Budget and a proposed Aircraft Asset Expenses Budget for such Year together with reasonably detailed information regarding the assumptions underlying such proposed budgets.

(c) In connection with the preparation of such proposed Lease Operating Budget and Aircraft Asset Expenses Budget, the Servicer shall provide the Manager, not later than the September 30 immediately preceding the commencement of such Year (other than with respect to the fiscal year commencing January 1, 2007), information in a form to be agreed from time to time relating to (i) Aircraft Assets lease rates, Utilization Rent, Aircraft redelivery payments, and Deposits (including interest, if any, thereon), (ii) Aircraft Assets being off lease, (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 as may be reasonably required to prepare such budgets, in each case including the assumptions relating thereto. The Servicer shall only be obligated to provide expense-related information to the Administrative Agent pursuant to this Section 7.03(c) to the extent that such information relates to the Services performed by the Servicer hereunder. The Company shall ensure that the Administrative Agent is instructed to prepare each such proposed Lease Operating Budget and proposed Aircraft Asset Expenses Budget on a timely basis and that the Administrative Agent cooperates therewith.

(d) After the delivery of such proposed Lease Operating Budget and Aircraft Asset Expenses Budget as described in Sections 7.03(b) and (c), the Servicer and the Administrative Agent shall review and discuss such proposed Lease Operating Budget and Aircraft Asset Expenses Budget and shall make such adjustments thereto as they shall deem appropriate, and the revised proposed Lease Operating Budget and proposed Aircraft Asset Expenses Budget in respect of any Year shall then be submitted no later than the December 15 (or, if such day is not a Business Day, the first following Business Day) preceding such Year to the Company for its consideration and approval (other than with respect to the fiscal year commencing January 1, 2007). The approved Lease Operating Budget and Aircraft Asset Expenses Budget for any Year, as each may be amended or modified from time to time, shall hereinafter be referred to as the “Approved Budget”. Each Approved Budget shall be consistent with, and not in any manner reduce, limit or circumscribe, the delegation to the Servicer pursuant to this Agreement (including pursuant to Section 7.04) of a practical and workable level of autonomy, authority and responsibility with respect to the performance of the Services.

(e) If the Company does not adopt any Approved Budget for any Year as contemplated by Section 7.03(d) or if, after an Approved Budget is adopted, the Company shall determine that any Changed Circumstances have occurred and are continuing, then the Company shall instruct the Servicer and the Administrative Agent, on behalf of the Company Group, to review and, to the extent possible, revise the Lease Operating Budget and Aircraft Asset Expenses Budget in such a manner as to adequately address the concerns of the Company and/or such Changed Circumstances (it being understood that, subject to the last sentence of Section 7.03(d), the Company may instruct the Servicer not to proceed with a Lease Operating Budget and an Aircraft Asset Expenses Budget approved by the Company if the Company determines that any proposed revisions do not adequately address the concerns of the Company and/or such Changed Circumstances).

 

20

 

---

(f) Notwithstanding any other provision hereof, the Servicer shall have no liability for the failure of the Approved Budget for any Year to be achieved.

Section 7.04. Transaction Approval Requirements. (a) The Servicer shall not do any of the following without the express prior written approval of the Board of Directors of the Company (which approval shall not be given or made by the Company to the extent such approval would breach any covenant or agreement of the Company in the Indenture) and, in the case of clauses (vii) and (viii) of this Section 7.04(a), the Company shall have given the Servicer written copies of any required Policy Provider consent as provided in the Indenture:

(i) Except as otherwise required in accordance with the terms of any Lease or the Asset Purchase Agreement, sell (or enter into any agreement to sell) or otherwise dispose of any Aircraft (excluding any sale or exchange of any Engine, parts or components thereof or aircraft or engine spare parts or ancillary equipment or devices furnished therewith) forming part of the Aircraft Assets.

(ii) Enter into any new Lease (or any renewal or extension of an existing Lease, unless any such Lease being renewed or extended had previously been approved pursuant to this Section 7.04(a) or if any such Lease contains an extension option and such option is being exercised in accordance with the terms of such Lease) of Aircraft Assets if (A) the Lease shall not comply with all the applicable provisions of Sections 5.02 and 5.03 of the Indenture expressly applicable to the leasing of such Aircraft Assets as set forth in Section 2.1 of Schedule 2.02(a), (B) the Lease grants a purchase option in favor of the Lessee (it being agreed that a right of first refusal or right of first offer is not a purchase option for purposes hereof) or (C) the Lease permits the Lessee to assign its obligations without the consent of the Lessor.

(iii) Terminate any Lease or Leases to any single Lessee with respect to any Aircraft Assets (A) on or prior to the fifth anniversary of the Closing Date, then having an aggregate depreciated net book value on the books of the applicable Person(s) within the Company Group in excess of $100,000,000 and (B) after the fifth anniversary of the Closing Date, with respect to more than five Aircraft Assets per year, and, in either case, unless such Lease or Leases is substituted or replaced by another substantially similar Lease or Leases with respect to such Aircraft Assets or unless such termination is related to the exercise of remedies following an event of default under the applicable Lease.

(iv) Unless provided for in the then current Approved Budget (including the provisions of Section 7.03(e)), (A) enter into any contract to make any capital expenditure for the purpose of effecting any optional improvement or modification of any Aircraft Asset, including any optional conversion thereof from passenger to a freighter or mixed use aircraft, except for capital expenditures made in the ordinary course of business in connection with the sale or lease of an Aircraft Asset, or (B) enter into any contract for maintenance of any Aircraft Asset, in either event, if the costs to be incurred thereunder by the applicable Person within the Company Group exceed the greater of (1) the estimated aggregate cost of the heaviest or most extensive maintenance check for the airframe and a total refurbishment and full restoration shop visit of the engines for Aircraft Assets of the type in question (and including the replacement of life limited parts) , in each case, based on then prevailing industry rates in the United States or Europe, and (2) the amount of the available Utilization Rent or other payments or other collateral under the applicable Lease and, in the case of conversions, the amount in the applicable Conversion Account.

(v) Issue any Guarantee on behalf of, or otherwise pledge the credit of (other than with respect to trade payables in the ordinary course of the Company Group’s business), any

 

21

 

---

Person within the Company Group, except (A) for guarantees by the Company or any other Person within the Company Group of the obligations of any other Person within the Company Group (including in connection with a Lease or the sale of an Aircraft Asset), (B) so long as the out-of-pocket cash payment or cash collateral deposit in respect thereof does not exceed $3,000,000 in any individual case (and not in excess of $20,000,000 in the aggregate at any time outstanding), any Lien or indebtedness created in favor of the issuer of a surety bond, letter of credit or similar instrument to be obtained by or for the benefit of any Person within the Company Group in connection with the detention or repossession of an Aircraft or enforcement action under a Lease or removal of a Lien and (C) with respect to instances in which the Servicer is seeking to repossess or otherwise protect an Aircraft Asset after an imminent default or an event of default under a Lease, (x) on or prior to the fifth anniversary of the Closing Date, in a notional amount or face value of bond or guaranty in excess of the Assumed Base Value (as defined in the Indenture) of such Aircraft Asset and, (y) thereafter, in a notional amount or face value of bond or guaranty in excess of the most recent appraised value of such Aircraft Asset as provided in Section 5.03(i) of the Indenture.

(vi) Except as specifically contemplated by Schedule 2.02(a), on behalf of any Person within the Company Group, enter into, amend or grant a waiver with respect to, any transaction with the Servicer or any of its Affiliates, including for the acquisition, sale or lease of any Aircraft Assets from or to, or the obtaining or provision of services by, any such Person (except for the acquisition, sale, exchange or lease of or services in respect of any Engine, parts or components thereof or aircraft or engine spare parts, components or ancillary equipment or devices furnished therewith).

(vii) Incur on behalf of any Person within the Company Group any liability (actual or contingent) or cause any such liability to be incurred, except for a liability (A) contemplated in the then current Approved Budget, (B) arising out of, in connection with or related to a transaction of a type which is otherwise subject to approval under this Section 7.04 and is, in fact, so approved or, due to the existence of an exception, limitation or other carve out contained therein or in any definition therein, is not subject to approval under the relevant provision of this Section 7.04, (C) incurred in the ordinary course of the Company Group’s business, including, but not limited to, liabilities related to such matters specified in Schedule 7.04, (D) incurred pursuant to a Lease or sale of an Aircraft Asset, in entering into the Lease or sale contract or performing any obligations as lessor or seller thereunder or (E) with respect to instances in which the Servicer is seeking to repossess or otherwise protect an Aircraft Asset after an imminent default or an event of default under a Lease, (x) on or prior to the fifth anniversary of the Closing Date, liabilities with maximum exposure (by way of notional amount, face value or otherwise) not to exceed the Assumed Base Value of such Aircraft Asset and, (y) thereafter, liabilities with a maximum exposure (by way of notional amount, face value or otherwise) not to exceed the most recent appraised value of such Aircraft Asset as provided in Section 5.03(i) of the Indenture; provided that the exception contained in clause (C) above is not intended to override any other restriction contained in this Agreement (other than this clause (vii)) relating to the incurrence of any liability referred to in such clause (C); and provided, further, that liabilities incurred pursuant to this clause (vii) (other than subclause (E) which shall not be subject to the following caps) after the fifth anniversary of the Closing Date shall not, without Company approval, exceed $1,000,000 per Aircraft Asset per year or $20,000,000 in the aggregate for all Aircraft Assets after the fifth anniversary of the Closing Date.

(viii) Enter into on behalf of the Company or any Person within the Company Group, any order or commitment to acquire, or acquire on behalf of the Company Group, (A) aircraft or (B) except as otherwise provided in Section 4(e) of Schedule 2.02(a), so long as no individual (and not aggregate) net (after credit for any exchanges, replacements or similar items)

 

22

 

---

out-of-pocket cash expenditures exceeds $3,000,000, aircraft engines, except, in the case of aircraft engines (X) in accordance with any Lease or for the benefit of a Lessee pursuant to a Lease or (Y) to acquire a replacement engine for an Aircraft so long as the same is provided for in the then current Approved Budget; provided that no orders or commitment for engines shall, without Company approval, require net out-of-pocket cash expenditures in excess of $20,000,000 in the aggregate for all Aircraft Assets after the fifth anniversary of the Closing Date.

(b) Any transaction entered into by the Servicer on behalf of any Person within the Company Group (other than with other Persons within the Company Group), including with the Servicer or any of its Affiliates, shall be on an arm’s-length basis and on fair market value terms, unless otherwise agreed by the Board of Directors of the Company on behalf of any such Person within the Company Group and, in the case of transactions with the Servicer or any of its Affiliates, the Policy Provider.

(c) The transaction approval requirements (the “Transaction Approval Requirements”) set forth in this Section 7.04 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. Any rejection by the Company of any proposed transaction submitted to it by the Servicer pursuant to the Transaction Approval Requirements shall only be applicable to such portions of any such proposed transaction as are specifically required to be approved as set forth in Section 7.04(a).

(d) The Company shall provide the Servicer with a response confirming its approval or rejection of any proposed transaction submitted to it by the Servicer as promptly as practicable following its receipt of a proposal from the Servicer and in any event not more than [five] Business Days after receipt of such a proposal. In the event that the board of directors of the Company, a duly authorized committee thereof or the Administrative Agent fails to approve of any transaction with respect to which an approval is required pursuant to the Transaction Approval Requirements and in respect of which the Servicer has submitted a reasonably detailed written proposal, the Company shall provide a reasonably detailed written explanation for any such rejection to the Servicer simultaneously with notifying the Servicer of such rejection. The Servicer is not required to take any action with respect to any transaction for which approval was sought pending receipt of such explanation.

Section 7.05. Approved Budgets and Transaction Approval Requirements. Except as set forth in Section 7.04(a), no transaction entered into by the Servicer on behalf of any Person within the Company Group in connection with the performance by the Servicer of the Services shall require the approval of any Person within the Company Group or its board of directors or trustees, as applicable, or any committees thereof, or the Administrative Agent or the Cash Manager; provided that nothing set forth in this Article VII shall prohibit the Servicer from seeking any approval or direction from the Company with respect to any matter related to the Services or the Aircraft Assets to the extent that the Servicer believes to be appropriate and, pending the Servicer’s receipt of any such approval or direction, the Servicer may refrain from taking any action with respect to the matter for which the Servicer has sought approval or direction.

ARTICLE VIII

Effectiveness

Section 8.01. Effectiveness. The effectiveness of this Agreement and all obligations of the parties hereunder shall be conditioned upon satisfaction (or waiver by the appropriate party) of the conditions set forth in Schedule 8.01.

 

23

 

---

ARTICLE IX

Servicing Fees; Expenses; Taxes;

Priority of Servicing Fees

Section 9.01. Servicing Fees. (a) In consideration of the Servicer’s performance of the Services, the Company agrees to pay to the Servicer servicing fees consisting of (i) the monthly base fee set forth in Section 9.02 (“Monthly Base Fee”), (ii) the rent fees set forth in Section 9.03 (“Rent Fees”), and (iii) the sales fee set forth in Section 9.04 (“Sales Fee”).

(b) The Company agrees to provide the Servicer (with a copy to the Administrative Agent) with any information in a timely manner that the Servicer may reasonably request to enable the Servicer to determine the timing and amount of any payment that the Servicer is entitled to receive pursuant to this Agreement.

Section 9.02. Monthly Base Fee. A Monthly Base Fee equal to $150,000 shall be payable by the Company to the Servicer in arrears on each Payment Date during the Term of this Agreement; provided that in the event that any Aircraft (other than any Former Aircraft Asset) shall become an Aircraft Asset after the Closing Date other than pursuant to the Asset Purchase Agreement, then the Monthly Base Fee will be increased by an additional amount equal to 0.01% of the Base Value of such additional Aircraft Asset on the date it becomes an Aircraft Asset to reflect the addition of such Aircraft.

Section 9.03. Rent Fees. (a) Rent Fees shall consist of the Rent Payable Fee and the Rent Collected Fee. The Rent Fees shall be calculated by the Servicer and payable by the Company as follows:

(i) A Rent Payable Fee shall be payable by the Company to the Servicer in arrears for each period commencing on the Closing Date (or, thereafter, the fourth Business Day prior to the most recent Calculation Date) and ending on the fourth Business Day prior to the next succeeding Calculation Date during the term of this Agreement (each such period, a “Fee Period”), such payment to be made no later than the Payment Date immediately following the end of each such Fee Period.

The “Rent Payable Fee” in respect of any Fee Period shall equal one percent (1.00%) of the aggregate amount of the Rents due from each Lessee attributable to such Fee Period, or portion of such Fee Period in which the relevant Aircraft constitutes an Aircraft Asset; provided that, in the event of an early termination of a Lease relating to any Aircraft Asset for any reason (other than by reason of the occurrence of an event of loss or exercise of a purchase option), the Rents which would have been payable pursuant to such Lease but for such early termination will be included in this calculation of the Rent Payable Fee until the earlier of (a) the date on which Rents shall become payable in respect of such Aircraft Asset pursuant to another Lease (the Rents of which shall be included in this calculation of the Rent Payable Fee) and (b) the day that numerically corresponds to the first date by which such Aircraft Asset and related Aircraft Documents shall have been physically repossessed by the Servicer following such early termination in (or, if no such day exists, the last day of) the calendar month that is the third month after the month in which such date occurs.

(ii) A Rent Collected Fee shall be payable by the Company to the Servicer in arrears for each Fee Period, such payment to be made no later than the Payment Date immediately following the end of each such Fee Period.

The “Rent Collected Fee” in respect of any Fee Period shall equal one percent (1.00%) of the aggregate amount of the Rents actually paid by each Lessee and, if any Lessee fails to pay any

 

24

 

---

Rent when due, amounts applied towards such payment during such Fee Period or portion of such Fee Period in which the relevant Aircraft constitutes an Aircraft Asset; provided that if any collateral security, including any security deposit, is applied to the payment of Rent, then, for purposes of calculating the Rent Collected Fee, the amounts so applied shall not be included as Rent at the time of such application but shall be so included at such time as any Person within the Company Group shall receive substitute collateral security or a payment (whether in the form of Rent or otherwise) which restores, in whole or in part, such collateral security.

(b) Not less than four Business Days prior to each Payment Date immediately following the end of each Fee Period, the Servicer shall deliver a written notice to the Company specifying the amount of the Rent Payable Fee and the amount of the Rent Collected Fee payable in respect of such Fee Period.

Section 9.04. Sales Fee. (a) A Sales Fee shall be payable with respect to each Fee Period by the Company to the Servicer, such payment to be made not later than the Payment Date immediately following the end of each such Fee Period.

(b) The “Sales Fee” in respect of any Fee Period shall equal one and one-half percent (1.50%) of the Aggregate Gross Proceeds in respect of Dispositions of Aircraft Assets during such Fee Period. “Aggregate Gross Proceeds” for any Fee Period means the sum of the Gross Proceeds for each Disposition of an Aircraft Asset that is an Aircraft Asset during such Fee Period. “Disposition” means, with respect to any Aircraft Asset, the sale (including pursuant to the exercise of a purchase option), total loss or other event or circumstances under which such Aircraft Asset ceases to be an Aircraft Asset. “Gross Proceeds” shall be an amount equal to the gross proceeds (including the fair market value of any non-cash consideration, but excluding any cash added to the purchase price of the applicable Aircraft Asset in respect of any Utilization Rent or Deposit) received by any Person within the Company Group in respect of any Disposition of an Aircraft Asset.

(c) Not less than four Business Days prior to each Payment Date immediately following the end of each Fee Period, the Servicer shall deliver a written notice to the Company specifying the amount of the Sales Fee payable in respect of such Fee Period.

Section 9.05. Fees in Bankruptcy. In the event that this Agreement is not terminated due to an event described in Section 10.02(a)(i)(D) or (E), the fees payable to the Servicer after the occurrence and during the continuance of such an event shall be 115% of the fees otherwise payable under Sections 9.02, 9.03 and 9.04 above.

Section 9.06. Expenses. (a) The Servicer shall be responsible for, and shall not be entitled to reimbursement for, the Servicer’s overhead expenses set forth in Schedule 9.06(a) (“Overhead Expenses”).

(b) (i) The Company shall be responsible for all costs and expenses relating to or associated with the Aircraft Assets other than Overhead Expenses, including those costs and expenses set forth in Schedule 9.06(b) (“Aircraft Asset Expenses”). Nothing contained in this Section 9.06 shall be deemed to impose on the Servicer any obligation to advance any of its own funds for any Aircraft Asset Expenses.

(ii) If, in connection with the performance of Services, and without limiting the Company Group’s liability to pay for any goods and services as and when invoiced by the Servicer that are not required to be so paid in advance by the Servicer, the Servicer, on behalf of any Person within the Company Group, proposes to provide goods and services, or arrange for the provision of goods or services, from any vendor, supplier, service provider or other Person (A) for a purchase price in excess of

 

25

 

---

U.S. $1,000,000 (or the equivalent thereof in the currency in which such obligation is payable) or (B) at any time when a default in respect of the payment of any amount due under this Agreement shall have occurred and be continuing, the Servicer may require the Company to pay for such goods or services in advance or otherwise make the funds for payment of such goods or services available to the satisfaction of the Servicer. If such advance payment is not made or such funds are not otherwise made available, notwithstanding any other provision in this Agreement, the Servicer shall be relieved of its obligation to provide or arrange for the provision of such goods or services in respect of the Aircraft Assets for which such goods or services were to be provided but shall otherwise continue to manage such Aircraft Assets as provided in this Agreement and shall continue to be entitled to receive the fees specified in Sections 9.01, 9.02, 9.03 and 9.04 in respect of such Aircraft Assets. In such case, the Company may provide or arrange for the provision of such goods or services in respect of such Aircraft Assets.

Section 9.07. Taxes. (a) The Company agrees to pay and to indemnify and hold harmless the Indemnified Parties on an After-Tax Basis from and against (i) all liability for Taxes of or imposed on the Taxpayers that are imposed on, or asserted to be payable by, any Indemnified Party as a result of the structuring and implementation of any aspect of the various transactions contemplated by the Final Prospectus, regardless of whether such Taxes are attributable to a taxable period ending before, on or after the Closing Date, other than (A) any such Taxes imposed on or payable by a Taxpayer in its capacity as a withholding agent in respect of amounts payable pursuant to this Agreement to an Indemnified Party (B) and any Taxes imposed on or payable by a Taxpayor that, prior to the Closing Date, was an Affiliate of the Servicer to the extent attributable to the period on or prior to the Closing Date, and (ii) any liability for out-of-pocket fees, costs and expenses (including reasonable attorneys’ fees) arising out of or incident to any Tax indemnified hereunder. If any Taxes for which the Company is to indemnify any Indemnified Party pursuant to the immediately preceding sentence are payable after the Closing Date, the Company shall pay or cause to be paid to such Indemnified Party an amount calculated on an After-Tax Basis equal to the amount of such Taxes no later than the later of (x) five Business Days after such Indemnified Party gives notice to the Company that such amount is due, a reasonably detailed explanation of such indemnity obligation and specifying the date such Taxes are due and payable (the “Due Date”) and (y) one Business Day before the Due Date. Amounts described in clause (ii) shall be reimbursed on an After-Tax Basis not less frequently than quarterly. Any payment required to be made hereunder and not made at the time specified in the preceding two sentences shall bear interest at the Stipulated Interest Rate or such higher rate actually payable by such Indemnified Party on the delayed payment of the Taxes being indemnified, calculated from the date such payment was required to be made hereunder to the date such payment is actually received by the Indemnified Party.

(b) All amounts payable by or on behalf of the Company pursuant to this Agreement shall be payable exclusive of any applicable value added tax, which value added tax, if payable, shall also be payable, upon production of a valid value added tax invoice by the Servicer. All amounts payable to the Company by an Indemnified Party pursuant to this Agreement shall be inclusive of value added tax save to the extent such Indemnified Party is entitled to recover (by way of repayment, credit or set off) the whole or any part of such value added tax. Where it is so entitled, at the request of the Company, value added tax shall be payable in addition thereto on production of a valid value added tax invoice but payment of the value added tax element shall not fall due until the latest possible date before the date on which such Indemnified Party shall receive such repayment, credit or set off (and such Indemnified Party shall be obligated to use reasonable endeavors (taking into account its overall tax position) to obtain such repayment, credit or set off as soon as possible); provided that, to the extent such payment of the value added tax element shall fall due prior to such date of receipt pursuant to Applicable Law, the Company shall compensate such Indemnified Party at the Prime Rate for any resulting loss of the time value of funds. The Servicer shall act on the Company’s behalf in processing any refund of value added tax and the Servicer and the Company shall cooperate in good faith to file an application for relief from value added taxes on VAT form 60A as soon as practicable after the date of this Agreement.

 

26

 

---

(c) The Company shall pay and indemnify and hold the Indemnified Parties harmless, on an After-Tax Basis, from all Taxes imposed, levied or assessed against or upon the Person in the Company Group or any Indemnified Parties by any Governmental Authority upon or with respect to any of the Operative Agreements or any payment pursuant thereto or resulting from the matters or activities described therein, other than (except to the extent required to make any payment on an After-Tax Basis) (i) payroll, social security and employment Taxes of such Indemnified Party and any Taxes that are based on or measured by the net income, net receipts, net profits, net worth, franchise, capital or conduct of business of such Indemnified Party, (ii) any Taxes payable by such Indemnified Party pursuant to the controlled foreign corporation provisions or the passive foreign investment company provisions of the U.S. Internal Revenue Code of 1986, as amended (the “Code”), or any successor provision, (iii) any Taxes payable by an Indemnified Party (other than stamp, documentary or other similar taxes), which Taxes are imposed by Ireland or the United States of America or any political subdivision of either, or any other jurisdiction, to the extent such Taxes would not have been imposed but for any connection of the Indemnified Party or any Affiliate thereof with the jurisdiction imposing such Taxes (other than any such connection that results from activities of such Indemnified Party or any Affiliate which activities are located in such jurisdiction by reason of the location of (x) a specific lessee or sublessee of any Person within the Company Group (or, if applicable, with respect to any Original Aircraft, the owner), (y) an Aircraft or any part thereof or (z) any other Person (other than any Indemnified Party) with whom any Person within the Company Group (or, if applicable, with respect to any Original Aircraft, the owner) may be engaging, or contemplating engaging, in a commercial relationship), (iv) Taxes attributable to events or conditions arising after the termination or expiration of this Agreement, (v) Taxes imposed as a result of the gross negligence or willful misconduct of any Indemnified Party, (vi) Taxes imposed on any Indemnified Party to the extent resulting from an unreasonable failure of such Indemnified Party to provide any certificate, documentation or other evidence reasonably requested by the Company and required under Applicable Law as a condition of allowance of a reduction or exemption in such Taxes; provided that such Indemnified Party is legally eligible to provide such certificate, documentation or other evidence without, in such Indemnified Party’s good faith judgment, any adverse consequence (other than de minimus costs and expenses) to it or any of its Affiliates, and (vii) Taxes imposed on or arising from fees or other similar amounts paid by the Company to any Indemnified Party. All Taxes with respect to which the Company has an indemnification responsibility under this Section 9.07 shall be paid not later than the date such Taxes shall be due unless and to the extent, in the case of Taxes that do not burden any of the assets or property of any Indemnified Party and are assessed solely upon a Person or Persons within the Company Group, such Person or Persons within the Company Group shall be contesting such Taxes in good faith by appropriate proceedings, in which case such Taxes, or so much thereof as are being contested and are unpaid, shall be paid promptly upon a final determination that such Taxes, are due and payable. In the event any Taxes with respect to which the Company has an indemnification responsibility under this Section 9.07 are levied on any Indemnified Party, or any Indemnified Party is required by law or otherwise to pay any such Taxes in the first instance or as a result of a Person or Persons within the Company Group’s failure to comply with, or nonperformance in relation to, any Applicable Law or regulations governing the payment thereof by such Person or Persons within the Company Group, the Company shall pay to such Indemnified Party the full amount thereof on an After-Tax Basis within five Business Days after receipt from such Indemnified Party of any written request for such payment but not later than the due date for such Taxes. Any payment required to be made hereunder and not made at the time specified under this Section 9.07 shall bear interest at the Stipulated Interest Rate or such higher rate actually paid by such Indemnified Party on the delayed payment of the Taxes being indemnified, calculated from the date such payment was required to be made hereunder to the date such payment is actually received by such Indemnified Party.

(d) If any claim or demand is asserted in writing with respect to a Tax indemnified hereunder, such Indemnified Party shall in good faith notify the Company of such claim or demand within 10 days of receipt thereof; provided that failure to give such notification shall not affect such Indemnified

 

27

 

---

Party’s entitlement to indemnification hereunder unless such failure shall materially and adversely prejudice the ability of the Company to defend itself or any Indemnified Party against any such action, claim, demand, proceeding or suit. If the Company shall so request within 30 days after receipt of such notice, such Indemnified Party shall in good faith at the Company’s expense contest the imposition of such Tax; provided that such Indemnified Party may in its sole discretion select any applicable forum for such contest and determine whether any such contest shall be by (i) resisting payment of such Tax, (ii) paying such Tax under protest or (iii) paying such Tax and seeking a refund thereof; provided further, that at such Indemnified Party’s option such contest shall be conducted by the Company in the name of such Indemnified Party (subject to the preceding proviso) (it being understood that the Company shall not be permitted to contest the imposition of such Tax in the name of such Indemnified Party without the prior written consent of such Indemnified Party). In no event shall such Indemnified Party be required or the Company be permitted by such Indemnified Party to contest the imposition of any Tax for which the Company is obligated to indemnify pursuant to this Section 9.07 unless (i) such Indemnified Party shall have received from the Company (A) an indemnity reasonably satisfactory to such Indemnified Party for any liability, expense or loss arising out of or relating to such contest and (B) an opinion of tax counsel to the Company furnished at the expense of the Company to the effect that a reasonable basis exists for contesting such claim; (ii) the Company shall have agreed to pay, on an After-Tax Basis, such Indemnified Party on demand all reasonable costs and expenses that such Indemnified Party may incur in connection with contesting such claim (including all costs, expenses, losses, reasonable legal and accounting fees, disbursements, penalties, interest and additions to tax); (iii) the Company shall be in compliance with all of its payment obligations under this Agreement and shall have acknowledged, in a manner reasonably satisfactory to the Servicer, its liability hereunder to indemnify the Indemnified Parties in respect of such Tax; (iv) such Indemnified Party shall have determined that the action to be taken will not result in a material risk of sale, forfeiture or loss of, or the creation of any Lien (except if the Company shall have adequately bonded such Lien or otherwise made provision to protect the interests of such Indemnified Party in a manner reasonably satisfactory to such Indemnified Party) on any property or rights of such Indemnified Party, or any portion thereof or any interest therein; and (v) if such contest shall be conducted in a manner requiring the payment of the claim, shall have paid the amount required. Notwithstanding anything contained in this Section 9.07, an Indemnified Party shall not be required nor shall the Company be permitted by such Indemnified Party to contest or continue to contest in the name of an Indemnified Party the imposition of any Tax for which the Company is obligated to indemnify pursuant to this Section 9.07 if such an Indemnified Party shall waive in writing its rights to indemnification under this Section 9.07 with respect to such Tax.

(e) If any Indemnified Party shall obtain a refund of all or any part of any Tax paid by the Company such Indemnified Party shall, provided no Event of Default, or default by the Company in the payment of any amount due hereunder, has occurred and is continuing, pay the Company an amount equal to the amount of such refund or credit, including interest received or credited and attributable thereto, plus any net Tax benefit (or minus any net Tax detriment) realized by such Indemnified Party as a result of a payment made pursuant to this sentence or as a result of the receipt or accrual of such refund, or credit including interest received or credited and attributable thereto; provided that an Indemnified Party will only be treated as receiving as credit for this purpose to the extent that the credit is utilized in the taxable year that the Tax arises. If any Indemnified Party shall have paid the Company any refund of all or part of any Tax paid by the Company and it is subsequently determined that such Indemnified Party was not entitled to the refund or credit, such determination shall be treated as the imposition of a Tax for which the Company is obligated to indemnify such Indemnified Party pursuant to the provisions of Section 9.07 hereof.

Section 9.08. Priority of Payments to Servicer. Any and all amounts due and owing to the Servicer or any of its Affiliates (including any amounts due and owing to the Servicer or any of its Affiliates with respect to indemnification) pursuant to this Agreement shall be entitled to the priority

 

28

 

---

established therefore in the Indenture, which priority the Company agrees not to amend without the consent of the Servicer.

ARTICLE X

Term; Right to Terminate; Resignation;

Consequences of Expiration, Termination,

Resignation or Removal; Certain Tax Matters; Survival

Section 10.01. Term. (a) This Agreement shall have a non-cancelable term commencing on the Closing Date and expiring on the later of (i) the first date on which there shall have been paid in full all amounts outstanding to be paid under the Notes and any similar obligations of the Company issued pursuant to any other indenture or similar agreement, including all obligations then due and payable under the Indenture and under the Policy Provider Documents (as defined in the Indenture) (i.e., there shall be no Notes or similar obligations outstanding under the Indenture and under the Policy Provider Documents (as defined in the Indenture)) and (ii) [                   ] [        ], 2034.

During the term, this Agreement shall not be terminable by either party except as expressly provided in this Article X.

Section 10.02. Right to Terminate. (a) (i) At any time during the term of this Agreement, the Servicer shall in accordance with Section 10.02(c) be entitled to terminate this Agreement if:

(A) The Company shall fail to pay in full when due (1) any Servicing Fees within five days after the receipt of written notice from the Servicer of such failure or (2) any other amount payable by the Company hereunder or under any other Operative Agreement within ten days after the effectiveness of written notice from the Servicer of such failure to the extent that such failure materially impairs the ability of the Servicer to perform the Services on the terms set forth herein; or

(B) any Person within the Company 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 Agreement (other than with respect to payment obligations of the Company referred to in clause (a)(i)(A) of this Section 10.02) and such violation is reasonably likely to have a Material Adverse Effect on the Servicer or a material adverse effect on the rights and obligations of the Servicer under this Agreement (including the Servicer’s compensation hereunder); or

(C) any material representation or warranty by any Person within the Company Group made in this Agreement or any other Operative Agreement or in any report, certificate, financial statement or other agreement, instrument or document at any time furnished by or on behalf of any Person within the Company Group in connection therewith shall prove to have been false or misleading in any material respect when made or furnished and such representation or warranty shall remain false and misleading in any material respect and such misrepresentation or breach of warranty is reasonably likely to have a Material Adverse Effect on the Servicer or a material adverse effect on the rights and obligations of the Servicer under this Agreement (including the Servicer’s compensation hereunder); or

(D) there shall cease to be any Aircraft Assets owned by any Company Group Member; or

(E) the Indenture shall cease to be in full force and effect and no obligations of the Company to the Policy Provider or Policy Provider Obligations are outstanding; or

 

29

 

---

 

 

(F) there shall exist Competitor Control of the Company or ▇▇▇▇▇▇▇ & ▇▇▇▇▇ Air Limited.

(ii) Upon the occurrence of an event set forth in clause (i) of this Section 10.02(a), in addition to the right of the Servicer to terminate this Agreement in whole pursuant to Section 10.02(a)(i), the Servicer shall be entitled to terminate its obligations to provide the Services with respect to one or more specific Aircraft Assets (but less than all the Aircraft Assets) (any termination with respect to less than all the Aircraft Assets being a “Partial Termination”). If, upon any such Partial Termination, the Servicer shall elect to continue to provide Services with respect to any Aircraft Asset, the Servicer shall specify the Aircraft Assets in respect of which it intends to continue to provide Services in the Termination Notice with respect to the Partial Termination. All references to the expiration or termination of this Agreement shall mean the expiration or termination of this Agreement in whole and not to a Partial Termination unless expressly otherwise stated.

(b) At any time during the term of this Agreement, the Company (with the prior written consent of the Policy Provider) or the Controlling Party shall be entitled to terminate this Agreement if (each of the following events, conditions or acts, a “Servicer Termination Event”):

(i) ▇▇▇▇▇▇▇ & ▇▇▇▇▇ International Pty Ltd shall cease to own, directly or indirectly, at least 50.01% of the voting equity of, and economic interest in, BBAM(Ireland) or BBAM(US) ; or

(ii) the Servicer shall (A) fail in any material respect to perform any material Services in accordance with the Standard of Care or the Conflicts Standard and such failure shall have a Material Adverse Effect on the Company Group taken as a whole or a Material Adverse Effect on the rights and obligations of the Company Group taken as a whole under this Agreement; (B) fail in any material respect to perform any material Services which failure results in liability of the Servicer under its Standard of Liability and such failure shall have a Material Adverse Effect on the Company Group taken as a whole or a Material Adverse Effect on the rights and obligations of the Company Group taken as a whole under this Agreement or (C) perform the Services hereunder, or fail to perform such Services, in such a manner as to directly result in a Default Notice (pursuant to which the Outstanding Principal Balance of the Notes and all accrued and unpaid interest thereon shall become due and payable) having been issued in accordance with the terms of the Indenture with respect to breach of an Applicable Indenture Covenant set forth in Annex [    ] hereto; 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 ▇▇▇▇▇▇▇ & ▇▇▇▇▇ International Pty Ltd or the Servicer, or 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 non-U.S. bankruptcy, insolvency, receivership or similar law, and such proceeding or petition shall continue undismissed for 60 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 60 days; or

(iv) ▇▇▇▇▇▇▇ & ▇▇▇▇▇ International Pty Ltd 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 non-U.S. bankruptcy, insolvency, receivership or similar law, (B) consent to the institution of, or fail to contest the filing of, any petition described in clause (iii) above, (C) file an answer

 

 

30

---

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; or

(v) there shall have occurred and be continuing an Event of Default under Section 4.01(a) of the Indenture in respect of the payment of interest on any Note (as defined in the Indenture) due to an insufficiency of funds in the Collection Account on the relevant date, which Event of Default (x) shall have occurred on a date on which no amount is available for drawing under any Eligible Credit Facility (as defined in the Indenture) in respect thereof and (y) shall have continued unremedied for 60 days; provided that, for the avoidance of doubt, payments by the Policy Provider under the Policy shall not be deemed to cure any such Event of Default for purposes of this clause (v); or

(vi) an Event of Default (other than one referred to in clause (v) of this Section 10.02(b)) under the Indenture shall have occurred and, other than in respect of an Event of Default under Sections 4.01(e) or 4.01(f) of the Indenture, a Default Notice (pursuant to which the Outstanding Principal Balance of the Notes and all accrued and unpaid interest thereon shall become due and payable) shall have been issued in accordance with the terms of the Indenture, and at the time of such Event of Default at least 15% of the number of Aircraft Assets shall not be subject to Leases and each such Aircraft Asset shall have been off-lease and reasonably available for re-lease (which, for purposes of clarification, shall mean that such Aircraft Asset shall be in the possession or under the unfettered control of the Servicer, together with the related Aircraft Documents, shall be free of any legal prohibition on the re-leasing thereof, shall be free of Liens (other than Liens, if any, created pursuant to the “Related Documents” as defined in the Indenture or created by or at the instruction of the Servicer) and shall be in a condition reasonably acceptable to a potential lessee) during the three-month period ending on the date of such Event of Default; or

(vii) the Servicer shall breach Section 5.04 hereof; or

(viii) there shall cease to be any Aircraft Assets owned by any Company Group Member; or

(ix) an Independent Representative shall have been appointed due to a conflict of interest under Section 3.02 or Section 2.04 hereof or the Servicer shall have elected a Partial Termination under Section 10.2(a)(ii) hereof, in the aggregate (A) in any twelve consecutive months, with respect to Aircraft Assets with aggregate Base Values as of the Closing Date in excess of $250 million or (B) in any sixty consecutive months, with respect to Aircraft Assets with aggregate Base Values as of the Closing Date in excess of $800 million (such limits shall be proportionately adjusted, pro rata based on such Base Values, to the extent that Aircraft Assets are not delivered prior to the Delivery Expiry Date (as defined in the Asset Purchase Agreement)); or

(x) the Servicer ceases to be actively involved in the aircraft leasing business (whether for aircraft owned by it or its Affiliates or owned by others, and without taking into account the Aircraft Assets).

(c) (i) Each party to this Agreement (the “Terminating Party”) may, at any time during the term of this Agreement, by written notice (the “Termination Notice”) to the other (the “Nonterminating Party”), set forth its determination to terminate this Agreement pursuant to clause (a) of this Section 10.02 (in the case of the Servicer) or Section 10.01 or clause (b) of this Section 10.02 (in the case of the Company or the Policy Provider) or to provide for a Partial Termination of this Agreement pursuant to clause (a)(ii) of this Section 10.02 (in the case of the Servicer); provided that this Agreement

 

 

31

---

shall not terminate until and unless a Replacement Servicer shall have been appointed and shall have accepted such appointment in accordance with and if required by Section 10.04(c); provided, further, that failure by the Terminating Party to provide such Termination Notice shall not affect such party’s rights under Section 10.02(a) or Section 10.01 or Section 10.02(b), as the case may be. Any Termination Notice shall set forth in reasonable detail the basis for such termination.

(ii) Unless the Termination Notice is provided by the Company or the Policy Provider pursuant to Section 10.02(b)(i), (b)(iii), (b)(iv), (b)(v), (b)(vi), (b)(vii) or (b)(viii), or by the Servicer pursuant to Section 10.02 (a)(i)(D), (a)(i)(E), (a)(i)(F) or (a)(i)(G) (each a “Non-Curable Termination Event”), no later than the fifth day following the effectiveness of the Termination Notice (the “Effectiveness Date”), the Nonterminating Party shall advise the Terminating Party in writing whether the Nonterminating 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; provided that the failure of the Nonterminating 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 Termination Notice is provided for a Non-Curable Termination Event or the Nonterminating Party notifies (or is deemed to have notified) the Terminating Party that the Nonterminating Party does not intend to cure the basis for such termination, then this Agreement shall terminate or the Partial Termination shall take effect, as the case may be, immediately or on such later date as the Terminating Party shall have indicated in the Termination Notice to the Nonterminating Party. In the event that the Nonterminating Party notifies the Terminating Party by such fifth day that it intends to cure the basis for such termination, then the Nonterminating Party or, in the event that the Nonterminating Party is the Company, each of the Company and the Policy Provider, shall (A) have 15 days from the Effectiveness Date to effectuate such cure to the reasonable satisfaction of the Terminating Party or (B) if such cure cannot reasonably be expected to be effectuated within such 15-day period and it is not a payment default, (1) demonstrate to the reasonable 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 thirtieth day following the Effectiveness Date. Upon the failure of the Nonterminating Party to effectuate a cure in accordance with the immediately preceding sentence, this Agreement shall terminate or the Partial Termination shall take effect, as the case may be, on the latest of (A) the day immediately following the expiration of such 15- or 30-day period, (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 Assets and has accepted such appointment in accordance with and to the extent required of the provision of Section 10.04(c).

Section 10.03. Resignation or Removal. (a) If the Servicer reasonably determines that directions given by any Person to the Servicer in accordance with this Agreement are or would be if carried out, or Services required to be performed under this Agreement are or would be if carried out, (i) unlawful under Applicable Law, (ii) likely to lead to an investigation by any Governmental Authority, directly or indirectly, of or relating to the Servicer, any of its Affiliates or the Services, (iii) directions or Services that would expose the Servicer to any liabilities for which adequate bond or indemnity has not, in the Servicer’s good faith opinion, been provided or (iv) directions or Services that would place the Servicer in a conflict of interest with respect to which, in the Servicer’s good faith opinion, the Servicer cannot continue to perform its obligations hereunder within the requirements set forth in Article III with respect to all Aircraft Assets or any affected Aircraft Assets, as the case may be, it may resign as the Servicer for all purposes under this Agreement in relation to all the Aircraft Assets or, at its election, any affected Aircraft Assets (but with respect to clause (iv) above the Servicer may resign only with respect to the affected Aircraft) for the duration of this Agreement, such resignation to become effective upon the selection by the Company of a Replacement Servicer that has been engaged to perform the Services with respect to all the Aircraft Assets or any affected Aircraft Assets, as the case may be, and that has accepted

 

 

32

---

such appointment in accordance with the provisions of Section 10.04(c) (it being understood that, notwithstanding any other provision herein to the contrary, the Servicer shall be under no obligation to follow such directions or perform such Services, or to provide any such Services, pending the selection of and acceptance by a Replacement Servicer).

(b) If the Company shall have received a notice from the Servicer pursuant to Section 3.02(d) hereof to the effect that the Servicer cannot continue to perform its obligations hereunder within the requirements set forth in Section 3.02 with respect to all Aircraft Assets or any affected Aircraft Assets, the Company may remove the Servicer for all purposes under this Agreement in relation to the affected Aircraft Assets or, in the event that the Servicer has notified the Company that the Servicer cannot continue to perform its obligations with respect to all Aircraft Assets, all the Aircraft Assets for the duration of this Agreement, such removal to become effective upon the selection by the Company (or, if an Event of Default has occurred and is continuing, the Policy Provider) of a Replacement Servicer that has been engaged to perform the Services with respect to any affected Aircraft Assets or all the Aircraft Assets, as the case may be, and that has accepted such appointment in accordance with the provisions of Section 10.04(c) (it being understood that, notwithstanding any other provision herein to the contrary, the Servicer shall be under no obligation to perform Services with respect to the affected Aircraft Assets pending the selection of and acceptance by a Replacement Servicer).

(c) If any Taxes that are based on or measured by all or a portion of the revenues, rental income or assets of any Person within the Company Group (other than (i) any Taxes payable by any such Person pursuant to the controlled foreign corporation provisions or the passive foreign investment company provisions of the Code or (ii) Taxes imposed as a result of the gross negligence or willful misconduct of any such Person) shall be imposed on or with respect to the Servicer or any Affiliate thereof, and if such Taxes are not indemnified by the Company then, provided that the Servicer shall have undertaken reasonable efforts (that do not involve any material cost to the Servicer or any Affiliate thereof) to otherwise avoid the imposition of such Taxes, the Servicer may resign as the Servicer for all purposes under this Agreement in relation to all the Aircraft Assets or, at its election, any Aircraft Assets the resignation with respect to which would reduce or eliminate such Taxes for the duration of this Agreement, such resignation to become effective upon the selection by the Company of a Replacement Servicer to perform the Services with respect to all the Aircraft Assets or such Aircraft Assets as the case may be, that has accepted such appointment in accordance with the provisions of Section 10.04(c); provided that pending the effectiveness of such resignation, the Company shall be required to post a bond, irrevocable letter of credit or other form of security reasonably acceptable to the Servicer to be drawn upon by the Servicer in the event that any such additional Taxes continue to be imposed on or with respect to the Servicer or any Affiliate thereof during such pendency.

Section 10.04. Consequences of Expiration, Termination, Resignation or Removal.

(a) Notices. (i) Upon the expiration or termination of this Agreement in accordance with this Article X, or upon the resignation by or removal of the Servicer with respect to the performance of the Services for any or all of the Aircraft Assets, the Servicer will promptly forward to the Company any notices, reports and communications received by it from any relevant Lessee during the one year immediately after expiration, termination, resignation or removal.

(ii) The Company will notify promptly each relevant Lessee and any relevant third party (with a copy to each Rating Agency and the Policy Provider) of the termination, resignation or removal of the Servicer under this Agreement in relation to any of the Aircraft Assets and will request that all such notices, reports and communications thereafter be made or given directly to the Replacement Servicer and the Company.

 

 

33

---

(b) Accrued Rights. A termination, resignation or removal in relation to any or all the Aircraft Assets shall not affect the respective rights (including as to fees) and liabilities of either party accrued prior to such termination in respect of any prior breaches hereof or otherwise.

(c) Replacement Servicer. (i) Upon the expiration or termination of this Agreement in accordance with this Article X, or upon the resignation by or removal of the Servicer with respect to the performance of the Services for any or all of the Aircraft Assets, the Servicer will cooperate with any Replacement Servicer, including providing such Replacement Servicer with all information and documents reasonably requested.

(ii) Other than at the expiration of the term as set forth in Section 10.01 or pursuant to a termination of the Agreement by the Servicer in accordance with Section 10.02(a)(i)(A) due to nonpayment of amounts owed to the Servicer, the Servicer may not resign or be removed from its obligations and duties as Servicer hereunder, nor may this Agreement be terminated with respect to the Servicer, in either case in whole or in part, unless a Replacement Servicer has been appointed by the Company or, if an Event of Default has occurred and is continuing, the Policy Provider, and has accepted such appointment, and the Company has received both a written confirmation from each of the Rating Agencies that no lowering or withdrawal of the then current Ratings of any class or subclass of Notes will result from such appointment and the prior written consent of the Policy Provider; provided that, in the event that a Replacement Servicer shall not have been appointed within 90 days after any termination of this Agreement with respect to the Servicer or any resignation by or removal of the Servicer, the Servicer or the Company (and, following the giving of a Default Notice under the Indenture, the Policy Provider or the Security Trustee) may petition any court of competent jurisdiction for the appointment of a Replacement Servicer.

(d) Payment of Fees and Expenses. (i) Upon the expiration or termination of this Agreement in accordance with this Article X, or upon the resignation or removal of the Servicer with respect to the performance of the Services for any Aircraft Asset, so long as the Servicer is continuing to perform any of the Services, the company shall continue to pay Servicing Fees and reimbursable Aircraft Asset 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 10.04(c).

(ii) If a Replacement Servicer is appointed with respect to any Aircraft Asset in accordance with Section 10.04(c) and such Aircraft Asset is sold by any Person within the Company Group to a customer to whom the Servicer had been actively engaged in marketing such Aircraft Asset 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 Fees in respect of such Aircraft Asset as if the Servicer had arranged for the sale of such Aircraft Asset. Following any such appointment of a Replacement Servicer, the Servicer will, upon the request of the Company, provide the Company with a list of customers with respect to which the Servicer had been actively engaged in marketing such Aircraft Asset 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 the Company and shall not be disclosed to any Person other than the Company or the Administrative Agent (including officers, directors, employees and agents), or used for any purpose other than as a basis for determining any Sales Fees payable to the Servicer pursuant to the first sentence of this Section 10.04(d)(ii).

(e) Transition. Upon the expiration or termination of this Agreement in accordance with this Article X, or upon the resignation or removal of the Servicer with respect to the performance of the Services for any Aircraft Asset, the Servicer shall promptly return the originals (and, if there are no originals, copies) within its possession of all Aircraft Assets Related Documents to the Company and shall provide the Company with such access to other nonconfidential, nonproprietary documentation and

 

 

34

---

information (exclusive of internal correspondence, approval materials, internal evaluations or similar documentation or information) generated as part of the performance of the Services to any Person within the Company Group (and, upon the request by the Company and to the extent practicable, copies thereof) within its possession as is reasonably necessary to the conduct of the business of any Person within the Company Group and the services to be performed by a Replacement Servicer in connection therewith.

Section 10.05. Survival. Notwithstanding any termination or the expiration of this Agreement, (a) the obligations of the Company, the Policy Provider and the Security Trustee under Sections 2.03(g), 2.03(i), 2.03(j), 2.04, 2.05(a), 2.05(c), 2.05(d), 2.05(f), 2.05(g), 2.05(h), 3.03, 3.04, 6.06 and 7.03(f), Article IX, Sections 10.04 and 10.05, Article XI and Sections 13.01 and 13.03 of this Agreement and Section 2.2(b) of Schedule 2.02(a) to this Agreement and the Servicer’s obligations under Section 10.04 and Article XI shall survive such termination or expiration, as the case may be, and (b) the representations and warranties contained in Article IV and in Section 2.02(g) shall survive and remain in full force and effect until the third anniversary of the date on which this Agreement shall have expired or terminated.

ARTICLE XI

Indemnification

Section 11.01. Indemnity. (a) Notwithstanding anything to the contrary set forth herein (other than Section 2.03(m)) or in any other Operative Agreement, the Company does hereby assume liability for, and does hereby agree to indemnify and hold harmless on an After-Tax Basis each of the Indemnified Parties from, any and all Losses that may be imposed on, incurred by or asserted against any Indemnified Party, directly or indirectly, arising out of, in connection with or related to (i) the Servicer’s performance under this Agreement or from errors in judgment or omissions by the Servicer under this Agreement; provided that such indemnity shall not apply to the extent that such Losses are finally adjudicated to have been directly caused by (x) the fraud, deceit, willful misconduct or gross negligence of the Servicer or its directors, officers or employees (or a Servicer Delegate) in respect of its obligation to apply the Standard of Care or the Conflicts Standard in respect of its performance of the Services or (y) any representation or warranty by the Servicer set forth in Section 4.10 or 4.11 having proven to be false on the date hereof; (ii) any Indemnified Parties’ involvement (or alleged involvement) in connection with the structuring or implementation of any aspect of the transactions contemplated by the Final Prospectus; (iii) without limiting, and subject to, the provisions of clause (y) above, any Aircraft Assets and (iv) except as expressly provided to be the obligation of the Servicer in Section 2.03(m), the offering or sale of the Notes, the securities of ▇▇▇▇▇▇▇ & ▇▇▇▇▇ Air Limited or any other debt or equity securities or the obtaining of any loans by the Company or any of its Affiliates, or any other Offerings, including any Losses to which any Indemnified Party may become subject, under the Securities Act of 1933, the Securities Exchange Act of 1934 or other Federal or state or non-U.S. statutory law or regulation, at common law or otherwise, including any Loss that arises out of or is based upon: (A) any untrue statement or alleged untrue statement of a material fact contained in any Prospectus or in any amendment thereof or supplement thereto or in any other document filed with the United States Securities and Exchange Commission, or (B) the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading.

(b) Each Indemnified Party agrees to give the Company prompt notice of any action, claim, demand, discovery of fact, proceeding or suit for which the applicable Indemnified Party intends to assert a right to indemnification under this Agreement; provided that failure to give such notification shall not affect such Indemnified Party’s entitlement to indemnification under this Section 11.01 unless and only to the extent such failure results in actual material prejudice to the Company or any other Person within the Company Group.

 

 

35

---

Section 11.02. Procedures for Defense of Claims.

(a) If a Third Party Claim is made against any Indemnified Party, the applicable Indemnified Party shall promptly notify the Company in writing of such claim (which notice shall include all relevant information reasonably necessary for the Company to understand such claim which is in the possession or under the control of, or which can with reasonable commercial efforts be obtained by, such Indemnified Party at the time of such notice, subject to Applicable Laws and confidentiality obligations), and the Servicer or the Company (if so directed by the applicable Indemnified Party and if so accepted by the Company) will undertake the defense thereof. The failure to notify the Company promptly shall not relieve the Company of its obligations under this Article XI unless and only to the extent that such failure results in actual material prejudice to the Company or any other Person within the Company Group.

(b) If so directed by the applicable Indemnified Party and if accepted by the Company, the Company shall within 30 days, undertake the conduct and control, through counsel of its own choosing (subject to the consent of the applicable Indemnified Party, such consent not to be unreasonably withheld or delayed) and at the Company’s risk and expense, the good faith settlement or defense of such claim, and the applicable Indemnified Party shall cooperate fully with the Company in connection therewith; provided that (i) at all times the applicable 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 applicable Indemnified Party, and (ii) the Company shall not be entitled to settle such claims unless it shall have confirmed in writing its obligation to indemnify the applicable Indemnified Party for the liability asserted in such claim. The Company shall obtain the written consent of the applicable Indemnified Party prior to ceasing to defend, settling or otherwise disposing of such claim if as a result thereof such Indemnified Party would become subject to injunctive, declaratory or other equitable relief or the business of such Indemnified Party would be materially adversely affected in any manner.

(c) So long as the Company is reasonably contesting any such claim in good faith, the applicable Indemnified Party shall fully cooperate with the Company in the defense of such claim as is reasonably required by the Company. Such cooperation shall include the retention and the provision of records and information, which are reasonably relevant to such Third Party Claim and making directors, officers and employees available on a mutually convenient basis to provide additional information. Neither the Servicer nor any Indemnified Party shall settle or compromise any claim without the written consent of the Company unless the Servicer or the applicable Indemnified Party agrees in writing to forego any and all claims for indemnification from the Company with respect to such claims.

(d) If the Company, within 10 days after notice of any such claim, does not agree to defend such Third Party Claim as directed by the applicable Indemnified Party, such Indemnified Party will have the right to undertake the defense, compromise or settlement of such Third Party Claim.

Section 11.03. Reimbursement of Costs. The costs and expenses, including fees and disbursements of counsel (except as provided in clause (i) of the proviso to the first sentence of Section 11.02(b)) and expenses of investigation, incurred by any Indemnified Party in connection with any Third Party Claim, shall be reimbursed on a monthly basis by the Company upon the submission of evidence reasonably satisfactory to the Company that such expenses have been incurred, without prejudice to the Company’s right to contest the Indemnified Party’s right to indemnification and subject to refund in the event that the Company is ultimately held not to be obligated to indemnify the Indemnified Party.

Section 11.04. Waiver of Certain Claims; Special Indemnity. The Company does hereby (a) assume liability for and agree to indemnify and hold harmless on an After-Tax-Basis, in accordance with the provisions of this Article XI, each of the Indemnified Parties from any and all Losses that may be imposed on, incurred by or asserted against any Indemnified Party directly or indirectly arising out of, in connection with or related to any claims of shareholders or creditors of any Person within the Company Group or of ▇▇▇▇▇▇▇ & ▇▇▇▇▇ Air Limited and any claims (“Shadow Director/Related Company Claims”) that may be made by or on behalf of any Person against any Indemnified Party which are based

 

 

36

---

on any Indemnified Party being a shadow director of, or a related company to, any Person within the Company Group under applicable Irish law or which are based on any similar concept under any other Applicable Law; (b) waive, and shall cause each other Person within the Company Group and ▇▇▇▇▇▇▇ & ▇▇▇▇▇ Air Limited to waive, any and all Shadow Director/Related Company Claims that may be made by or on behalf of any Person within the Company Group against any Indemnified Party, (c) agree not to ▇▇▇, and to cause each other Person within the Company Group and ▇▇▇▇▇▇▇ & ▇▇▇▇▇ Air Limited not to ▇▇▇, upon any such Shadow Director/Related Company Claims, and (d) agree that any amounts awarded to or received by any Person within the Company Group or of ▇▇▇▇▇▇▇ & ▇▇▇▇▇ Air Limited arising out of or related to any such Shadow Director/Related Company Claims (whether such claims were made by or on behalf of any Person within the Company Group or of International Pty Ltd or by a third party (including any liquidator)) shall be paid over to the applicable Indemnified Party.

Section 11.05. Continuing Liability under Other Agreements. The Servicer understands, acknowledges and agrees that the intent of the parties hereunder is that any limitation on the liability of the Servicer under this Agreement, whether under this Article XI, Article III or otherwise, is not intended to and shall not be construed to limit the liability of any Person selling any Aircraft Assets under the Asset Purchase Agreement or the liability, if any, of any seller or other party to the initial purchasers under a separate indemnification agreement, and that any such liability under such agreement shall not give rise to any claim for indemnification in favor of the Servicer or any of its Affiliates under this Agreement.

ARTICLE XII

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 all other parties hereto; provided that (i) the Servicer may delegate, subject to the terms hereof, any portion of but not all its obligations to any Affiliate of the Servicer (a “Servicer Delegate”); (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 subject to the terms hereof; and (iii) the Company may assign its rights hereunder to the Security Trustee under the Security Trust Agreement and, without in any way releasing the Company from any of its duties or obligations hereunder, the Servicer consents to such assignment, it being understood that neither the Company’s assignment nor the Servicer’s consent to such assignment will affect the Servicer’s rights and obligations hereunder, subject the Servicer to any liability to which it would not otherwise be subject to hereunder nor modify in any respect the contract rights of the Servicer hereunder. Subject to the Security Trustee’s compliance with the provisions of this Agreement in exercising any such rights, the Servicer and each member of the Company Group agrees that all of the Company Group’s rights, including the right of the Company or any agent on its behalf to give notices or instructions to the Servicer under this Agreement, hereunder may be exercised by the Security Trustee to the exclusion of any member of the Company Group following notice to the Servicer by the Trustee or the Policy Provider of the occurrence and continuance of an Event of Default (whether or not other remedial action, such as the giving of a Default Notice, has been taken). Any assignment or delegation pursuant to this Section 12.01(a) shall not require any approval pursuant to Section 7.04 and no delegation or contract pursuant to clause (i) or (ii) above shall release the Servicer from any of its obligations hereunder.

(b) Without limiting the foregoing, any Person who shall become a successor by assignment or otherwise of the Company 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; provided that the Security Trustee

 

 

37

---

shall not be required to become a party to this Agreement solely by reason of the execution and delivery of the Security Trust Agreement.

(c) BBAM(US) and BBAM(Ireland) shall be co-servicers under this Agreement. Any action required or permitted to be taken hereunder by the Servicer may be taken by either BBAM(US) or BBAM(Ireland), as they shall agree from time to time; provided that BBAM(US) and BBAM(Ireland) shall be jointly and severally liable for any and all obligations required to be performed by, and each shall have all rights of, the Servicer hereunder and all representations and warranties of the Servicer are made jointly and severally; and provided, further, that all information required to be provided by the Servicer to the Company, the Administrative Agent, the Cash Manager, the Policy Provider and the Security Trustee, and any consent of, approval from or notice to the Servicer shall be delivered, given or made on behalf of the Servicer by and through BBAM(Ireland) and BBAM(US) agrees to be bound by any acts or omissions to act of BBAM(Ireland).

ARTICLE XIII

Miscellaneous

Section 13.01. Documentary Conventions. The Documentary Conventions shall govern this Agreement.

Section 13.02. Power of Attorney. The Company shall and shall cause each other Person within the Company Group, to appoint the Servicer and its successors, and its permitted designees and assigns, as their true and lawful attorney-in-fact pursuant to the form of Power of Attorney attached as Schedule 13.02 to this Agreement (with such modifications as are necessary under the laws of the jurisdictions in which such Persons are organized). All services to be performed and actions to be taken by the Servicer pursuant to this Agreement shall be performed for and on behalf of the Company. The Servicer shall be entitled to seek and obtain from the Company (and/or any other Person within the Company Group as appropriate) a power of attorney in respect of the execution of any specific action as the Servicer deems appropriate.

Section 13.03. 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, the Company or its board of directors (or any duly appointed committee thereof), the Administrative Agent or the Cash Manager, to the extent set forth in Section 2.02(c), the Security Trustee and the Transaction Approval Requirements, in carrying out its obligations hereunder, and the Company 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 Conflicts 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 board of directors of the Company or a duly appointed committee thereof.

Section 13.04. Certain Information. The parties hereto agree (a) not to provide to each other competitively sensitive information, other than information required to be provided by the Servicer or the Company, as the case may be, under contractual arrangements existing on the date hereof (or successor arrangements thereto), (b) that any party receiving such information shall take such action as shall be necessary to maintain the confidentiality thereof and (c) to establish appropriate procedures and protocols to ensure compliance with the agreements in clauses (a) and (b). Similarly, the Company’s board of directors and ▇▇▇▇▇▇▇ & ▇▇▇▇▇ Air Limited’s board of directors and ▇▇▇▇▇▇▇ & ▇▇▇▇▇ Air Limited itself on behalf of itself and its employees shall agree (x) not to provide competitively sensitive information which it may receive from the Servicer pursuant to this Agreement to any third party and (y) not to use any such competitively sensitive information for any purpose other than its duties and responsibilities as a director or shareholder of the Company or director or employee of ▇▇▇▇▇▇▇ & ▇▇▇▇▇

 

 

38

---

Air Limited. In addition, to the extent that any director of the Company or ▇▇▇▇▇▇▇ & ▇▇▇▇▇ Air Limited or employee of ▇▇▇▇▇▇▇ & ▇▇▇▇▇ Air Limited is involved in any other business activities that are competitive with the Servicer or any Affiliate thereof, the Company must screen such Person from receipt of competitively sensitive information.

Section 13.05. Original Aircraft. In the event that in the Servicer’s reasonable judgment the application of the terms of any provision hereunder in respect of any Aircraft Asset would not be appropriate prior to the title to such Aircraft Asset being transferred to a Person within the Company Group, then the Servicer shall take such action in respect of such Aircraft Asset as is commercially reasonable or appropriate in such context or circumstances. The Servicer shall make a good faith effort to consult with the Company prior to taking any action in reliance upon this Section 13.05, taking into account timing and other relevant considerations; provided that any failure to so consult with the Company will not constitute a default under or violation of this Agreement.

Section 13.06. Limited Recourse. (a) In the event that the assets of the Persons in the Company Group are insufficient, after payment of all other claims, if any, ranking in priority to the claims of the Servicer hereunder (it being agreed that there are no claims ranking in priority to those of the Servicer), to pay in full such claims of the Servicer in accordance with the Indenture and the Security Trust Agreement, then the Servicer shall have no further claim against the Persons in the Company Group in respect of any such unpaid amounts.

(b) To the extent permitted by Applicable Law, no recourse under any obligation, covenant or agreement of any party contained in this Agreement shall be had against any shareholder, officer or director of the relevant party as such, by the enforcement of any assessment or by any proceeding, by virtue of any statute or otherwise; it being expressly agreed and understood that this Agreement is a corporate obligation of the relevant party and no personal liability shall attach to or be incurred by the shareholders, officers, agents or directors of the relevant party as such, or any of them under or by reason of any of the obligations, covenants or agreements of such relevant party contained in this Agreement, or implied therefrom, and that any and all personal liability for breaches by such party of any of such obligations, covenants or agreements, either at law or by statute or constitution, of every such shareholder, officer, agent or director is hereby expressly waived by the other parties as a condition of and consideration for the execution of this Agreement. For purposes of clarification, the foregoing applies only to Persons acting in their capacity as such shareholder, officer, agent or director and not in any other capacity and does not extend to the benefit of the Person for which such Person serves as shareholder, officer, agent or officer.

Section 13.07. The Company Group Members. Each Person in the Company Group that joins as a party to this Agreement hereby agrees to be bound by and perform the obligations hereunder of a Person in the Company Group, and if any such Person is a trust of which the Company or another Person in the Company Group is the beneficiary, The Company hereby instructs and authorizes such trust to execute this Agreement, and perform such obligations (and the Policy Provider, and the Security Trustee by its acceptance of the assignment provided above, consent thereto to the extent applicable).

[Remainder of page intentionally left blank.]

 

 

39

---

IN WITNESS WHEREOF, this Agreement has been duly executed on the date first written above.

 

 

 

 

 

 

 

 

 

 

---

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 7.04(a) of the Servicing Agreement and the provisions of this Schedule 2.02(a) shall be deemed to be so qualified. All Services set forth in this Schedule 2.02(a) shall be performed in accordance with and subject to the Standard of Care, the Conflicts Standard and the Standard of Liability.

Unless otherwise defined herein, all capitalized terms used in this Schedule 2.02(a) have the meanings assigned to such terms in Appendix A to the Servicing Agreement or, in the case of certain defined terms used in Annex 1 or 2 to the Servicing Agreement or Schedule 2.02(a)(i) to the Servicing Agreement, in the copy of the Indenture delivered to the Servicer pursuant to Section 2.1. The Company shall provide to the Servicer any instructions the Servicer may require in the interpretation of Annexes 1 and 2 to the Servicing Agreement on which instructions the Servicer shall be entitled to rely in all respects.

SECTION 1. Lease Services. Subject to the availability of adequate funding to comply with the obligations under this Schedule 2.02(a) and the Servicing Agreement with respect to Services that require such funding:

SECTION 1.1. Collections and Disbursements. In connection with each Lease of an Aircraft Asset under which any Person within the Company 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 the Company Group, for all payments due from the Lessee, including Rents, Deposits, Utilization Rent, Aircraft redelivery payments, late payment charges and any payments in respect of Taxes and other payments (including technical, engineering, insurance and other recharges) due under the relevant Lease, direct the Lessee, subject to the terms of the Lease, to make such payments to such account designated as the “Rental Account” in Schedule 4.03 to the Servicing Agreement (the relevant details of such Rental Account being set forth in such Schedule) or to such other accounts as specified in writing by the Cash Manager and enforce the rights and remedies of the Lessor under applicable Lease with respect to 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, Deposits, Utilization Rent and other amounts that may be adjusted under a Lease (and to the extent they are provided to be adjusted pursuant to the provisions of such Lease) and shall propose to the relevant Lessee and/or make such adjustments to the Rents, Deposits, Utilization Rent and other amounts as are required or that the Servicer otherwise deems reasonably appropriate considering, among other things, the terms of the relevant Lease and practices that the Servicer believes are prevalent in the operating lease market;

(c) subject to the timely receipt by the Servicer from the Cash Manager of the information related to the receipt of all payments made pursuant to any Lease into any Bank Account, maintain appropriate records regarding payments under the Leases;

(d) subject to the terms of any applicable Aircraft Assets Related Document, take such actions as are necessary to apply any payments of any type received from any Lessee, or to make any payments payable to a 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

 

 

---

SCHEDULE 2.02(a) TO
SERVICING AGREEMENT

 

actions as are necessary to give effect to such directions; provided that, in the event a Lessee is in default under a Lease or a Lessee is subject to a voluntary or involuntary bankruptcy, liquidation, receivership or other similar proceeding, the Servicer will advise the Company of how funds received from such Lessee were applied to the extent that such funds were applied to leases relating to both Aircraft Assets and Other Assets; 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 Deposits or Utilization Rent and the timely renewal or drawing on or disbursement thereof as provided under the applicable Lease or other Aircraft Assets Related Document or otherwise in accordance with Section 1.5 of this Schedule 2.02(a).

SECTION 1.2. Maintenance. The Servicer will perform the following technical services relating to the maintenance of the Aircraft Assets:

(a) monitor the performance of maintenance obligations by Lessees under all Leases relating to the Aircraft Assets by including the Aircraft Assets in the Servicer’s technical audit program, which program entails, to the extent feasible in a reasonable commercial manner in the ordinary course of business under the terms of the applicable Lease, the review of a Lessee’s technical recordkeeping procedures, the collection of summary maintenance data on each Aircraft Asset and, to the extent the Servicer deems reasonably necessary or appropriate, physical inspection of the Aircraft Assets on a sampling basis consistent with procedures employed from time to time by the Servicer and its Affiliates with respect to their own or other serviced Aircraft;

(b) confirm the air authority approval status of a Lessee’s proposed maintenance program and proposed maintenance performer under any new Lease of any Aircraft Assets under which any Person within the Company Group is, or following the Delivery of the related Aircraft Asset will be, the lessor;

(c) in connection with a termination or expiration of a Lease under which any Person within the Company Group is, or following the Delivery of the related Aircraft Asset will be, the lessor:

(i) arrange for the appropriate technical inspection of the Aircraft Asset for the purpose of determining if the re-delivery conditions under the Lease have been satisfied;

(ii) maintain a record of 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 Persons within the Company Group;

(iii) on the basis of the final 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 Asset and as required by the Lease;

(iv) (A) determine whether the Lessee has satisfied the re-delivery conditions applicable to the Aircraft Asset specified in the Lease and negotiate any modifications, repairs, refurbishments, inspections or overhauls to or compromises of such conditions

 

 

SCHED 2.02(a)-2

 

---

SCHEDULE 2.02(a) TO
SERVICING AGREEMENT

 

that the Servicer deems reasonably necessary or appropriate, (B) determine the application of any available Deposits, Utilization Rent or other payments under the Lease and (C) maintain a record of the satisfaction of such conditions and accept re-delivery of the Aircraft Asset; and

(v) determine the need for, procure and monitor (as provided in clause (a) above) the performance of any maintenance and refurbishment of the Aircraft Asset upon re-delivery, 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 Asset;

(d) consider and, to the extent the Servicer deems reasonably necessary or appropriate, approve any Lessee-originated modifications to any Aircraft Asset submitted by any Lessee for approval:

(i) to the extent authorized by the terms of the relevant Lease; or

(ii) which the Servicer reasonably determines would not result in a material diminution in value of the Aircraft Asset or the interests of any Person within the Company Group; or

(iii) which are approved by the Company;

(e) determine the amount (if any) that the relevant Person within the Company Group is obliged to contribute pursuant to the provisions of a Lease (taking into account where applicable the amount of Utilization Rent paid with respect to such Lease and the receivables position of the related Lessee) to the cost of complying with any modification requirements, maintenance contribution requirements, redelivery condition payment requirements, airworthiness directives and similar requirements; and

(f) arrange and supervise appropriate storage and any required on-going maintenance of any Aircraft Asset, at the expense of the relevant Person within the Company Group, following termination of a Lease for any reason and re-delivery of the Aircraft Asset thereunder and prior to delivery of such Aircraft Asset to a new lessee or purchaser, on the most economic basis reasonably available and appropriate under the circumstances.

The Servicer shall generally provide the technical/maintenance services set forth in this Section 1.2 through the use of its own staff where it shall deem appropriate and shall utilize third parties to provide such technical/maintenance services where it shall deem appropriate.

SECTION 1.3. 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 the Servicing Agreement; provided that, if an agreement with respect to hull or liability insurance, if any, cannot be reached with any particular Lessee pursuant to which such Lessee will procure and pay the premiums for such insurance in amounts consistent with the foregoing, the Servicer may still cause the applicable Person in the

 

 

SCHED 2.02(a)-3

 

---

SCHEDULE 2.02(a) TO
SERVICING AGREEMENT

 

Company Group to enter into such proposed lease or other agreement, but in which case the Servicer shall arrange for any shortfall in the required amount of insurance to be covered, at the expense of the Company, pursuant to arrangements entered into pursuant to clauses (iii) and (v) of this Section 1.3(a);

(ii) monitor the performance of the obligations of Lessees relating to insurance under Leases of any Aircraft Assets and, where practicable, ensuring that appropriate evidence of insurance exists with respect to any Aircraft Assets maintenance providers;

(iii) source and arrange an aviation insurance program covering the Aircraft Assets (it being understood that such program may be arranged pursuant to a group policy covering both Aircraft Assets and Other Assets the premiums in respect of which are 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 the Servicing Agreement;

(iv) procure such repossession insurance for Aircraft Assets registered, habitually based in, or subject to a Lease with a Lessee domiciled in, one of those countries listed on Annex 1 to the Servicing Agreement and with such minimum coverage amounts with respect to hull insurance as are set forth on Annex 1 to the Servicing Agreement; provided that, if an agreement with respect to repossession insurance, if any, cannot be reached with any particular Lessee pursuant to which such Lessee will pay the premiums for such insurance in amounts consistent with the foregoing, the Servicer may still cause the applicable Person in the Company Group to enter into such proposed lease or other agreement, but in which case the Servicer shall pay any premiums to the extent unpaid by the Lessee, at the expense of the Company; and

(v) if at any time the Servicer becomes aware that any Aircraft Asset ceases to be insured or any Person within the Company Group requires insurance coverage relating to an Aircraft Asset for any reason, including default by the Lessee or an Aircraft Asset not being leased upon termination of a Lease, the Servicer will procure, at the expense of the relevant Person within the Company Group, alternative insurance coverage, with such minimum coverage amounts with respect to hull and liability insurance as are set forth on Annex 1 to the Servicing Agreement;

provided 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; and, provided, further, that the Servicer shall not obtain or shall terminate, as the case may be, any such insurance (except liability insurance and war risk liability insurance in favor of the Servicer and its Affiliates) with respect to which the Servicer has been so instructed by the Company (and the Company has delivered to the Servicer a copy of the related Policy Provider consent as required by the Indenture) because the Company has determined that the rates for such insurance are not commercially reasonable. The foregoing provisions shall apply, mutatis mutandis, 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).

 

 

SCHED 2.02(a)-4

 

---

SCHEDULE 2.02(a) TO
SERVICING AGREEMENT

 

(b) The Servicer may engage, on behalf of, and for the benefit and at the expense of, any Person within the Company Group, one or more Advisers and Brokers with respect to insurance matters, each of whom:

(i) may also act in the same or similar capacities for the Servicer and its Affiliates;

(ii) shall take directions from the Servicer (as authorized by the Servicing Agreement) in respect of the Aircraft Assets; and

(iii) may act on behalf of any Person within the Company Group in respect of any of their other insurance requirements, if requested to do so by any such Person within the Company Group.

The Servicer shall be entitled to rely reasonably on the actions taken by or recommendations of any such Adviser and Broker, subject to the terms of the relevant Lease and the requirements of the Servicing Agreement. The Servicer will obtain such advice from the relevant Adviser or Broker or both, as it deems appropriate, as to the reasonableness of any insurance arrangements proposed by a Lessee, and as to the levels and types of insurance to be provided by a Lessee or to be arranged by the Servicer, for any of the Aircraft Assets. Except to the extent the Servicer can effect more cost efficient coverage under fleet or group policies, the Servicer will use reasonable commercial efforts to maintain separate and distinct customer relationships with such Advisers or Brokers when acting on behalf of any Person within the Company Group, on the one hand, and when acting on its own behalf or on behalf of other Persons not within the Company Group whose Aircraft Assets it manages, on the other hand. Any such insurance obtained by the Servicer shall include as the named insured thereunder, such Persons as are required to be designated as named insureds pursuant to paragraph 6 of Annex 1 to the Servicing Agreement.

SECTION 1.4. Administration. The Servicer shall administer each Lease in accordance with its terms and as otherwise specifically addressed herein. In connection with any Person within the Company Group entering into a Future Lease, the Servicer shall, on behalf of such person, timely make the necessary filings and obtain the necessary opinions as required under Section [    ]of the Security Trust Agreement and Section 5.03(f) of the Indenture, respectively.

SECTION 1.5. Enforcement. The Servicer shall take steps to enforce the obligations to the relevant Person within the Company Group of the Lessee and any other parties under each Lease and under any ancillary agreements thereto delivered by the Company 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 such steps as it deems reasonably necessary or appropriate to preserve and enforce the rights of the relevant Person within the Company Group (or, if applicable, with respect to any Original Aircraft, the owner) under the applicable Lease, including entering into negotiations with such Lessee with respect to the restructuring of such Lease or declaration of an event of default under the applicable Lease, drawing on or making disbursement of any Deposits, Utilization Rent 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 1.6. 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 that such amendment or modification shall require the approval of the Company pursuant to Section 7.04(a) of the Servicing 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

 

 

SCHED 2.02(a)-5

 

---

SCHEDULE 2.02(a) TO
SERVICING AGREEMENT

 

entering into of such new Lease to require the approval of the Company pursuant to Section 7.04(a)(ii) of the Servicing 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 good faith but sole discretion, overdue interest due from any Lessee under any Lease on any default in payment of rent, Utilization Rent or other amount thereunder.

SECTION 1.7. 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 the Company Group of any right or option that such Person may have with respect to any of the Aircraft Assets or the Leases.

SECTION 2. Compliance with Covenants; Security Interests.

SECTION 2.1. Compliance Generally. Subject to the availability to the Servicer of adequate funding to comply with its obligations under this Schedule 2.02(a) and the Servicing Agreement with respect to Services that require such funding, the Servicer shall take such commercially reasonable actions as it shall deem reasonably necessary or appropriate to keep the Company in compliance with its obligations and covenants under Sections 5.02 and 5.03 of the Indenture, as and to the extent set forth on Schedule 2.02(a)(i) and solely to the extent that such obligations and covenants specifically and directly relate to the Services, excluding, in any case, (i) any reporting obligations in respect of any of the foregoing and (ii) any rental, any Note obligations or any payment or monetary obligations under the Indenture; provided that the foregoing shall only apply to (A) any Indenture covenants that are set forth (or, in certain cases, appear as extracts) on Schedule 2.02(a)(i) to the Servicing Agreement, to the extent that each provision set forth (or extracted) on such Schedule includes the relevant section references for each such provision from the Indenture, and which (together with the definitions for any capitalized terms used therein) are set forth in full in a copy of the Indenture delivered by the Company to the Servicer, certified by the Company as a true and complete copy thereof (and the Company shall promptly provide the Servicer with all amendments, supplements and waivers thereto, so certified), and the Company 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 2.2 of this Schedule 2.02(a)) first coming into effect (including through amendments or modifications) after the date of the Servicing Agreement that are reasonably acceptable to the Servicer, or which the Company shall from time to time notify the Servicer in writing, in reasonably specific detail by amendment to such Schedule 2.02(a)(i) and that are reasonably acceptable to the Servicer.

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 Company Group (or, if applicable, with respect to any Original Aircraft, the owner) 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 or interest in any Lease or related agreement or any Aircraft Asset covered thereby.

 

 

SCHED 2.02(a)-6

 

---

SCHEDULE 2.02(a) TO
SERVICING AGREEMENT

 

SECTION 2.2. Certain Matters Relating to Concentration Thresholds.

(a) Concentration Thresholds Generally. The Servicer shall comply with any covenants specifically relating to limitations on Lessee concentration set forth in the Indenture (“Concentration Limits”) and shall promptly inform the Company of any proposed transaction that it reasonably determines may result in such Concentration Limits being exceeded, and the Company shall promptly provide to the Servicer any information that the Servicer may reasonably require in connection with such Concentration Limits in order to comply with the provisions of this Section 2.2. The Servicer shall not enter into any such transaction other than pursuant to the terms of Section 2.2(c) below.

(b) Present Concentration Limits. The Company hereby represents and warrants to the Servicer that set forth in Annex 2 to the Servicing Agreement are the Concentration Limits (including, following each provision set forth in such Annex, the relevant section references for each such provision from the Indenture) presently imposed under the Indenture, which Concentration Limits (together with the definitions for any capitalized terms used therein) are set forth in a full copy of the Indenture delivered by the Company to the Servicer, certified by the Company as a true and complete copy thereof (and the Company shall promptly provide the Servicer with all amendments, supplements and waivers thereto, so certified) and the Company shall provide to the Servicer any instructions the Servicer may require in the interpretation of such Concentration Limits, on which instructions the Servicer shall be entitled to rely in all respects.

(c) Directions to Servicer. The Servicer shall not enter into any transaction with respect to which it has provided notice pursuant to Section 2.2(a) until the Company has provided a written certification to the Servicer to the effect that such transaction will not result in any violation of the Concentration Limits and the Servicer shall be entitled to rely upon such certification for all purposes of the Servicing Agreement and this Schedule 2.02(a).

SECTION 2.3. Security Interests and International Interests. (a) Security Interests. In connection with the obligation of any Person within the Company Group under the Security Trust Agreement to perfect any security interest granted by it in its right, title and interest in and to any Assigned Lease, the Servicer’s sole responsibility in respect thereof shall be to take the following actions with respect to each Assigned Lease: (1) seek advice from local counsel in the jurisdiction where the related Aircraft Asset is registered as to what actions would be customarily taken in such jurisdiction to perfect the security interest created in such Assigned Lease pursuant to the Security Trust Agreement and to use commercially reasonable efforts to implement such advice, (2) create an original chattel paper copy of such Assigned Lease by adding the following language to the cover of such Assigned Lease: “To the extent, if any, that this [Lease Agreement] or any [Lease Supplement] hereunder constitutes tangible chattel paper (as such term is defined in the Uniform Commercial Code as in effect in any applicable jurisdiction), no security interest in this [Lease Agreement] or such [Lease Supplement] may be created through the transfer or possession of any counterpart other than the original executed counterpart, which shall be identified as the counterpart containing the receipt therefore executed by the Security Trustee under and as defined in the Security Trust Agreement dated as of [               ] [        ], 2007 between the Company, Deutsche Bank Trust Company Americas, as Security Trustee, and the various other parties identified on the signature pages thereof”, and (3) no later than ten days after the execution of such Assigned Lease by all the parties thereto, deliver such original tangible chattel paper copy (which, by way of clarification, shall not include the signature or the receipt therefore of the Security Trustee) to a courier service for delivery to the Security Trustee at Deutsche Bank Trust Company Americas, Attention: Structured Finance Services / Trust & Agency Services, ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, (4) notify the Lessee in writing of the security assignment of such Assigned Lease to the Security Trustee

 

 

SCHED 2.02(a)-7

 

---

SCHEDULE 2.02(a) TO
SERVICING AGREEMENT

 

pursuant to the Security Trust Agreement (which notice may be contained in such Assigned Lease), (5) obtain from the Lessee a written acknowledgment addressed to, or for the benefit of, the Security Trustee (A) acknowledging receipt of notification of such security assignment and (B) containing the agreement of the Lessee to continue to make all payments required to be made to the lessor under such Assigned Lease to the account specified in such Assigned Lease unless and until the Security Trustee otherwise directs (it being understood that the account specified in such Assigned Lease will be the account specified by the Administrative Agent to the Servicer as contemplated by Section 1.1(a) of this Schedule 2.02(a)) and (6) take such other action as the Company shall have reasonably requested and described in reasonable detail in a written notice to the Servicer. Notwithstanding the foregoing, the Servicer shall have no obligation to take any action specified in the prior sentence of this Section 2.3(a) with respect to any Assigned Lease or any supplement or amendment thereto that was executed before the related Aircraft became an Aircraft Asset. In connection with any Assigned Lease, the Company will cooperate with the Servicer in obtaining a letter of quiet enjoyment with respect to such Assigned Lease referred to in the final sentence of Section 2.08(a) of the Security Trust Agreement.

(b) International Interests. In connection with the obligation of any Person within the Company Group under the Security Trust Agreement to register at the International Registry any International Interest constituted by any Assigned Lease, the Servicer’s sole responsibility in respect thereof shall be to direct the International Registry administrator of the Person within the Company Group that is lessor under such Assigned Lease to register such International Interest with the International Registry and seek the consent of the Lessee to such registration. In connection with the obligation of any Person within the Company Group under the Security Trust Agreement to register the assignment to the Security Trustee of any International Interest constituted by any Assigned Lease of an Aircraft, the Servicer’s sole responsibility in respect thereof shall be to, upon request by the Security Trustee, direct the International Registry administrator of the Person within the Company Group that is lessor under such Lease to consent to the registration of the assignment in favor of the Security Trustee of any International Interest that has been registered with the International Registry in respect of such Assigned Lease and is then held by a Person with the Company Group, and request the consent of the lessee under such Assigned Lease to such assignment (which consent may be set forth in the Assigned Lease). In connection with the obligation of any Person within the Company Group under the Security Trust Agreement to register any interest created under any contract of sale with respect to an Aircraft Asset, the Servicer’s sole responsibility in respect thereof shall be to direct the International Registry administrator of the Person within the Company Group that is a party to such contract of sale to register such interest with the International Registry and seek the consent of the other party to such contract of sale to such registration. In connection with the obligation of any Person within the Company Group under the Security Trust Agreement to register any contract of sale with respect to an Aircraft Asset, the Servicer’s sole responsibility in respect thereof shall be to, upon request by the Security Trustee, direct the International Registry administrator of the Person within the Company Group that is owner of such Aircraft Asset to consent to the registration in favor of the Security Trustee of such interest with the International Registry.

SECTION 3. Lease Marketing.

(a) The Servicer shall provide and perform lease marketing services with respect to the Aircraft Assets and in connection therewith is authorized:

(i) to negotiate and enter into any commitment for a lease of an Aircraft Asset in the name of the relevant Person within the Company Group (or, if applicable, with respect to any Original Aircraft, the owner); and

 

 

SCHED 2.02(a)-8

 

---

SCHEDULE 2.02(a) TO
SERVICING AGREEMENT

 

(ii) to include within any commitment for a Lease of an Aircraft Asset and/or effect any intermediate Lease or Leases through any Person within the Company Group that the Servicer deems reasonably necessary or appropriate.

(b) The Servicer shall commence the negotiation of any commitment for a Lease or Leases of Aircraft Assets in a manner consistent with the practices employed by the Servicer with respect to its aircraft operating leasing services business generally and shall commence the drafting of, and negotiation with respect to, any Leases for Aircraft Assets on the following basis:

(i) in the case of any proposed Lessee that is not and has not been a lessee of an aircraft managed or serviced by the Servicer, the Servicer shall commence the drafting of, and negotiation with respect to, a Lease for Aircraft Assets based on the form of lease agreement or agreements then used by the Servicer in connection with its aircraft operating leasing services business generally but reflecting any changes thereto required under clause (c)(ii) below (as such form of lease shall be amended from time to time by the Servicer, the “Company 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”).

Provided that the Servicer commences the negotiation of a Lease of any Aircraft Asset in accordance with clauses (b)(i) and (b)(ii) above, the terms of any executed Lease may vary from the terms of the Company Pro Forma Lease or the Precedent Lease employed by the Servicer in accordance with such clauses. Section 3(b) shall not be applicable to the negotiation with respect to, or execution of, any Lease for Aircraft Assets in which negotiations commenced on or prior to the Closing Date. The Servicer is authorized to execute and deliver binding leases and related agreements on behalf of the relevant Person within the Company Group based on the foregoing procedures. All Leases shall contain the Core Lease Provisions, unless otherwise approved by the Company and the Policy Provider

(c) (i) Upon ten Business Days’ prior written notice from the Company or the Policy Provider (x) requesting a copy of the then current Company Pro Forma Lease and (y) specifying that such Company Pro Forma Lease is to be used for purposes of the annual review required pursuant to the terms of Section 5.03(f) of the Indenture (the “Annual Review”), the Servicer shall provide the Company or the Policy Provider, as the case may be, with a copy of its then current Company Pro Forma Lease, together with a copy thereof marked to reflect changes from the version of the Company Pro Forma Lease that was produced by the Servicer following the immediately preceding Annual Review to give effect to the terms of Section 3(c)(ii) below (or from the Company Pro Forma Lease utilized as of the Closing Date (a copy of which shall have been delivered to the Company on or before the Closing Date) in the case of the first such Annual Review).

(ii) On or prior to each anniversary of the Closing Date and following the Annual Review, the Company shall advise the Servicer in writing whether any provisions in the then current The Company Pro Forma Lease that correspond to the Core Lease Provisions are required in accordance with the terms of Section 5.03(e) of the Indenture to be deleted from such The Company Pro Forma Lease and replaced with the provision corresponding thereto in the most recent The Company Pro Forma Lease in which such provision was determined to be acceptable in accordance with the terms of Section

 

 

SCHED 2.02(a)-9

 

---

SCHEDULE 2.02(a) TO
SERVICING AGREEMENT

 

5.03(e) of the Indenture. Following any such written advice from the Company, the Servicer shall amend the Company Pro Forma Lease accordingly and shall commence the negotiation of any Lease thereafter with the Company Pro Forma Lease as so amended in respect of any such provision.

(d) The Servicer shall take such actions as shall be reasonably necessary or appropriate 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.

(e) The Servicer shall generally provide the marketing services set forth in this Section 3 through the use of its own marketing staff where it shall deem appropriate and shall utilize third parties to provide such marketing services where it shall deem appropriate; provided that no such utilization shall release the Servicer from any of its obligations under the Servicing Agreement.

SECTION 4. Sales of Aircraft and Engines.

(a) The Servicer shall provide and perform sales services with respect to the Aircraft Assets at, and on a basis consistent with, the direction from time to time of the Company, and, in connection therewith, is authorized:

(i) to enter into any commitment for a sale of an Aircraft Asset on behalf and (through a power of attorney) in the name of the relevant Person within the Company Group; and

(ii) to include within any sale and effect any intermediate Lease or Leases through any Person within the Company Group that the Servicer deems reasonably necessary or appropriate;

provided 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 the Company pursuant to Section 7.04(a) of the Servicing Agreement.

(b) The Servicer shall negotiate documentation of any sale and, subject to Section 4(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 the Company Group.

(c) The Servicer shall take such reasonable commercial actions as shall be reasonably necessary or appropriate to deliver any Aircraft Asset pursuant to the terms of the documentation of the sale.

(d) In the event that the Company directs the Servicer to sell or arrange for the sale of any Aircraft Asset, the Servicer will not be required to take any such action until the Company shall provide the Servicer with an Officer’s Certificate, substantially in the form attached as Schedule 2.02(a)(ii) to the Servicing Agreement, 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 the Servicing Agreement and this Schedule 2.02(a).

(e) Notwithstanding any other provision in Section 7.04 of the Servicing Agreement to the contrary, the Servicer shall be permitted to purchase, sell or exchange any Engine relating

 

 

SCHED 2.02(a)-10

 

---

SCHEDULE 2.02(a) TO
SERVICING AGREEMENT

 

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 that the Servicer shall not be permitted to purchase, or enter any order to purchase, Engines or spare parts (y) in a quantity in excess of that quantity deemed by the Servicer as appropriate in connection with the operation, leasing or sale of such the Aircraft Assets without obtaining the prior written consent of the Company, or (z) if the net (after credit for any exchanges, replacements or similar items) cash out-of-pocket purchase price of such Engine exceeds $3,000,000.

SECTION 5. Aircraft Acquisitions.

SECTION 5.1. Limitation on Acquisitions. The Company shall not, and shall not permit any other Person within the Company Group to, purchase or otherwise acquire, directly or indirectly, (x) Aircraft Assets from any Person other than the Servicer or any of its Affiliates, or (y) without the consent of the Servicer, any Aircraft as to which Servicer has no obligation to provide Services under the Servicing Agreement and other than as provided herein (including, without limitation, with respect to any Engine, in Section 4(e) of Schedule 2.02(a) and, in respect of any Aircraft Assets, pursuant to the terms of the Asset Purchase Agreement). For purposes of clarification, the Servicer shall have no obligations under this Agreement with respect to the acquisition of any Aircraft except to the extent expressly set forth in this Section 5.1 and subject to the conditions in Section 2.03(g) of the Servicing Agreement.

SECTION 5.2. Other Acquisitions. Except as otherwise provided in Section 2.03(g) of the Servicing Agreement, the Servicer shall not be required to assist in the solicitation of, or otherwise take any action to obtain, any acquisition of any aircraft, engine or other property or any lessee consents and/or novations in connection with the acquisition of any Aircraft Assets or the issuance of Additional Notes or any other additional equity or debt capital (it being the expectation of the parties hereto that the obtaining of any lessee consents and/or novations with respect to any Aircraft Asset shall be the responsibility of the seller of such Aircraft Asset to any Person within the Company Group). The parties hereto acknowledge that Section 2.03 of the Servicing Agreement deals with, among other things, the Servicer’s involvement in the issuance of Additional Notes.

SECTION 6. [Reserved]

SECTION 7. Aircraft Asset Cash Services.

SECTION 7.1. 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 the Servicing Agreement (the “Existing Accounts”) in accordance with Section 2.04 of the Cash Management Agreement, the Company shall cause the Cash Manager to (i) 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 (ii) transmit instructions to the relevant banking institution to effect such modifications and shall take such other actions as are incidental thereto in order to give effect to the foregoing.

(b) New Accounts. The Servicer shall notify the Cash Manager in the event that any new bank accounts need to be established on behalf of any Person within the Company Group in connection with a Lease and shall set forth in reasonable detail the (i) identity of the Lessee, (ii)

 

 

SCHED 2.02(a)-11

 

---

SCHEDULE 2.02(a) TO
SERVICING AGREEMENT

 

Aircraft Assets subject to such Lease and (iii) jurisdiction of the Lessee and in which such Aircraft Assets are to be registered. Following receipt of such notice from the Servicer, the Company shall cause the Cash Manager promptly to (i) deliver a certificate to the Servicer specifying (v) the name and location of the bank at which such account will be established, (w) the name(s) in which such account will be established, (x) the names of the beneficiaries of such account, (y) the names of the Persons authorized to make withdrawals from such account and (z) such other information (including with respect to any security arrangements) as the Cash Manager deems appropriate and certifying that the establishment of such account is in accordance with the applicable provisions of the Indenture and the Cash Management Agreement and (ii) transmit instructions to the relevant banking institution to effect the establishment of such account and shall take such other actions as are incidental thereto in order to give effect to the foregoing (the “New Accounts”; and, together with the Existing Accounts, the “Bank Accounts”).

SECTION 7.2. Cash Transfers. (a) In the event that funds are required to be transferred from any Bank Account to the account of another Person (other than any Person within the Company Group) in order to give effect to the directions of any Lessee in accordance with Section 1.1(d) of this Schedule 2.02(a), the Servicer shall provide the Cash Manager and the Administrative Agent with written notice setting forth the (i) name of the transferor, (ii) name of the transferee, (iii) accounts from and to which funds are to be transferred, (iv) amounts to be transferred, (v) amount of the initial payment from or to the Lessee and (vi) anticipated date of transfer. No later than the next following Business Day, the Company shall cause the Cash Manager to notify the Servicer in writing whether the proposed transfer will be made on such anticipated date of transfer or on another stated date. The Company shall instruct the Cash Manager to cause such transfer to be made on such date in accordance with the terms of the written notice provided by the Servicer.

(b) It is understood and agreed that (i) all decisions as to any transfers contemplated by Section 7.2(a) shall be the decisions and responsibility of the Cash Manager or the Administrative Agent, as the case may be, and not the decisions and responsibility of the Servicer (and the Servicer shall not be subject to any other responsibilities not specified in this Section 7 or any liability whatsoever for any such transfers or any decisions of the Cash Manager or the Administrative Agent, as the case may be, related thereto) and (ii) the Servicer shall have no responsibility as to the actions taken (or omitted) by any banking institution upon receipt of any payment instruction from the Cash Manager or the Administrative Agent, as the case may be, in accordance with the procedures set forth in this Section 7.

SECTION 7.3 Payments.

(a) Anticipated Payments. For purposes of the calculation of the Required Expense Amount by the [Cash Manager pursuant to Section 2.03 of the Cash Management Agreement], not less than one Business Day prior to each Calculation Date, the Servicer shall deliver to the [Cash Manager and] the Administrative Agent a written projection of payment obligations (including projected expenditures (including maintenance contribution payments, airworthiness directive payments and redelivery condition payments), or return to Lessees of security deposits 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 the Servicing 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 later than two Business Days prior to the date of each cash payment, the Servicer shall deliver to [the Cash Manager and] the Administrative Agent a written notice of such payment (whether or not such cash payment was reflected in the projection referred to in this Section

 

 

SCHED 2.02(a)-12

 

---

SCHEDULE 2.02(a) TO
SERVICING AGREEMENT

 

7.3(a)), and shall state (i) the anticipated date of such payment, (ii) the payee, (iii) the amount of such payment and (iv) the obligation in respect of which such payment is to be made (the “Stated Services Obligation”), with an appropriate notation if, and to what extent, such payment should be made from the Lessee Funded Account. No later than the Business Day prior to such anticipated date of payment, the Company shall instruct the Cash Manager to notify the Servicer in writing whether the proposed payment will be made on such anticipated date or on another stated date. The Company shall instruct the Cash Manager to pay or cause such payment to be made on such date to the payee for the Stated Services Obligation from the funds then available in the Expense Account and/or the Lessee Funded Account, as the case may be.

(b) Unanticipated Payments. During any Monthly Payment Period, the Servicer may request in writing the Cash Manager’s approval for the Cash Manager 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 7.3(a) with respect to such Monthly Payment Period was delivered to the Cash Manager. 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 and (iv) the Stated Services Obligation, with an appropriate notation if, and to what extent, such payment should be made from the Lessee Funded Account. No later than the Business Day next following such request by the Servicer, the Company shall instruct the Cash manager to notify the Servicer in writing whether such payment will be made on such anticipated date of payment or on another stated date. The Company shall instruct the Cash Manager to pay or cause such payment to be made on such date to the payee for the Stated Services Obligation from the funds then available in the Expense Account or the Lessee Funded Account, as the case may be. In the event that the funds then available in the Expense Account or the Lessee Funded Account are insufficient to make any such payment, pursuant to Section 2.03 of the Cash Management Agreement, the Company shall cause the Cash Manager to take such actions as are necessary to cause funds sufficient to make any such payments to be transferred as soon as practicable from the Collection Account to the Expense Account and/or the Lessee Funded Account, as the case may be. Following the transfer of such funds from the Collection Account, the Company shall cause the Cash Manager to pay or cause such payments to made in accordance with the foregoing provisions.

(c) Limitation on Payments. It is understood and agreed that (i) all decisions as to the payment of funds from any Bank Account (including the timing, amount and payee thereof) shall be the decisions and responsibility of the Cash Manager and not the decisions or responsibility of the Servicer (and the Servicer shall not be subject to any other responsibilities not specified in this Section 7 or any liability whatsoever for any such payments or any decisions of the Cash Manager related thereto) and (ii) the Servicer shall have no responsibility as to the action taken (or omitted) by any banking institution upon receipt of any payment instructions from the Cash Manager in accordance with the procedures set forth in this Section 7 or as to the application by any payee of any amounts paid to it from any Bank Account in accordance with the procedures set forth in this Section 7, including no responsibility as to whether such payee applies such payment toward the Stated Services Obligation for which such payment was made.

SECTION 8. Professional and Other Services.

SECTION 8.1. Legal Services. The Servicer shall provide or procure legal services, in all relevant jurisdictions, on behalf of the relevant Persons within the Company Group with respect to the lease, sale or financing of the Aircraft Assets, any amendment or modification of any Lease, the enforcement of the rights of any Person within the Company Group under any Lease, any disputes that arise with respect to the Aircraft Assets or for any other purpose that the Servicer reasonably determines

 

 

SCHED 2.02(a)-13

 

---

SCHEDULE 2.02(a) TO
SERVICING AGREEMENT

 

is necessary in connection with the performance of the Services. The Servicer shall provide such legal services (which services shall not, in any case, be deemed to include (i) services or transactions relating to taxation matters, the laws of foreign jurisdictions, capital markets transactions or novel or unique transactions or (ii) a high level of services at fiscal year end or other times of peak activity relative to the level of services at other times) by using its in-house legal staff where it shall deem appropriate and shall authorize outside counsel to provide such legal services where it shall deem appropriate. The Company recognizes, and shall cause each other Person within the Company Group to recognize, that from time to time the Servicer will retain legal counsel to provide legal services on behalf of Persons within the Company Group and, in the event that a dispute arises between any Person within the Company Group and the Servicer, the Company agrees, and shall cause each other Person within the Company Group, to waive any conflict of interest any such counsel may have with respect to any such dispute or otherwise to enable the Servicer to retain such counsel on its own behalf (it being understood that notwithstanding any such waiver of a conflict of interest, any such Persons within the Company Group do not waive any rights to retain any such counsel on its own behalf if such counsel is so agreeable).

SECTION 8.2. Tax Services. The Servicer shall arrange for such 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 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; provided that the Servicer shall not be responsible for arranging for any tax services with respect to the preparation of tax returns or the acquisition of any Additional Aircraft or in connection with any Offering or other financing.

SECTION 9. Reports; Custody.

SECTION 9.1. Monthly Reports. On the fifth Business Day iafter each Calculation Date (or, to the extent impracticable, promptly thereafter), the Servicer shall provide to the Company, the Administrative Agent and the Cash Manager a written report substantially in the form attached as Exhibit A covering the period from the last Calculation Date preceding the last such report, if any, through such Calculation Date. The Servicer acknowledges that the Company, the Administrative Agent and the Cash Manager will provide the information in such reports, together with the additional monthly information set forth on Exhibit B, to the Policy Provider.

SECTION 9.2. Quarterly Reports. The Servicer shall provide written reports to the Company (a copy of which the Company shall promptly provide the Policy Provider) within forty-five days after the end of each calendar quarter substantially in the form of Exhibit B with respect to such calendar quarter. The Servicer shall provide to the Company (a copy of which the Company shall promptly provide, together with the additional quarterly information set forth on Exhibit B, to the Policy Provider) a quarterly certificate from a responsible member of its staff as to its compliance with its obligations under the Servicing Agreement.

SECTION 9.3. Other Information.

(a) To the extent the Servicer is in possession of the relevant information, the Servicer shall prepare and submit to the Company the following information with respect to each Person within the Company Group:

(i) upon request by the Company, information with respect to transactions relating to Aircraft Assets necessary for each Person within the Company Group or ▇▇▇▇▇▇▇ & ▇▇▇▇▇ Air Limited or any other holder of a Beneficial Interest to prepare value added tax and other tax returns;

 

 

SCHED 2.02(a)-14

 

---

SCHEDULE 2.02(a) TO
SERVICING AGREEMENT

 

(ii) promptly after the occurrence thereof, notification to the Company of any accident or incident of which the Servicer has notice involving any Aircraft Asset where (A) the potential loss in connection therewith exceeds the higher of the damage notification threshold under the relevant Lease, if any, and $2,000,000 or (B) the potential liability in connection therewith exceeds $2,000,000; and

(iii) advise the Company of any settlement offers received by the Servicer with respect to any claim of damage or loss in excess of $10,000,000 with respect to an Aircraft Asset, and, upon request by the Company, provide the Company with copies of all relevant documentation related thereto and such other additional information and advice as the Company may reasonably request and, upon direction from the Company that any such 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 the Company (it being understood that settlement offers with respect to any such claims up to and including $10,000,000 may be settled by the Servicer independently).

(b) Upon request by the Company, the Servicer shall provide to the Company copies of any financial statements received by the Servicer from any Lessee under and in accordance with the provisions of its Lease of an Aircraft Asset.

(c) Upon request by the Company, the Servicer shall provide to the Company such factual non-proprietary and non-confidential information and data about the Aircraft Assets that the Servicer has created to provide the Services (exclusive of internal correspondence, approval materials, internal evaluations and similar information and data) or obtained from Lessees which may reasonably be requested by the Company; provided that the Servicer shall not be required to provide any valuations, interpretations, comparisons, evaluations, opinions, forecasts, predictions or analytical analysis.

SECTION 9.4. Ratings Information. Upon request by the Company, and subject to the rating agency’s handling of such information and data pursuant to its confidentiality policies, the Servicer shall provide to the Company such information and data about the Aircraft Assets that the Servicer has created to provide the Services or obtained from Lessees and other commercially reasonable assistance relating to the Aircraft Assets as the Company shall deem reasonably necessary or appropriate in connection with providing information to the ratings agencies for the Company’s debt ratings.

SECTION 9.5. Custody of Documents. The Servicer agrees to hold all original documents of any Person within the Company Group that relate to the Aircraft Assets in the possession of the Servicer in safe custody and according to the commercially reasonable instructions of the Company.

SECTION 9.6. Reporting Obligations Generally. Notwithstanding anything herein to the contrary, the Company acknowledges and agrees that it shall be responsible for, and the Servicer shall not have any responsibility for, (a) any obligations under securities laws or otherwise to any holders of outstanding Notes, any holders of any other securities issued by any Person within the Company Group or by ▇▇▇▇▇▇▇ & ▇▇▇▇▇ Air Limited or any of its Affiliates or any Governmental Authorities, (b) any instructions, discretion, judgments and assumptions related to such obligations, and the Company agrees to indemnify the Servicer and its Affiliates in respect of the foregoing as further provided in the Servicing Agreement, and (c) the completeness or accuracy of any information or data provided by the Servicer hereunder to the extent based upon, reflecting or otherwise incorporating any information or data

 

 

SCHED 2.02(a)-15

 

---

SCHEDULE 2.02(a) TO
SERVICING AGREEMENT

 

prepared by any Lessee, other party to an Asset Related Document, any other party to any Operative Agreement.

SECTION 9.7. Aircraft Assets Related Documents. The Servicer shall provide to the Security Trustee a copy of each fully executed Aircraft Assets Related Document received by the Servicer no later than ten Business Days after the receipt thereof by the Servicer. For purposes of this Section 9.7, the term “Aircraft Assets Related Documents” does not include letters of intent, memoranda of understanding or similar documents.

SECTION 9.8. Quarterly Meeting Directions. At each quarterly meeting contemplated by Section 5.01 of the Servicing Agreement, the Servicer will be advised by the Company if there are Aircraft Assets which the Company instructs the Servicer to sell pursuant to Section 4 of this Schedule 2.02(a) of the Servicing Agreement, and, with respect to any Aircraft Asset subject to a Lease expiring within the next twelve (12) months of the end of the preceding calendar quarter, if such Aircraft Asset is not to be remarketed for lease or an extension of a Lease because such Aircraft Asset is to be converted to a freighter aircraft (and is to be remarketed for lease after giving effect to such conversion) or is to be sold free and clear of a Lease (it being agreed that in the absence of an instruction not to remarket an Aircraft Asset for lease, such Aircraft Asset shall be remarketed for lease and in any event an Aircraft Asset shall continue to be remarketed for lease (or an extension of an existing Lease), and notwithstanding any contrary instruction, may be leased if the Servicer has entered into any preliminary agreement (such as a letter of intent) with respect thereto or has entered into a lease or lease extension with respect thereto).

SECTION 9.9. Public Filing Information. The Servicer shall provide to the Company such information and data about the Aircraft Assets that the Servicer has created to provide the Services or obtained from Lessees, as the Company may reasonably request to comply with its public statutory and filing obligations.

 

 

SCHED 2.02(a)-16

 

---

Applicable Indenture Covenants

Attached are applicable extracts of the following sections of the Indenture:

 

 

---

Form of Officer’s Certificate for ▇▇▇▇▇▇▇ & ▇▇▇▇▇ Air Limited

The undersigned, representing ▇▇▇▇▇▇▇ & ▇▇▇▇▇ Air Funding I Limited, a Bermuda limited liability company, in accordance with Section 4(d) of Schedule 2.02(a) to the Servicing Agreement dated as of [            ] [     ], 2007 (the “Servicing Agreement”) among ▇▇▇▇▇▇▇ & ▇▇▇▇▇ Air Funding I Limited (the “Company”), ▇▇▇▇▇▇▇ & ▇▇▇▇▇ Aircraft Management LLC and ▇▇▇▇▇▇▇ & ▇▇▇▇▇ Aircraft Management (Europe) Limited (collectively, the “Servicer”), hereby certifies as follows:

(a) the sale of the [insert description of asset(s) to be sold], which the Company has directed the Servicer to arrange pursuant to Section 4 of Schedule 2.02(a) to the Servicing Agreement (the “Sale”), complies in all respects with the terms of the Trust Indenture dated as of ________, between the Company, ▇▇▇▇▇▇▇ & ▇▇▇▇▇ Air Limited, _______, and Deutsche Bank Trust Company Americas (including, if required, has been consented to by the Policy Provider);

(b) the Sale has been approved by the board of directors of the Company in accordance with Section 7.04(a) of the Servicing Agreement;

(b) in connection with such Sale, the Servicer is entitled to rely upon this certification for all purposes of the Servicing Agreement and Schedule 2.02(a) thereto; and

(c) the undersigned is a duly appointed, qualified and acting officer of the Company and the signature appearing below after his/her name is a genuine signature.

IN WITNESS WHEREOF, I have hereunto set my hand on and as of this [____] day of [____ ], [_____].

 

 

 

---

 

 

Aircraft Assets*

 

 

---

Aircraft Assets Related Documents*

 

 

---

Bank Accounts

 

* Deutsche Bank Trust Company Americas – NY

ABA #: ▇▇▇-▇▇▇-▇▇▇

Account #:

Account Name: [Deutsche Bank Trust Company Americas as Security Trustee for [THE COMPANY-THE COMPANY] Rental    Account]

Attn:

 

 

---

List of Persons within the Company

Group and Jurisdictions

▇▇▇▇▇▇▇ & ▇▇▇▇▇ Air Funding I Limited Non-Corporate Entities

▇▇▇▇▇▇▇ & ▇▇▇▇▇ Air Funding I Limited Corporate Entities

 

 

---

SCHEDULE 4.04(a) TO

THE SERVICING AGREEMENT 

______________

* These Persons will be within the Company Group as of the Closing Date. All other Persons will be within the Company Group as of the date of each such Persons’ applicable BI Transfer Date (as defined in the Asset Purchase Agreement).

 

 

SCHED 4.04(a) -2

 

---

Responsibilities of the Company Group

It is expressly understood by the parties that while the Servicer will, to the extent expressly provided in Schedule 2.02(a) to the Servicing Agreement, provide the Company with assistance and information required to assist in its compliance with its obligations and covenants under the Indenture to the extent such compliance specifically relates to the Services, the Servicer shall not deal directly with any creditors of any Person within the Company Group, except to the extent such dealings with trade creditors are incidental to the Servicer’s provision of the Services under the Servicing Agreement.

 

---

SCHEDULE 7.01 TO

SERVICING AGREEMENT

 

 

 

SCHED 7.01 - 2

 

---

SCHEDULE 7.01 TO

SERVICING AGREEMENT

 

to the extent any such counterclaim relates to the Aircraft Assets) brought by the Company or any other Person within the Company Group commencing after the date of the Servicing Agreement.

Notwithstanding anything contained herein to the contrary, the Company acknowledges and agrees that it shall be responsible for, and the Servicer shall not have any responsibility for, (a) any securities law or other obligations to any holders of outstanding Notes or to ▇▇▇▇▇▇▇ & ▇▇▇▇▇ Air Limited, any holders of any other securities issued by any Person within the Company Group or any Governmental Authorities and (b) all instructions, discretion, judgments and assumptions related to such obligations, and the Company agrees to indemnify the Servicer and its Affiliates in respect of the foregoing as further provided in Section 11.05 of the Servicing Agreement.

 

 

SCHED 7.01 - 3

 

---

 

 

Liabilities Incurred in Ordinary Course of Business

 

 

---

Conditions to Execution

1. Each Person within the Company Group (other than the Company) as to which a request therefore has been made shall have executed and delivered a Company Group Guarantee in favor of the Servicer substantially in the form attached to the Servicing Agreement as Appendix B.

2. Each appendix, annex, exhibit or schedule to the Servicing Agreement and each Company Group Guarantee shall have been completed to the reasonable satisfaction of the Servicer and delivered with the Servicing Agreement and the Company Group Guarantees on the Closing Date.

3. The Aircraft Assets Related Documents shall have been delivered to the Servicer, pursuant to Sections 2.02(f) and 4.02 of the Servicing Agreement, at the Servicer’s offices in ▇▇▇▇▇▇▇, Ireland, on or prior to the Closing Date.

4. Each person within the Company Group shall have executed and delivered to the Servicer the acknowledged power of attorney contemplated by Section 13.02 of the Servicing Agreement.

5. The Company shall have delivered to the Servicer a copy of the Indenture, certified by the Company as a true and complete copy thereof.

6. The Company and each other Person within the Company Group shall have delivered to the Servicer satisfactory evidence, in the reasonable judgment of the Servicer, as to the appointment of agents for service of process as required by the Documentary Conventions set forth in Appendix A to the Servicing Agreement.

7. The Company and each other Person within the Company Group shall have delivered to the Servicer, in form and substance reasonably satisfactory to the Servicer:

(A) a certificate dated the Closing Date of the secretary, any assistant secretary or other appropriate officer of each such Person certifying as to:

(1) the attached corporate charter, by-laws and other constituent documents of such Person, recently certified, in the case of any such document filed with the secretary of state or similar Governmental Authority of the jurisdiction in which such Person is organized by such Governmental Authority;

(2) the absence of amendments to any constituent document since the date of the last amendment (a) shown on the official evidence as to filed constituent documents furnished pursuant to (B) below if such official evidence is available and (b) in any event reflected in the constituent documents furnished pursuant to (1) above;

(3) resolutions or other written evidence of corporate action of the board of directors (or appropriate committee thereof) and, if applicable, the shareholders of such Person duly authorizing or ratifying the execution, delivery and performance by such Person of the Servicing Agreement and the Company Group Guarantee, as applicable, to which it is or is to be party and the absence of any modification, amendment or revocation thereof or any other resolutions relating thereto;

(4) the absence of proceedings for the dissolution, liquidation, receivership or similar proceedings with respect to such Person;

 

 

---

SCHEDULE 8.01 TO
THE SERVICING AGREEMENT

 

(5) if applicable, its corporate seal; and

(6) the incumbency and signatures of the individuals authorized to execute and deliver documents on such Person’s behalf; and

(B) to the extent available from appropriate Governmental Authorities, recent official evidence from appropriate Governmental Authorities of appropriate jurisdictions as to constituent documents on file, good standing, payment of franchise taxes and qualification to do business in the jurisdiction in which such Person is organized.

8. The Company and each other Person within the Company Group shall have delivered to the Servicer an Officer’s Certificate dated the Closing Date, in form and substance reasonably satisfactory to the Servicer, stating that:

(A) each representation and warranty of such Person contained in the Servicing Agreement and the Company Group Guarantee, as applicable, is true and correct as of the Closing Date;

(B) such Person has duly performed and complied in all material respects with all covenants, agreements and conditions contained in the Servicing Agreement and the Company Group Guarantee, as applicable, required to be performed or complied with by it on or before the Closing Date;

(C) no event has occurred and is continuing or condition exists or would result from the consummation of any transaction contemplated by the Servicing Agreement or the Company Group Guarantee, as applicable, to which such Person is a party that constitutes, or with the giving of notice or lapse of time or both would constitute, a default in any material respect under such Servicing Agreement or the Company Group Guarantee, as applicable, or a breach thereof or would give any party thereto the right to terminate, or not to perform any material obligation under, any thereof; and

(D) the Servicing Agreement and the Company Group Guarantee, as applicable, to which it is a party is in full force and effect with respect to it, has not been amended, modified or terminated and constitutes its legal, valid and binding obligation enforceable against it in accordance with its terms (subject to bankruptcy and similar laws applicable to creditors’ rights generally and to general equitable principles).

9. The Servicer (and such Affiliates of the Servicer that the Servicer designates as addressees) shall have received legal opinions dated as of the Closing Date, which shall cover the following matters and shall also cover such other matters as the Servicer and its counsel may reasonably request:

(A) Each of the Company and each other Person within the Company Group has been duly organized and is validly existing as a trust, a corporation or a limited liability company in good standing under the laws of its jurisdiction or organization, incorporation or formation, respectively.

(B) Neither the execution and delivery of the Servicing Agreement and the Company Group Guarantee, as applicable, nor the consummation of the transactions contemplated thereby nor the performance by the Company or any other Person within the Company Group of any of their obligations thereunder in accordance with the terms thereof will (i) violate any order, writ, injunction, judgment or decree in effect as of the date hereof of any [insert appropriate courts] to

 

 

SCHED 8.01 - 2

 

---

SCHEDULE 8.01 TO
THE SERVICING AGREEMENT

 

which the Company or any other Person within the Company Group, or any of their respective Affiliates, is a party or by which any of their respective properties or assets are bound, (ii) violate in any material respect any applicable law of [insert applicable law] in effect as of the date hereof or (iii) result in any conflict with, breach of or default (or give rise to any right of termination, cancellation or acceleration) under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, warrant or other similar instrument or any license, permit material agreement or other material obligation to which any such Person is a party or by which any such Person’s properties or assets may be bound.

(C) Upon execution and delivery thereof, the Servicing Agreement and the Company Group Guarantee, as applicable, to which the Company and each other Person within the Company Group is a party shall be valid and legally binding on and enforceable against such party in accordance with its terms, subject to applicable bankruptcy, reorganization, insolvency, fraudulent transfer, moratorium or other laws affecting creditors’ rights generally from time to time in effect and to general equity principles regardless of whether such enforceability is considered in a proceeding in equity or at law.

(D) No action, consent or approval by, or filing with, any [insert appropriate Governmental Authorities] or other third party is required in connection with the execution, delivery or performance by the Company or any other Person within the Company Group of the Servicing Agreement and the Company Group Guarantee, as applicable, to which it is a party or the consummation by the Company or any other Person within the Company Group of the transactions contemplated thereby.

10. The Servicer shall have delivered to the Company, in form and substance reasonably satisfactory to the Company:

(A) a certificate dated the Closing Date of the secretary, any assistant secretary or other appropriate officer of the Servicer certifying as to:

(1) the attached corporate charter, by-laws and other constituent documents of the Servicer, recently certified, in the case of any such document filed with the secretary of state or similar Governmental Authority of the jurisdiction in which the Servicer is organized by such Governmental Authority;

(2) the absence of amendments to any constituent document since the date of the last amendment (a) shown on the official evidence as to filed constituent documents furnished pursuant to (B) below if such official evidence is available and (b) in any event reflected in the constituent documents furnished pursuant to (1) above;

(3) resolutions or other written evidence of corporate action of the board of directors (or appropriate committee thereof) and, if applicable, the shareholders of the Servicer duly authorizing or ratifying the execution, delivery and performance by the Servicer of the Servicing Agreement and the absence of any modification, amendment or revocation thereof or any other resolutions relating thereto;

(4) the absence of proceedings for the dissolution, liquidation, receivership or similar proceedings with respect to the Servicer;

(5) if applicable, its corporate seal; and

 

 

SCHED 8.01 - 3

 

---

SCHEDULE 8.01 TO
THE SERVICING AGREEMENT

 

(6) the incumbency and signatures of the individuals authorized to execute and deliver documents on the Servicer’s behalf; and

(B) to the extent available from appropriate Governmental Authorities, recent official evidence from appropriate Governmental Authorities of appropriate jurisdictions as to constituent documents on file, payment of franchise taxes and qualification to do business in the jurisdiction in which the Servicer is organized.

11. The Servicer shall have delivered to the Company an Officer’s Certificate dated the Closing Date, in form and substance reasonably satisfactory to the Company, stating that:

(A) each representation and warranty of the Servicer contained in the Servicing Agreement is true and correct as of the Closing Date;

(B) the Servicer has duly performed and complied in all material respects with all covenants, agreements and conditions contained in the Servicing Agreement required to be performed or complied with by it on or before the Closing Date;

(C) no event has occurred and is continuing or condition exists or would result from the consummation of any transaction contemplated by the Servicing Agreement that constitutes, or with the giving of notice or lapse of time or both would constitute, a default in any material respect under the Servicing Agreement or a breach thereof or would give any party thereto the right to terminate, or not to perform any material obligation under, the Servicing Agreement; and

(D) the Servicing Agreement is in full force and effect with respect to it, has not been amended, modified or terminated and constitutes its legal, valid and binding obligation enforceable against it in accordance with its terms (subject to bankruptcy and similar laws applicable to creditors’ rights generally and to general equitable principles).

12. The Company shall have received legal opinions dated as of the Closing Date, covering matters comparable to those set forth in Section 9 above, with respect to the Servicer.

 

 

SCHED 8.01 - 4

 

---

Overhead Expenses

 

 

---

Categories of Aircraft Asset Expenses

 

 

---

MANAGEMENT SERVICES

 

POWER OF ATTORNEY

 

OF

 

[GRANTOR]

WHEREAS [GRANTOR], having its [registered] office at [insert address] desires to appoint ▇▇▇▇▇▇▇ & ▇▇▇▇▇ Aircraft Management (Europe) Limited having its registered office at ▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ , ▇▇▇▇▇▇▇ (“the Attorney”) as the true and lawful attorney of the Grantor for and in the name of and on behalf of the Grantor in such Attorney’s absolute discretion to execute each and every Requisite Document and Requisite Act as defined below and do all or any of the acts or things hereinafter mentioned.

KNOW ALL MEN BY THESE PRESENTS that in consideration for the mutual promises and benefits set forth in the Servicing Agreement (defined below) the Grantor does hereby make, constitute and irrevocably and unconditionally appoint for the period (the “Term”) as and from the date hereof until termination or expiry of the Servicing Agreement between ________________ and [▇▇▇▇▇▇▇ & ▇▇▇▇▇] Aviation Services Limited dated as of ________ (“the Servicing Agreement”), in accordance with its terms, the Attorney as a true and lawful attorney of the Grantor for and in the name of and on behalf of the Grantor with absolute discretion to exercise, do, execute and/or deliver all or any of the acts, documents and things hereinafter mentioned, that is to say:

 

 

---

SCHEDULE 13.02 TO THE
SERVICING AGREEMENT

 

IT IS HEREBY DECLARED THAT:-

IN WITNESS WHEREOF the Grantor has caused this Power of Attorney duly executed by the Grantor this day of [    ], [    ].

 

 

 

SCHED 13.02 - 2

 

---

INSURANCE GUIDELINES

 

 

---

ANNEX 1 TO THE
SERVICING AGREEMENT

 

consistent with Sections 3(b) and (c) of Schedule 2.02(a) to the Servicing Agreement and (b) not subject to a Lease, shall be substantially consistent with customary practices of the Servicer regarding similar equipment.

 

 

ANNEX 1 - 2

 

---

 

 

Note Target Price

 

 

 

---

SCHEDULE 1(a) TO ANNEX 1
TO THE SERVICING AGREEMENT

 

 

 

 

SCHEDULE 1(a) - 2

 

 

---

Appraised Values

 

 

 

---

Net Book Value

 

 

---

SCHEDULE 1(c) TO ANNEX 1
TO THE SERVICING AGREEMENT

 

 

SCHEDULE 1(c)-2

 

---

Liability Insurance

 

Notwithstanding the foregoing, with respect to any liability insurance maintained by any Person within the Company Group for the benefit of the Persons listed in clause 2(h) of Schedule 6 to Annex 1, such amount of insurance shall be not less than US$750 million for wide-body Aircraft and US$500 million for narrow-body Aircraft and liability insurance with respect to any Aircraft in storage shall be not less than US$300 million, but need not exceed $300 million.

 

 

---

Repossession Insurance

 

 

 

---

Named Insureds

with respect to each Aircraft Asset, owner (and head lessor, if applicable) and/or lessor and intermediate lessor(s), if any, of Aircraft and Security Trustee

(a) owner (and head lessor, if applicable) of Aircraft (Person within the Company Group)

(b) intermediate lessor(s), if any, of Aircraft (Person(s) within the Company Group)

(c) the Servicer

(d) the Administrative Agent

(e) the Trustee and Security Trustee

(f) the Company

(g) with respect to each Aircraft Asset acquired pursuant to the Asset Purchase Agreement, the relevant Seller Indemnitees (as defined in the Asset Purchase Agreement) during the period commencing on the date of Delivery of such Aircraft Asset and ending on the earlier of (i) the second anniversary of such date of Delivery and (ii) the date of completion of the next major check in respect of such Aircraft Asset

(h) the Policy Provider.

 

 

---

 

Concentration Limits

The following chart sets forth the Concentration Limits that are applicable during periods when the weighted Portfolio age (weighted by Assumed Base Value of each Aircraft in the Portfolio) is (1) below ten years and (2) at or above ten years. The percentages in the following chart are obtained by dividing the Assumed Base Value of all Aircraft leased to lessees habitually based or domiciled in the applicable country or category by the Assumed Portfolio Value.

 

 

______________

 

 

 

 

---

ANNEX 2 TO THE

SERVICING AGREEMENT

 

The Concentration Limits for the Initial Aircraft will be determined based on the Leases to which such Initial Aircraft are subject to, regardless of the time or order of acquisition. Without limiting Section 5.03 of the Indenture, any failure to meet the Concentration Limits arising solely by reason of the non-acquisition of an Initial Aircraft will be deemed not to result in a Concentration Default.

 

______________

 

 

ANNEX 2 - 2

 

---

ANNEX 2 TO THE

SERVICING AGREEMENT

 

Prohibited

All other countries not listed above; provided that, unless otherwise approved by the Policy Provider, Belize, Bolivia, Ecuador, Ethiopia, Kazakhstan, Libya, Pakistan, Turkmenistan and Uzbekistan shall also be Prohibited Countries (notwithstanding that any such country is also listed as “Undesignated” above).

 

 

ANNEX 2 - 3

 

---

CONSTRUCTION AND USAGE; DEFINITIONS

Construction and Usage

The terms defined below have the meanings set forth below for all purposes. “Include”, “includes” and “including” shall be deemed to be followed by “without limitation” whether or not they are in fact followed by such words or words of like import. “Writing”, “written” and comparable terms refer to printing, typing, lithography or other means of reproducing words in a visible form (including electronic mail). Any agreement or instrument or any law, rule or regulation of any Governmental Authority defined or referred to below means such agreement or instrument or such law, rule or regulation as from time to time amended, modified or supplemented, including (in the case of agreements or instruments) by waiver or consent and (in the case of such law, rule or regulation) by succession of any comparable successor law, rule or regulation and includes (in the case of agreements or instruments) references to all attachments, annexes, schedules and exhibits thereto and instruments incorporated therein. References to a Person are also to its permitted successors and assigns. Any term defined below by reference to any agreement or instrument or any law, rule or regulation of any Governmental Authority has such meaning whether or not such agreement, instrument or law, rule or regulation is in effect. “Agreement”, “hereof”, “herein”, “hereunder” and comparable terms refer to the agreement in which such term appears (including all annexes, exhibits and schedules hereto) and not to any particular article, section, clause or other subdivision thereof or attachment thereto. References to any gender include, unless the context otherwise requires, references to all genders, and references to the singular include, unless the context otherwise requires, references to the plural and vice versa. “Shall” and “will” have equal force and effect. References to “Article”, “Section”, “Clause” or another subdivision or to an attachment are, unless the context otherwise requires, to an article, section, clause or subdivision of or attachment to such agreement.

Definitions

“Additional Aircraft” means any Aircraft that is not then an Aircraft Asset proposed to be acquired by a Person in the Company Group in accordance with the provisions of Section 5 of Schedule 2.02(a).

“Additional Notes” means any class or subclass of Notes issued pursuant to the Indenture (or pursuant to supplements thereto) at any time after the Closing Date, the proceeds of which are used, in substantial part, to acquire Aircraft.

“Administrative Agent” means ▇▇▇▇▇▇▇ & ▇▇▇▇▇ Aircraft Management Co. Limited, acting under the Administrative Agency Agreement.

“Administrative Services Agreement” means the Administrative Services Agreement dated as of [    ] [    ], 2007 between the Administrative Agent and the Company.

“Adviser” means an insurance adviser engaged by the Servicer in accordance with Section 1.3(b) of Schedule 2.02(a) to the Servicing 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 that the Company and its respective Subsidiaries, on the one part, and the Servicer and its Subsidiaries and Affiliates, on the other part, shall not be considered to be Affiliates of each other .

 

 

---

APPENDIX A TO THE

SERVICING AGREEMENT

“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 Taxes resulting from the receipt (actual or constructive) or accrual of such payments (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.

“Aggregate Gross Proceeds” has the meaning assigned to such term in Section 9.04(b) of the Servicing Agreement.

“Aircraft” means any airframe together with (i) any Engine installed on such airframe (or any Engine substituted therefore), (ii) parts or components thereof, (iii) spare parts or ancillary equipment or devices furnished therewith and (iv) the Aircraft Documents with respect thereto.

“Aircraft Asset Expenses” has the meaning assigned to such term in Section 9.06(b)(i) of the Servicing Agreement.

“Aircraft Asset Expenses Budget” has the meaning assigned to such term in Section 7.03(a) of the Servicing Agreement.

“Aircraft Assets” means (a) all Aircraft owned or leased-in by any Person within the Company Group as of the Closing Date or at any time or from time to time thereafter (taking into account any acquisitions or dispositions made in accordance with this Agreement) and (b) all Original Aircraft; provided that Aircraft Assets shall not include (x) any Aircraft Asset that shall have ceased to be an Aircraft Asset in accordance with the provisions of Sections 2.04(b) or 3.02(d) of the Servicing Agreement, but shall include any Former Aircraft Asset that shall have become an Aircraft Asset pursuant to Section 6.07 of the Servicing Agreement or (y) any Aircraft Asset in respect of which the obligation of the Servicer to provide Services shall have been terminated in accordance with Article X of the Servicing Agreement.

“Aircraft Assets Related Documents” means all Leases and other contracts and agreements of Persons within the Company Group the terms of which relate to or affect any of the Aircraft Assets.

“Aircraft Documents” means, in relation to an Aircraft, all records, logs, technical data, manuals and other documents relating to the maintenance and operation of such Aircraft.

“Annex 1” means Annex 1 to the Servicing Agreement, which annex sets forth the Insurance Guidelines.

“Annex 2” means Annex 2 to the Servicing Agreement, which annex sets forth the Concentration Limits contained in Section 5.03(a) of the Indenture.

“Annual Review” has the meaning assigned to such term in Section 3(c)(i) of Schedule 2.02(a) to the Servicing Agreement.

“Anti-Terrorism Laws” means the USA Patriot Act and the Executive Order [Bermuda additions?].

“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

 

 

APPENDIX A - 2

---

APPENDIX A TO THE

SERVICING AGREEMENT

EU or any Irish or other foreign or international Governmental Authority that applies to such Person or any of its properties or assets.

“Appraised Value” means with respect to any Aircraft, the average of the most recent appraisals by each of the Appraisers of the Base Value of such Aircraft.

“Appraiser” means at least three independent appraisers that are members of the International Society of Transport Aircraft Trading or any similar organization.

“Approved Budget” has the meaning assigned to such term in Section 7.03(d) of the Servicing Agreement.

“Asset Purchase Agreement” means the Asset Purchase Agreement dated as of [               ] [       ], 2007, among [JEDI], the Company and the other parties thereto.

“Assigned Leases” has the meaning assigned to such term in Section 1.01 of the Security Trust Agreement.

“Auditor” has the meaning assigned to such term in Section 5.01 of the Servicing Agreement.

“▇▇▇▇▇▇▇ & ▇▇▇▇▇ Air Limited” means ▇▇▇▇▇▇▇ & ▇▇▇▇▇ Air Limited, a limited liability company organized under the laws of Bermuda.

“Bank Accounts” has the meaning assigned to such term in Section 7.1(b) of Schedule 2.02(a) to the Servicing Agreement.

“Base Value” has the meaning assigned to such term in Section 1.01 of the Indenture.

“Beneficial Interest” means [voting] shares issued by the Company.

“Broker” means an insurance broker engaged by Servicer in accordance with Section 1.3(b) of Schedule 2.02(a) to the Servicing Agreement.

“Business Day” means a day on which U.S. dollar deposits may be traded on the London inter-bank market and commercial banks and foreign exchange markets are open in ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇. [tie to Indenture.}

“Calculation Date” means the sixth Business Day immediately preceding each Payment Date.

“Cape Town Convention” means the Convention on International Interests in Mobile Equipment and its Protocol on Matters Specific to Aircraft Equipment, concluded in Cape Town on 16 November 2001.

“Cash Manager” means Deutsche Bank Trust Company Americas, and its successors and assigns.

“Cash Management Agreement” means the Cash Management Agreement dated as of [          ] [    ], 2007 between the Cash Manager and the Company.

“Changed Circumstance” means the occurrence and continuation of any material event, circumstance or condition that is reasonably likely to result in the current cash flow projections in any

 

 

APPENDIX A - 3

---

APPENDIX A TO THE

SERVICING AGREEMENT

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 Section 7.03 of the Servicing Agreement.

“Closing” means the closing of the offering and sale of the Notes by the Company and the consummation of the Acquisition and the other transactions described in the Final Prospectus.

“Closing Date” means [                ] [        ], 2007.

“Code” has the meaning assigned to such term in Section 9.07(c) of the Servicing Agreement.

“Collection Account” has the meaning assigned to such term in Section 3.01(a) of the Indenture.

“Company” means ▇▇▇▇▇▇▇ & ▇▇▇▇▇ Air Funding I Limited, a limited liability company incorporated under the laws of Bermuda.

“Company Group” has the meaning assigned to such term in Section 2.01(a) of the Servicing Agreement.

“Company Group Guarantees” means each Guarantee, in the form set forth as Appendix B to the Servicing Agreement, issued by each Person within the Company Group (other than the Company) pursuant to Section 6.13 of the Servicing Agreement.

“Company Group Liabilities” means any obligations or liabilities of any Person within the Company Group (whether accrued, absolute, contingent, unasserted, known or unknown or otherwise).

“Company Pro Forma Lease” has the meaning assigned to such term in Section 3(b)(ii) of Schedule 2.02(a) to the Servicing Agreement.

“Competitor” means any of the following Persons:

(i) any Person (other than ▇▇▇▇▇▇▇ & ▇▇▇▇▇ International Pty Ltd and its Affiliates) engaged in, or which has an Affiliate engaged in, the business of manufacturing aircraft or aircraft engines, which business had consolidated revenues attributable to such business for such Person’s and/or its Affiliates’, as the case may be, most recently completed fiscal year in excess of $200 million; or

(ii) any of the following Persons (or any of their respective Affiliates) and their respective successors and assigns:

(a)           GE Commercial Aviation Services Limited

(b)           International Lease Finance Corporation;

(c)           Aviation Capital Group;

(d)           AWAS;

(e)           ORIX;

(f)            CIT Group Inc.;

(g)            Macquarie;

 

 

APPENDIX A - 4

---

APPENDIX A TO THE

SERVICING AGREEMENT

(h)          AerCap B.V.;

(i)           RBS Aviation Capital;

(j)           Fortress Investments/Aircastle Advisor LLC;

(k)           Cerberus Capital Management;

(l)           Terra Firma Capital Partners;

(m)          Singapore Aircraft Leasing Enterprise;

(n)           Boeing Capital;

(o)           BCI;

(p)           Pembroke;

(q)           Aircastle Advisor;

(r)           Allco;

(s)           Sumisho;

(t)           Tombo Aviation;

(u)           Guggenheim Aviation Partners;

(v)           GATX Air;

(w)          Genesis Lease Limited; and

(x)           Pegasus Aviation; or

(iii) any other Person (or any Affiliate thereof) (other than ▇▇▇▇▇▇▇ & ▇▇▇▇▇ International Pty Ltd and its Affiliates) which engages in a business as an operating lessor of Aircraft Assets in competition with any Person within the Company Group either (x) in succession to any of the Persons specified in clause (ii) above or (y) which has consolidated aircraft leasing-related revenues (excluding revenues from sales of aircraft) attributable to such business for its most recently completed fiscal year in excess of $200 million.

“Competitor Control” means, with respect to any Person, a Competitor’s control or beneficial ownership, directly or indirectly, of 50% or more of any class of securities (other than promissory notes or loan certificates or pass-through certificates in respect of promissory notes or loan certificates), directly or indirectly, of such Person, or the appointment or ability to appoint a director, member, trustee or similar Person of such Person.

“Concentration Limits” has the meaning assigned to such term in Section 2.2(a) of Schedule 2.02(a) to the Servicing Agreement.

“Conflicts Standard” has the meaning assigned to such term in Section 3.02(b) of the Servicing Agreement.

 

 

APPENDIX A - 5

---

APPENDIX A TO THE

SERVICING AGREEMENT

“control” (including, with its correlative meanings, “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).

“Core Lease Provisions” means the core lease provisions included as Exhibit F to the Indenture, as the same may be amended from time to time.

“Default Notice” has the meaning assigned to such term in Section 1.01 of the Indenture.

“Delivery” has the meaning assigned to such term in Section 1.1 of the Asset Purchase Agreement.

“Deposits” means the deposits required under a Lease.

“Disposition” has the meaning assigned to such term in Section 9.04(b) of the Servicing Agreement.

“Documentary Conventions” with respect to any agreement, instrument or other document that states it is governed thereby, means that, except as otherwise expressly provided therein:

(a) No Partnership. The parties thereto expressly recognize and acknowledge that such agreement, instrument or other document is not intended to create a partnership, joint venture or other similar arrangement between or among any of the parties thereto or their respective Affiliates.

(b) Notices. Subject to paragraph (d) below, all notices, consents, directions, approvals, instructions, requests and other communications required or permitted by such agreement, instrument or other document to be given to any Person shall be in writing, and any such notice shall become effective five Business Days after being deposited in the mails, certified or registered, return receipt requested, with appropriate postage prepaid for first class mail or, if delivered by hand or courier service or in the form of a facsimile, when received (and, in the case of a facsimile, receipt of such facsimile is electronically or otherwise confirmed to the sender), and shall be directed to the address or facsimile number of such Person set forth in Appendix C to the Servicing Agreement. From time to time any party to such agreement, instrument or other document may designate a new address or number for purposes of notice thereunder by notice to each of the other parties thereto.

(c) Governing Law. SUCH AGREEMENT, INSTRUMENT OR OTHER DOCUMENT SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

(d) Jurisdiction; Court Proceedings; Waiver of Jury Trial. Any suit, action or proceeding against any party to such agreement, instrument or other document arising out of or relating to such agreement, instrument or other document, any transaction contemplated thereby or any judgment entered by any court in respect of any thereof may be brought in any New York State court located in the County of New York or Federal court sitting in the Second Circuit, and each such party hereby submits to the nonexclusive jurisdiction of such courts for the purpose of any such suit, action or proceeding. To the extent that service of process by mail is permitted by applicable law, each party thereto irrevocably consents to the service of process in any such suit, action or proceeding in such courts by the mailing of such process by registered or certified mail,

 

 

APPENDIX A - 6

---

APPENDIX A TO THE

SERVICING AGREEMENT

postage prepaid, at its address for notices provided for above. Each party to such agreement, instrument or other document irrevocably agrees not to assert any objection which it may ever have to the laying of venue of any such suit, action or proceeding in any New York State court located in the County of New York or Federal court sitting in the Second Circuit, and any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. To the fullest extent permitted by Applicable Law, each party to such agreement, instrument or other document waives any right it may have to a trial by jury in respect of any litigation directly or indirectly arising out of, under or in connection with such agreement, instrument or other document. The Company agrees, and it shall cause each other Person within the Company Group, not to bring any action, suit or proceeding against the Servicer or any of its Affiliates or any of the Servicer’s or its Affiliates’ Representatives arising out of, in connection with or related to any such agreement, instrument or other document or any transaction contemplated thereby except in a New York State court located in the County of New York or Federal court sitting in the Second Circuit.

(e) Agent. The Company and each other Person within the Company Group hereby appoints CT Corporation System (the “Agent”), ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇.▇.▇. ▇▇▇▇▇, as its nonexclusive agent for service of process in connection with each Operative Agreement. The parties may use any other legally available means of service of process. The Company will promptly notify the Servicer and the Policy Provider of any change in the address of the Agent; provided that the Company will at all times maintain an agent located within New York State for service of process in connection with each Operative Agreement.

The Servicer hereby appoints [               ] (the “Servicer’s Agent”), [address], New York, N.Y. [10xxx], U.S.A., as its nonexclusive agent for service of process in connection with each Operative Agreement. The parties may use any other legally available means of service of process. The Servicer will promptly notify the Company and the Policy Provider of any change in the address of the Servicer’s Agent; provided that the Servicer will at all times maintain an agent located within New York State for service of process in connection with each Operative Agreement.

(f) Consequential Damages. In no event will any party to such agreement, instrument or other document be liable to any other for lost profits, income tax consequences, lost savings or any other consequential damages, even if such party has been advised of the possibility of such damages, or for punitive damages, resulting from the breach of any obligation under such agreement, instrument or other document.

(g) Counterparts. Each such agreement, instrument or other document may be executed by the parties thereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute one and the same agreement, instrument or other document. All signatures need not be on the same counterpart.

(h) Entire Agreement; Amendment and Waiver. Such agreement, instrument or other document, together with the other Operative Agreements, shall constitute the entire agreement of the parties thereto with respect to the subject matter thereof and supersedes all prior written and oral agreements and understandings with respect to such subject matter. Neither any such agreement, instrument or other document nor any of the Appendix A to the Servicing Agreement terms thereof may be terminated, amended, supplemented, waived or modified, except by an instrument in writing signed by the Company, the Policy Provider and the Servicer. No failure or delay of any party to any such agreement, instrument or other document, in exercising any power or right thereunder shall operate as a waiver thereof, nor shall any single or

 

 

APPENDIX A - 7

---

APPENDIX A TO THE

SERVICING AGREEMENT

partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power.

(i) Table of Contents; Headings. The table of contents and headings of the various articles, sections and other subdivisions of such agreement, instrument or other document are for convenience of reference only and shall not modify, define or limit any of the terms or provisions of such agreement, instrument or other document.

(j) Parties in Interest; Limitation on Rights of Others. The terms of such agreement, instrument or other document shall be binding upon, and inure to the benefit of, the parties thereto and their permitted successors and assigns and, to the extent applicable, their respective Affiliates and Representatives. Except as expressly set forth in any such agreement, instrument or other document with respect to Affiliates and Representatives of the parties thereto, nothing in such agreement, instrument or other document, whether express or implied, shall be construed to give any Person (including any past, present or future employee of any Person within the Company Group) (other than the parties thereto and their permitted successors and assigns (including, in the case of the Company, the Security Trustee, the extent provided in Section 12.01 of the Servicing Agreement) and, with respect to Section 2.01(a) of the Servicing Agreement and Section 9.3 of Schedule 2.02 to the Servicing Agreement, Genesis) any legal or equitable right, remedy or claim under or in respect of such agreement, instrument or other document or any covenants, conditions or provisions contained therein. References in the Servicing Agreement to the Policy Provider shall terminate without further action upon the occurrence and during the continuance of a Policy Non-Consent Event as defined in the Indenture.

(k) Method of Payment. Except as otherwise agreed, all amounts required to be paid by any party to such agreement, instrument or other document to any other party thereunder (including in respect of any judgment or settlement entered in respect of such agreement, instrument or other document) shall be paid in dollars, by wire transfer, or other acceptable method of payment, of same day funds to a dollar account located in the United States as such party may specify by notice to the other party.

(l) Payment on Business Days. If any payment under such agreement, instrument or other document is required to be made on a day other than a Business Day, the date of payment shall be extended to the next Business Day.

(m) Past Due Payments. Any amount payable to any party or any of its Representatives under any such agreement, instrument or other document shall be paid on the date therein specified for payment of such amounts. To the extent that all or a portion of such amount is not paid on such date, such amount (or the unpaid portion thereof) shall bear interest at the Stipulated Interest Rate from such date until and through the date that such amount has been paid in full.

(n) Severability. Any provision of such agreement, instrument or other document that shall be prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions thereof and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. To the extent permitted by Applicable Law, each of the Company and the Servicer waives any provision of law that renders any provision of any agreement, instrument or other document prohibited or unenforceable in any respect.

 

 

APPENDIX A - 8

---

APPENDIX A TO THE

SERVICING AGREEMENT

“Dollar” or “$” means the lawful money of the United States of America.

“Due Date” has the meaning assigned to such term in Section 9.07(a) of the Servicing Agreement.

“Effectiveness Date” has the meaning assigned to such term in Section 10.02(c)(ii) of the Servicing Agreement.

“Engine” means owned or leased-in aircraft engines or, with respect to any Original Aircraft, any aircraft engine required to be delivered together with such Original Aircraft pursuant to the terms of the Asset Purchase Agreement.

“EU” means the European Union.

“Event of Default” has the meaning assigned to such term in Section 1.01 of the Indenture.

“Executive Order” means US Executive Order No. 13224 on Blocking Property and Prohibiting Transaction with Persons who Commit, Threaten to Commit, or Support Terrorism, which came into effect on September 23, 2001.

“Existing Accounts” has the meaning assigned to such term in Section 7.1(a) of Schedule 2.02(a) to the Servicing Agreement.

“Expense Account” has the meaning assigned to such term in Section 3.01(a) of the Indenture.

“Fee Period” has the meaning assigned to such term in Section 9.03(a)(i) of the Servicing 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.

“Gross Proceeds” has the meaning assigned to such term in Section 9.04(b) of the Servicing Agreement.

“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, however, that the term Guarantee shall not include (x) endorsements for collection or deposit, in either case in the ordinary course of business, (y) any guarantee by any Person within the Company Group of the obligations of another Person within the Company Group in respect of such Person’s obligations in connection with any Aircraft Assets, whether as lessor, seller or otherwise, or (z) the delivery of a bond or similar instrument by or on behalf of any Person within the Company Group in connection with the detention or repossession of any Aircraft Assets or enforcement of a Lease or removal of an encumbrance.

“Indebtedness” means, with respect to any Person at any date of determination (without duplication), (a) all indebtedness of such Person for borrowed money, (b) all obligations of such Person

 

 

APPENDIX A - 9

---

APPENDIX A TO THE

SERVICING AGREEMENT

evidenced by bonds, debentures, notes or other similar instruments, (c) all obligations of such Person in respect of letters of credit or other similar instruments (including reimbursement obligations with respect thereto), (d) all the 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, (e) 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, (f) all Indebtedness of other Persons secured by a lien on any asset of such Person, whether or not such Indebtedness is assumed by such Person, and (g) all Indebtedness of other Persons Guaranteed by such Person.

“Indemnified Parties” means the Servicer and its respective Affiliates and each of the Servicer’s and its respective Affiliates’ Representatives.

“Indenture” means the Trust Indenture dated as of [                ] [        ], 2007, among the Company, the Administrative Agent, the Policy Provider and Deutsche Bank Trust Company Americas, as trustee.

“Independent Representative” has the meaning assigned to such term in Section 3.02(c) of the Servicing Agreement.

“Independent Director” means the independent directors of the Company.

“International Interest” has the meaning given such term in the Cape Town Convention.

“International Registry” has the meaning given such term in the Cape Town Convention.

“Initial Offer” means the offer by the Company of its Class G-1 Floating Rate Asset-Backed Notes Series 2006-1 as described in that certain Offering Memorandum dated [                ] [        ], 2007.

“Lease” means any lease or other agreement or arrangement pursuant to which any Person (other than a Person within the Company Group) has the right to possession and use of any Aircraft Asset.

“Lease Operating Budget” has the meaning assigned to such term in Section 7.03(a) of the Servicing Agreement.

“Lessee” means the lessee (or equivalent Person) in respect of a Lease.

“Lessee Contact” has the meaning assigned to such term in Section 2.01(a) of the Servicing Agreement.

“Lessee Funded Account” has the meaning assigned to such term in Section 3.01(a) of the Indenture.

“Lien” means, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, encumbrance, charge, International Interest, Prospective International Interest or security interest in or on such asset, (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement relating to such asset and (c) in the case of securities, any purchase option, call or similar right of a third party with respect to such securities.

 

 

APPENDIX A - 10

---

APPENDIX A TO THE

SERVICING AGREEMENT

“Losses” means any and all liabilities (including liabilities arising out of the doctrine of strict liability), obligations, losses, damages, penalties, actions, suits, judgments, costs, fees, expenses (including reasonable legal fees, expenses and related charges and costs of investigation, including in connection with enforcement of any indemnity) and disbursements, of whatsoever kind and nature; provided, however, the term “Losses” shall not include Taxes or any Indemnified Party’s management time or overhead expenses.

“Material Adverse Effect” means an event, condition, matter, change or effect that impacts or, insofar as reasonably can be foreseen, in the future is likely to impact, in a material adverse manner, (a) with respect to any Person other than the Servicer, the condition (financial or otherwise), properties, assets, liabilities, earnings, capitalization, shareholders’ equity, licenses or franchises, businesses, operation or prospects of such Person or the ability of such Person to perform fully any of its obligations under any of the Operative Agreements, and (b) with respect to the Servicer, the Servicer’s liabilities, obligations, rights or benefits under the Servicing Agreement or the Servicer’s ability to perform fully any of the Services.

“Monthly Base Fee” has the meaning assigned to such term in Section 9.01(a) of the Servicing Agreement.

“Monthly Payment Period” has the meaning assigned to such term in Section 7.3(a) of Schedule 2.02(a) to the Servicing Agreement.

“Net Proceeds” has the meaning assigned to such term in Section 2.03(g) of the Servicing Agreement.

“New Accounts” has the meaning assigned to such term in Section 7.1(b) of Schedule 2.02(a) to the Servicing Agreement.

“Non-Curable Termination Event” has the meaning assigned to such term in Section 10.02(c)(ii) of the Servicing Agreement.

“Nonterminating Party” has the meaning assigned to such term in Section 10.02(c)(i) of the Servicing Agreement.

“Note Target Price” has the meaning assigned to such term in the Indenture.

“Notes” means any class or subclass of Notes issued pursuant to the Indenture on the Closing Date, any Additional Notes and any Refinancing Notes, in each case issued pursuant to the Indenture (or pursuant to any supplements thereto).

“Notice of Termination” means a Termination Notice.

“OFAC Designated Person” means a Person: (a) listed in the annex to, or otherwise subject to the provisions of, the Executive Order; (b) named as a specially designated national and blocked Person” on the most current list published by the Office of Foreign Asset Control of the United States Department of the Treasury; or (c) owned or controlled by, or acting for on behalf of, any Person referred to in clause (a) or (b) above.

“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, the Secretary or any Assistant Secretary, or any Director.

 

 

APPENDIX A - 11

---

APPENDIX A TO THE

SERVICING AGREEMENT

“Operative Agreements” means the Servicing Agreement, the Company Group Guarantees and all other agreements, instruments or other documents, which are required by the terms of any thereof to be delivered in connection with any of the foregoing documents.

“Original Aircraft” means any “Aircraft” (as defined in the Asset Purchase Agreement); provided that Original Aircraft shall not include any “Aircraft” (x) which shall have suffered an “Event of Loss” (as defined in the Asset Purchase Agreement) or (y) with respect to which a payment of the Aircraft Refund Amount has been made pursuant to Section 4.2 or 5.3 of the Asset Purchase Agreement.

“Other Assets” has the meaning assigned to such term in Section 3.02(a) of the Servicing Agreement.

“Outstanding Principal Balance” has the meaning assigned to such term in Section 1.01 of the Indenture.

“Overhead Expenses” has the meaning assigned to such term in

Section 9.06(a) of the Servicing Agreement.

“Partial Termination” has the meaning assigned to such term in Section 10.02(a)(ii) of the Servicing Agreement.

“Payment Date” means the 19th day of each month, commencing on [                ] [        ], 2007; provided that, if any Payment Date would otherwise fall on a day that is not a Business Day, the relevant Payment Date shall be the first following day which is a Business Day.

“Permitted Account Investments” has the meaning assigned to such term in Section 1.01 of the Indenture.

“Person” means any individual, firm, corporation, limited liability company, partnership, trust, body of persons, joint venture, governmental authority or other entity, and shall include any successor (by merger or otherwise) of such entity.

“Policy Provider” means Ambac Assurance Corporation, a Wisconsin stock insurance company.

“Precedent Lease” has the meaning assigned to such term in Section 3(b) of Schedule 2.02(a) to the Servicing Agreement.

“Prime Rate” means the rate of interest per annum publicly announced from time to time by Deutsche Bank Trust Company Americas as its prime rate in effect at its principal office in New York City; each change in the “Prime Rate” shall be effective on the date such change is announced.

“Prospective International Interest” has the meaning given to such term in the Cape Town Convention.

“Rating Agencies” means each of Standard & Poor’s Ratings Group, a division of the ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc. and ▇▇▇▇▇’▇ Investors Service, Inc. and any successors to either of the foregoing.

“Ratings” means the then current rating assigned by a Rating Agency in respect of the Notes.

 

 

APPENDIX A - 12

---

APPENDIX A TO THE

SERVICING AGREEMENT

“Refinancing Notes” means any class or subclass of Notes issued pursuant to the Indenture (or pursuant to supplements thereto) at any time after the Closing Date, the proceeds of which are used to repay all or any part of the then outstanding Notes.

“Reimbursable Audit” has the meaning assigned to such term in Section 5.01 of the Servicing Agreement.

“Rent Collected Fee” has the meaning assigned to such term in Section 9.03(a)(ii) of the Servicing Agreement.

“Rent Fees” has the meaning assigned to such term in Section 9.01 of the Servicing Agreement.

“Rent Payable Fee” has the meaning assigned to such term in Section 9.03(a)(i) of the Servicing Agreement.

“Rents” means the basic rent payable pursuant to a Lease, and in the event that the agreement or arrangement pursuant to which possession of any Aircraft Asset is given is other than as a lease, amounts equivalent to any basic rent, and, in the event that there is a negotiated or non-consensual termination of a Lease prior to the scheduled expiry date of the term thereof or the exercise of a termination right by the Lessee under a Lease, all amounts payable by the Lessee in connection therewith other than amounts that the Servicer allocates in good faith to damages for the applicable Aircraft’s failure to comply with the return conditions specified in the Lease for such Aircraft (as compared with damages for failure to pay overdue or future rent).

“Replacement Servicer” means a replacement servicer to perform some or all of the Services under the Servicing Agreement formerly performed by the Servicer, Appendix A to the Servicing Agreement appointed in accordance with Section 10.04(c) of the Servicing Agreement.

“Representatives” with respect to any Person means the officers, directors, employees, advisors and agents of such Person.

“Required Expense Amount” has the meaning assigned to such term in Section 1.01 of the Indenture.

“Restricted Lessee Contact” has the meaning assigned to such term in Section 2.01 of the Servicing Agreement.

“Sales Fee” has the meaning assigned to such term in Section 9.01 of the Servicing Agreement.

“Security Trust Agreement” means the Security Trust Agreement dated as of the Closing Date among the Company, Deutsche Bank Trust Company Americas, as Security Trustee and the operating bank, and the other parties thereto.

“Security Trustee” means Deutsche Bank Trust Company Americas, a New York banking corporation, in its capacity as security trustee pursuant to the Security Trust Agreement.

“Servicer” means each of ▇▇▇▇▇▇▇ & ▇▇▇▇▇ Aircraft Management LLC and ▇▇▇▇▇▇▇ & ▇▇▇▇▇ Aircraft Management (Europe) Limited.

“Servicer Delegate” has the meaning assigned to such term in Section 12.01 of the Servicing Agreement.

 

 

APPENDIX A - 13

---

APPENDIX A TO THE

SERVICING AGREEMENT

“Servicer Termination Event” has the meaning assigned to such term in Section 10.02(b) of the Servicing Agreement.

“Services” has the meaning assigned to such term in Section 2.02(a) of the Servicing Agreement.

“Servicing Agreement” or “Agreement” means the Servicing Agreement dated as of [                ] [        ], 2007, between the Company and the Servicer.

“Servicing Fees” means the Monthly Base Fee, the Sales Fee, the Rent Fees and any other fees payable to the Servicer under the Servicing Agreement.

“Shadow Director/Related Company Claims” has the meaning assigned to such term in Section 11.04 of the Servicing Agreement.

“Significant Subsidiary” means any Person within the Company Group that has title to, or any other indicia of ownership in, any Aircraft Assets.

“Standard of Care” has the meaning assigned to such term in Section 3.01 of the Servicing Agreement.

“Standard of Liability” has the meaning assigned to such term in Section 3.03 of the Servicing Agreement.

“Stated Services Obligation” has the meaning assigned to such term in Section 7.3(a) of Schedule 2.02(a) to the Servicing Agreement.

“Stipulated Interest Rate” means, for any period, a rate per annum equal to the Prime Rate in effect during such period plus 2 percent per annum.

“Subsidiary” of any Person means a corporation, company, common law or statutory trust or other entity (i) more than 50% of whose outstanding shares or securities (representing the right to vote for the election of directors or other managing authority) are, or (ii) which does not have outstanding shares or securities (as may be the case in a partnership, joint venture or unincorporated association), but more than 50% of whose ownership interest representing the right to make decisions for such other entity is, now or hereafter owned or controlled, directly or indirectly, by such Person, but such corporation, company, common law or statutory trust or other entity shall be deemed to be a Subsidiary only so long as such ownership or control exists.

“Tax” or “Taxes” means all fees (including documentation, license and registration fees), taxes, assessments, levies, impositions, duties, withholdings and other charges of any nature whatsoever (including taxes based upon or measured by gross receipts, income, profits, sales, use or occupation, and value added, ad valorem, transfer, franchise, withholding, payroll, social security, employment, excise, documentary, stamp, corporation, corporation profits, advance corporation, capital duty, capital gains, capital acquisitions, wealth, vehicle registration, social insurance, and property taxes) asserted or imposed by any Governmental Authority, together with all interest, fines, penalties and additions imposed with respect to such amounts.

“Taxpayer” means any Person within the Company Group or any predecessor of any Person within the Company Group, or any successor to any Person within the Company Group or ▇▇▇▇▇▇▇ & ▇▇▇▇▇ Air Limited and its Subsidiaries (but not including the Servicer or any of its Affiliates).

 

 

APPENDIX A - 14

---

APPENDIX A TO THE

SERVICING AGREEMENT

“Terminating Party” has the meaning assigned to such term in Section 10.02(c)(i) of the Servicing Agreement.

“Termination Notice” has the meaning assigned to such term in Section 10.02(c)(i) of the Servicing 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 the Servicing Agreement.

“Transaction Approval Requirements” has the meaning assigned to such term in Section 7.04(c) of the Servicing Agreement.

“Trustee” has the meaning assigned to such term in the Indenture.

“U.S.” means the United States of America.

“U.S. GAAP” means generally accepted accounting principles in the United States.

“Utilization Rent” means the utilization rent, supplemental rent, and other similar payments (including payments analogous to or consisting of maintenance reserves) under each of the Leases.

“Year” means each fiscal year ending December 31.

 

 

APPENDIX A - 15

---

GUARANTEE dated as of [insert date],

made by [insert name] (“Guarantor”) in favor of ▇▇▇▇▇▇▇ & ▇▇▇▇▇ Aircraft Management (Europe) Limited and ▇▇▇▇▇▇▇ & ▇▇▇▇▇ Aircraft Management LLC (collectively, the “Servicer”) and its Affiliates relating to the Servicing Agreement dated as of _________ __, 2007 (the “Agreement”), between the Servicer and _________________(the “Company”).

WHEREAS pursuant to the Agreement, the Servicer has agreed to provide Services to each Person within the Company Group in accordance with and to the extent set forth in the Agreement;

WHEREAS the Obligor is a party to the Agreement and is liable for any and all amounts due and owing to the Servicer and any of its Affiliates under the Agreement; and

WHEREAS each Person within the Company Group is a direct or indirect beneficiary of the Services performed by the Servicer pursuant to the Agreement.

NOW, THEREFORE, in consideration of the premises and to induce the Servicer to enter in the Agreement and to perform the Services thereunder, Guarantor hereby agrees, for the benefit of the Servicer and its Affiliates, as follows:

1. Guarantor unconditionally and irrevocably guarantees to the Servicer and its Affiliates (a) the due and punctual payment of all amounts due to the Servicer and its Affiliates from the Obligor under the Agreement, whether now existing or hereafter incurred, and (b) the due and punctual performance of all other obligations of the Obligor to the Servicer and its Affiliates under the Agreement (all the foregoing being hereinafter collectively called the “Obligations”) and any and all fees and expenses (including, without limitation, reasonable attorneys’ fees and expenses) incurred by the Servicer and its Affiliates in enforcing any rights under this Guarantee, all without regard to any counterclaim, set-off, deduction or defense of any kind which the Obligor or Guarantor may have or assert, and without abatement, suspension, deferment or diminution on account of any event or condition whatsoever. In case of failure of the Obligor punctually to pay any of the amounts referred to in clause (a) above, Guarantor hereby agrees to cause such amounts to be paid punctually when and as the same shall become due and payable as if such payment were made by the Obligor. Guarantor further agrees that this Guarantee constitutes a guarantee of payment when due and not of collection.

2. The liability of the undersigned under this Guarantee shall, to the fullest extent permitted by Applicable Law, be unconditional irrespective of (i) any lack of enforceability against the Obligor of any Obligation, (ii) any change of the time, manner or place of payment, or any other term, of any Obligation, (iii) any exchange, release or nonperfection of any collateral securing payment of any Obligation or any other guarantee in respect thereof, (iv) any law, regulation or order of any jurisdiction affecting any term of any Obligation or the Servicer’s or any of its Affiliates’ rights with respect thereto and (v) any other circumstance which might vary the risk of or otherwise constitute a defense available to, or a discharge of, the Obligor, Guarantor or any surety. The Guarantor waives, to the fullest extent permitted by Applicable Law, promptness, diligence and notices with respect to any Obligation and this Guarantee and any requirement that the Servicer or any of its Affiliates exhaust any right or take any action against the Obligor, any collateral security or any other guarantor.

3. In the event that the Guarantor is required by any applicable law to make any deduction or withholding for or on account of Taxes from any payment to be made by it hereunder, then it shall

 

 

---

APPENDIX B TO THE

SERVICING AGREEMENT

(i) pay over to the government or taxing authority imposing such Tax the full amount required to be deducted or withheld (including the full amount required to be deducted or withheld from the additional amounts required to be paid pursuant to clause (ii) below), (ii) pay to the Servicer or its Affiliates, as the case may be, together with such payment such additional amounts as may be necessary in order that the net amount received by the Servicer or its Affiliates, as the case may be, will be not less than the full amount of such payment which would otherwise have been receivable had no such deduction or withholding been required and (iii) forward to the Servicer as soon as possible such tax receipts or other official documentation with respect to the payment of the Taxes so deducted or withheld as may be issued from time to time by such government or taxing authority.

4. Guarantor further agrees that this Guarantee shall continue to be effective or be reinstated, as the case may be, if at any time payment, or any part thereof, of any Obligation or interest thereon is rescinded or must otherwise be restored by the Servicer upon the bankruptcy or reorganization of the Obligor, Guarantor or otherwise.

5. Upon payment by Guarantor of any sums to the Servicer or its Affiliates under this Guarantee, all rights of Guarantor against the Obligor arising as a result thereof by way of right of subrogation or otherwise shall in all respects be subordinate and junior in right of payment to the prior indefeasible payment in full of all the obligations of the Obligor under the Agreement.

6. The Guarantor represents and warrants as of the date hereof to the Servicer and its Affiliates that:

(a) the Guarantor is a [corporation or business trust duly organized and validly existing and, if relevant, in good standing under the laws of the jurisdiction in which it is legally organized] [national banking association duly organized and validly existing in good standing under the laws of the United States], and has full power, authority and legal right to execute and deliver, and to perform its obligations under, this Guarantee;

(b) the Guarantor has taken all necessary corporate and legal action to authorize the guarantee hereunder on the terms and conditions of this Guarantee and to authorize its execution, delivery and performance;

(c) this Guarantee has been duly executed and delivered by a duly authorized officer or Representative of the Guarantor, and constitutes the legal, valid and binding obligation of the Guarantor, enforceable against the Guarantor in accordance with its terms;

(d) the execution, delivery and performance of this Guarantee will not constitute a default under or violate any provision of any law or regulation, or any judgment or order of any court, arbitrator or governmental authority, in each case applicable to the Guarantor, constituent documents of the Guarantor, or any agreement to which the Guarantor is a party; and

(e) no consent of any other Person, and no consent, license, permit, approval or authorization of, exemption by, notice or report to, or registration, filing or declaration with, any Governmental Authority, is required in connection with the execution delivery, performance, validity or enforceability with respect to the Guarantor of this Guarantee.

7. This Guarantee shall remain in full force and effect and be binding in accordance with its terms upon the Guarantor and shall inure to the benefit of the Servicer and its Affiliates until all the Obligations and the obligations of the Guarantor under this Guarantee shall have been satisfied by indefeasible payment in full.

 

 

APPENDIX B - ▇▇

---

▇▇▇▇▇▇▇▇ ▇ TO THE

SERVICING AGREEMENT

8. The obligations of Guarantor under this Guarantee may not be assigned or delegated without the prior written consent of the Servicer.

9. The liability of the Guarantor under this Guarantee is limited to the maximum amount that will result in the obligations of the Guarantor not constituting a fraudulent conveyance or fraudulent transfer under Applicable Law.

10. This Guarantee shall be governed by the Documentary Conventions, and all capitalized terms used but not defined herein have the meanings assigned to such terms in Appendix A to the Agreement. The construction and usage set forth in such Appendix A are incorporated herein by reference.

11. All of the statements, representations, covenants and agreements made by Guarantor contained in this Guarantee are made and intended only for the purpose of binding the Trust Estate (as such expression is defined in the Trust Agreement) and establishing the existence of rights and remedies which can be exercised and enforced against the Trust Estate. Therefore, anything contained in this Guarantee to the contrary notwithstanding, no recourse shall be had with respect to this Guarantee against Guarantor in its individual capacity or against any institution or person which becomes a successor trustee or co-trustee or any officer, director, trustee, servant or direct or indirect parent or controlling person or persons of any of them; provided, however, that this Section 11 shall not be construed to prohibit any action or proceeding against any party hereto for its own willful misconduct or grossly negligent conduct for which it would otherwise be liable; and provided, further, that nothing contained in this Section 11 shall be construed to limit the exercise and enforcement in accordance with the terms of this Guarantee or such other agreements of rights and remedies against the Trust Estate.

IN WITNESS WHEREOF, Guarantor has executed this Guarantee as of the date first above written.

 

 

 

APPENDIX B - 18

---

Notices

If to the Servicer:

▇▇▇▇▇▇▇ & ▇▇▇▇▇ Aircraft Management (Europe) Limited

▇▇▇▇ ▇▇▇▇

▇▇▇ ▇▇▇▇▇▇▇▇▇

, ▇▇▇▇▇▇ ▇▇▇▇▇▇

▇▇▇▇▇▇▇

Attention: Company Secretary

Fax: (▇▇▇) ▇-▇▇▇-▇▇▇▇

Telephone: (▇▇▇) ▇-▇▇▇-▇▇▇▇

and to:

▇▇▇▇▇▇▇ & ▇▇▇▇▇ Aircraft Management LLC

▇▇▇ ▇▇▇▇▇

▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇

▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇

Attention: General Counsel

Fax: (▇▇▇) ▇▇▇-▇▇▇▇

Telephone: (▇▇▇) ▇▇▇-▇▇▇▇

If to the Company:

▇▇▇▇▇▇▇ & ▇▇▇▇▇ Air Funding I Limited

c/▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇ Aircraft Management (Europe) Limited

▇▇▇▇ ▇▇▇▇

▇▇▇ ▇▇▇▇▇▇▇▇▇

, ▇▇▇▇▇▇ ▇▇▇▇▇▇

▇▇▇▇▇▇▇

Attention: Company Secretary

Fax: (▇▇▇) ▇-▇▇▇-▇▇▇▇

Telephone: (▇▇▇) ▇-▇▇▇-▇▇▇▇

If to the Administrative Agent:

▇▇▇▇▇▇▇ & ▇▇▇▇▇ Aircraft Management (Europe) Limited

▇▇▇▇ ▇▇▇▇

▇▇▇ ▇▇▇▇▇▇▇▇▇

, ▇▇▇▇▇▇ ▇▇▇▇▇▇

▇▇▇▇▇▇▇

Attention: Company Secretary

Fax: (▇▇▇) ▇-▇▇▇-▇▇▇▇

Telephone: (▇▇▇) ▇-▇▇▇-▇▇▇▇

If to the Cash Manager:

Deutsche Bank Trust Company Americas

Attention: Structured Finance Services/Trust & Securities Services

▇▇ ▇▇▇▇ ▇▇▇▇▇▇

▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇

 

 

---

APPENDIX C TO THE
SERVICING AGREEMENT

 

Telephone: (▇▇▇) ▇▇▇-▇▇▇▇

 

 

APPENDIX C

 

---

MONTHLY REPORT TO THE COMPANY

 

 

 

---

EXHIBIT A TO
THE SERVICING AGREEMENT

 

Summary of commercial activity

All of the Company’s [ # ] aircraft are currently on lease, to [ # ] customers in [ # ] countries.

Cash disbursements expected [___________ to _____________].

Material cash disbursements anticipated from [______________ not included in the _____ Budget].

Events of Loss

No Event of Loss was reported during the Reporting Period.

Notices of Default

No event of default was issued in the previous month.

Lease Receivables and Arrears

The total outstanding is [ $ ______ ] compared to [ $ ______ ] at the end of [ previous reporting period ].

 

 

EXHIBIT A

 

---

EXHIBIT A TO
THE SERVICING AGREEMENT

 

Appendix – 1

▇▇▇▇▇▇▇ & ▇▇▇▇▇ Air

Funding I Limited

 

 

 

EXHIBIT A

 

---

EXHIBIT A TO
THE SERVICING AGREEMENT

 

Appendix 2 Arrears as at [_______________]

 

 

 

EXHIBIT A

 

---

QUARTERLY REPORT TO THE COMPANY

 

SECTION {9.2}:

 

---

EXHIBIT B TO
THE SERVICING AGREEMENT

 

 

The applicable rating is the sovereign foreign currency debt rating assigned by the Rating Agencies to the country in which a Lessee is habitually based or domiciled at the time the relevant is executed.

The Concentration Limits for the Initial Aircraft will be determined based on the Leases to which such Initial Aircraft are subject to, regardless of the time or order of acquisition. Without limiting Section 5.03 of the Indenture, any failure to meet the Concentration Limits arising solely by reason of the non-acquisition of an Initial Aircraft will be deemed not to result in a Concentration Default.

 

 

EXHIBIT B

 

---

EXHIBIT B TO
THE SERVICING AGREEMENT

 

 

 

EXHIBIT B

 

---

QUARTERLY REPORT TO THE COMPANY

The ▇▇▇▇▇▇▇ & ▇▇▇▇▇ Air Funding I Limited Group

Cash Receipts - Reporting Period - ____________________

 

 

---

EXHIBIT B TO
THE SERVICING AGREEMENT

 

 

 

 

EXHIBIT B

 

---

 

 

EXHIBIT B TO
THE SERVICING AGREEMENT

 

ADDITIONAL INFORMATION TO BE PROVIDED TO THE POLICY PROVIDER

STATUS OF ALL AIRCRAFT NOT ON LEASE

if any, please list and fully describe

LEASING ACTIVITY SINCE LAST REPORT

 

SALES ACTIVITY SINCE LAST REPORT

 

 

 

EXHIBIT B

 

---

EXHIBIT B TO
THE SERVICING AGREEMENT

 

TOTAL CASUALTY LOSS SINCE LAST REPORT

 

DEFAULT NOTICES ISSUED TO LESSEES SINCE LAST REPORT

 

NOTICE OF FAILURE TO PERFORM UNDER SECTION 2.01(A)(IX) OF SERVICING AGREEMENT

[insert description of failure to perform]

OPTION INFORMATION

 

 

 

EXHIBIT B

 

---

EXHIBIT B TO
THE SERVICING AGREEMENT

 

LIST OF ALL LEASES/LESSEES THAT ARE OVER 30 DAYS PAST DUE

if any, please list and fully describe

CONFLICT EVENTS (NOT PREVIOUSLY REPORTED)

if any, please list and describe in reasonable detail (including identity of the lessee, aircraft and Independent Representative involved and date of inception based on the date the Independent Representative was appointed)

ADDITIONAL EXPENSES

Amount and nature of expenses incurred outside of the ordinary course of business per Section 7.04(vii) of the Servicing Agreement for (1) the period and (ii) cumulative, inception to date)

PORTFOLIO REPORT

 

 

 

EXHIBIT B

 

---

EXHIBIT B TO
THE SERVICING AGREEMENT

 

 

DAMAGE NOTIFICATION

Description of known damage, estimated in excess of $500,000.

UPDATED APPRAISAL VALUES (TO THE EXTENT REQUIRED BY THE INDENTURE)

Aircraft-by aircraft updated appraised values, to the extent updates are required under the Indenture.

 

 

EXHIBIT B

 

---