1
Exhibit 4.1
EXECUTION COPY
SERVICING AGREEMENT
among
AerFi Group plc
AerFi Administrative Services Limited
AerFi Cash Manager II Limited
AerCo Limited
and
The Entities Listed on Appendix A Hereto
Dated as of July 17, 2000
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TABLE OF CONTENTS
PAGE
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . . .1
ARTICLE 2
APPOINTMENT; SERVICES
SECTION 2.01. Appointment . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 2.02. Services . . . . . . . . . . . . . . . . . . .. . . . . . . 14
SECTION 2.03. Compliance with Applicable Laws . . . . . . . . . . . . . . 14
SECTION 2.04. Standby Servicer . . . . . . . . . . . . . . .. . . . . . . 14
ARTICLE 3
STANDARD OF CARE; CONFLICTS OF INTEREST
SECTION 3.01. Standard of Care . . . . . . . . . . . . . . .. . . . . . . 15
SECTION 3.02. Conflicts of Interest . . . . . . . . . . . . . . . . . . . 15
SECTION 3.03. Standard of Liability . . . . . . . . . . . . . . . . . . . 16
SECTION 3.04. Waiver of Implied Standard . . . . . . . . . .. . . . . . . 17
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Aircraft Assets . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 4.02. Aircraft Assets Related Documents . . . . . . . . . . . . . 18
SECTION 4.03. Accounts and Cashflow . . . . . . . . . . . . . . . . . . . 19
SECTION 4.04. Organization and Standing . . . . . . . . . . . . . . . . . 19
SECTION 4.05. Authority . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 4.06. No Conflicts . . . . . . . . . . . . . . . . . . . . . . . .20
SECTION 4.07. Compliance with Applicable Laws . . . . . . . . . . . . . . 21
ARTICLE 5
SERVICER UNDERTAKINGS
SECTION 5.01. Staff and Resources . . . . . . . . . . . . . . . . . . . . 22
SECTION 5.02. Access . . . . . . . . . . . . . . . . . . . . . . . . . . .22
SECTION 5.03. Compliance with Law . . . . . . . . . . . . . . . . . . . . 22
SECTION 5.04. Commingling . . . . . . . . . . . . . . . . . . . . . . . . 22
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PAGE
SECTION 5.05. Notes Offering . . . . . . . . . . . . . . . . . . . . . . .22
SECTION 5.06. Performance Objectives . . . . . . . . . . . . . . . . . . .26
SECTION 5.07. Management . . . . . . . . . . . . . . . . . . . . . . . . .26
SECTION 5.08. Limitations . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 5.09. Location of Performance of Services . . . . . . . . . . . . 26
SECTION 5.10. Prior Servicer Fees . . . . . . . . . . . . . . . . . . . . 27
ARTICLE 6
UNDERTAKINGS OF AERCO AND THE SUBSIDIARIES
SECTION 6.01. Cooperation . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 6.02. No Representation with Respect to Third Parties . . . . . . 27
SECTION 6.03. Related Document Amendments . . . . . . . . . . . . . . . . 27
SECTION 6.04. Other Services . . . . . . . . . . . . . . . . . . . . . . .28
SECTION 6.05. Ratification . . . . . . . . . . . . . . . . . . . . . . . .28
SECTION 6.06. Execution, Amendment, Modification or Termination of
Aircraft Assets Related Documents . . . . . . . . . . . . . 28
SECTION 6.07. AerCo Group Accounts and Cash Arrangements . . . . . . . . .28
SECTION 6.08. Notification of Bankruptcy . . . . . . . . . . . . . . . . .29
SECTION 6.09. Further Assurances . . . . . . . . . . . . . . . . . . . . .29
SECTION 6.10. Communications . . . . . . . . . . . . . . . . . . . . . . .29
ARTICLE 7
AERCO GROUP RESPONSIBILITY; BUDGETS
SECTION 7.01. AerCo Group Responsibility . . . . . . . . . . . . . . . . .30
SECTION 7.02. Instructions by AerCo Group. . . . . . . . . . . . . . . . .30
SECTION 7.03. Request for Authority . . . . . . . . . . . . . . . . . . . 30
SECTION 7.04. Operating Budget; Aircraft Asset Expenses Budget . . . . . .31
SECTION 7.05. Transaction Approval Requirements . . . . . . . . . . . . . 34
SECTION 7.06. Approved Budgets and Transaction Approval
Requirements . . . . . . . . . . . . . . . . . . . . . . . .35
SECTION 7.07. Communication with AerCo . . . . . . . . . . . . . . . . . .36
ARTICLE 8
EFFECTIVENESS
SECTION 8.01. Effectiveness . . . . . . . . . . . . . . . . . . . . . . . 36
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PAGE
ARTICLE 9
SERVICING FEES; EXPENSES
SECTION 9.01. Servicing Fees . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 9.02. Retainer Fee . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 9.03. Rental Fee . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 9.04. [Reserved] . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 9.05. Base Sales Fee . . . . . . . . . . . . . . . . . . . . . 38
SECTION 9.06. Expenses . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE 10
TERM; TERMINATION; SURVIVAL
SECTION 10.01. Term. . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 10.02. Right to Terminate. . . . . . . . . . . . . . . . . . . . 41
SECTION 10.03. Consequences of Termination . . . . . . . . . . . . . . . 46
SECTION 10.04. Survival . . . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE 11
INDEMNIFICATION
SECTION 11.01. Indemnity . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 11.02. Procedures for Defense of Claims . . . . . . . . . . . . . 48
SECTION 11.03. Reimbursement of Costs . . . . . . . . . . . . . . . . . . 49
ARTICLE 12
ASSIGNMENT AND DELEGATION
SECTION 12.01. Assignment and Delegation . . . . . . . . . . . . . . . . 49
ARTICLE 13
MISCELLANEOUS
SECTION 13.01. Notices . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 13.02. Governing Law . . . . . . . . . . . . . . . . . . . . . 51
SECTION 13.03. Jurisdiction . . . . . . . . . . . . . . . . . . . . . 51
SECTION 13.04. Waiver of Jury Trial . . . . . . . . . . . . . . . . . . 51
SECTION 13.05. Counterparts; Third Party Beneficiaries . . . . . . . . . 52
SECTION 13.06. Entire Agreement . . . . . . . . . . . . . . . . . . . . 52
SECTION 13.07. Power of Attorney . . . . . . . . . . . . . . . . . . . . 52
SECTION 13.08. Restrictions on Disclosure . . . . . . . . . . . . . . . 52
SECTION 13.09. Rights of Setoff . . . . . . . . . . . . . . . . . . . . 53
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PAGE
SECTION 13.10. Reliance . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 13.11. Limited Recourse . . . . . . . . . . . . . . . . . . . . . 53
SCHEDULES
Appendix A Subsidiaries
Appendix B Form of Accession Agreement
Schedule 2.02(a) Services
Schedule 8 to
Schedule 2.02(a) Weekly, Monthly and Quarterly Reports
Schedule 4.01 Aircraft
Schedule 4.02 Aircraft Asset Related Documents
Schedule 4.03 Bank Accounts
Schedule 7.04(b)(1) One Year Initial Period Asset Expenses Budget
Schedule 7.04(b)(2) Three Year Initial Period Asset Expenses Budget
ANNEXES
Annex 1 Insurance
Annex 2 Indenture Covenants
EXHIBITS
Exhibit A Pro Forma Lease
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SERVICING AGREEMENT dated as of July 17, 2000 (the "AGREEMENT"), among
AerFi Group plc, an Irish limited liability company (the "SERVICER"), AerCo
Limited, a Jersey limited liability company ("AERCO"), AerFi Administrative
Services Limited, as Administrative Agent (the "ADMINISTRATIVE AGENT"), AerFi
Cash Manager II Limited, as Cash Manager (the "CASH MANAGER"), and the entities
listed on Appendix A hereto and any other Subsidiary of AerCo which accedes to
this Agreement pursuant to an Accession Agreement (together, the
"SUBSIDIARIES").
For the consideration set forth herein and other good and valuable
consideration, the receipt of which is hereby acknowledged, the parties hereto
agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions. The following terms, as used herein, have the
following meanings. Unless otherwise defined herein, all capitalized terms used
but not defined herein have the meanings assigned to such terms in the
Indenture.
"ACCESSION AGREEMENT" means an accession agreement substantially in the
form of Appendix B hereto.
"ADDITIONAL AIRCRAFT" means any aircraft (i.e., the airframe and
associated engines whether or not installed on such airframe and any engine
subsequently substituted for any such associated engine) (other than the
Offering Memorandum Aircraft) acquired after the Closing Date by AerCo or any of
its Subsidiaries for which the Servicer is appointed to provide Services
pursuant to Section 2.01(d) of this Agreement.
"ADMINISTRATIVE AGENCY AGREEMENT" means the Amended and Restated
Administrative Agency Agreement dated as of July 17, 2000, among the
Administrative Agent, AerFi Group plc, AerCo, the Servicer and the entities
listed on Appendix A thereto and any other Subsidiary of AerCo which accedes
thereto, as amended from time to time.
"ADMINISTRATIVE AGENT" has the meaning assigned to such term in the
preamble hereto.
"AERCO" has the meaning assigned to such term in the preamble hereto.
"AERCO GROUP" has the meaning assigned to such term in Section 2.01 of
this Agreement.
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"AERFI GROUP" means AerFi Group plc and its subsidiaries and Affiliates.
"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. The parties hereto acknowledge that each of AerCo
and its Subsidiaries, on the one part, and AerFi Group plc and its subsidiaries,
on the other part, are not Affiliates of each other.
"AFTER-TAX BASIS" means on a basis such that any payment received, deemed
to have been received or receivable by any Person shall, if necessary, be
supplemented by a further payment to that Person so that the sum of the two
payments shall, after deduction of all U.S. Federal, state, local or other
foreign Taxes, penalties, fines, interest, additions to Tax and other charges
resulting from the receipt (actual or constructive) or accrual of such payments
imposed by or under any U.S. Federal, state, local or other foreign law or
Governmental Authority (after taking into account any current deduction to which
such Person shall be entitled with respect to the amount that gave rise to the
underlying payment), be equal to the payment received, deemed to have been
received or receivable.
"AGREEMENT" has the meaning assigned to such term in the preamble hereto.
"AIRCRAFT" means the Initial Aircraft, the Offering Memorandum Aircraft
and any Additional Aircraft.
"AIRCRAFT ASSETS" means all Initial Aircraft, the Offering Memorandum
Aircraft, any Additional Aircraft, any spare parts, spare engines or ancillary
equipment or devices furnished therewith and related lease interests and options
owned by any Person within AerCo Group; provided however, that Aircraft Assets
shall not include any Aircraft Asset (x) that shall have ceased to be an
Aircraft Asset pursuant to this Agreement, or (y) in respect of which the
Servicer or AerCo shall have terminated the Servicer's obligation to provide
Services in accordance with Article 10 of this Agreement.
"AIRCRAFT ASSET EXPENSES" has the meaning assigned to such term in Section
9.06(b) of this Agreement.
"AIRCRAFT ASSETS RELATED DOCUMENTS" means all Lease related documents and
other contracts and agreements of Persons within AerCo Group the terms of which
relate to or affect any of the Aircraft Assets.
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"ANNUAL REVIEW" has the meaning assigned to such term in Section 3.02(c)
of Schedule 2.02(a) to this Agreement.
"APPLICABLE LAW" with respect to any Person means any law, statute,
ordinance, rule or regulation or code of conduct or practice of any national,
Federal, state, local or international Governmental Authority that applies to
such Person or any of its properties or assets.
"APPROVED BUDGET" has the meaning assigned to such term in Section 7.04(g)
of this Agreement.
"APPROVED BUDGET TARGET" for any Year means the approved budget target
determined annually by AerCo reasonably, consistently and in good faith
following discussions with the Servicer and review of and reliance on the
information provided by the Servicer in the Operating Budget and the Asset
Expenses Budget.
"ASSET EXPENSES BUDGET" has the meaning assigned to such term in Section
7.04(a)(ii) of this Agreement.
"BANK ACCOUNTS" has the meaning assigned to such term in Section 6.01(b)
of Schedule 2.02(a) to this Agreement.
"BASE SALES FEE" has the meaning assigned to such term in Section 9.01(c)
of this Agreement.
"BOARD OF DIRECTORS" means the board of directors of AerCo.
"BUSINESS DAY" means a day on which U.S. dollar deposits may be dealt
on the London inter-bank market and commercial banks and foreign exchange
markets are open in ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇.▇.▇. ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇.
"CALCULATION DATE" means the calculation date as defined in the Indenture.
"CASH MANAGEMENT AGREEMENT" means the Amended and Restated Cash Management
Agreement dated as of July 17, 2000, among the Cash Manager, AerFi Group plc,
AerCo, the Servicer, Bankers Trust Company, solely in its capacity as indenture
trustee and security trustee and the entities listed on Appendix A thereto and
any other Subsidiary of AerCo which accedes thereto, as amended from time to
time.
"CASH MANAGER" has the meaning assigned to such term in the preamble
hereto.
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"CHANGED CIRCUMSTANCE" means any material event, circumstance or condition
that shall have occurred or arisen and be continuing that is reasonably likely
to result in the current cash flow projections in any Year being materially less
favorable than the forecast which is the most current at the time that the
Approved Budget is finalized for that Year in accordance with this Agreement.
"CHANGE OF CONTROL" has the meaning assigned to such term in Section
10.02(a)(iv) of this Agreement.
"CHANGE OF CONTROL RATING DECLINE" has the meaning assigned to such term
in Section 10.02(a)(iv) of this Agreement.
"CLOSING DATE" means the date of the closing of the Offering.
"CONCENTRATION THRESHOLDS" has the meaning assigned to such term in
Section 2.02(a) of Schedule 2.02(a).
"CONFLICTS STANDARD" has the meaning assigned to such term in Section
3.02(b) of this Agreement.
"CONTROL" (including, with its correlative expressions, "CONTROLLED BY"
and "UNDER COMMON CONTROL WITH") means possession, directly or indirectly, of
power to direct or cause the direction of management or policies (whether
through ownership of securities or partnership or other ownership interests, by
contract or otherwise).
"CORE LEASE PROVISIONS" has the meaning assigned to such term in the
Indenture.
"DELIVERY DATE" means, with respect to each Aircraft and the related
Aircraft Assets, the date as of which AerCo Group directly or indirectly
acquires ownership of such Aircraft and related Aircraft Assets.
"DIRECTORS" means the directors of AerCo at the relevant time.
"DISCLOSURE DOCUMENT" has the meaning assigned to such term in Section
5.05(a) of this Agreement.
"EFFECTIVENESS DATE" has the meaning assigned to such term in Section
10.02(e)(ii) of this Agreement.
"EU" means The European Union.
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"EXTRAORDINARY PLAN" has the meaning assigned to such term in Section
7.04(i) of this Agreement.
"GROUP" has the meaning assigned to such term in Section 10.02(a)(iv) of
this Agreement.
"GOVERNMENTAL AUTHORITY" means any court, administrative agency or
commission or other governmental agency or instrumentality (or any officer or
representative thereof), national, federal, state, local or international, of
competent jurisdiction including the EU.
"INDEMNIFIED PARTY" has the meaning assigned to such term in Section
11.01(b) of this Agreement.
"INDEMNIFYING PARTY" has the meaning assigned to such term in Section
11.01(b) of this Agreement.
"INDENTURE" means the Indenture dated as of July 15, 1998, between AerCo
and Bankers Trust Company, as amended or supplemented from time to time.
"INDEPENDENT REPRESENTATIVE" has the meaning assigned to such term in
Section 3.02(c) of this Agreement.
"INITIAL AIRCRAFT" means the aircraft specified in the 1998 Offering
Memorandum and owned by AerCo Group as of the date hereof.
"INITIAL APPRAISED VALUE" means (i) for all the Initial Aircraft in
aggregate, $817,814,000.00 and, for each Initial Aircraft, means the dollar
amount specified opposite such Aircraft on Schedule 4.01 hereto, (ii) for all
the Offering Memorandum Aircraft in aggregate, $724,053,000.00 and, for each
Offering Memorandum Aircraft, means the dollar amount specified opposite such
Aircraft on Schedule 4.01 hereto and (iii) for the Additional Aircraft, the
"Initial Appraised Value" of such Additional Aircraft as such term is defined in
the Indenture.
"INITIAL APPROVED BUDGETS" has the meaning assigned to such term in
Section 7.04(b) of this Agreement.
"INITIAL PERIODS" has the meaning assigned to such term in Section 7.04(b)
of this Agreement.
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"LEASE" means any lease agreement with respect to an Aircraft including
any and all amendments, side letters and other supplements thereto.
"LESSEE DOCUMENTATION" has the meaning assigned to such term in Section
1.08(b) of Schedule 2.02(a) to this Agreement.
"LESSOR" means AerCo or the relevant Subsidiary of AerCo which directly or
indirectly leases an Aircraft to a Lessee and includes any such lessor of
Additional Aircraft.
"LESSEE" means each lessee as defined in the Indenture, including lessees
of Additional Aircraft.
"LOSS" (together with "LOSSES") means any and all damage, loss, liability
and expense (including reasonable legal fees, expenses and related charges and
costs of investigation); provided however, the terms "LOSS" and "LOSSES" shall
not include any Indemnified Party's management time or overhead expenses.
"MAINTENANCE RESERVES" means the maintenance reserves under each of the
Leases.
"MONTHLY PAYMENT PERIOD" has the meaning assigned to such term in Section
6.03(a) of Schedule 2.02(a) to this Agreement.
"NET CASH PROCEEDS" has the meaning assigned to such term in Section 9.05
of this Agreement.
"NEW ACCOUNTS" has the meaning assigned to such term in Section 6.01(b) of
Schedule 2.02(a) to this Agreement.
"1998 OFFERING MEMORANDUM" means the offering memorandum dated June 23,
1998 with respect to debt securities of AerCo.
"NON TERMINATING PARTY" has the meaning assigned to such term in Section
10.02(e)(i) of this Agreement.
"NOTE TRANSFER RATING DECLINE" has the meaning assigned to such term in
Section 10.02(a)(vii) of this Agreement.
"NOTES" has the meaning assigned to such term in Section 1.01 of the
Indenture.
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"NOTES OFFERING" has the meaning assigned to such term in Section 5.05(a)
of this Agreement.
"OFFERING" means the offering of debt securities contemplated in the
Offering Memorandum.
"OFFERING MEMORANDUM" means the Offering Memorandum dated July 12, 2000
with respect to debt securities of AerCo.
"OFFERING MEMORANDUM AIRCRAFT" means, as of any date, the Aircraft
specified in the Offering Memorandum which AerCo Group intends to acquire on or
after the Closing Date and which have not been deleted, as of such date, from
Schedule 4.01 by an amendment thereto as contemplated by Section 4.01 of this
Agreement.
"OFFICER'S CERTIFICATE" means, as to any Person, a certificate of the
President, any Vice President or Assistant Vice President, the Treasurer or any
Assistant Treasurer or such other equivalent officer.
"ONE YEAR INITIAL PERIOD" has the meaning assigned to such term in Section
7.04(b) of this Agreement.
"ONE YEAR PERIOD" has the meaning assigned to such term in Section 7.04(a)
of this Agreement.
"OPERATING BUDGET" has the meaning assigned to such term in Section
7.04(a)(i) of this Agreement.
"OPERATING GUIDELINES" has the meaning assigned to such term in Section
5.09 of this Agreement.
"OPERATIVE AGREEMENTS" means this Agreement and all other agreements,
instruments or other documents which are required by the terms of this Agreement
to be delivered in connection herewith.
"OTHER ASSETS" has the meaning assigned to such term in Section 3.02(a) of
this Agreement.
"OVERHEAD EXPENSES" has the meaning assigned to such term in Section
9.06(a) of this Agreement.
"OWN BUSINESS" has the meaning assigned to such term in Section 2.01(e) of
this Agreement.
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"PAYMENT DATE" has the meaning assigned to such term in the Indenture.
"PERFORMANCE OBJECTIVES" has the meaning assigned to such term in Section
5.06 of this Agreement.
"PERIOD" has the meaning assigned to such term in Section 7.04(a) of this
Agreement.
"PERMITTED ENCUMBRANCE" has the meaning assigned to such term in the
Indenture.
"PERSON" means an individual, corporation, partnership, limited liability
company, association, statutory business trust, common law trust or other entity
or organization, including a government or political subdivision or an agency or
instrumentality thereof.
"PRECEDENT LEASE" has the meaning assigned to such term in Section
3.02(a)(ii) of Schedule 2.02(a) to this Agreement.
"PRO FORMA LEASE" has the meaning assigned to such term in Section
3.02(a)(i) of Schedule 2.02(a) to this Agreement.
"QUARTERLY MEETING" has the meaning assigned to such term in Section
7.07(b) of this Agreement.
"RATING DECLINE" has the meaning assigned to such term in Section
10.02(a)(iv) of this Agreement.
"REFERRAL NOTICE" means a notice of the type described in Section 7.03(d)
of this Agreement.
"REIMBURSABLE EXPENSES" has the meaning assigned to such term in Section
9.06(c) of this Agreement.
"RELATED PERSON" has the meaning assigned to such term in Section
10.02(a)(iv) of this Agreement.
"RENT" has the meaning assigned to such term in Section 9.03 of this
Agreement.
"RENTAL FEE" has the meaning assigned to such term in Section 9.01(b) of
this Agreement.
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"RENTAL FEE PERCENTAGE" has the meaning assigned to such term in Section
9.03 of this Agreement.
"REPRESENTATIVE" with respect to any Person means the officers, directors,
employees, advisors and agents of such Person.
"RETAINER FEE" has the meaning assigned to such term in Section 9.01(a) of
this Agreement.
"SEC" has the meaning assigned to such term in Section 5.05(a) of this
Agreement.
"SECURITY DEPOSITS" means, at the time of calculation, with respect to
each Aircraft, all cash amounts, prepayments of rent, letters of credit and
guarantees paid by or issued on behalf of the Lessee for the benefit of the
lessor under the relevant Lease as security for obligations of such Lessee under
such Lease and related Lease Documents.
"SERVICER" has the meaning assigned to such term in the preamble hereto.
"SERVICER PROPOSAL" has the meaning given to it in Section 7.03(d) of this
Agreement.
"SERVICER REPRESENTATIVE" means any officer, director, employee, partner,
consultant, advisor or agent of the Servicer or any of its Affiliates.
"SERVICES" has the meaning assigned to such term in Section 2.02(a) of
this Agreement.
"SERVICING FEES" has the meaning assigned to such term in Section 9.01 of
this Agreement.
"SPECIAL BOARD RESOLUTION" has the meaning given to it in the Articles of
Association of AerCo; provided that references to a Special Board Resolution
shall be construed as references to an ordinary resolution of the Board of
Directors any time at which the Servicer and/or its Affiliates do not hold a
majority of the Class E Notes.
"STANDARD OF CARE" has the meaning assigned to such term in Section 3.01
of this Agreement.
"STANDARD OF LIABILITY" has the meaning assigned to such term in Section
3.03(c) of this Agreement.
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"STANDBY SERVICER" means the Standby Servicer under the Standby Servicing
Agreement or another servicer acceptable to AerCo and the Rating Agencies.
"STANDBY SERVICING AGREEMENT" means the Standby Servicing, Administrative
Agency and Cash Management Agreement dated as of July 17, 2000, among AerCo,
debis Aircraft Leasing Limited, as Standby Servicer, and debis AirFinance B.V.,
as Guarantor, as amended from time to time.
"START DATE" has the meaning assigned to such term in the Standby
Servicing Agreement.
"STATED SERVICES OBLIGATION" has the meaning assigned to such term in
Section 6.03(a) of Schedule 2.02(a) to this Agreement.
"SUBSIDIARIES" has the meaning assigned to such term in the preamble
hereto.
"TARGET SALES PRICE" has the meaning assigned to such term in Section 9.05
of this Agreement.
"TAX" OR "TAXES" means (i) any net income, alternative or add-on minimum
tax, gross income, gross receipts, sales, use, ad valorem, value added,
transfer, franchise, profits, license, registration, recording, documentary,
conveyancing, gains, withholding on amounts paid to or by any Person, payroll,
employment, excise, severance, stamp, occupation, premium, property,
environmental or windfall profit tax, custom duty or other tax, governmental fee
or other like assessment or charge of any kind whatsoever, together with any
interest, penalty, addition to tax or additional amount imposed by any
governmental authority responsible for the imposition of any such tax (domestic
or foreign) (a "TAXING AUTHORITY"), or (ii) liability for the payment of any
amounts of the type described in (i) as a result of being party to any agreement
or any express or implied obligation to indemnify any other Person.
"TECHNICAL MANAGEMENT EXPENSES" has the meaning assigned to such term in
Section 9.06(b)(i) of this Agreement.
"TECHNICAL MANAGEMENT EXPENSES RESERVE AMOUNT" has the meaning assigned to
such term in Section 7.04(f) of this Agreement.
"TERMINATING PARTY" has the meaning assigned to such term in Section
10.02(e)(i) of this Agreement.
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"TERMINATION NOTICE" has the meaning assigned to such term in Section
10.02(e)(i) of this Agreement.
"THIRD PARTY CLAIM" means a claim by a third party arising out of a matter
for which an Indemnified Party is entitled to be indemnified pursuant to the
indemnity provisions of this Agreement.
"THREE YEAR INITIAL PERIOD" has the meaning assigned to such term in
Section 7.04(b) of this Agreement.
"THREE YEAR PERIOD" has the meaning assigned to such term in Section
7.04(a) of this Agreement.
"TRANSACTION APPROVAL REQUIREMENTS" has the meaning assigned to such term
in Section 7.05(c) of this Agreement.
"YEAR" means each twelve month fiscal year (or such shorter fiscal period
as agreed upon by the parties hereto in the future) ended June 30 or as modified
by agreement of the parties hereto in the future.
ARTICLE 2
APPOINTMENT; SERVICES
SECTION 2.01. Appointment. Each of AerCo and the Subsidiaries hereby
appoints the Servicer as the exclusive provider of the Services (as defined in
Section 2.02 below) to AerCo and the Subsidiaries (collectively, "AERCO GROUP")
in respect of the Aircraft Assets on the terms and subject to the conditions set
forth in this Agreement.
(a) The Servicer hereby accepts such appointment and agrees to perform the
Services on the terms and subject to the conditions set forth in this Agreement.
(i) In all of its dealings with third parties (including, without
limitation, lessees, potential lessees, sellers, purchasers
and service providers) in connection with its provision of the
Services, the Servicer shall (and shall procure that persons
to whom it delegates performance of any of the Services shall)
at all times so far as it is within its power to do so:
(1) make it clear that it is acting solely in its capacity
as Servicer for AerCo and/or any applicable Subsidiaries
under this Agreement and not in its own right
(including, without limitation, by use of
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letterhead (or equivalent, in the case of email
correspondence) showing its name as "AerFi Group plc as
servicer for AerCo group companies" or similar
language);
(2) where relevant make clear that the Aircraft Assets are
the property of AerCo Group or the relevant Person
therein; and
(3) enter into contractual arrangements only as disclosed
agent for AerCo and/or any applicable Subsidiaries.
(ii) The Servicer shall ensure that its Own Business is kept
entirely separate, identifiable and segregated from the
services performed on behalf of AerCo Group, and shall in
particular (but without limiting the foregoing) (a) keep and
maintain records and documents relating to the Aircraft Assets
and its activities as Servicer hereunder separate from those
relating to its Own Business, and (b) ensure that all third
parties from whom money will become due to AerCo Group will be
required to make the relevant payments into the accounts
required under this Agreement and the Indenture and shall use
all commercially reasonable endeavors to ensure that such
payment directions are complied with; but if notwithstanding
such endeavors any payments are received in an account of an
AerFi Group company, the Servicer shall comply with the
provisions of Section 5.08(b) of this Agreement in relation
thereto.
(iii) The Servicer shall under no circumstances during the term of
this Agreement pledge the credit of, or suggest to third
parties that it is acting on behalf of, any member of the
AerCo Group in connection with the Servicer's Own Business.
(iv) The Servicer shall not pledge its own credit for any amounts
due by AerCo or members of the AerCo Group (but this paragraph
(iv) shall not restrict the Servicer from discharging amounts
due in connection with the Aircraft Assets for which the
Servicer is entitled to be reimbursed by AerCo Group under
this Agreement).
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(v) Subject to the Servicer's obligations having regard to
relevant accounting regulations, the Servicer shall at no time
represent or suggest to any third party that it forms part of
the AerCo Group, that any member of the AerCo Group forms part
of the AerFi Group, or that the Servicer or any member of the
AerFi Group has any title to or interest in the Aircraft
Assets.
If, notwithstanding the foregoing, the Servicer shall not have contracted for or
otherwise obtained any goods and services from third party providers in
connection with the Services in the name of or as disclosed agent for AerCo or
the relevant Subsidiary, as the case may be, the Servicer shall use commercially
reasonable efforts to cause AerCo or the relevant Subsidiary, as the case may
be, to be in a position to have direct recourse against any such third party
provider providing goods and services for AerCo or the relevant Subsidiary, as
the case may be, for any breaches by such third party provider related to the
provision of such goods and services. Any third party provider discount or
rebate related directly or indirectly to the Aircraft Assets shall be made
available to AerCo Group.
(b) AerCo and the Servicer acknowledge that each Person within AerCo Group
has appointed the Administrative Agent to undertake certain functions on its
behalf to the extent set out in, and subject to the terms of, the Administrative
Agency Agreement. Accordingly, unless earlier notified in writing by AerCo that
the Administrative Agent's appointment to act on behalf of AerCo has been
revoked or terminated, the Servicer agrees to liaise with the Administrative
Agent in respect of those matters for which the Administrative Agent has
responsibility under the Administrative Agency Agreement; provided that nothing
in this Section 2.01(b) shall permit the Administrative Agent to issue any
instructions or directions to the Servicer (other than by transmitting
instructions or directions of the Board of Directors) or detract from the
provisions of Section 2.02(b).
(c) AerCo has advised the Servicer that the Cash Manager has been
appointed to perform certain cash management services on behalf of AerCo Group
in accordance with the terms of the Cash Management Agreement. In connection
with the performance of the Services required to be performed by the Servicer
pursuant to Sections 6.01, 6.02 and 6.03 of Schedule 2.02(a) to this Agreement,
the Servicer shall in all cases be entitled to rely on instructions (or other
actions) of the Cash Manager as regards those matters delegated to the Cash
Manager pursuant to the Cash Management Agreement unless earlier notified in
writing by AerCo that the Cash Management Agreement has been terminated, in
which case the Servicer shall be entitled to rely upon the instructions (or
other actions) of AerCo in accordance with Section 2.02(b). The Servicer shall
not be liable to any
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Person within AerCo Group or any other Person for any action taken or omission
to act in accordance with instructions (or other actions) of the Cash Manager
for purposes of Sections 6.01, 6.02 and 6.03 of Schedule 2.02(a)
(d) AerCo, at its sole option, may appoint the Servicer to provide
Services under the terms of this Agreement to any aircraft or engines acquired
by AerCo and its Subsidiaries additional to the Offering Memorandum Aircraft and
the Initial Aircraft.
(e) In this Section 2.01, references to the Servicer's "OWN BUSINESS"
are to the business(es) carried on by AerFi Group and its subsidiaries,
including any business of providing services to other parties (not being members
of AerCo Group), other than any business consisting of the provision of services
to members of AerCo Group under this Agreement, the Administrative Agency
Agreement and the Cash Management Agreement.
SECTION 2.02. Services. (a) The services to be provided by the Servicer
in respect of the Aircraft Assets (the "SERVICES") are as set forth in Schedule
2.02(a).
(b) In connection with the performance of the Services, except where
discretion has been given to the Servicer under this Agreement, the Servicer
shall in all cases only be obliged to act upon, and shall be entitled to rely
on, the instructions, directions or other actions of AerCo or, if applicable as
set forth in Section 2.01(c) above, the Cash Manager on behalf of AerCo Group.
The Servicer shall not be liable to any of AerCo, the Subsidiaries or any other
Person for any action taken by the Servicer, or which the Servicer omitted to
take, in accordance with such instructions, directions or other actions.
(c) References in this Agreement (including the Schedules) to
notifications to, and directions, consents, agreements and approvals of, AerCo
are to be construed, except where expressly stated otherwise, as references to
notifications to, and directions, consents, agreements and approvals of, the
Directors and not of any agent of AerCo.
SECTION 2.03. Compliance with Applicable Laws. Notwithstanding anything to
the contrary in this Agreement, the Servicer shall not be obligated to take or
refrain from taking any action which would violate any Applicable Law.
SECTION 2.04. Standby Servicer. AerCo has advised the Servicer that AerCo
has entered into the Standby Servicing Agreement with the Standby Servicer
pursuant to which AerCo may, upon notice to the Standby Servicer, instruct the
Standby Servicer to perform certain services on behalf of AerCo
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Group, including the Services, in accordance with the terms of the Standby
Servicing Agreement upon a termination of this Agreement pursuant to Section
10.02 hereof. AerCo agrees, so long as it maintains a Standby Servicer pursuant
to the Standby Servicing Agreement during the term of this Agreement, to pay the
costs of such appointment and the ongoing fees of such Standby Servicer.
ARTICLE 3
STANDARD OF CARE; CONFLICTS OF INTEREST
SECTION 3.01. Standard of Care. The Servicer shall use reasonable care
and diligence at all times in the performance of the Services as if it were the
owner of the Aircraft Assets (subject to the terms and conditions of this
Agreement and the Indenture) and at all times in a manner at least consistent
with customary commercial practice of a prudent international aircraft lessor in
the management, servicing and marketing of commercial jet aircraft and related
assets (the "STANDARD OF CARE").
SECTION 3.02. Conflicts of Interest. (a) Each of AerCo and the
Subsidiaries acknowledges and agrees that: (i) in addition to managing,
servicing and marketing the Aircraft Assets under this Agreement, the Servicer
may manage, service or market and shall be entitled to manage, service or market
from time to time, the separate assets and businesses of the Servicer, its
Affiliates and third parties ("OTHER ASSETS"); (ii) nothing in this Agreement
will prevent the Servicer from carrying on its normal investment banking,
advisory or aircraft or lease management businesses; (iii) notwithstanding
3.02(b) below, in the course of conducting such activities, the Servicer may
from time to time have conflicts of interest in performing its duties on behalf
of AerCo on the one hand and the various entities to whom it provides
management, servicing or marketing services and with respect to the various
assets it may own or in respect of which it provides management, servicing or
marketing services on the other hand; and (iv) the Directors of AerCo have
approved the transactions contemplated by this Agreement and desire that such
transactions be consummated and, in giving such approval, the Directors of AerCo
have expressly recognized that such conflicts of interest may arise and that
when such conflicts of interest arise the Servicer shall perform the Services in
accordance with the Standard of Care and, to the extent applicable, the
Conflicts Standard.
(b) If conflicts of interest arise regarding the management, servicing or
marketing of (i) a particular Aircraft Asset, on the one hand, and another
Aircraft Asset, on the other hand, or (ii) any Aircraft Assets, on the one hand,
and Other Assets, on the other hand, the Servicer shall (A) notify AerCo as
provided in Section 3.02(c), and (B) perform the Services in good faith and to
the extent (i) such Aircraft Assets or (ii) such Aircraft Asset and such Other
Asset are
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substantially similar in terms of objectively identifiable characteristics
relevant for purposes of the particular Services to be performed, the Servicer
shall not discriminate among such Aircraft Assets or between such Aircraft
Assets and such Other Assets, respectively, on an unreasonable basis (the
standard set forth in this Section 3.02(b) shall be referred to collectively as
the "CONFLICTS STANDARD").
(c) If the Servicer determines in good faith that a conflict of interest
exists with AerCo then, as soon as practicable after becoming aware of the
conflict of interest, the Servicer shall inform AerCo of the existence of the
conflict of interest and shall promptly propose to AerCo a method of resolving
the conflict of interest, including one or more of the following: (i) a proposal
to disregard the conflict of interest on the basis of lack of materiality; (ii)
an agreement by the Servicer to give preference to the particular Aircraft
Asset; (iii) a proposal to form separate teams within the Servicer and its
Affiliates which will act at all times at arm's length and each of which will be
bound by a strict duty of confidentiality towards its respective client; or (iv)
a proposal that the Servicer withdraw from acting as Servicer with respect to
the negotiation of the issue giving rise to such conflict of interest regarding
the particular Aircraft Asset and that AerCo appoint an independent
representative (the "INDEPENDENT REPRESENTATIVE") to act on behalf of AerCo with
respect thereto. If AerCo does appoint an Independent Representative, the
Servicer will not receive fees pursuant to Section 9.02 or 9.03 in respect of
the Aircraft Asset or Aircraft Assets giving rise to such conflict of interest
for so long as such Independent Representative is engaged. The Independent
Representative's fee will be paid by AerCo.
(d) If AerCo does not find one of the Servicer's proposed resolutions of
the conflict to be acceptable, then AerCo may propose an alternative method of
resolution to the Servicer. If the conflict cannot be resolved to the
satisfaction of AerCo in its sole discretion after negotiation in good faith
with the Servicer, then AerCo shall in accordance with Section 10.02(a) be
entitled to terminate this Agreement in respect of such Aircraft Asset.
(e) The Directors of AerCo, by a Special Board Resolution, shall be
entitled to seek independent advice and to appoint an independent representative
in connection with the provision of the Services by the Servicer hereunder,
including in connection with any conflict of interest or any potential conflict
of interest.
SECTION 3.03. Standard of Liability. (a) The Servicer shall not be
liable to AerCo or any of the Subsidiaries or any other Person under any
circumstances for any Losses directly or indirectly arising out of, or in
connection with or related to: (i) an Aircraft Asset being sold, leased or
purchased on less favorable terms than might have been achieved at any time,
provided such
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transactions were entered into on the basis of a commercial decision or
recommendation of the Servicer in accordance with the Standard of Care; (ii) the
Servicer's obligation to apply the Conflicts Standard in respect of its
performance of the Services, except, in either of case (i) or (ii), where such
Losses are finally adjudicated to have been caused directly by the negligence,
recklessness, wilful misconduct or fraud of the Servicer or any Servicer
Representative; (iii) the ownership, operation, maintenance, acquisition,
leasing, financing, refinancing or sale of any of the Aircraft Assets, or any
action or failure to act on the part of any Person at any time, prior to the
effectiveness of this Agreement; (iv) any action taken, limited or terminated by
the Servicer in accordance with the instructions of AerCo pursuant to Section
7.02 of this Agreement, or as contemplated by this Agreement, the instructions
of the Cash Manager or the Administrative Agent; (v) a refusal by AerCo or any
of the Subsidiaries to take any action recommended by the Servicer; or (vi) the
gross negligence, recklessness, fraud or wilful misconduct of any person within
AerCo Group.
(b) The Servicer shall indemnify, reimburse and hold harmless AerCo and
the Subsidiaries on an After-Tax Basis in accordance with the provisions of
Article 11 for any Loss arising as a result of the performance of any of the
Services where (i) such Loss is finally adjudicated to have been caused directly
by the negligence, recklessness, fraud or wilful misconduct of the Servicer or
any of its Affiliates or any Servicer Representative in respect of its
obligations to apply the Standard of Care or the Conflicts Standard in
connection with the performance of the Services; or (ii) such Loss is finally
adjudicated to have directly resulted from a breach by the Servicer of the
express terms and conditions of this Agreement. The parties agree that under no
circumstances shall the foregoing provision provide for or permit any
duplicative payment to or recovery by AerCo Group. In the event that the
Servicer shall have made an indemnity payment with respect to a Loss to AerCo or
a Subsidiary and any member of AerCo Group subsequently is paid or otherwise
recovers an amount in respect of such Loss from any other person, then AerCo
shall repay such amount to the Servicer.
(c) The liability standards set forth in this Section 3.03 shall be the
"STANDARD OF LIABILITY").
SECTION 3.04. Waiver of Implied Standard. Except as expressly stated above
in this Article 3, all other warranties, conditions and representations, express
or implied, statutory or otherwise, arising under U.S. Federal, New York,
Jersey, Channel Islands, Irish or other Applicable Law in relation to either the
skill, care, diligence or otherwise in respect of any service to be performed
hereunder or to the quality or fitness for any particular purpose of any goods
are hereby excluded and the Servicer shall not be liable in contract, tort or
otherwise under U.S. Federal, New York, Jersey, Channel Islands, Irish or other
Applicable
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Law for any loss, damage, expense or injury of any kind whatsoever, arising out
of or in connection with the Services to be supplied pursuant to this Agreement
or any goods to be provided or sold in conjunction with such Services.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
Each of AerCo and each Subsidiary jointly and severally represents and
warrants to the Servicer as follows (except to the extent the following is with
respect to a Subsidiary or Aircraft which is owned directly or indirectly at the
date hereof by the Servicer or is with respect to a matter under the control of
the Servicer):
SECTION 4.01. Aircraft Assets. Schedule 4.01 contains a true and
complete list of all Aircraft Assets, the Initial Appraised Value of each
Aircraft and the Person within AerCo Group that owns directly or indirectly such
Aircraft Asset (or, in the case of the Offering Memorandum Aircraft, the AerFi
company whose stock is contemplated by the Offering Memorandum to be acquired by
AerCo on or following the Closing Date and which has contracted to acquire such
Offering Memorandum Aircraft), in each case as of the date hereof. Except as set
forth on Schedule 4.01 or as disclosed in the Offering Memorandum, each Person
listed within AerCo Group as an owner of the Aircraft Asset on Schedule 4.01 has
good and marketable title to such Aircraft Asset, free and clear of all liens
other than Permitted Encumbrances. If, following the Offering, less than all of
the Offering Memorandum Aircraft are acquired by AerCo Group, the parties hereto
will agree to an amended Schedule 4.01 to reflect the Offering Memorandum
Aircraft actually acquired by AerCo Group. In addition, the Servicer will
furnish to AerCo, upon request of AerCo, information necessary for AerCo to
furnish to the Standby Servicer a complete list of all Aircraft Assets, the
Initial Appraised Value of each Aircraft Asset and the Person within AerCo Group
that owns such Aircraft Asset, the jurisdiction in which such Person is legally
organized and its officers, directors and shareholders, in each case as of the
Start Date.
SECTION 4.02. Aircraft Assets Related Documents. Each Aircraft Assets
Related Document provided by the previous servicer to AerFi Group plc or
subsequently delivered to the Servicer is (or at the time of such delivery will
be) in full force and effect and a legal, valid and binding agreement of the
Person in AerCo Group, whether such Person became or becomes a member of AerCo
Group prior to, on or after the Closing Date, that is a party thereto and, to
the best knowledge of such Person within AerCo Group, each such other party
thereto, and is (or at the time of such delivery will be) enforceable against
such Person within AerCo Group that is a party thereto and, to the best
knowledge of such Person within AerCo Group, against each such other party
thereto in accordance with its terms subject to bankruptcy, insolvency,
fraudulent transfer, reorganization,
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moratorium and similar laws affecting creditors' rights and remedies and to
general equity principles. To the best knowledge of AerCo after due inquiry (it
being understood that such due inquiry shall consist of a review of the Aircraft
Assets Related Documents obtained by AerCo and the Subsidiaries from the
previous servicer of the Initial Aircraft), none of the Aircraft Assets Related
Documents listed on Schedule 4.02 or subsequently delivered to the Servicer has
been modified, amended or terminated except as disclosed therein. To the best
knowledge of AerCo after due inquiry (it being understood that such due inquiry
shall consist of a review of the Aircraft Assets Related Documents obtained by
AerCo and the Subsidiaries from the previous servicer of the Initial Aircraft),
except as set forth in the Aircraft Assets Related Documents with respect to
specific potential defaults, each Person within AerCo Group (and each
predecessor-in-interest of any Person) has performed or is performing all
material obligations required to be performed by it under the applicable
Aircraft Assets Related Documents and is not (with or without notice or lapse of
time or both) in breach or default in any material respect thereunder and, to
the best knowledge of AerCo, no other party to any of the Aircraft Assets
Related Document is or at the time of the delivery of such Aircraft Assets
Related Document to the Servicer will be (with or without notice or lapse of
time or both) in breach or default in any material respect thereunder.
SECTION 4.03. Accounts and Cashflow. Schedule 4.03 hereto sets forth a
true and complete list as of the date hereof of all AerCo Group's bank or other
similar accounts relating to the Aircraft Assets.
SECTION 4.04. Organization and Standing. (a) Each Person in AerCo Group,
whether such Person became or becomes a member of AerCo Group prior to, on or
after the Closing Date, is or when it becomes a member of the AerCo Group will
be, a corporation, limited liability company or business trust, as applicable,
duly organized and validly existing and, if applicable, in good standing under
the laws of the jurisdiction in which it is legally organized and possesses all
franchises, licenses, permits, authorizations and approvals necessary to enable
it to use its corporate or other name and to own, lease or otherwise hold its
properties and assets and to carry on its business as presently conducted and as
proposed to be conducted except for such jurisdictions where the failure to be
so qualified could not, individually or in the aggregate, have a material
adverse effect on the ability of such Person within AerCo Group or the Servicer
to perform their respective obligations under this Agreement. Appendix A sets
forth a true and complete list as of the date hereof of each Person within AerCo
Group other than a Person being acquired on the date hereof, the jurisdiction in
which each such Person within AerCo Group is legally organized, and its
officers, directors and shareholders.
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(b) Each Person within AerCo Group is duly qualified to do business as a
foreign corporation, limited liability company or business trust, as applicable,
in each jurisdiction in which the nature of its business or the ownership,
leasing or holding of its properties or assets requires qualification, except
for such jurisdictions where the failure to be so qualified could not,
individually or in the aggregate, have a material adverse effect on the ability
of such Person within AerCo Group or the Servicer to perform their respective
obligations under this Agreement.
(c) No Person within AerCo Group is subject to any actual or, to the
best of its knowledge, contingent liability that could individually or in the
aggregate (i) have a material adverse effect on the ability of such Person
within AerCo Group or the Servicer to perform their respective obligations under
this Agreement or (ii) materially adversely affect the ownership, operation,
leasing, financing, refinancing or sale of any Aircraft Asset.
SECTION 4.05. Authority. (a) Each of AerCo and each other Person within
AerCo Group which is a party to an Operative Agreement has all requisite power
and authority to execute each Operative Agreement to which it is or will be a
party and to consummate the transactions and to perform its obligations
contemplated thereby. All corporate acts and other proceedings required to be
taken by each Person within AerCo Group to authorize the execution, delivery and
performance of each Operative Agreement to which it is or will be a party and
the consummation of the transactions and the performance of its obligations
contemplated thereby have been on or before the date of entering into the
relevant Operative Agreements or will have been duly and properly taken.
(b) Each of the Operative Agreements to which each Person within AerCo
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, and enforceable against it in
accordance with its terms subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws affecting creditors'
rights and remedies and to general equity principles.
SECTION 4.06. No Conflicts. Neither the execution and delivery of any
Operative Agreement with respect to which any Person within AerCo Group is a
party nor the consummation of the transactions contemplated thereby or the
performance by any Person within AerCo Group of any of its obligations
thereunder will (i) violate any provision of the constituent documents of any
such Person within AerCo Group, (ii) violate any order, writ, injunction,
judgment or decree applicable to any Person within AerCo Group or any of their
respective properties or assets, (iii) violate in any material respect any
Applicable Law or (iv)
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result in any conflict with, breach of or default (or give rise to any right of
termination, cancellation or acceleration) under any note, bond, mortgage,
indenture, warrant or similar instrument or any licence, permit, material
agreement or other material obligation to which any Person within AerCo Group or
by which any Person within AerCo Group or any of their respective properties or
assets may be bound, except such violations, breaches, conflicts or defaults
which could not individually or in the aggregate have a material adverse effect
on the ability of AerCo Group or the Servicer to perform their respective
obligations under this Agreement. No action, consent or approval by or filing
with any Governmental Authority or any other Person is required in connection
with the execution, delivery or performance by any Person within AerCo Group of
the Operative Agreements to which it is a party or the consummation by any
Person within AerCo Group of the transactions contemplated thereby which has not
already been obtained.
SECTION 4.07. Compliance with Applicable Laws. (a) Each of AerCo and
each other Person within AerCo Group and their respective properties, assets,
operations and businesses have been operated and are in compliance with all
Applicable Laws and any filing requirements relating thereto, except where any
non-compliance could not individually or in the aggregate have a material
adverse effect on the ability of AerCo Group or the Servicer to perform their
respective obligations under this Agreement.
(b) Each of AerCo and each other Person within AerCo Group has obtained
all permits, licenses and other authorizations which are required with respect
to the operation of their respective businesses and the ownership of their
respective assets and properties under all Applicable Laws, other than any
permits, licenses or authorizations which the failure to obtain could not
individually or in the aggregate have a material adverse effect on the ability
of AerCo Group or the Servicer to perform their respective obligations under
this Agreement. Each Person within AerCo Group is in compliance with all terms
and conditions of such permits, licenses and authorizations, except where any
non- compliance could not individually or in the aggregate have a material
adverse effect on the ability of AerCo Group or the Servicer to perform their
respective obligations under this Agreement.
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ARTICLE 5
SERVICER UNDERTAKINGS
SECTION 5.01. Staff and Resources. The Servicer shall employ or
otherwise engage such staff (including in-house legal staff) and maintain such
supporting resources as the Servicer shall reasonably deem necessary, both in
number and in quality, to enable the Servicer to perform the Services in
accordance with the terms of this Agreement.
SECTION 5.02. Access. The Servicer at such times as AerCo may reasonably
request shall grant to AerCo Group and its agents (including auditors):
(a) "READ ONLY" (including by way of hard copy) and reporting access
regarding the Servicer's management information systems, but only to that part
of such systems that relates to the Aircraft Assets and AerCo Group's business;
(b) access to the related programs for review and testing purposes only;
and
(c) access to the ledgers, documents and other records related to the
Aircraft Assets or AerCo Group's business (copies of which AerCo Group shall be
entitled to take) and to officers and employees of the Servicer, to enable AerCo
Group to monitor the performance by the Servicer under this Agreement and
otherwise for the purposes of AerCo Group's business.
SECTION 5.03. Compliance with Law. The Servicer shall, in connection with
the performance of the Services, comply in all material respects with all laws,
rules and regulations applicable to the Servicer and with the laws, rules and
regulations of Jersey, Channel Islands, Ireland and the United States and other
Governmental Authorities applicable to the Aircraft Assets and, where
applicable, the relevant Person within AerCo Group; provided, however, that this
Section 5.03 shall not limit the obligation of the Servicer to monitor the
performance of the obligations of Lessees under the Leases as set forth in
Article 1 of Schedule 2.02(a).
SECTION 5.04. Commingling. The Servicer shall not commingle with its
own funds any funds of any Person within AerCo Group.
SECTION 5.05. Notes Offering. (a) The Servicer agrees to use commercially
reasonable efforts to cooperate, in its capacity as Servicer, with AerCo and its
Affiliates in connection with the public or private offering and sale after the
date hereof of any securities of AerCo or any of its Affiliates (a "NOTES
OFFERING") including participation in preparation of any offering memorandum,
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prospectus or other offering materials (but assuming no responsibility for the
preparation, form or content thereof, provided, however, that the Servicer will
assume responsibility for the content of any information therein provided by the
Servicer regarding it), participating, on reasonable notice and with
representatives of AerCo, in customary marketing activities relating to a Notes
Offering solely in the Servicer's capacity as Servicer of the Aircraft Assets
(including road shows and investor meetings); attending, on reasonable prior
notice, all meetings with rating agencies relating to any Notes Offering;
providing AerCo and its Affiliates, underwriters, rating agencies and other
advisors with reasonable opportunities to conduct legal and business due
diligence with respect to the Servicer and its provision of Services and with
respect to the Aircraft Assets and Leases (including, for this purpose any
future lease) including providing, to the extent that such data is in the
Servicer's possession or within its knowledge, any historical Lease and Aircraft
Assets related data, including access to and information regarding all Leases
for due diligence purposes; procuring, at AerCo's expense, opinions of counsel
with respect to matters requested by the rating agencies and relating to the
Aircraft Assets, Leases and related documents and related collateral and
payments thereunder; assisting with respect to the preparation of financial
statements for AerCo Group; and (to the extent that such data is in the
Servicer's possession or within its knowledge) providing, reviewing and, if the
Servicer so chooses, commenting on information regarding the Aircraft Assets and
provision of Services for inclusion in any offering memorandum, prospectus or
other offering document or any periodic report required to be filed or furnished
by AerCo with or to the United States Securities and Exchange Commission (the
"SEC") or any other Governmental Authority (any such document or report, a
"DISCLOSURE DOCUMENT"). The Servicer also shall provide information regarding
the Servicer for inclusion in any Disclosure Document and shall provide
customary indemnities against material misstatements or omissions with respect
to such information regarding the Servicer; provided that AerCo agrees that the
Servicer has the right to approve any information in any Disclosure Document
relating to the Servicer or any Affiliate thereof and that AerCo will not permit
the inclusion in any Disclosure Document of (i) any financial statements or
financial data relating to the Servicer or any Affiliate thereof, (ii) any
performance or related data with respect to the Servicer's management of (y)
aircraft directly or indirectly owned by AerCo (it being understood that such
data shall not include financial or other data relating to the Aircraft Assets,
the Leases and the Lessees where the principal purpose for including such data
in the Disclosure Document is not to provide a measurement or other assessment
of the Servicer's performance in managing the Aircraft Assets) or (z) any other
Person's aircraft or other assets or (iii) information relating to aircraft that
do not comprise Aircraft Assets which are owned or managed by the Servicer or
any of its Affiliates (except and to the extent that the quantities and types of
aircraft currently owned or managed by the Servicer are disclosed in summary
form, which summary shall be subject to the
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prior approval of the Servicer), except, in the case of clauses (ii) and (iii),
to the extent reasonably required by the SEC or other Governmental Authority or
otherwise under Applicable Law; provided that, before including any such
information so required, AerCo shall have used commercially reasonable efforts
to have (or to have caused its Representatives to have) such requirement
withdrawn or otherwise satisfied and to limit the information required to be
included. AerCo also will provide the Servicer with copies of, and an
opportunity to review and comment on, marketing materials produced in connection
with any Notes Offering. AerCo will not distribute any such marketing materials
or disseminate the information contained therein, where such materials or
information includes information relating to the Servicer or any of its
Affiliates, without the Servicer's prior written consent, which consent shall
not be unreasonably withheld.
(b) AerCo agrees that it will not submit to any rating agency any
materials relating to the Servicer or any of its Affiliates without the
Servicer's prior written consent, which consent shall not be unreasonably
withheld.
(c) AerCo acknowledges and agrees that neither the Servicer nor any of its
Affiliates will be a party to any underwriting agreement or any letter to,
representation to, indemnity or other agreement with, any underwriter in
connection with any Notes Offering, and shall not assume any responsibility for
any information set forth in any Disclosure Document related thereto except for
information provided by the Servicer regarding the Servicer.
(d) Except to the extent required by law, AerCo agrees, and shall cause
each other Person within AerCo Group to agree, not to issue any press release or
make any other public announcement relating to the Servicer or any of its
Affiliates and their respective involvement in any Notes Offering without the
Servicer's prior written consent, which consent shall not be unreasonably
withheld. In the event a press release or other public announcement is required
by law, AerCo shall consult with the Servicer prior to issuing or making any
such press release or public announcement to the extent that any such press
release or public announcement relates to the Servicer or any of its Affiliates
and their respective involvement in any Notes Offering.
(e) Neither the Servicer nor any of its Affiliates shall be required to
sign any registration statement (or any similar document) in connection with any
Notes Offering or to take any other action that could reasonably be expected to
result in the Servicer or any of its Affiliates being or being deemed to be a
"control person" with respect to the applicable issuer of any securities issued
in connection with any such financing transaction under applicable securities
laws in connection with any such financing or an "underwriter" of any such
securities. The obligations of
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the Servicer under this Section 5.05 shall be subject to the reasonable
satisfaction of the Servicer with all the terms and conditions of the applicable
Notes Offering that relate to the Servicer or any of its Affiliates including
the customary indemnities in favor of the Servicer and its Affiliates.
(f) At the request of the Servicer, AerCo agrees to request that its
legal, accounting and other technical advisors include the Servicer and such
Affiliates of the Servicer as the Servicer may designate as addressees of any
opinions and/or comfort letters being provided to AerCo in connection with any
Notes Offering.
(g) In the case of any Notes Offering, none of the Servicer, its
Affiliates or its Representatives shall have any liability for, and AerCo and
the Subsidiaries jointly and severally shall hold, and shall cause each other
Person, if any, for whom a Notes Offering was conducted to hold, the Servicer,
its Affiliates and its Representatives harmless from, and indemnify on an
After-Tax Basis, the Servicer, its Affiliates and its Representatives against,
any and all Losses that may be imposed on, incurred by or asserted against
(including with respect to any such claims, suits, actions or proceedings by
third parties, including the underwriters and purchasers of any securities
issued in connection with any such Notes Offering) the Servicer, its Affiliates
or its Representatives directly arising out of, in connection with or related to
the Servicer's performance of the obligations set forth in this Section 5.05
with respect to any Notes Offering (except to the extent, but only to the
extent, of any such Losses directly arising out of, in connection with or
related to the content of any information in any offering memorandum or
prospectus provided by the Servicer in writing expressly for use therein
regarding the Servicer). The joint and several obligations of AerCo and the
Subsidiaries under this Section 5.05(g) shall be in addition to any liability
that such Persons may otherwise have to the Servicer, its Affiliates or its
Representatives and shall not be limited or reduced with respect to the
Servicer, its Affiliates or its Representatives by any other rights to
indemnification that may be available to the Servicer, its Affiliates or its
Representatives.
(h) The foregoing provisions of this Section 5.05 relate to the Servicer
solely in its capacity as such and not in any other capacity.
(i) The Servicer agrees to notify AerCo promptly of a proposed Change of
Control of which it has actual knowledge or a proposed Note Transfer and to
cooperate with AerCo in notifying the credit rating agencies then rating the
Notes of such proposed Change of Control or proposed Note Transfer. AerCo
undertakes to notify such rating agencies thereof as promptly as practicable
after receipt of any such notice from the Servicer.
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(j) The Servicer will provide directly to the Standby Servicer such of
the information in its possession from time to time which AerCo is required
under Section 3.03 of the Standby Servicing Agreement to provide to the Standby
Servicer at the times required thereby.
SECTION 5.06. Performance Objectives. The Servicer will perform the
Services in a manner that is intended to be consistent with maximizing the
present value of the cash flows derived from the lease or sale of the Aircraft
over time, subject to the constraints imposed by the Indenture and this
Agreement and by seeking to achieve a balanced and diversified portfolio
(including with respect to lessees, geography and lease expiries), in all cases
taking into account the then- existing and anticipated market conditions
affecting the operating lease of used aircraft and the commercial aviation
industry generally (the "PERFORMANCE OBJECTIVES").
SECTION 5.07. Management. The Servicer warrants that it is not under any
obligation to a third party owner or lessor of aircraft to give preference to
such aircraft in the management or remarketing of such aircraft over any
Aircraft Assets.
SECTION 5.08. Limitations. (a) Notwithstanding any other provision of this
Agreement, the Servicer shall not be obligated either initially or on a
continuing basis to provide any Person within AerCo Group or any of their
respective Representatives any confidential or proprietary information regarding
the Servicer's or any of its Affiliates' business or the business or finances of
any Person, other than any Person within AerCo Group, whose assets it manages
from time to time.
(b) The relationship of the Servicer is an agency relationship and, except
in relation to any money erroneously received by the Servicer into any of the
Servicer's or any of its Affiliates' bank accounts on behalf of any Person
within AerCo Group, which the Servicer will hold in trust for such Person and
deposit into one or more accounts in accordance with the instructions of the
Cash Manager as soon as reasonably practicable, neither the Servicer nor any of
its Affiliates or Representatives shall be under any fiduciary duty or other
implied obligation or duty to any Person within AerCo Group or any holder of any
equity or debt security issued by any Person within AerCo Group, any Lessee or
any other Person arising out of this Agreement.
SECTION 5.09. Location of Performance of Services. The Servicer shall
manage and control the performance of the Services exclusively from within
Ireland. In this regard, the Servicer shall in no event (1) execute any letter
of intent, new lease agreement, amendment to an existing lease or any agreement
in
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respect of a sale of an Aircraft Asset outside Ireland (except pursuant to a
specific power of attorney issued on a case-by-case basis in Ireland), or (2)
make any material Operational Decision outside Ireland. For the purpose of this
Section 5.09, an "OPERATIONAL DECISION" is any decision with respect to (a) a
new lease or an amendment to a lease that concerns (i) lease rental, (ii) lease
term, (iii) the amount of security deposits and maintenance accruals, or (iv)
the terms of delivery and redelivery conditions, or (b) the sale of Aircraft
Assets. The Servicer shall adopt operating guidelines (as adopted from time to
time, the "OPERATING GUIDELINES") to carry out the purpose of this Section 5.09.
The Servicer shall provide a copy of its Operating Guidelines to AerCo for
approval. Nothing in this Section 5.09 shall in any way entitle the Servicer to
make any Operational Decision unless permitted under Section 7.05 hereof.
SECTION 5.10. Prior Servicer Fees. The Servicer shall, promptly following
demand therefor by AerCo, pay, or reimburse AerCo for, all fees payable by AerCo
to ▇▇▇▇▇▇▇ & ▇▇▇▇▇ Limited in connection with termination of the Servicing
Agreement dated as of July 15, 1998 among ▇▇▇▇▇▇▇ & ▇▇▇▇▇ Limited, AerCo and the
Subsidiaries specified therein.
ARTICLE 6
UNDERTAKINGS OF AERCO AND THE SUBSIDIARIES
SECTION 6.01. Cooperation. Each of AerCo and the Subsidiaries shall at all
times reasonably cooperate with the Servicer to enable the Servicer to provide
the Services, including providing the Servicer with all powers of attorney or
other required documentation as may be reasonably necessary or appropriate to
perform the Services.
SECTION 6.02. No Representation with Respect to Third Parties. Each of
AerCo and the Subsidiaries agrees that as between the Servicer in its capacity
as such, on the one hand, and any Person within AerCo Group, on the other hand,
no representation is made as to the financial condition and affairs of any
Lessee of, or purchaser of, any Aircraft Asset or any vendor or supplier
utilized by the Servicer in connection with its performance of the Services.
SECTION 6.03. Related Document Amendments. Each of AerCo and the
Subsidiaries shall not take any action that would increase in any material
respect the scope, nature or level of the Services to be provided under this
Agreement or that would affect the Servicer's rights, obligations or liabilities
(or potential liabilities) under this Agreement or with respect to the Cash
Management Agreement or otherwise, in each case without the Servicer's prior
written consent.
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SECTION 6.04. Other Services. Except as provided in this Agreement
without the prior written consent of the Servicer, AerCo and the Subsidiaries
shall not:
(a) enter into, or cause or permit any Person (other than the Servicer)
to enter into on their behalf, any transaction for the lease or sale of any
Aircraft Asset in respect of which the Servicer is at such time performing
Services; or
(b) employ any Person other than the Servicer to perform any of the
Services.
SECTION 6.05. Ratification. Each of AerCo and the Subsidiaries hereby
ratifies and confirms and agrees to ratify and confirm whatever the Servicer
does in accordance with this Agreement in the exercise of any of the powers or
authorities conferred upon the Servicer under the terms of this Agreement.
SECTION 6.06. Execution, Amendment, Modification or Termination of
Aircraft Assets Related Documents. No later than ten Business Days after the
date that (i) any agreement, instrument or other document becomes an Aircraft
Assets Related Document or (ii) any Aircraft Assets Related Document shall have
been amended, modified or terminated, AerCo shall deliver written notice thereof
to the Servicer together with (A) in the case of any newly executed Aircraft
Assets Related Document, a true and complete copy of such Aircraft Assets
Related Document, a list of all Aircraft Assets to which it relates and a
description, in reasonable detail, of the relevance of such Aircraft Assets
Related Document to such assets or (B) in the case of any amendment,
modification or termination, a true and complete copy of the agreement,
instrument or other document as so amended, modified or terminated; provided
however, that such notice or such document shall not be required to be delivered
if the Servicer was substantially involved in the preparation and execution of
such new, amended, modified or terminated agreement, instrument or other
document. The Servicer shall not be obligated to perform any Services with
respect to or in accordance or connection with any Aircraft Assets Related
Document or any amendment, modification or termination thereof unless and until
AerCo shall have provided it with a copy thereof in accordance with the
foregoing sentence.
SECTION 6.07. AerCo Group Accounts and Cash Arrangements. AerCo shall
promptly notify the Servicer of any new bank or similar account established by
or on behalf of AerCo or any of the Subsidiaries or otherwise relating to the
Aircraft Assets and of any such account relating to any Aircraft Assets that
become Aircraft Assets after the date of this Agreement and the closing of any
such account. No Person within AerCo Group shall modify any arrangement with
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respect to any bank or similar account or the flow of cash in connection with
the Aircraft Assets other than in accordance with the Cash Management Agreement.
SECTION 6.08. Notification of Bankruptcy. If any of AerCo or the
Subsidiaries shall consider taking any action to:
(a) file any petition or application, commence any proceeding, pass any
resolution or convene a meeting with respect to itself or any of its Affiliates
under any Jersey, Irish, United States Federal, State or foreign or
international law relating to the appointment of a trustee in bankruptcy,
liquidator or receiver with respect to any of AerCo or the Subsidiaries or over
the whole or any part of any properties or assets of any of AerCo or the
Subsidiaries or any bankruptcy, reorganization, compromise arrangements or
insolvency of any of AerCo or the Subsidiaries; or
(b) make an assignment for the benefit of its creditors generally;
then AerCo shall notify the Servicer, to the extent practicable, of such
consideration a reasonable period of time prior to taking any such action, but
in any event, prior to taking any such action (it being understood that the
foregoing notice requirement shall not be construed to prohibit or restrain the
taking of any action described in (a) or (b) above). If any of AerCo or the
Subsidiaries becomes aware of the intent or action of any Person (whether a
creditor or member of any of AerCo or the Subsidiaries) to appoint a trustee in
bankruptcy, liquidator or receiver, AerCo shall promptly notify the Servicer.
SECTION 6.09. Further Assurances. Each of AerCo and the Subsidiaries
agrees that at any time and from time to time upon the written request of the
Servicer, that it will execute and deliver such further documents and do such
further acts and things as the Servicer may reasonably request in order to
effect the purposes of this Agreement.
SECTION 6.10. Communications. (a) Upon the occurrence of any change
in the officers, directors or shareholders of any Person within AerCo Group,
AerCo shall provide prompt written notice thereof to the Servicer.
(b) Each of AerCo and each other Person within AerCo Group shall, and
shall cause the Administrative Agent and the Cash Manager to, forward promptly
to the Servicer a copy (or, if such communication is oral, notify the Servicer
by prompt written notice) of any communication received from any Person which
relates to the Services to be provided with respect to any Aircraft Asset.
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ARTICLE 7
AERCO GROUP RESPONSIBILITY; BUDGETS
SECTION 7.01. AerCo Group Responsibility. Notwithstanding the
appointment of the Servicer to perform the Services and the related delegation
of authority and responsibility to the Servicer pursuant to this Agreement, each
of AerCo and the Subsidiaries shall remain responsible for all matters related
to its business, operations, assets and liabilities.
SECTION 7.02. Instructions by AerCo Group. If AerCo, by Special Board
Resolution, determines that an action being taken by the Servicer under this
Agreement is not in the best interests of AerCo Group, then AerCo shall deliver
written notice to the Servicer directing the Servicer to limit or terminate such
action or to take other action authorized or contemplated by this Agreement
(including leases, sales or disposals of any Aircraft Asset) or the applicable
Lease which is described in reasonable detail in such notice and, upon receipt
of such written notice, the Servicer shall comply with the terms thereof.
SECTION 7.03. Request for Authority. (a) Subject to Section 7.03(b), if
the Servicer wishes to take or approve any action which it is not expressly
authorized under this Agreement to take or approve, it shall request authority
from AerCo to take or approve the action. The Servicer's request for authority
shall be in writing, and shall include a reasonably detailed explanation of the
reason for the request. If on or prior to the earlier of (i) the last day for a
response by AerCo as specified by the Servicer in its request (being not less
than 5 Business Days after the request) or (ii) the day following the next
meeting of the Directors following the request, AerCo does not expressly refuse
such request and no Referral Notice has issued in respect of it, the Servicer
shall be deemed to be authorized in writing to take or to approve such action on
behalf of AerCo Group following notification in writing to AerCo of the
Servicer's intention to proceed in accordance with its request. For the
avoidance of doubt, this Section 7.03 does not permit the Servicer to take or
approve any action which it is expressly required not to take or approve under
this Agreement.
(b) If the Servicer reasonably determines that an action to protect the
interests of AerCo Group is required before the expiration of the relevant time
period specified in Section 7.03(a), then the Servicer shall notify the
Directors of such determination and, unless otherwise directed by the Directors
and provided no Referral Notice has issued, the action proposed may be deemed to
be authorized in writing on behalf of AerCo Group following notification in
writing to AerCo of the Servicer's intention to proceed in accordance with its
request.
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(c) In relation to each payment required to be made in relation to an
Aircraft Asset and not authorized under any other provision of this Agreement,
the Servicer will submit a certificate to the Administrative Agent with a copy
to the Directors giving reasonable details and confirming that any required
authorization for such payment pursuant to this Agreement has been obtained.
(d) In relation to any proposal, or proposed action, compromise,
restructuring or incurring of expenses ("SERVICER PROPOSAL") which is referred
or notified to AerCo by the Servicer under Section 7.03(a), 7.03(b) or 7.04(h)
of this Agreement, or under Sections 1.01(c)(iv) or 1.05 of Schedule 2.02(a),
any Director may issue a notice (a "REFERRAL NOTICE") requiring the relevant
matter to be determined by the Board of Directors. If a Referral Notice is
issued in relation to a Servicer Proposal, the Servicer Proposal may not be
carried out by the Servicer unless it has been approved by the Board of
Directors.
SECTION 7.04. Operating Budget; Aircraft Asset Expenses Budget. (a) AerCo,
on behalf of AerCo Group, shall adopt with respect to the Initial Periods, each
one Year period (a "ONE YEAR PERIOD") and each three Year period (a "THREE YEAR
PERIOD" and, together with a One Year Period, each a "PERIOD") during the term
of this Agreement, the following projected budgets which are to be prepared by
the Administrative Agent on behalf of AerCo.:
(i) a separate lease operating budget with respect to the Aircraft
Assets distinguishing between cash and non-cash items (an "OPERATING
BUDGET"); and
(ii) a separate budget with respect to Aircraft Asset Expenses
related to the Aircraft Assets distinguishing between cash and non-cash
items (an "ASSET EXPENSES BUDGET").
(b) The initial Operating Budget for the period from the Closing Date
through March 31, 2001 (the "ONE YEAR INITIAL PERIOD") and through March 31,
2003 (the "THREE YEAR INITIAL PERIOD" and, together with the One Year Initial
Period, the "INITIAL PERIODS"), and the initial Asset Expenses Budget for the
One Year Initial Period and the Three Year Initial Period shall be substantially
in the forms attached hereto as Schedule 7.04(b)(1) and Schedule 7.04(b)(2) (the
"INITIAL APPROVED BUDGETS"). The format for the Operating Budget and Asset
Expenses Budget for future Years may be modified by AerCo with the consent of
the Servicer, which consent shall not be unreasonably withheld.
(c) Operating Budgets and Asset Expenses Budgets for each Period during
the term of this Agreement shall be adopted by AerCo Group in accordance with
Section 7.04(a).
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(d) The Servicer shall use reasonable commercial efforts to manage the
Aircraft Assets in accordance with this Agreement so as to achieve the Initial
Approved Budget and the Approved Budget for any Period; provided that the
Servicer shall have no liability for any Losses that may be imposed on, incurred
by or asserted against any Indemnified Party arising out of a failure by the
Servicer to achieve either the Initial Approved Budgets or the Approved Budget
for any Period.
(e) In respect of each Period during the term of this Agreement after
the Initial Periods, the Administrative Agent shall prepare, and deliver to
AerCo for its consideration no later than 30 days immediately preceding the
commencement of each Year, a proposed Operating Budget and a proposed Asset
Expenses Budget for such Period together with reasonably detailed supporting
information and the assumptions underlying such proposed Operating Budget and
Asset Expenses Budget. The proposed Operating Budget and Asset Expenses Budget
for each Year shall, if approved by AerCo, supercede prior Years' budgets.
(f) In connection with AerCo's consideration of such proposed Operating
Budget and Asset Expenses Budget for each Period, the Servicer shall provide
AerCo and the Administrative Agent, not later than 90 days immediately preceding
the commencement of each Year, information on a monthly basis in a form to be
agreed relating to (i) Aircraft lease rates, (ii) Aircraft downtime, (iii)
direct technical expenditures (including any costs to be capitalized) relating
to the Aircraft Assets, (iv) indirect costs relating to insurance, legal,
consulting and other similar expenses and (v) such other Aircraft Assets
expense-related information (including, in the case of the Asset Expenses Budget
for any One Year Period, an estimate of the Technical Management Expenses to be
incurred during such Period (such estimate, the "TECHNICAL MANAGEMENT EXPENSES
RESERVE AMOUNT")) as may be reasonably required to prepare such budgets, in each
case including the assumptions relating thereto. The Servicer will cooperate in
good faith with the Administrative Agent to answer the Administrative Agent's
inquiries with respect to the above items and other items in connection with
preparation of the Operating Budget and the Asset Expenses Budget. The
Administrative Agent shall prepare such proposed Operating Budget and Asset
Expenses Budget and shall, where reasonable, incorporate, use and rely upon the
information and assumptions provided by the Servicer.
(g) During the 20-day period following its receipt of the Administrative
Agent's proposed Operating Budget and Asset Expenses Budget, AerCo shall consult
with the Servicer in good faith regarding the contents of the final Operating
Budget and Asset Expenses Budget for each applicable One Year Period and Three
Year Period. The Servicer shall have the right to attend and
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make representations at any meetings of the Directors held for the purpose of
considering and approving the final Operating Budget and Asset Expenses Budget
for each applicable One Year Period and Three Year Period. Not later than the 10
days immediately preceding the commencement of each Year, the Board of Directors
shall adopt a final Operating Budget and Asset Expenses Budget for each
applicable One Year Period and Three Year Period which shall, where reasonable,
incorporate, use and rely upon the information and assumptions provided by the
Servicer (the "APPROVED BUDGET").
(h) If at any time the Servicer reasonably believes that the incurrence of
any Aircraft Asset Expense is reasonably likely to result in the actual
aggregate Aircraft Asset Expenses of the same category as such Aircraft Asset
Expense (taking into account all Aircraft Asset Expenses of such category
incurred to date) exceeding 120% of the line item amount included in the then
applicable Approved Budget for such Year for such category of Aircraft Asset
Expenses, the Servicer shall not incur such Aircraft Asset Expense unless 5
Business Days' prior notification to AerCo has been made and AerCo has not
determined that such expense should not be incurred and no Referral Notice has
issued. In connection with the foregoing, the Servicer may request that the
related line item amount included in the then applicable Approved Asset Expenses
Budget be increased to the reasonably anticipated level of Aircraft Asset
Expenses in such category for the balance of the Period.
(i) If, at any time during any Period, AerCo, in its reasonable opinion,
determines that any Changed Circumstance shall have occurred and be continuing,
AerCo may notify the Servicer that such Changed Circumstance has occurred, and
AerCo may modify the Approved Budget in a manner reasonably necessary or
appropriate to reflect such Changed Circumstance, provided that any such
modification shall not become effective unless and until AerCo shall have given
the Servicer at least 15 days prior written notice of such modification,
provided further that during the 15 day period following the effectiveness of
such notice, the Servicer shall have the opportunity to express any objections
it may reasonably have to the proposed modification and AerCo shall negotiate in
good faith with the Servicer to agree on such modification (it being understood
that AerCo shall not be obligated to alter its proposed modification). In
addition, if AerCo notifies the Servicer that a Changed Circumstance has
occurred, then upon the request of AerCo, the Servicer shall develop, in
consultation with AerCo, within the 30 days following such request, an
extraordinary plan (an "EXTRAORDINARY PLAN"). The Servicer shall implement such
Extraordinary Plan.
(j) Notwithstanding the foregoing, the Approved Budgets shall not be
modified in any manner (including pursuant to an Extraordinary Plan) unless: (i)
AerCo Group shall have funds available to satisfy fully any financial obligation
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that may arise from compliance with such modification; (ii) such modification
shall be consistent with, and shall not in any manner reduce, limit or
circumscribe, the delegation to the Servicer pursuant to this Agreement of a
practicable and workable level of autonomy, authority and responsibility with
respect to the performance of the Services; and (iii) such modification shall be
consistent with the express terms of this Agreement and any Aircraft Assets
Related Document then applicable to any of the Aircraft Assets.
SECTION 7.05. Transaction Approval Requirements. (a) Consistent with the
overall business objectives of AerCo Group with respect to the Aircraft Assets,
and with the delegation to the Servicer by AerCo Group of a practicable and
workable level of autonomy, responsibility and authority regarding the
performance of the Services, the Servicer shall not do any of the following
without the express prior written approval of AerCo:
(i) except as required in accordance with the terms of any Lease
existing as of the date hereof, sell (or enter into any agreement to
sell or grant any option for a Lessee or any other party to acquire) or
otherwise dispose of any Aircraft or any engine;
(ii) enter into any new Lease (or any renewal or extension of an
existing Lease) of an Aircraft Asset if such Lease shall not comply with
the covenants of the Indenture (as summarized or set forth in Annex 2
hereto) and any amendments, modifications or supplements thereto or such
other covenants specifically relating to Leases as AerCo shall identify
to the Servicer in writing and provide the Servicer with copies thereof
or with any express direction issued by AerCo as contemplated by this
Agreement;
(iii) terminate any Lease or Leases to any single Lessee or
related Lessees with respect to any Aircraft having an aggregate
depreciated net book value on the books of the relevant Person in AerCo
Group in excess of $100,000,000;
(iv) unless provided for in the then current Approved Budget,
enter into any contract for the modification, maintenance or
refurbishment of any Aircraft (A) if the costs to be incurred thereunder
by AerCo Group exceed the greater of (1) the estimated aggregate cost of
a heavy maintenance "D" check for the airframe and the equivalent for
engines for Aircraft of the type in question and (2) the amount of the
available maintenance reserve or other collateral received and available
under the applicable Lease or (B) if such modification or maintenance
shall be outside the ordinary course of AerCo Group's business;
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(v) enter into on behalf of AerCo or any of the Subsidiaries,
any capital commitment or confirm any order or commitment to acquire, or
acquire on behalf of AerCo Group, Aircraft or engines with any aircraft
or engine manufacturers or other third party;
(vi) issue any guarantee on behalf of, or otherwise pledge the
credit of any Person within, AerCo Group other than guarantees by a
member of AerCo Group of the Lease obligations of another member of
AerCo Group and other than with respect to trade payables in the
ordinary course of AerCo Group's business;
(vii) enter into any agreement for a particular service costing
in excess of $50,000 for such service to be provided in respect of
Aircraft Assets by third parties, the cost of which is to be borne by
AerCo Group, except in each case to the extent that the same is an
Aircraft Asset Expense provided for in the then applicable Approved
Budget;
(viii) on behalf of any Person within AerCo Group enter into,
amend or grant a waiver with respect to any transaction with the
Servicer or any of its Affiliates including without limitation for the
acquisition, sale or lease of any Aircraft Assets from or to, or the
obtaining or provision of services by, any such Person; or
(ix) enter into any agreement or commitment which is
inconsistent with any express direction issued by AerCo as contemplated
by this Agreement.
(b) Any transaction entered into by the Servicer on behalf of any Person
or Persons within AerCo Group (other than with another Person within AerCo
Group) shall be on an arm's length basis and on fair market value terms, unless
otherwise agreed by AerCo or directed by AerCo in accordance with Section 7.02.
(c) The transaction approval requirements (the "TRANSACTION APPROVAL
REQUIREMENTS") set forth in this Section 7.05 may only be amended by mutual
agreement of the parties, and shall not in any event be amended to reduce or
circumscribe the delegation to the Servicer of the level of autonomy, authority
and responsibility contemplated by the Transaction Approval Requirements with
respect to the performance of the Services.
SECTION 7.06. Approved Budgets and Transaction Approval Requirements.
Except as set forth in Section 7.05(a), no transaction entered into by the
Servicer on behalf of any Person within AerCo Group in connection with
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the performance by the Servicer of the Services shall require the approval of
any Person within AerCo Group or their respective Directors or committees
thereof.
SECTION 7.07. Communication with AerCo. (a) The Servicer shall, on a
weekly basis, notify AerCo of any potential leasing opportunities identified by
it and shall comply with any directions which AerCo may issue in respect
thereof.
(b) The Servicer shall arrange to meet with the Board of Directors in
each financial quarter (each such meeting being a "QUARTERLY MEETING") in order
to discuss the weekly, monthly and quarterly reports presented during the
preceding quarter in accordance with Article 8 of Schedule 2.02(a).
(c) At any time, including at or after a Quarterly Meeting, AerCo may
issue such directions as it may see fit and believes to be in the interests of
AerCo Group (provided such directions are not inconsistent with market practice,
the Core Lease Provisions, the provisions of the Indenture and this Agreement),
in relation to the manner in which leasing and other services contemplated by
this Agreement are to be carried out, including without limitation as to the
identity of permitted lessees, targets for rental levels, parameters as to
security to be required from lessees, and terms as to maintenance, modification
and replacement of parts and redelivery condition. The Servicer shall endeavor
to carry out such directions and shall notify AerCo as to whether it has been
possible to carry them out; and, in any event, the Servicer shall not take any
action which is inconsistent with any such directions.
ARTICLE 8
EFFECTIVENESS
SECTION 8.01. Effectiveness. (a) The effectiveness of this Agreement and
all obligations of the parties hereunder with respect to each Aircraft Asset
shall be conditional upon:
(i) the occurrence of the Delivery Date of such Aircraft Asset,
(ii) with respect to AerCo, the Servicer and the entities listed on
Appendix A to this Agreement, the execution hereof by those parties; and
(iii) with respect to any entity which executes and delivers an
Accession Agreement, the execution thereof in acknowledgment and agreement
by AerCo, the Servicer, the Cash Manager and the Administrative Agent. The
original parties hereto and each entity which becomes a party hereto by
executing and delivering such an Accession
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Agreement agree that such Accession Agreement shall be effective without
the need for each other party hereto to execute such Accession Agreement
in acknowledgment and agreement.
(b) With respect to any Aircraft Assets that AerCo Group shall purchase
pursuant to any firm order, order subject to cancellation, option or other
arrangement (including any Aircraft Asset purchased through the acquisition of
stock or other equity interest in a corporation or other entity formed to hold
such Aircraft Asset), the Servicer shall, at the request of AerCo, take such
reasonable commercial actions as the Servicer shall deem reasonably necessary or
appropriate to accept delivery of any such Aircraft Assets on behalf of AerCo
Group, in accordance with the terms of such order, option or other arrangement
(including, without limitation, conducting such pre-delivery inspections as the
Servicer deems reasonably appropriate); provided, however, that the Servicer
shall have no obligation to make any payments to any manufacturer or seller of
such Aircraft Assets.
ARTICLE 9
SERVICING FEES; EXPENSES
SECTION 9.01. Servicing Fees. In consideration of the Servicer's
performance of the Services, AerCo shall pay to the Servicer servicing fees
consisting of the fees set forth in the sections listed below (collectively, the
"SERVICING FEES"):
(a) Section 9.02 (the "RETAINER FEE");
(b) Section 9.03 (the "RENTAL FEE"); and
(c) Section 9.05 (the "BASE SALES FEE").
SECTION 9.02. Retainer Fee. (a) A Retainer Fee of ten basis points per
annum of the Initial Appraised Value of the Aircraft with respect to which the
Delivery Date therefor has occurred will be payable to the Servicer monthly in
arrears in twelve equal installments on or before the Payment Date in the
succeeding month. Ten percent (10%) of such Retainer Fee will relate to the
provision of technical services under Section 1.02 of Schedule 2.02(a) to this
Agreement.
(b) If and when an Aircraft is sold, the Initial Appraised Value of the
Aircraft on which the Retainer Fee is calculated will be reduced by the Initial
Appraised Value of such Aircraft; provided that, solely for purposes of
calculating the Retainer Fee, the Initial Appraised Value shall not be reduced
below $250 million unless and until all of the Aircraft shall have been sold.
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SECTION 9.03. Rental Fee. A Rental Fee shall be payable for each month
during the term of this Agreement by AerCo to the Servicer equal to 1.00% (the
"RENTAL FEE PERCENTAGE") of the aggregate amount of the "RENT" (as defined in
each Lease) actually paid by each Lessee in such month or portion of a month the
related Aircraft (and Additional Aircraft in the event the Servicer has been
appointed to provide the Services to such Additional Aircraft) is owned by AerCo
Group. All payments of the Rental Fee shall be payable in arrears on the Payment
Date immediately preceding the commencement of the second month following each
such month or portion of a month.
SECTION 9.04. [Reserved].
SECTION 9.05. Base Sales Fee. A Base Sales Fee shall be payable by AerCo
to the Servicer at any time during the term of this Agreement on the actual date
of sale of any of the Aircraft in the amount of (i) 1.25% multiplied by (ii) the
Target Sales Price for the sale of any Aircraft, net of transaction expenses,
provided that no Base Sales Fee shall be payable with respect to a sale in
connection with a refinancing, restructuring, reorganization or tax based
financing with respect to AerCo Group or the Aircraft if, after such sales, the
Servicer (i) remains as Servicer of such Aircraft, (ii) continues to receive a
Retainer Fee and a Rental Fee with respect to such Aircraft and (iii) remains
eligible to earn a Base Sales Fee with respect to such Aircraft in the future.
"TARGET SALES PRICE" means, with respect to a sale of any Aircraft, an amount
initially equal to 90% of the Initial Appraised Value of the relevant Aircraft,
such valuations, in accordance with the appraisals of the Aircraft, to be
adjusted annually by AerCo, subject to any restrictions imposed by any indenture
or similar agreement binding AerCo Group. To the extent that the Net Cash
Proceeds from a sale exceed the Target Sales Price, then transaction expenses
shall not be deducted from the Target Sales Price for the purpose of calculating
the Base Sales Fee. "NET CASH PROCEEDS" means the gross cash proceeds of any
sale of Aircraft net of any break funding gains or losses directly associated
with the sale of such Aircraft and transaction costs (including transaction
taxes and Servicer's out-of-pocket expenses) and brokerage commissions.
SECTION 9.06. Expenses. (a) The Servicer shall be responsible for, and
shall not be entitled to reimbursement for, the Servicer's overhead expenses
("OVERHEAD EXPENSES") which shall include, without limitation:
(i) salary, bonuses and benefits of the Servicer's employees;
(ii) travel and entertainment expenses of the Servicer's
employees;
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(iii) office, office equipment and rental expenses other than
those incurred by third-party independent advisors hired in relation to
the Aircraft;
(iv) telecommunications expenses;
(v) advertising and promotional expenses;
(vi) legal fees and costs, other than those relating to (A)
local law, jurisdictional and tax issues, (B) the provision of legal
opinions, (C) enforcement actions, (D) litigation or (E) other matters
outside the ordinary course of business, but including, for the
avoidance of doubt, the costs associated with providing the legal
services set out in Section 7.01(a) of Schedule 2.02(a);
(vii) taxes on the income, receipts, profits, gains, net worth
or franchise of the Servicer and payroll, employment and social security
taxes for employees of the Servicer;
(viii) costs of negotiating and managing the insurance
arrangements for each Aircraft Asset under the Leases, in connection
with sales of Aircraft Assets or otherwise, including all insurance
renewals; and
(ix) costs in respect of technical management services provided
with respect to any Aircraft Assets as set forth in Section 1.02 of
Schedule 2.02(a) (other than any such costs described in clause (b)(i)
below).
(b) AerCo Group shall be responsible for all costs and expenses relating
to or associated with the Aircraft Assets other than Overhead Expenses
("AIRCRAFT ASSET EXPENSES") which shall include, without limitation:
(i) storage, maintenance, fees and expenses in connection with
non-ordinary course technical management services, repossession (whether
or not successful) and repair expenses (all the foregoing fees and
expenses, "TECHNICAL MANAGEMENT EXPENSES") and reconfiguration and
refurbishment expenses related to Aircraft Assets, including, in each
case, any expenses incurred by the Servicer relating to compliance with
airworthiness directives and service bulletins, which includes the fees
and expenses of independent technicians and other experts (in each case as
approved by the Administrative Agent on behalf of AerCo, except in the
case of any Technical Management Expenses to the extent that the aggregate
amount of such expenses incurred during the applicable One Year Period
does not exceed the Technical Management Expenses
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Reserve Amount for such One Year Period) retained for any of the
foregoing purposes;
(ii) insurance expenses related to Aircraft Assets, including
all fees and expenses of insurance advisors and brokers;
(iii) fees and expenses of third-party independent advisors hired
in relation to the Aircraft and approved by the Administrative Agent on
behalf of AerCo;
(iv) outside legal counsel fees and expenses and other
professional expenses related to the Aircraft Assets in connection with
the provision of advice on local law, jurisdictional and tax issues, the
provision of legal opinions, enforcement actions, litigation and other
matters outside the ordinary course of business; and
(v) third-party fees and expenses incurred in connection with
the negotiation and execution of this Agreement and any amendments
thereto, the preparation of the Offering Memorandum, any Notes Offering,
any financing, restructuring or re-financing efforts, any SEC-registered
public offering and any disclosure in public filings.
(c) The Servicer shall use commercially reasonable efforts to ensure
that Aircraft Asset Expenses shall be paid directly by the Person within AerCo
Group that owns the relevant Aircraft Assets. In the event that AerCo does not
approve the payment of any Aircraft Asset Expense, the Servicer shall be
entitled to make such payment on behalf of AerCo Group and to the extent the
Servicer does so, the funds so advanced ("REIMBURSABLE EXPENSES") shall be
repaid by AerCo to the Servicer in accordance with paragraph (b) of this Section
9.06, provided that:
(i) the Servicer believes that failure to make such payment is
reasonably likely to prejudice or otherwise adversely affect the Servicer
or its Affiliates' business relationship with the relevant payee;
(ii) the relevant Aircraft Asset Expense (when added to all the
Aircraft Asset Expenses of the same category incurred to date during such
Year) shall not exceed 120% of the line item amount in the applicable
Approved Asset Expenses Budget for such Year or the Asset Expense shall
otherwise have been approved by AerCo; and
(iii) the Servicer shall have contracted for or otherwise committed
for such Aircraft Asset Expense prior to such time.
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(d) Reimbursable Expenses shall be payable by AerCo to the Servicer
reasonably promptly following the payment of such Reimbursable Expenses by the
Servicer.
ARTICLE 10
TERM; TERMINATION; SURVIVAL
SECTION 10.01. Term. This Agreement shall have a term commencing on the
Closing Date and expiring on the date of payment in full of all amounts
outstanding to be paid on the Notes (including the Class D Notes and the Class E
Notes) and any other securities issued by AerCo as relating to Additional
Aircraft owned by AerCo Group. During such term, this Agreement shall not be
terminable by either party except as expressly provided in this Article 10.
SECTION 10.02. Right to Terminate. (a) At any time during the term of
this Agreement, AerCo and the Subsidiaries by a Special Board Resolution shall
in accordance with this Section 10.02(a) be entitled to terminate this Agreement
with respect to one or more of the Aircraft Assets if:
(i) the Servicer shall materially breach any of its obligations
under this Agreement (including, but not limited to, a breach of its
obligation not to execute lease documents or make other operational
decisions outside Ireland or any other material breach of the Operating
Guidelines, as set out in Section 5.09 of this Agreement) and, after
written notice from AerCo, the Servicer has failed to cure such breach
pursuant to Section 10.02(e); or
(ii) the Servicer ceases, or the Servicer gives notice that it
intends to cease, to be actively involved in the aircraft advisory and
management business; or
(iii) all of the public or private debt securities of AerCo are
repaid, refinanced or defeased in full in accordance with the terms of
any indenture or similar agreement binding AerCo; or
(iv) a Change of Control of the Servicer has occurred or may
occur and as a result thereof a Change of Control Rating Decline occurs.
A "CHANGE OF CONTROL" will be deemed to have occurred at such time as
either (A) any Person or any Persons acting together that would
constitute a "group" (a "GROUP") for purposes of Section 13(d) of the
Securities Exchange Act of 1934, or any successor provision thereto,
together with any Affiliates or Related Persons thereof, shall
beneficially own (within the meaning of Rule 13d-3 under the Securities
Exchange Act of 1934, or any successor provision thereto) at least 50%
of the aggregate voting
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power of all classes of voting stock of the Servicer; or (B) any Person
or Group, together with any Affiliates or Related Persons thereof, shall
succeed in having a sufficient number of its nominees elected to the
Board of Directors of the Servicer such that such nominees, when added
to any existing director remaining on the Board of Directors of the
Servicer after such election who was a nominee of or is an Affiliate or
Related Person of such Person or Group, will constitute a majority of
the Board of Directors of the Servicer; provided that any event
described in clause (A) or (B) above will not constitute a "CHANGE OF
CONTROL" where the relevant Person or Group, together with any relevant
Affiliates or Related Persons, consists exclusively of the Servicer, any
Affiliate or any Person who is an officer, director, shareholder,
employee or partner of the Servicer or any Affiliate (or an entity
controlled by any of the foregoing) as of the date of this Agreement. A
"RELATED PERSON" of any Person means any other Person directly or
indirectly owning (A) 5% or more of the outstanding common stock of such
Person, (or, in the case of a Person that is not a corporation, 5% or
more of the equity interest in such Person) or (B) 5% or more of the
combined voting power of the voting stock of such Person. A "CHANGE OF
CONTROL RATING DECLINE" will be deemed to have occurred if, at any time
between (a) the date of public notice of a Change of Control or of the
intention of the Servicer or of any Person to effect a Change of Control
and (b) 90 days after the occurrence of the Change in Control (which
period shall in either event be extended so long as the rating of any of
the Notes (other than the Class E Notes) is under publicly announced
consideration for possible downgrade by a credit rating agency), any
credit rating agency which then rates the Notes notifies or confirms to
AerCo that it intends to decrease, is decreasing or has decreased the
rating of any of the Notes (other than the Class E Notes);
(v) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed in a court of competent jurisdiction
seeking relief in respect of the Servicer or in respect of a substantial
part of the property or assets of the Servicer, under Title 11 of the
United States Code, as now constituted or hereafter amended, or any
other U.S. Federal or state or foreign bankruptcy, insolvency,
receivership or similar law, and such proceeding or petition shall
continue undismissed for 100 days or an order or decree approving or
ordering any of the foregoing shall be entered or the Servicer shall go
into liquidation, suffer a receiver or mortgagee to take possession of
all or substantially all of its assets or have an examiner appointed
over it or if a petition or proceeding is presented for any of the
foregoing and not discharged within 100 days; or the Servicer shall (A)
voluntarily commence any proceeding or file any petition seeking relief
under Title 11 of the United States Code, as now constituted or
hereafter
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amended, or any other U.S. Federal or state or foreign bankruptcy,
insolvency, receivership or similar law, (B) consent to the institution
of, or fail to contest the filing of, any petition described in clause
(A) above, (C) file an answer admitting the material allegations of a
petition filed against it in any such proceeding, or (D) make a general
assignment for the benefit of its creditors;
(vi) the Servicer and AerCo shall fail to resolve a conflict as
provided in Section 3.02(d) of this Agreement; or
(vii) AerFi Group transfers, or intends to transfer, more than
50% of the outstanding Class E Notes to a Person who is not an Affiliate
(a "NOTE TRANSFER") and as a result thereof a Note Transfer Rating
Decline occurs. A "NOTE TRANSFER RATING DECLINE" will be deemed to have
occurred if at any time between (a) the date of notice by AerCo to any
rating agency of a Note Transfer, or of the intention of the Servicer or
of any of its Affiliates to effect a Note Transfer, and (b) 90 days
after the occurrence of the Note Transfer (which period shall in either
event be extended so long as the rating of any of the Notes (other than
the Class E Notes) is under publicly announced consideration for
possible downgrade by a credit rating agency), any credit rating agency
which then rates the Notes notifies or confirms to AerCo that it intends
to decrease, is decreasing or has decreased the rating of any of the
Notes (other than the Class E Notes);
(b) Subject to the following conditions, at any time during the term of
this Agreement, AerCo and the Subsidiaries by a Special Board Resolution shall,
in accordance with this Section 10.02(b), be entitled to terminate this
Agreement in respect of any Aircraft to which one or more of the following
conditions apply:
(i) in the case of marketing for re-lease of an Aircraft, such
Aircraft has been off-lease and is reasonably available for re-lease for
more than 180 days after expiry of the agreed lease marketing period; or
(ii) the Servicer fails, within a reasonable period of time (not
to exceed 180 days), to submit to AerCo a bona fide third party offer to
purchase an Aircraft after written direction from AerCo to arrange such
a sale; or
(iii) the Servicer recommends a course of action in respect of
an Aircraft Asset to AerCo which AerCo does not approve and, after
negotiation in good faith, the Servicer refuses to amend, withdraw or
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replace such recommendation with one that is consistent with the
performance of the Services pursuant to this Agreement.
(c) At any time during the term of this Agreement, the Servicer shall in
accordance with this Section 10.02(c) be entitled to terminate this Agreement
if:
(i) AerCo shall fail to pay in full when due (A) any Servicing
Fees within five Business Days after delivery of written notice from the
Servicer of such failure or (B) any other amount payable by any Person
within AerCo Group hereunder or under any other Operative Agreement,
within ten Business Days after delivery of written notice from the
Servicer to AerCo of such failure; or
(ii) any Person within AerCo Group shall fail to perform or
observe or shall violate in any material respect any material term,
covenant, condition or agreement to be performed or observed by it in
respect of this Agreement or any other Operative Document (other than
with respect to the payment obligations of AerCo referred to in clause
(c)(i) of this Section 10.02); or
(iii) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed in a court of competent jurisdiction
seeking relief in respect of AerCo or any Subsidiary or in respect of a
substantial part of the property or assets of AerCo or any Subsidiary
under Title 11 of the United States Code, as now constituted or
hereafter amended, or any other U.S. Federal or state or foreign
bankruptcy, insolvency, receivership or similar law, and such proceeding
or petition shall continue undismissed for 100 days or an order or
decree approving or ordering any of the foregoing shall be entered or
AerCo or any Subsidiary shall go into liquidation, suffer a receiver or
mortgagee to take possession of all or substantially all of its assets
or have an examiner appointed over it or if a petition or proceeding is
presented for any of the foregoing and not discharged within 100 days;
or AerCo or any Subsidiary shall (A) voluntarily commence any proceeding
or file any petition seeking relief under Title 11 of the United States
Code, as now constituted or hereafter amended, or any other U.S. Federal
or state or foreign bankruptcy, insolvency receivership or similar law,
(B) consent to the institution of, or fail to contest the filing of, any
petition described in clause (A) above, (C) file an answer admitting the
material allegations of a petition filed against it in any such
proceeding or (D) make a general assignment of the benefit of its
creditors; or
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(iv) the Servicer or any of its Affiliates becomes obligated to
pay (or indemnify for) Taxes as a result of its provision of the
Services (other than taxes on the income, receipts, profits, gains, net
worth or franchise of the Servicer and payroll, employment and social
security taxes for employees of the Servicer), which Taxes it is unable
to avoid using reasonable commercial efforts, and AerCo fails to
indemnify the Servicer or its Affiliate for such Taxes; or
(v) the Servicer reasonably determines that directions given by
AerCo or any Subsidiary are, or if carried out would be, unlawful under
Applicable Law.
(d) Subject to the first proviso in subsection (e)(i) of this Section
10.02, this Agreement shall terminate in the event of a termination of either
the Cash Management Agreement or the Administrative Agency Agreement.
(e) (i) Either AerCo or the Servicer, as applicable (the "TERMINATING
PARTY") may, at any time during the term of this Agreement, by written notice
("TERMINATION NOTICE") to the other (the "NON TERMINATING PARTY"), set forth its
determination to terminate this Agreement pursuant to this Section 10.02;
provided however, that, this Agreement shall not terminate until and unless the
Standby Servicer shall have been appointed and shall have accepted such
appointment in accordance with Section 10.03(d); provided further that failure
by the Terminating Party to provide such Termination Notice shall not affect
such party's rights under this Section 10.02. Any Termination Notice shall set
forth in reasonable detail the basis for such termination.
(ii) No later than the fifth Business Day following delivery of the
Termination Notice (the "EFFECTIVENESS DATE"), the Non Terminating Party shall
advise the Terminating Party in writing whether the Non Terminating Party (A)
intends to cure the basis for such termination and, if so, the action it intends
to take to effectuate such cure or (B) does not intend to cure the basis for
such termination (it being understood that failure of the Non Terminating Party
to deliver such notice by such day shall be deemed to constitute notice that it
does not intend to cure the basis for termination). In the event that the Non
Terminating Party notifies (or is deemed to have notified) the Terminating Party
that it does not intend to cure the basis for such termination, then this
Agreement shall terminate immediately or on such later date as the Terminating
Party shall have indicated in the Termination Notice. In the event that the Non
Terminating Party notifies the Terminating Party by such fifth day that it
intends to cure the basis for such termination, then the Non Terminating Party
shall (A) have 30 days from the Effectiveness Date to effectuate such cure to
the satisfaction of the Terminating Party or (B) if such cure cannot reasonably
be expected to be effectuated within a 30 day period, (1) demonstrate to the
satisfaction of the Terminating Party that
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substantial progress is being made toward the effectuation of such cure and (2)
effectuate such cure to the reasonable satisfaction of the Terminating Party no
later than the sixtieth day following the Effectiveness Date. Upon the failure
of the Non Terminating Party to effectuate a cure in accordance with the
immediately preceding sentence, this Agreement shall terminate on the later of
(A) the day immediately following the expiration of such 30 or 60 day period, as
the case may be, (B) such later date as shall be indicated in the Termination
Notice or (C) the date as of which the Standby Servicer has been engaged to
perform the Services with respect to the Aircraft and has accepted such
appointment in accordance with the provisions of Section 10.03(d).
SECTION 10.03. Consequences of Termination. (a) Upon the expiration or
termination of this Agreement in accordance with this Article 10, or upon the
removal of the Servicer with respect to the performance of the Services for any
Aircraft, the Servicer will promptly forward to AerCo any notices, reports and
communications received by it from any relevant Lessee within 30 days after
termination or expiration.
(b) AerCo will notify promptly each relevant Lessee and any relevant
third party of the termination or expiration of the Servicer under this
Agreement in relation to any of the Aircraft and will request that all such
notices, reports and communications thereafter be made or given directly to or
as directed by AerCo.
(c) A termination or resignation in relation to any or all Aircraft
shall not affect the respective rights and liabilities of either party accrued
prior to such termination in respect of any prior breaches hereof or otherwise.
(d) (i) Upon the expiration or termination of this Agreement in
accordance with this Article 10, or upon the removal of the Servicer with
respect to the performance of the Services for any Aircraft, the Servicer will
cooperate with the Standby Servicer, including providing all information,
documents and records relating to the Aircraft for a 12 month period following
the termination or expiration.
(ii) This Agreement may not be terminated with respect to the Servicer,
in either case in whole or in part, unless the Standby Servicer has been
appointed and has accepted such appointment; provided that in the event that the
Standby Servicer shall not have been appointed within 90 days after the date on
which this Agreement would otherwise have terminated, or the removal of the
Servicer with respect to the performance of the Services for any Aircraft, the
Servicer may petition any court of competent jurisdiction for the appointment of
a Standby Servicer.
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(e) Upon the termination of this Agreement in accordance with this
Article 10, or upon the removal of the Servicer with respect to the performance
of the Services for any Aircraft, AerCo shall continue to pay the Servicing Fees
and Reimbursable Expenses to the Servicer until the Standby Servicer shall have
been appointed and shall have accepted such appointment in accordance with the
provisions of Section 10.03(d).
(f) Upon the termination of this Agreement in accordance with this
Article 10, or upon the removal of the Servicer with respect to the performance
of the Services for any Aircraft, the Servicer shall promptly (but no later than
30 days after the appointment and acceptance of the Standby Servicer) return the
originals (and all copies) within its possession of all applicable Aircraft
Assets Related Documents and other documents related to the Aircraft Assets to
AerCo and shall provide access to other documentation and information relating
to the business of AerCo Group (and, to the extent practicable, copies thereof)
within its possession as is reasonably necessary to the conduct of the services
to be provided by the Standby Servicer.
SECTION 10.04. Survival. Notwithstanding any termination or the
expiration of this Agreement, the obligations of AerCo and the Subsidiaries
under Article 9, Section 10.03, this Section 10.04, Article 11 and Section 13.08
of this Agreement and the Servicer's obligations or limitations on liability
under Sections 3.03, 10.03, this Section 10.04, Article 11 and Section 13.08 and
the limitations on Servicer's liability under Sections 2.01(c), 2.02, 3.03,
3.04, 5.05, 5.08, 7.04(d), 13.10 and Schedule 2.02(a) shall survive such
termination or expiration, as the case may be.
ARTICLE 11
INDEMNIFICATION
SECTION 11.01. Indemnity. (a) Notwithstanding anything to the contrary set
forth herein or in any other Operative Agreement, AerCo and the Subsidiaries do
hereby jointly and severally assume liability for, and do hereby jointly and
severally agree to indemnify, reimburse and hold harmless on an After-Tax Basis,
the Servicer, its Affiliates and the Servicer Representatives from any and all
Losses that may be imposed on, incurred by or asserted against any such Person,
directly or indirectly, arising out of, in connection with or related to (i) the
Servicer's performance under this Agreement, errors in judgment or omissions by
the Servicer under this Agreement or any action which the Servicer is requested
to take or requested to refrain from taking by AerCo, or as contemplated by this
Agreement, by the Cash Manager or the Administrative Agent; provided that the
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indemnity pursuant to this clause (i) shall not extend to (A) any Loss which is
finally adjudicated to have been caused directly by the negligence,
recklessness, fraud or wilful misconduct of the Servicer or any Servicer
Representatives in respect of its obligations to apply the Standard of Care or
the Conflicts Standard in respect of the performance of the Services or (B) any
other Loss for which the Servicer has agreed to indemnify AerCo and its
Affiliates pursuant to this Agreement or (ii) any of the circumstances described
in clauses (iii) - (vi) of Section 3.03(a).
(b) Any person who may seek indemnification pursuant to Section 3.03 or
Section 11.01(a), (such person the "INDEMNIFIED PARTY") agrees to give the
person against whom such indemnity may be sought (the "INDEMNIFYING PARTY")
prompt notice of any action, claim, demand, discovery of fact, proceeding or
suit for which the Indemnified Party intends to assert a right to
indemnification under this Agreement; provided, however, that failure to give
such notification shall not affect the Indemnified Party's entitlement to
indemnification under this Section 11.01 unless and only to the extent such
failure results in actual irreparable prejudice to the Indemnifying Party.
SECTION 11.02. Procedures for Defense of Claims. (a) If a Third Party
Claim is made against the Indemnified Party, the Indemnified Party shall
promptly notify the Indemnifying Party in writing of such claim (which notice
shall include all relevant information reasonably necessary for the Indemnifying
Party to understand such claim which is in the possession or under the control
of, or can be obtained by, the Indemnified Party at the time of such notice,
subject to Applicable Laws and confidentiality obligations), and the Indemnified
Party or the Indemnifying Party (as agreed between them) will undertake the
defense thereof. The failure to notify the Indemnifying Party promptly shall not
relieve the Indemnifying Party of its obligations under Section 3.03 or Section
11.01(a) unless such failure results in actual prejudice to the Indemnifying
Party.
(b) If agreed and accepted by the Indemnified Party, the Indemnifying
Party shall within 30 days, undertake the conduct and control, through counsel
of its own choosing (subject to the consent of the Indemnified Party, such
consent not to be unreasonably withheld or delayed) and at the Indemnifying
Party's sole risk and expense, the good faith settlement or defense of such
claim, and the Indemnified Party shall cooperate fully with the Indemnifying
Party in connection therewith; provided that (i) at all times the Indemnified
Party shall be entitled to participate in such settlement or defense through
counsel chosen by it, and the fees and expenses of such counsel shall be borne
by the Indemnified Party, and (ii) the Indemnifying Party shall not be entitled
to settle such claims unless it shall have confirmed in writing the obligation
of the Indemnifying Party to indemnify the Indemnified Party for the liability
asserted in such claim.
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(c) So long as the Indemnifying Party is reasonably contesting any such
claim in good faith, the Indemnified Party shall fully cooperate with the
Indemnifying Party in the defense of such claim as is reasonably required by the
Indemnifying Party. Such cooperation shall include the retention and the
provision of records and information which are reasonably relevant to such Third
Party Claim and the availability on a mutually convenient basis of directors,
officers and employees to provide additional information. The Indemnified Party
shall not settle or compromise any claim without the written consent of the
Indemnifying Party unless the Indemnified Party agrees in writing to forego any
and all claims for indemnification from the Indemnifying Party with respect to
such claims.
(d) If, within ten days after notice of any such claim, the Indemnified
Party and the Indemnifying Party are unable to agree on which of them will
defend such Third Party Claim, the Indemnified Party will have the right to
undertake the defense, compromise or settlement of such claim.
SECTION 11.03. Reimbursement of Costs. The costs and expenses, including
fees and disbursements of counsel (except as provided in Section 11.02(b)(i))
and expenses of investigation, incurred by the Indemnified Party in connection
with any Third Party Claim, shall be reimbursed on a quarterly basis by the
Indemnifying Party upon the submission of evidence reasonably satisfactory to
the Indemnifying Party that such expenses have been incurred, without prejudice
to the Indemnifying Party's right to contest the Indemnified Party's right to
indemnification and subject to refund in the event that the Indemnifying Party
is ultimately held not to be obligated to indemnify the Indemnified Party.
ARTICLE 12
ASSIGNMENT AND DELEGATION
SECTION 12.01. Assignment and Delegation. (a) No party to this Agreement
shall assign or delegate this Agreement or all or any part of its rights or
obligations hereunder to any Person without the prior written consent of each of
the other parties hereto; provided however that (i) the Servicer may delegate
any portion of its obligations to any company which is, and for so long as it
is, a subsidiary of AerFi Group plc and (ii) the foregoing provisions on
assignment and delegation shall not limit the ability of the Servicer to
contract with any Person, including any of its Affiliates, for services in
respect of Aircraft Assets. Any assignment or delegation pursuant to this
Section 12.01(a) shall not require any
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approval pursuant to Section 7.05 as long as such assignment or delegation is at
the cost of the Servicer.
(b) Without limiting the foregoing, any Person who shall become a
successor by assignment or otherwise of any of AerCo, the Subsidiaries or the
Servicer (or any of their respective successors) in accordance with this Section
12.01 shall be required as a condition to the effectiveness of any such
assignment or other arrangement to become a party to this Agreement.
ARTICLE 13
MISCELLANEOUS
SECTION 13.01. Notices. All notices, requests and other communications
to any party hereunder shall be in writing (including facsimile transmission)
and shall be given,
If to the Servicer, to:
AerFi Group plc
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇
Attention: Company Secretary
Telephone: ▇▇▇-▇▇-▇▇▇▇▇▇
Facsimile: ▇▇▇-▇▇-▇▇▇▇▇▇
If to AerCo and the other AerCo Group Members, to:
AerCo Limited
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇
Channel Islands
Attention: Mourant & Co. Secretaries Limited, Company Secretary
Facsimile: 44-1534-609-333
with a copy to:
AerFi Administrative Services Limited
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇
▇▇
▇▇
▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇
Attention: Company Secretary
Copy: General Counsel
Facsimile: 353-61-360-503
and
▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇
Facsimile: ▇▇-▇▇▇-▇▇▇-▇▇▇▇
All such notices, requests and other communications shall be deemed
received on the date of receipt by the recipient thereof if received prior to 5
p.m. in the place of receipt and such day is a business day in the place of
receipt. Otherwise, any such notice, request or communication shall be deemed
not to have been received until the next succeeding business day in the place of
receipt.
SECTION 13.02. Governing Law. This Agreement shall be governed by
and construed in accordance with the law of the State of New York.
SECTION 13.03. Jurisdiction. Except as otherwise expressly provided in
this Agreement, the parties hereto agree that any suit, action or proceeding
seeking to enforce any provision of, or based on any matter arising out of or in
connection with, this Agreement or the transactions contemplated hereby may be
brought in the United States District Court for the Southern District of New
York or any other New York State court sitting in New York City, and each of the
parties hereby consents to the jurisdiction of such courts (and of the
appropriate appellate courts therefrom) in any such suit, action or proceeding
and irrevocably waives, to the fullest extent permitted by law, any objection
which it may now or hereafter have to the laying of the venue of any such suit,
action or proceeding in any such court or that any such suit, action or
proceeding which is brought in any such court has been brought in an
inconvenient forum. Process in any such suit, action or proceeding may be served
on any party anywhere in the world, whether within or without the jurisdiction
of any such court. Without limiting the foregoing, each party agrees that
service of process on such party as provided in Section 13.01 shall be deemed
effective service of process on such party.
SECTION 13.04. Waiver of Jury Trial. EACH OF THE PARTIES HERETO
HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR
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RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 13.05. Counterparts; Third Party Beneficiaries. This Agreement
may be signed in any number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement shall become effective when each party hereto shall
have received a counterpart hereof signed by the other party hereto. No
provision of this Agreement is intended to confer upon any Person other than the
parties hereto any rights or remedies hereunder.
SECTION 13.06. Entire Agreement. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter of this
Agreement and supersedes all prior agreements and understandings, both oral and
written, between the parties with respect to the subject matter of this
Agreement.
SECTION 13.07. Power of Attorney. Each of AerCo and the Subsidiaries
shall appoint the Servicer and its successors, and its permitted designees and
assigns, as their true and lawful attorney-in-fact. All services to be performed
by the Servicer pursuant to this Agreement shall be performed on behalf of AerCo
and any relevant Subsidiaries. The Servicer shall be entitled to seek and obtain
from each of AerCo and the Subsidiaries a power of attorney or such other
appropriate documentation in respect of the execution of any specific action as
the Servicer deems appropriate.
SECTION 13.08. Restrictions on Disclosure. The Servicer agrees that it
shall not, prior to the termination or expiration of this Agreement or within
the three years after such termination or expiration, disclose to any Person any
confidential or proprietary information, whether of a technical, financial,
commercial or other nature, received directly or indirectly from any Person
within AerCo Group regarding AerCo Group's business or the Aircraft Assets or
the Leases, except as authorized in writing by AerCo, and except:
(a) To Representatives of the Servicer and any of its Affiliates in
furtherance of the purpose of this Agreement;
(b) To the extent required by Applicable Law or by judicial or
administrative process, but in the event of proposed disclosure, the Servicer
shall seek the assistance of AerCo to protect information in which AerCo has an
interest to the maximum extent achievable;
(c) To the extent that the information: (i) was generally available in the
public domain; (ii) was, to the Servicer's knowledge, lawfully obtained from a
52
58
source under no obligation of confidentiality, directly or indirectly, to any
Person within AerCo Group; (iii) was disclosed to the general public with the
approval of any Person within AerCo Group; or (iv) was developed independently
by the Servicer or any of the Servicer's Affiliates; and
(d) To the extent the Servicer deems necessary to protect and enforce its
rights and remedies under this Agreement.
SECTION 13.09. Rights of Setoff. To the extent permitted by Applicable
Law, the Servicer hereby waives any right it may have under Applicable Law to
exercise any rights of setoff it has under Applicable Law with respect to any
assets it holds owned by, or money or monies it owes to, any Person within AerCo
Group pursuant to and in accordance with the terms and conditions of this
Agreement; provided however that this Section 13.09 shall not affect any rights
of setoff or other rights that the Servicer has or may have under the express
terms and conditions of this Agreement.
SECTION 13.10. Reliance. The Servicer shall be entitled to rely on the
provisions of this Agreement, including Schedule 2.02(a), any Approved Budget,
any direction of, or certification by, AerCo or the Directors (or any duly
appointed committee thereof) or the Administrative Agent or the Cash Manager, to
the extent set forth in Sections 2.01(b) and 2.01(c), respectively, and the
Transaction Approval Requirements in carrying out its obligations hereunder, and
each of AerCo and each other Person within AerCo Group hereby waives any rights
to challenge any action taken by the Servicer that is consistent with the
provisions of this Agreement (including the Standard of Care and the Conflict
Standard) including Schedule 2.02(a), any Approved Budget, any such direction or
certification or the Transaction Approval Requirements or which has been
approved by the Directors of AerCo or a Subsidiary or a duly appointed committee
thereof, the Administrative Agent or the Cash Manager.
SECTION 13.11. Limited Recourse. (a) In the event that the assets of AerCo
are insufficient, after payment of all other claims, if any, ranking in priority
to the claims of the Servicer hereunder, to pay in full such claims of the
Servicer, then the Servicer shall have no further claim against AerCo in respect
of any such unpaid amounts.
(b) 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 statue 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
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59
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.
(c) The Servicer hereby agrees that it shall not, until the
expiry of one year and one day after the payment of all sums outstanding and
owing under the latest maturing Note then rated, take any corporate action or
other steps or legal proceedings for the winding-up, dissolution or
re-organization or for the appointment of a receiver, administrator,
administrative receiver, trustee, liquidator, sequestrator or similar officer of
AerCo or of any or all of AerCo's revenues and assets.
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IN WITNESS WHEREOF, this Agreement has been duly executed on the date
first written above.
AERFI GROUP PLC,
as Servicer
By:
-----------------------------------------
Name:
Title:
AERFI ADMINISTRATIVE
SERVICES LIMITED,
as Administrative Agent
By:
-----------------------------------------
Name:
Title:
AERFI CASH MANAGER II LIMITED,
as Cash Manager
By:
-----------------------------------------
Name:
Title:
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AERCO LIMITED
By:
-----------------------------------------
Name:
Title:
AERCO IRELAND LIMITED
By:
-----------------------------------------
Name:
Title:
AERCO IRELAND II LIMITED
By:
-----------------------------------------
Name:
Title:
AERCOUSA INC.
By:
-----------------------------------------
Name:
Title:
AERFI BELGIUM N.V.
By:
-----------------------------------------
Name:
Title:
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AIRCRAFT LEASE PORTFOLIO
SECURITIZATION 94-1 LIMITED
By:
-----------------------------------------
Name:
Title:
ALPS ▇▇-▇ (▇▇▇▇▇▇▇) N.V.
By:
-----------------------------------------
Name:
Title:
PERGOLA LIMITED
By:
-----------------------------------------
Name:
Title:
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APPENDIX A
SUBSIDIARIES
AerCo Ireland Limited
AerCo Ireland II Limited
AerCoUSA Inc.
AerFi Belgium N.V.
Aircraft Lease Portfolio Securitization 94-1 Limited
ALPS ▇▇-▇ (▇▇▇▇▇▇▇) N.V.
Pergola Limited
▇-▇
▇▇
▇▇▇▇▇▇▇▇ ▇
FORM OF ACCESSION AGREEMENT
[DATE]
We refer to the Servicing Agreement dated as of July 17, 2000, among
AerFi Group plc, AerFi Administrative Services Limited, AerFi Cash Manager II
Limited, AerCo Limited, the entities listed on Appendix A thereto and all other
Subsidiaries which have heretofore signed an Accession Agreement in
substantially the form of this Accession Agreement (the "SERVICING AGREEMENT").
We agree, as of the date of this Accession Agreement, to be considered a
party to the Servicing Agreement for all purposes, as if an original signatory
to the Servicing Agreement, and to be bound by the terms of the Servicing
Agreement.
This Accession Agreement may be signed in any number of counterparts, each
of which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
IN WITNESS WHEREOF, this Accession Agreement has been duly executed on the
date first written above.
[ ]
By:
----------------------------------
Name:
Title:
B-1
65
ACCEPTED AND ACKNOWLEDGED:
AERCO LIMITED
By:
---------------------------------
Name:
Title:
AERFI GROUP PLC,
as Servicer
By:
---------------------------------
Name:
Title:
AERFI ADMINISTRATIVE
SERVICES LIMITED,
as Administrative Agent
By:
---------------------------------
Name:
Title:
AERFI CASH MANAGER II LIMITED,
as Cash Manager
By:
---------------------------------
Name:
Title:
B-2
66
SCHEDULE 2.02(A)
AIRCRAFT ASSETS SERVICES
The provision of the Services set forth in this Schedule 2.02(a) will be
subject in all cases to such approval as may be required or such limitations as
may be imposed pursuant to Sections 2.02, 7.04 and 7.05 of this Agreement and
the provisions of this Schedule 2.02(a) shall be deemed to be so qualified.
Unless otherwise defined herein or in this Agreement, all capitalized
terms used in this Schedule 2.02(a) have the meanings assigned to such terms in
the Indenture.
ARTICLE 1
LEASE SERVICES
SECTION 1.01. Collections and Disbursements. In connection with each
Lease of an Aircraft Asset under which any Person within AerCo Group is the
Lessor, the Servicer will:
(a) Invoice the Lessee or otherwise arrange, as the Servicer deems
reasonably appropriate on behalf of such Person within AerCo Group, for all
payments due from the Lessee, including Rents, Security Deposits, Maintenance
Reserves, late payment charges and any payments in respect of Taxes and other
payments (including technical, engineering, insurance and other charges) due
under the relevant lease, use commercially reasonable efforts to direct the
Lessee, subject to the terms of the Lease, to make such payments to such
accounts as are specified in writing by the Cash Manager and use commercially
reasonable efforts to enforce the payment thereof in the event of a nonpayment
by the relevant due date;
(b) Review from time to time, as deemed necessary by the Servicer, the
level of Rents, Security Deposits, Maintenance Reserves and other amounts that
may be adjusted under the Leases and propose to the relevant Lessee or make such
adjustments to the Rents, Security Deposits, Maintenance Reserves and other
amounts as are required under the terms of the relevant Lease or that the
Servicer otherwise deems reasonably appropriate considering, among other things,
practices that the Servicer believes are prevalent in the operating lease
market, provided that such adjustment is not contrary to any direction issued by
AerCo or to the terms of the Indenture or any other documents notified to the
Servicer with which AerCo Group must comply;
67
(c) Maintain appropriate records regarding payments under the Leases;
(d) Subject to the terms of any applicable Aircraft Asset Related
Document, take such actions as are necessary to apply any payments of any type
received from any Lessee on a basis consistent with the directions of such
Lessee and, to the extent that any such payments are made to an account other
than the account to which such payment should have been directed pursuant to
such Lessee's direction, to take such further actions as are necessary to give
effect to such directions; and
(e) Provide for the safekeeping and recording of any letters of credit,
guarantees or other credit support (other than cash and cash equivalents) held
as part of Security Deposits or Maintenance Reserves and the timely renewal or
drawing on or disbursement thereof as provided under the applicable Lease or
other Aircraft Asset Related Document or otherwise in accordance with Section
1.05 of this Schedule 2.02(a).
SECTION 1.02. Technical Services. The Servicer will perform the following
technical services relating to the management of the technical condition of the
Aircraft Assets and using commercially reasonable efforts to apply the Standard
of Care and the Performance Objectives:
(a) Monitor the performance of maintenance obligations by Lessees under
all Leases relating to the Aircraft by including the Aircraft in the Servicer's
technical audit program (which shall include inspection of each Aircraft at
least every 18 months, attendance at major checks or inspections and maintenance
of a record of written reports generated in connection with such inspections)
consistent with practices employed from time to time by the Servicer and its
Affiliates with respect to their own aircraft and other aircraft which they
manage. The Servicer shall advise AerCo as to the content of such technical
audit program and shall advise AerCo as to any material change to such technical
audit program from time to time;
(b) Determine the air authority approval status of a proposed maintenance
program and proposed maintenance performer under any new Lease of any Aircraft
under which any Person within AerCo Group is the Lessor;
(c) Manage aircraft deliveries and re-deliveries in connection with the
commencement or termination or expiration of a Lease under which any Person
within AerCo Group is the Lessor; and
(i) arrange for the appropriate technical inspection of the
Aircraft Assets and records for the purpose of determining if the re-
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delivery conditions under the Lease have been satisfied and integrated
into the maintenance program of the new lessee;
(ii) maintain a record of all material reports and other written
materials (including any relevant reconciliation statements) received or
generated by the Servicer in connection with such inspection and provide
reasonable access to such reports and written materials to the relevant
Person within AerCo Group;
(iii) on the basis of inspection and available records, determine
whether the Lessee has complied with all required airworthiness
directives and mandatory modifications and establish the status of
compliance with airframe and engine manufacturer service bulletins and
Lessee-originated modifications undertaken, in each case with respect to
the Aircraft Assets and as required by the Lease;
(iv) (A) determine whether the Lessee has satisfied the
re-delivery conditions applicable to the Aircraft Assets specified in
the Lease and negotiate any modifications, repairs, refurbishments,
inspections or overhauls to or compromises of such conditions that the
Servicer deems reasonably necessary or appropriate; provided that the
Servicer keeps AerCo notified of material compromises on a weekly basis
(or as the Board of Directors may otherwise decide) and, if practicable,
notifies AerCo of any specific material compromise (if not previously
notified) prior to entering into any proposal binding on AerCo in
relation thereto and that the Servicer shall comply with any direction
of AerCo in relation thereto and if any Referral Notice is issued in
relation thereto the provisions of Section 7.03(d) shall apply; (B)
determine, in accordance with the Lease, the application of any
available Security Deposits, Maintenance Reserves or other payments
under the Lease; and (C) maintain a record of the satisfaction of such
conditions and recommend whether AerCo should accept redelivery of the
Aircraft Assets; and
(v) determine the need for and procure and monitor the
performance of any maintenance and refurbishment of the Aircraft Assets
upon redelivery, including compliance with applicable airworthiness
directives, service bulletins and other modifications which the Servicer
may deem reasonably necessary or appropriate for the marketing of the
Aircraft;
(d) Consider and, to the extent the Servicer deems reasonably necessary
or appropriate, approve any Lessee-originated modifications to any Aircraft
Assets submitted by any Lessee:
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69
(i) to the extent authorized by the terms of the relevant
Lease; or
(ii) which the Servicer reasonably determines would not result in
a material diminution in value of the Aircraft Assets or the interests
of any Person within AerCo Group; or
(iii) which are approved by AerCo.
(e) Determine the amount (if any) that the relevant Person within AerCo
Group is obliged to contribute pursuant to the provisions of a Lease (taking
into account the amount of Maintenance Reserves available with respect to such
Lease and the receivables position of the related Lessee) to maintenance work
performed, the cost of complying with any modification requirements,
airworthiness directives and similar requirements; and
(f) Arrange and supervise appropriate storage and any required on-going
maintenance of any Aircraft Assets, at the expense of the relevant Person within
AerCo Group, following termination of a Lease for any reason and redelivery of
the Aircraft Asset thereunder and prior to delivery of such Aircraft Assets to a
new lessee or purchaser, on the most economic basis reasonably commercially
available and appropriate under the circumstances.
The Servicer shall generally provide the technical management services
set forth in this Section 1.02 through the use of its own staff and the use of
qualified third parties. Technical management services will be provided at the
Servicer's expense except as specified in Section 9.06(b) of the Servicing
Agreement.
SECTION 1.03. Insurance. (a) The Servicer will provide the following
insurance services:
(i) negotiate the insurance provisions of any proposed lease or
other agreement affecting any of the Aircraft Assets, with such provisions
to include such minimum coverage amounts with respect to hull and
liability insurance as are set forth on Annex 1 to this Agreement, as the
same may be amended from time to time at the direction of AerCo, and such
other terms as AerCo may require from time to time consistent with the
terms reasonably available in the market;
(ii) monitor the performance of the obligations of Lessees relating
to insurance under Leases of any Aircraft Assets and ensuring that
appropriate evidence of insurance exists with respect to any Aircraft
Assets maintenance providers;
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70
(iii) procure a group aviation insurance program covering the
Aircraft Assets (it being understood that any savings resulting from a
group policy covering both Aircraft Assets and Other Assets shall be
shared equitably based on the amount of insurance obtained and premium
paid thereunder with respect to the covered Aircraft Assets, on the one
hand, and the Other Assets, on the other hand), with such minimum
coverage amounts with respect to hull and liability insurance as are set
forth on Annex 1 to this Agreement, as the same may be amended from time
to time at the direction of AerCo;
(iv) procure such political risk insurance for Aircraft Assets
habitually based or registered in those countries listed on Annex 1 to
this Agreement (which list has been established by AerCo and may be
modified from time to time by AerCo) and such other insurance related
thereto from the sources and with such minimum coverage amounts with
respect to hull insurance as are set forth on Annex 1 to this Agreement,
as the same may be amended from time to time at the direction of AerCo,
and such other terms as AerCo may require from time to time consistent
with the terms reasonably available in the market;
(v) review the "Agreed Values" set forth on Annex 1 to this
Agreement by reference to market valuations and advise AerCo as to whether
the insurance levels should be modified;
(vi) if at any time any Aircraft Asset ceases to be insured or any
Person within AerCo Group requires insurance coverage relating to an
Aircraft for any reason, including default by the Lessee or an Aircraft
not being leased upon termination of a Lease, the Servicer will promptly
procure, at the expense of the relevant Person within AerCo Group,
alternative insurance coverage, with such minimum coverage amounts with
respect to hull and liability insurance as are set forth on Annex 1 to
this Agreement, as the same may be amended from time to time at the
direction of AerCo; and
(vii) advise AerCo of any settlement offers received by the
Servicer with respect to any claim of damage or loss in excess of
$1,000,000 with respect to an Aircraft Asset, provide AerCo with copies of
all relevant documentation related thereto and such other additional
information and advice as AerCo may reasonably request and, upon direction
from AerCo that any settlement offer related thereto is acceptable,
prepare the appropriate documentation, including releases and any
indemnities required in connection with such releases, to give effect to
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71
such settlement offer and procure the execution of such documentation by
AerCo (it being understood that settlement offers with respect to any
such claims up to and including $1,000,000 may be settled by the
Servicer independently);
provided however, that in each case where insurance is to be obtained by the
Servicer, such insurance is reasonably available in the relevant insurance
market and the Servicer shall have used reasonable sourcing techniques prior to
obtaining such insurance. The foregoing provisions shall apply to any
arrangements in which Persons other than Lessees have possession of, or
insurance responsibility for, an Aircraft Asset (including in the event that an
Aircraft Asset has been sold pursuant to a mortgage, deferred payment agreement
or any similar arrangement).
(b) The Servicer shall provide to AerCo such periodic reports regarding
insurance matters relating to the Aircraft Assets as AerCo shall reasonably
request.
(c) The Servicer may engage, with the approval of AerCo, and, at AerCo's
expense, one or more insurance advisors to advise on insurance related issues.
The Servicer shall be entitled to rely reasonably on actions taken by or
recommendations of any such advisor, subject to the terms of the relevant Lease.
Any such insurance advisor may also act in the same or similar capacities for
the Servicer or its Affiliates.
SECTION 1.04. Administration. The Servicer shall administer each Lease
in accordance with its terms and as otherwise specifically addressed herein.
SECTION 1.05. Enforcement. The Servicer shall take commercially reasonable
steps to enforce the obligations to the relevant Person within AerCo Group of
the Lessee and any other parties under each Lease and under any ancillary
agreements thereto delivered by AerCo to the Servicer (including any guarantees
of the obligations of the Lessee). Following any default by a Lessee under the
applicable Lease, the Servicer will take all steps as it deems reasonably
necessary or appropriate to preserve and enforce the rights of the relevant
Person within AerCo Group under the applicable Lease, including entering into
negotiations with such Lessee with respect to the restructuring of such Lease
(provided that the Servicer keeps AerCo notified of material proposed
restructurings on a weekly basis (or as the Board of Directors may otherwise
decide) and, if practicable, notifies AerCo of any specific material proposed
restructuring (if not previously notified) prior to entering into any proposal
binding on AerCo in relation thereto and that the Servicer shall comply with any
direction of AerCo in relation thereto and if any Referral Notice is issued in
relation thereto the provisions of Section 7.03(d) shall apply) or declaration
of an
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event of default under the applicable Lease, providing for the drawing on or
making disbursement of any Security Deposits, Maintenance Reserves or any
letters of credit, guarantees or other credit support thereunder, voluntary or
involuntary termination of the Lease and repossession of the Aircraft Asset that
is the subject of the Lease, and pursuing such legal action with respect thereto
as the Servicer deems reasonably necessary or appropriate.
SECTION 1.06. Lease Modifications. (a) The Servicer shall be authorized
to make such amendments and modifications to any Lease as it shall deem
reasonably necessary or appropriate; provided however, that such amendment or
modification shall require the approval of AerCo pursuant to Section 7.05 of
this Agreement if the provisions of such amendment or modification, were they to
be included in a new Lease to be entered into after the date hereof, would, on
their own, cause the entering into of such new Lease to require the approval of
AerCo pursuant to Section 7.05(a) of this Agreement. Such amendments or
modifications may be made without regard to whether there is a default by the
Lessee or other party under or with respect to any such Lease.
(b) The Servicer may waive, in its absolute discretion, overdue interest
due from any Lessee under any Lease on any default in payment of rent,
Maintenance Reserves or other amount thereunder if any such default is cured
within seven days of the date on which such payment was due.
SECTION 1.07. Options and Other Rights. The Servicer shall be
authorized to take such action as it shall deem reasonably necessary or
appropriate with respect to:
(a) The exercise by any Lessee or other party of any option or right
affecting the applicable Aircraft Asset or the applicable Lease, consistent with
the terms of any such option or right; and
(b) The exercise on behalf of any Person within AerCo Group of any right
or option that such Person may have with respect to any of the Aircraft Assets
or the Leases, but subject to any directions in that respect which may
previously have been issued by AerCo.
SECTION 1.08. Lessee Solicitations. Upon AerCo's request, with respect
to the Aircraft Assets, the Servicer shall provide assistance to the relevant
Persons within AerCo Group with respect to:
(a) Obtaining Lessee consents, novations, assignments, amendments and
related documentation (including insurance certificates, title transfer
documents and legal opinions); and
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(b) The issue (or reissue) or amendment of letters of credit, guarantees
and related documentation (the documents referred to in clauses (a) and (b)
above are, collectively, the "LESSEE DOCUMENTATION");
SECTION 1.09. Tax Based Financings. The Servicer will cooperate with AerCo
and its advisors to structure any tax based financings, including assisting with
lessee solicitations in accordance with Section 1.08 to this Schedule 2.02(a),
if so requested by AerCo.
ARTICLE 2
COMPLIANCE WITH COVENANTS
SECTION 2.01. Compliance Generally. (a) The Servicer shall take such
actions as it shall deem reasonably necessary or appropriate to keep AerCo in
compliance with its obligations and covenants under any indenture or similar
agreements binding it from time to time (including the Indenture) solely to the
extent that such obligations and covenants specifically relate to the status,
insurance, maintenance or operation of the relevant Aircraft Assets excluding,
in any case, (i) any reporting obligations in respect of any of the foregoing
and (ii) any rental or other payment or monetary obligations under such. AerCo
shall provide to the Servicer any instructions the Servicer may require in the
interpretation of the Indenture, on which instructions the Servicer shall be
entitled to rely in all respects.
(b) Nothing in this Schedule 2.02(a) or elsewhere in the Servicing
Agreement shall be deemed to constitute or be construed as (i) a delegation or
other transfer to, or an assumption by, the Servicer or any of its Affiliates of
any obligations of any Person within AerCo Group to make any payment to any
Lessee or other Person, or to comply with any other monetary obligation, under
any Lease or (ii) a transfer to the Servicer or any of its Affiliates of any
right, title and interest in any Lease or related agreement or any Aircraft
Asset covered thereby.
SECTION 2.02. Certain Matters Relating to Concentration Thresholds. (a)
The Servicer shall comply with any covenants specifically relating to
limitations on Lessee concentration set forth in the Indenture ("CONCENTRATION
THRESHOLDS") to the extent commercially reasonable. If compliance is not
commercially reasonable, the Servicer shall promptly inform AerCo of any
proposed transaction that it reasonably determines may result in such
Concentration Thresholds being exceeded, and AerCo shall promptly provide to
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the Servicer any information that the Servicer may reasonably require in
connection with such Concentration Thresholds in order to comply with the
provisions of this Section 2.02. The Servicer shall not enter into any such
transaction other than pursuant to the terms of Section 2.02(c) below.
(b) AerCo and each Person within AerCo Group hereby, jointly and
severally, represent and warrant to the Servicer that set forth in Annex 2 to
this Schedule 2.02(a) are summaries of the Concentration Thresholds (including,
following each provision summarised in such Annex, the relevant section
references for each such provision from the Indenture) presently imposed under
the Indenture, which Concentration Thresholds (together with the definitions for
any capitalised terms used therein) are set forth in a full copy of the
Indenture delivered by AerCo to the Servicer, certified by AerCo as a true and
complete copy thereof (and AerCo shall promptly provide the Servicer with all
amendments, supplements and waivers thereto, so certified) and AerCo shall
provide to the Servicer any instructions the Servicer may require in the
interpretation of such Concentration Thresholds, on which instructions the
Servicer shall be entitled to rely in all respects.
(c) The Servicer shall not enter into any transaction with respect to
which it has provided notice pursuant to Section 2.02(a) until AerCo has
provided a written certification to the Servicer to the effect that such
transaction will not result in any violation of the Concentration Thresholds and
the Servicer shall be entitled to rely upon such certification for all purposes
of this Agreement and this Section 2.02.
ARTICLE 3
LEASE MARKETING
SECTION 3.01. Lease Marketing Services. The Servicer shall provide and
perform lease marketing services with respect to the Aircraft Assets on a basis
consistent with any directions of AerCo and in connection therewith is
authorised:
(a) To negotiate and enter into any commitment for a Lease of an
Aircraft Asset, provided that such commitment does not (unless expressly
approved by AerCo) commit AerCo Group to any terms which conflict with Section
7.05 of this Agreement, or with Section 2.01 of this Schedule, or any other
provision of this Agreement or any direction of AerCo on behalf of and (through
a power of attorney) in the name of the relevant Person within AerCo Group; and
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(b) To include within any commitment for a Lease of an Aircraft Asset
any intermediate Lease or Leases through any Person within AerCo Group that the
Servicer deems reasonably necessary or appropriate.
SECTION 3.02. Form of Lease. (a) The Servicer shall commence the
negotiation of any commitment for a Lease or Leases of Aircraft Assets in a
manner consistent with the practices employed by the Servicer with respect to
its aircraft operating leasing services business generally and shall commence
the drafting of, and negotiation with respect to, any Leases for Aircraft Assets
on the following basis:
(i) in the case of any proposed Lessee that is not and has not
been a lessee of an aircraft managed or serviced by the Servicer, the
Servicer shall commence the drafting of, and negotiation with respect
to, a Lease for Aircraft Assets based on the form of lease agreement or
agreements then used by the Servicer in connection with its aircraft
operating leasing services business generally (as such form of lease
shall be amended from time to time by the Servicer, subject to Section
3.02(c) below, the "PRO FORMA LEASE"); and
(ii) in the case of any proposed Lessee that is or was a lessee
of an aircraft managed or serviced by the Servicer, the Servicer may
commence the drafting of, and negotiation with respect to, a Lease for
Aircraft Assets based on a form of lease substantially similar to the
lease previously used with respect to such Lessee (the "PRECEDENT
LEASE").
(b) Provided that the Servicer commences the negotiation of a Lease of
any Aircraft Asset in accordance with clauses (a)(i) and (a)(ii) above, the
terms of any executed Lease may vary from the terms of the Pro Forma Lease or
the Precedent Lease employed by the Servicer in accordance with such clauses.
Subject to compliance with the terms and conditions of this Agreement, the
Servicer is authorized to execute and deliver binding Leases and related
agreements on behalf of the relevant Person within AerCo Group. It is the
intention of the parties that following the execution and delivery of any Lease
with respect to Aircraft Assets the Servicer shall deliver a copy of the
executed Lease, together with a copy thereof marked to reflect changes from the
precedent employed in accordance with the foregoing procedures, to AerCo within
20 Business Days of such execution and delivery.
(c) In good time prior to each anniversary of the Closing Date for
purposes of the annual review of the Pro Forma Lease (the "ANNUAL REVIEW"), the
Servicer shall provide AerCo with a copy of its then current pro forma lease as
used in its Own Business, together with a copy thereof marked to reflect the
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differences between it and the then current Pro Forma Lease, indicating any
which are inconsistent with the Core Lease Provisions, the Indenture and any
AerCo direction(s).
(d) On or prior to each anniversary of the Closing Date and following
the Annual Review, AerCo shall advise the Servicer in writing whether any
provisions in the Servicer's then current pro forma lease may be adopted in the
Pro Forma Lease, and shall also advise the Servicer of any other amendments it
proposes to the Pro Forma Lease (together the "REVISIONS"). AerCo may not
propose amendments which would require the Servicer to obtain lease terms which
are not reasonably commercially available. The Servicer shall amend the Pro
Forma Lease to incorporate the Revisions (adjusted to take account of any
amendments required by AerCo) and shall commence the negotiation of any Lease
thereafter with the Pro Forma Lease as so amended in respect of any such
provision. Nothing in this Section 3.02 shall authorize the Servicer or AerCo to
propose or make any Revisions which conflict with the Core Lease Provisions or
any provision of the Indenture. AerCo may take independent advice as to whether
any Revisions should be made.
SECTION 3.03. Deliveries. The Servicer shall take commercially reasonable
action to deliver any Aircraft Asset pursuant to the terms of the documentation
of the Lease or Leases of such Aircraft Asset, including upon an extension of
such Leases.
SECTION 3.04. Management. The Servicer shall generally manage the
marketing services set forth in this Article 3 through the use of its own
marketing staff.
ARTICLE 4
SALES AND PURCHASES OF AIRCRAFT
SECTION 4.01. Sales Services And Authority. (a) The Servicer shall
provide and perform sales services with respect to the Aircraft Assets at, and
on a basis consistent with, the directions from time to time of AerCo, and, in
connection therewith, is authorized;
(i) to enter into any commitment for a sale of an Aircraft Asset on
behalf and (through a power of attorney) in the name of the relevant
Person within AerCo Group; and
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(ii) to include within any sale any intermediate Lease or Leases
through any Person within AerCo Group that the Servicer deems reasonably
necessary or appropriate; provided however, that, except as otherwise
required in accordance with the terms of a Lease, the Servicer shall not
enter into any sale of any Aircraft Asset or agreement to sell any
Aircraft Assets without obtaining the approval of AerCo pursuant to
Section 7.05(a) of this Agreement.
(b) The Servicer shall negotiate documentation of any sale and, subject
to Section 4.01(a) of this Schedule 2.02(a), is authorized to execute and
deliver binding agreements on behalf and (through a power of attorney) in the
name of the relevant Person within AerCo Group.
(c) The Servicer shall take commercially reasonable efforts to deliver
any Aircraft Asset pursuant to the terms of the documentation of the sale.
(d) In the event that AerCo directs the Servicer to arrange for the sale
of any Aircraft Asset, the Servicer will not be required to take any such action
until AerCo shall provide the Servicer with an Officer's Certificate certifying
that such sale complies with the terms of the Indenture and that the Servicer is
entitled to rely upon such certification for all purposes of this Agreement and
this Schedule 2.02(a).
(e) Notwithstanding any other provision in Section 7.05 of the Servicing
Agreement to the contrary, the Servicer shall be permitted to purchase, sell or
exchange any engine relating to an Aircraft or any part or components thereof or
spare parts or ancillary equipment or devices furnished with an Aircraft at such
times and on such terms and conditions as the Servicer deems reasonably
necessary or appropriate in connection with its performance of the Services;
provided however, the Servicer shall not be permitted to purchase, or enter any
order to purchase, engines or spare parts in a quantity in excess of that
quantity then required to enable the Aircraft Assets to be leased without
obtaining the prior written consent of AerCo.
SECTION 4.02. Tax Based Financings. Subject to satisfaction of the
conditions set forth in clauses (i) and (ii) and (iii) of the provisos in
Sections 9.05(a) and 9.05(b) of the Servicing Agreement, the transfer of title
shall not be deemed to be a sale for the purpose of calculation of Sales Fees
pursuant to Section 9.05 of the Servicing Agreement if such transfer of title is
part of a tax based financing or a refinancing. The transfer of title shall be
deemed to be a sale for the purpose of obtaining approvals pursuant to Section
7.05 if such transfer of title is part of a tax based financing or a
refinancing.
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ARTICLE 5
MARKET AND OTHER RESEARCH
SECTION 5.01. Valuations. From time to time, but in any event at least
annually:
(a) AerCo will request, and the Servicer shall, upon such request, use
commercially reasonable efforts to obtain, current or projected valuations of
the Aircraft; and
(b) The Servicer shall use commercially reasonable efforts to arrange
for such valuation services with respect to the Aircraft as shall be reasonably
necessary or appropriate in connection with the performance of the Services, in
each case from any internationally recognized independent appraiser chosen by
AerCo.
SECTION 5.02. Regulatory Changes. The Servicer shall:
(a) Advise AerCo on a timely basis in summary form of such information
regarding legal, regulatory and manufacturer material changes and developments
with respect to each Aircraft Asset after the relevant Delivery Date, of which
the Servicer has knowledge, which legal, regulatory and manufacturer
developments are likely to, or will, be applicable to the Aircraft Assets; and
(b) Take such commercially reasonable action as may be necessary or
appropriate to comply therewith.
SECTION 5.03. Market Research. The Servicer shall maintain research
capability and shall provide commercial aviation market industry research
reports to AerCo on a regular basis using internal and external resources where
appropriate to keep AerCo adequately informed regarding developments in the
commercial aviation industry. The reports shall include market information with
respect to commercial aviation demand in terms of traffic growth, new Aircraft
requirements and other information relevant to AerCo Group's long-term planning
with respect to Leases, purchases and sales, market conditions, industry trends
and the Aircraft Assets.
SECTION 5.04. Lessee Information. The Servicer shall provide on a timely
basis in summary form such information regarding default history, audit analysis
or other material Lessee information of which the Servicer has knowledge.
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SECTION 5.05. Confidentiality. Nothing in this Article 5 or in Article
8 hereof shall require the Servicer to reveal information which is confidential
to its other clients or its business generally.
ARTICLE 6
AIRCRAFT ASSET CASH SERVICES
SECTION 6.01. Accounts and Account Information. (a) EXISTING ACCOUNTS.
In the event that the Cash Manager desires to modify any of the arrangements
relating to any of the bank accounts set forth on Schedule 4.03 to this
Agreement (the "EXISTING ACCOUNTS") in accordance with the Cash Management
Agreement, the Cash Manager shall deliver a certificate to the Servicer
specifying in reasonable detail the modifications to be made with respect to any
such Existing Accounts and certifying that any such modifications are in
accordance with the applicable provisions of the Indenture and the Cash
Management Agreement and the Servicer shall notify the relevant Lessees of such
modifications and shall take such other actions as are incidental thereto in
order to give effect to the foregoing.
(b) NEW ACCOUNTS. The Servicer shall notify the Cash Manager in the event
that any new bank accounts need to be established on behalf of any Person within
AerCo Group in connection with the execution of a new Lease and shall set forth
in reasonable detail the (i) identity of the new Lessee, (ii) Aircraft Assets
subject to such Lease and (iii) the jurisdiction in which such Aircraft Assets
are to be registered, and shall take such other actions as are incidental
thereto in order to give effect to the establishment of the new accounts (the
"NEW ACCOUNTS"); and, together with the Existing Accounts, the "BANK ACCOUNTS").
SECTION 6.02. Cash Transfers. In the event that the Cash Manager is
required to transfer funds from any Bank Account to the account of another
Person (other than any Person within AerCo Group) in order to give effect to the
directions of any Lessee in accordance with Section 1.01(d) of this Schedule
2.02(a), the Servicer shall provide the Cash Manager with written notice setting
forth (i) the name of the transferor, (ii) the name of the transferee, (iii) the
accounts from and to which funds are to be transferred, (iv) the amounts to be
transferred, (v) the amount of the initial payment from the Lessee and (vi) the
anticipated date of transfer. No later than the next following Business Day, the
Cash Manager shall notify the Servicer in writing whether the proposed transfer
is approved or disapproved. If approved, the Cash Manager shall cause such
transfer to be made in accordance with the terms of such written notice. If not
approved, the Cash Manager shall advise the Servicer in writing as to the
reasons therefor.
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SECTION 6.03. Payments. (a) ANTICIPATED PAYMENTS. For purposes of the
calculation of the required expenses by the Cash Manager pursuant to the Cash
Management Agreement, not less than one Business Day prior to each Calculation
Date, the Servicer shall deliver to the Cash Manager a written projection of
payment obligations (including projected expenditures, or return to Lessees, of
Security Deposits or Maintenance Reserves in accordance with the terms of any
Lease) reasonably anticipated by the Servicer to be necessary to be paid in
connection with the Servicer's performance of the Services under this Agreement
during the period extending from the Payment Date immediately following such
Calculation Date through to the next succeeding Payment Date (the "MONTHLY
PAYMENT PERIOD"). Not less than five Business Days prior to the first Business
Day of each week, the Servicer shall deliver to the Cash Manager a list
specifying each cash payment projected to be made during such week (whether or
not such cash payment was reflected in the projection referred to in this
Section 6.03(a)), and shall state (i) the anticipated date of such payment, (ii)
the payee, (iii) the amount of such payment, (iv) the obligation in respect of
which such payment is to be made (the "STATED SERVICES OBLIGATION") and (v) the
account from which such payment should be made. Not later than two Business Days
prior to the date of each payment set forth on such list, the Cash Manager shall
deliver to the Servicer a written notice of such proposed payment, restating the
date, payee and amount relating to such payment. Not later than the Business Day
prior to the date of such proposed payment, the Cash Manager shall notify the
Servicer in writing whether the proposed payment is approved or disapproved. If
such payment is approved, the Cash Manager shall pay or cause such payment to be
made to the payee for the Stated Services Obligation from the funds then
available in the relevant account, as the case may be. If such payment is not
approved, the Cash Manager shall advise the Servicer in writing as to reasons
therefor and the Cash Manager shall not proceed with such transfer.
(b) UNANTICIPATED PAYMENTS. During any Monthly Payment Period the Servicer
may request in writing the Cash Manager's approval to pay or cause to be paid
expenses that had not been reasonably anticipated by the Servicer at the time
the projection required to be provided to the Cash Manager pursuant to Section
6.03(a) with respect to such Monthly Payment Period was delivered to the Cash
Manager (whether or not such expense was reflected in the weekly list of
projected payments referenced in Section 6.03(a)). Any such request shall
specify for each such payment obligation (i) the anticipated date of such
payment, (ii) the payee, (iii) the amount of such payment, (iv) the Stated
Services Obligation and (v) the account from which such payment should be made.
Not later than the Business Day next following such request by the Servicer, the
Cash Manager shall notify the Servicer in writing whether such payment request
is approved or disapproved. If approved, the Cash Manager shall pay or cause
such payment to be made to the payee for the Stated Services Obligation from the
funds then
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available in the relevant account. In the event that the funds then available in
such account are insufficient to make any such payment, pursuant to the Cash
Management Agreement, the Cash Manager shall take such actions as are necessary
to cause funds sufficient to make any such payments to be transferred as soon as
practicable from the Collection Account to such account. Following the transfer
of such funds, the Cash Manager shall pay or cause such payments to be made in
accordance with the foregoing provisions. If such payment is not approved, the
Cash Manager shall advise the Servicer in writing as to reasons therefor and the
Cash Manager shall not proceed with such transfer.
ARTICLE 7
PROFESSIONAL AND OTHER SERVICES
SECTION 7.01. Legal Services. (a) The Servicer shall provide or procure
legal services, in all relevant jurisdictions, on behalf of the relevant Persons
within AerCo Group with respect to the lease or sale of the Aircraft Assets, any
amendment or modification of any Lease, the enforcement of the rights of any
Person within the Group under any Lease, any disputes that arise with respect to
the Aircraft Assets or for any other purpose that the Servicer reasonably
determines is necessary in connection with the performance of the Services.
(b) The Servicer shall provide such legal services by using its in house
legal staff where it shall deem appropriate and shall authorise outside counsel
to provide such legal services where it shall deem appropriate (it being
understood that while the obligations set forth in this Section 7.01 are, to the
extent possible, generally anticipated to be discharged by the Servicer without
resorting to outside counsel, the Servicer retains the flexibility to engage
outside counsel as it determines in its sole discretion to be necessary). The
cost of any outside counsel shall be borne or reimbursed and apportioned as set
forth in Section 9.06 of the Servicing Agreement. AerCo recognises, and shall
cause each other Person within AerCo Group to recognise, that from time to time
the Servicer will retain legal counsel to provide legal services on behalf of
Persons within AerCo Group and, in the event that a conflict of interest or
potential conflict of interest arises between any Person within AerCo Group and
the Servicer, AerCo agrees, and shall cause each other Person within AerCo Group
to agree, to waive any conflict of interest any such counsel may have with
respect thereto or otherwise to enable the Servicer to retain such counsel on
its own behalf.
SECTION 7.02. Accounting And Tax Services. The Servicer shall arrange
for such accounting and tax services and advice (which may be provided by the
Servicer's internal staff, to the extent available) as shall be reasonably
necessary or appropriate in connection with the structuring of lease or sale
transactions with
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respect to the Aircraft Assets or for any other purpose that the Servicer
reasonably determines is necessary in connection with the performance of the
Services.
ARTICLE 8
INFORMATION: REPORTS; CUSTODY
SECTION 8.01. Management Information Systems. (a) The Servicer will, so
long as and to the extent it maintains the following, provide to AerCo, the
Administrative Agent and the Cash Manager access to Servicer's management
information storage and systems, provided that such reasonable access shall only
be granted with respect to information related to the Aircraft Assets.
(b) The Servicer will from time to time, as it reasonably deems necessary,
update the management information systems with (i) data and information on a
basis consistent with the type of data and information available on such systems
as of the first Delivery Date and (ii) such other data and information as the
Servicer shall deem necessary or appropriate in connection with the performance
of the Services.
SECTION 8.02. Weekly Reports. On the last Business Day of each week the
Servicer will provide to AerCo and the Administrative Agent a report in the form
of a weekly report attached hereto as part of Schedule 8 to Schedule 2.02(a).
SECTION 8.03. Monthly Reports. Five Business Days after the first Business
Day of each month, the Servicer shall provide to AerCo and the Administrative
Agent a report in the form of a monthly report attached hereto as part of
Schedule 8 to Schedule 2.02(a).
SECTION 8.04. Quarterly Reports. Thirty Business Days after the end of
each calendar quarter the Servicer shall provide to AerCo and the Administrative
Agent a report in the form of a quarterly report attached hereto as part of
Schedule 8 to Schedule 2.02(a).
SECTION 8.05. Other Information. (a) To the extent the Servicer is in
possession of the relevant information, the Servicer shall prepare and submit to
AerCo the following information with respect to each Person within AerCo
Group:
(i) information with respect to transactions relating to Aircraft
Assets necessary for each Person within AerCo Group to prepare value added
tax and other tax returns;
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(ii) promptly after the occurrence thereof, notify AerCo of any
accident or incident of which the Servicer has notice involving any
Aircraft Asset where (A) the potential loss in connection therewith
exceeds the higher of the damage notification threshold under the
relevant Lease, if any, and $1,000,000 or (B) the potential liability in
connection therewith exceeds $1,000,000; and
(iii) information with respect to transactions relating to
Aircraft Assets necessary for any Person within AerCo Group to prepare
statutory returns with respect to contractors engaged by the Servicer on
behalf of such Person, to the extent such information is reasonably
available to the Servicer.
(b) The Servicer will make available to AerCo and its advisers and
designees, at reasonable times and upon reasonable notice, the Servicer
Representatives in order to provide to AerCo and its advisers and designees
information with regard to the Aircraft Assets and Leases (including in response
to inquiries with respect to the reports provided to AerCo by the Servicer
pursuant to Sections 8.02, 8.03 and 8.04 hereof) which may reasonably be
required by AerCo. In furtherance thereof, in order to facilitate each Person
within AerCo Group carrying out its responsibilities upon the request of AerCo,
the Servicer shall make available (through physical attendance or telephonic
conference) such officers and employees as AerCo shall reasonably deem
appropriate for Board of Directors meetings of AerCo and the Subsidiaries and
meetings with AerCo's representatives to provide to AerCo information, and
response to inquiries, with respect to the reports provided to AerCo by the
Servicer pursuant to Sections 8.02, 8.03 and 8.04 or otherwise.
SECTION 8.06. Ratings Information. Upon request by AerCo, the Servicer
shall provide to AerCo such information and data about the Aircraft Assets and
other commercially reasonable assistance relating to the Aircraft Assets as
AerCo shall deem reasonably necessary or appropriate in connection with
providing information to the rating agencies for AerCo's debt ratings.
SECTION 8.07. Custody Of Documents. The Servicer agrees to hold all
original documents of any Person within AerCo Group that relate to the Aircraft
Assets in the possession of the Servicer in safe custody and according to the
commercially reasonable instructions of AerCo.
SECTION 8.08. Public Filing Information. (a) The Servicer shall provide
to AerCo such information and data relating to the Servicer, the Services and
the
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Aircraft Assets as AerCo shall reasonably request to comply with its public or
statutory reporting and filing obligations.
(b) Notwithstanding anything herein to the contrary, each of AerCo and
each Person within AerCo Group, jointly and severally, acknowledges and agrees
that it shall be responsible for, and the Servicer shall not have any
responsibility for: (i) any reporting or compliance obligations to any holders
of outstanding Notes, any liquidity facility providers or any Governmental
Authorities and (ii) the preparation of any forecasts (except for the mechanical
preparation thereof to the extent expressly specified in Section 8.03 of this
Schedule 2.02(a)) and for all instructions, discretion and judgments related to
such reporting or compliance obligations and forecasts, and each of AerCo and
each Person within AerCo Group, jointly and severally, agrees to indemnify the
Servicer and its Affiliates in respect of the foregoing as further provided in
Article 11 of the Servicing Agreement.
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SCHEDULE 8 TO
SCHEDULE 2.02(A)
WEEKLY, MONTHLY AND QUARTERLY REPORTS
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SCHEDULE 4.01
AIRCRAFT
Initial Aircraft
Offering Memorandum Aircraft
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SCHEDULE 4.03
BANK ACCOUNTS
Bankers Trust Accounts
1 RENTAL ACCOUNTS Trustee Account No
(a) Bankers Trust Company, as Trustee for AerCo ▇▇-▇▇▇-▇▇▇
(b) Bankers Trust Company, as Trustee for AerCo ▇▇-▇▇▇-▇▇▇
2 EXPENSE ACCOUNT
Bankers Trust Company, as Trustee for AerCo ▇▇-▇▇▇-▇▇▇
3 OTHER ACCOUNTS PURSUANT TO THE CASH
MANAGEMENT AND INDENTURES
AerCo Expense Account 26071
AerCo Purchase Account 26076
AerCo Note Account 26070
AerCo Lessee Funded Account 26072
AerCo Collection Account 26073
AerCo Defeasance/Redemption Account 26075
AerCo Refinancing Account 26074
4. ADDITIONAL BANK ACCOUNTS
Account Name: ALPS 1994-- 1 Belgium NV
Bank: Generale de Bank, Brussels
Account No.: ▇▇▇-▇▇▇▇▇▇▇-▇▇
Currency: Belgian Franc
88
Account Name: AerFi Belgium NV
Bank: Citibank Brussels
Account No.: ▇▇▇-▇▇▇▇▇▇▇-▇▇
Currency: Belgian Franc
Account Name: AerFi Belgium NV
Bank: Citibank Brussels
Account No.: ▇▇▇-▇▇▇▇▇▇▇-▇▇
Currency: US Dollar
Account Name: AerCo Group
Bank: AIB ▇▇▇▇▇▇▇
Account No.: 01659-053
Currency: Irish Pounds
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SCHEDULE 7.04(B)(1)
ONE YEAR INITIAL PERIOD
OPERATING BUDGET AND ASSET EXPENSES BUDGET
90
SCHEDULE 7.04(B)(2)
THREE YEAR INITIAL PERIOD
OPERATING BUDGET AND ASSET EXPENSES BUDGET
91
ANNEX 1
INSURANCE
1. MINIMUM COVERAGE AMOUNTS:
(a) HULL INSURANCE: With respect to any Aircraft, hull insurance and
political risk insurance, if necessary, shall be maintained in an amount equal
to the greatest of:
(i) the Note Target Price for such Aircraft (as such Note Target Price
is defined in any Indenture and as set forth on Schedule 1 hereto, as the same
shall be amended in writing from time to time by AerCo);
(ii) the appraised value for such Aircraft (as such appraised value is
set forth in Schedule 1 hereto, as the same shall be amended in writing from
time to time by AerCo;
(iii) the Agreed Value of such Aircraft;
(iv) 110% of the net book value of such Aircraft (as such net book
value is set forth in Schedule 1 attached hereto, as the same shall be amended
in writing from time to time by AerCo ); and
(v) such greater amounts as may be directed in writing by AerCo from
time to time; provided however, that in the event that an agreement with respect
to hull insurance or political risk insurance, if necessary, cannot be reached
with any particular Lessee pursuant to which such Lessee will pay the premiums
to procure such insurance in amounts consistent with the foregoing, hull
insurance shall be maintained in an amount equal to the greater of the amounts
described in clause (i) above and this clause (v). Spare engines and parts, if
any, shall be insured on the basis of their "replacement costs".
(b) LIABILITY INSURANCE: Liability insurance shall be maintained for
each Aircraft Asset and occurrence in an amount equal to that set forth below,
as the same shall be amended in writing from time to time by AerCo.
MODEL MINIMUM LIMIT
F100 US $300 million
B737 US $400 million
MD83 US $400 million
A320 US $400 million
A300 US $550 million
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B767 US $550 million
B757 US $450 million
B747 US $750 million
DC8 US $450 million
2. INSURANCE DEDUCTIBLES:
(a) Deductibles and self-insurance for Aircraft Assets subject to a
Lease may be maintained in an amount pursuant to deductible and self-insurance
arrangements (taking into account, inter alia, the creditworthiness and
experience of the Lessee, the type of aircraft and market practices in the
aircraft insurance industry generally) consistent with the Servicer's
commercially reasonable practices for its own aircraft.
(b) Deductibles for Aircraft Assets off-lease shall be maintained in
respect of any one occurrence in respect of such Aircraft Assets in an amount
consistent with the Servicer's commercially reasonable practice for its own
aircraft with any difference between such amount and $200,000 (or such other
amount as AerCo may direct in writing from time to time), taking into account
any deductible insurance procured, to be notified to AerCo by the Servicer.
3. OTHER INSURANCE MATTERS:
Apart from the matters set forth above, the coverage and terms of any
insurance with respect to any Aircraft Assets not subject to a Lease shall be
substantially consistent with the reasonable commercial practices of the
Servicer with respect to its own aircraft.
4. ADDITIONAL INSUREDS:
Any insurance arrangements entered into with respect to any Aircraft
Assets shall include as named insureds such persons as are reasonably requested
by AerCo.
5. CURRENCIES:
Any insurance requirement stated in U.S. dollar terms shall be interpreted
to include the foreign currency equivalent thereto from time to time if any such
insurance related thereto is denominated in a currency other than U.S. dollars.
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6. AVAILABILITY:
The insurance guidelines set forth herein are subject to such insurance
being generally available in the relevant insurance market at commercially
reasonable rates from time to time.
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ANNEX 2
INDENTURE COVENANTS
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EXHIBIT A
PRO FORMA LEASE