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EXHIBIT 4.16
THE RIGHTS OF LESSOR UNDER THIS AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT
[GPA 1989 BN-8] AND IN THE AIRCRAFT COVERED HEREBY WILL BE OR HAVE BEEN
ASSIGNED TO, AND ARE OR WILL BE SUBJECT TO A SECURITY INTEREST IN FAVOR OF, THE
CHASE MANHATTAN BANK, FORMERLY KNOWN AS CHEMICAL BANK, SUCCESSOR BY MERGER TO
MANUFACTURERS HANOVER TRUST COMPANY, AS INDENTURE TRUSTEE UNDER AN AMENDED AND
RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [GPA 1989 BN-8] DATED AS OF
JUNE ___, 1997. AS PROVIDED IN SECTION 21(e) HEREOF, TO THE EXTENT, IF ANY,
THAT THIS AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT CONSTITUTES CHATTEL
PAPER (AS SUCH TERM IS DEFINED IN THE UNIFORM COMMERCIAL CODE AS IN EFFECT IN
ANY APPLICABLE JURISDICTION), NO SECURITY INTEREST IN THIS AMENDED AND RESTATED
AIRCRAFT LEASE AGREEMENT MAY BE CREATED THROUGH THE TRANSFER OF POSSESSION OF
ANY COUNTERPART OTHER THAN THE ORIGINAL COUNTERPART, WHICH SHALL BE IDENTIFIED
AS THE COUNTERPART CONTAINING THE RECEIPT THEREFOR EXECUTED BY THE CHASE
MANHATTAN BANK, AS INDENTURE TRUSTEE, ON THE SIGNATURE PAGE THEREOF.
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AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT
[GPA 1989 BN-8]
Dated as of December 19, 1989
Amended and Restated as of June __, 1997
between
WILMINGTON TRUST COMPANY,
not in its individual capacity except
as otherwise expressly provided herein,
but solely as Owner Trustee under a
Trust Agreement [GPA 1989 BN-8] dated
as of December 19, 1989, as amended
Lessor
and
AMERICA WEST AIRLINES, INC.
Lessee
One Airbus A320-231 Aircraft
Manufacturer's Serial Xx.00
X.X. Xxxxxxxxxxxx Xx. X000XX
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TABLE OF CONTENTS
Page
Section 1. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2. Agreement to Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 3. Delivery and Acceptance; Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(a) Time of Delivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(b) [Intentionally Left Blank] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(c) Acceptance of Aircraft . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(d) Term of Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 4. Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(a) Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(b) Minimum Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(c) Date, Place and Method of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(d) Prohibition Against Setoff, Counterclaim, Etc. . . . . . . . . . . . . . . . . . . . . . . 24
Section 5. Representations, Warranties and Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
(a) Warranties and Disclaimer of Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . 26
(b) Representations and Warranties of Lessor . . . . . . . . . . . . . . . . . . . . . . . . . 27
(c) No Amendments to Financing Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(d) Suppliers' Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 6. Possession and Use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(a) Possession . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(b) Reciprocal Recognition of Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
(c) Lawful Insured Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
(d) Maintenance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
(e) Registration and Insignia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 7. Inspection. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 8. Additional Covenants of Lessee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
(a) Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
(b) Maintenance of Corporate Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
(c) Maintenance of Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
(d) Payment of Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
(e) Consolidation, Merger, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
(f) Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
(g) Place of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
(h) Certain Limitations on Use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
(i) Section 1110 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
(j) Permits and Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
(k) Security Opinion; Annual Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
(l) Letter of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
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Section 9. Replacement of Parts; Alterations, Modifications and Additions . . . . . . . . . . . . . . . . . . . . . 50
(a) Replacement of Parts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
(b) Alterations, Modifications and Additions . . . . . . . . . . . . . . . . . . . . . . . . . 51
(c) Pooling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 10. General Tax Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
(a) Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
(b) Exclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
(c) Covered Income Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
(d) Reports and Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
(e) After-Tax Basis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
(f) Tax Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
(g) Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
(h) Contest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
(i) Refund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
(j) Diligence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
(k) Affiliated Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
(l) Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 11. Loss, Damage and Requisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
(a) Event of Loss with Respect to the Airframe . . . . . . . . . . . . . . . . . . . . . . . . 66
(b) Event of Loss with Respect to an Engine . . . . . . . . . . . . . . . . . . . . . . . . . . 69
(c) Conveyance of Replacement Airframe . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
(d) Application of Proceeds and Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
(e) Requisition for Use by Government with Respect to the Aircraft . . . . . . . . . . . . . . 74
(f) Application in Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Section 12. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
(a) Public Liability and Property Damage Insurance. . . . . . . . . . . . . . . . . . . . . . 75
(b) Insurance Against Loss or Damage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
(c) Application of Insurance Proceeds for an Event of Loss . . . . . . . . . . . . . . . . . . 80
(d) Application of Insurance Proceeds for Other than an Event of Loss . . . . . . . . . . . . . 81
(e) Application in Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
(f) Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
(g) Reinsurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
(h) Storage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
(i) Amounts Held . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
(j) After the Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
(k) Governmental Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Section 13. General Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Section 14. Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
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Section 15. Protection of Title and Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
Section 16. Return of Aircraft and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
(a) Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
(b) Status Upon Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
(c) Engines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
(d) Records and Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
(e) Condition of Aircraft . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
(f) Final Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
(g) Aircraft Records and Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
(h) Corrections and Subsequent Corrections . . . . . . . . . . . . . . . . . . . . . . . . . . 98
(i) Functional Flight Check . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
(j) Export Certificate of Airworthiness . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
(k) Service Bulletin and Modification Kits . . . . . . . . . . . . . . . . . . . . . . . . . . 99
(l) Storage Upon Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
(m) Resale/Release Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
Section 17. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
Section 18. Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
Section 19. Security for Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
Section 20. Renewal Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
Section 21. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
(a) Severability, Amendment, and Construction . . . . . . . . . . . . . . . . . . . . . . . . . 110
(b) GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
(c) Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
(d) Lessor's Right to Perform for Lessee . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
(e) Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
(f) Quiet Enjoyment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
(g) Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
(h) Investment of Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
(i) Entire Agreement; Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
(j) Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
(k) Federal Bankruptcy Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
(l) U.S. Registration Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
(m) Submission to Jurisdiction; Service of Process; Waiver of Forum Non Conveniens;
Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
(n) Limitation on Recourse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
(o) Successor Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
(p) Article 2-A of the UCC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117
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ANNEXES
Annex I - Description of Original Head Lease
EXHIBITS
Exhibit A - Stipulated Loss Values
Exhibit B - Aircraft Records and Documents
Exhibit C - Definitions and Values
Exhibit D-1 - Lease Supplement No. 3
Exhibit D-2 - Letter of Credit
Exhibit E - Return Condition Requirements
Exhibit F-1 - Foreign Air Carriers
Exhibit F-2 - Permitted Foreign Sublessee Domiciles
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AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT
THIS AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT dated as of December 19,
1989 and amended and restated as of June __, 1997 is entered into between
WILMINGTON TRUST COMPANY, not in its individual capacity except as otherwise
expressly provided herein, but solely as Owner Trustee under a Trust Agreement
[GPA 1989 BN-8] dated as of December 19, 1989, as amended, and with its
principal place of business at Xxxxxx Xxxxxx Xxxxx, Xxxxxxxxxx, Xxxxxxxx 00000
(together with its successors and permitted assigns, "Lessor"), and AMERICA
WEST AIRLINES, INC., a Delaware corporation, with its chief executive office at
0000 Xxxx Xxx Xxxxxx Xxxxxxxxx, Xxxxxxx, Xxxxxxx 00000 (together with its
successors and permitted assigns, "Lessee").
W I T N E S S E T H:
WHEREAS, Lessor and Lessee desire to amend and, solely for the
convenience of the parties, restate in its entirety the Original Head Lease (as
hereinafter defined) as of the Restatement Date (as hereinafter defined) as
hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual promises herein
contained, Lessor and Lessee agree as follows:
Section 1. Definitions.
The following terms shall have the following respective
meanings for all purposes of this Lease (including the Recitals) and shall be
equally applicable to both the singular and the plural forms of the terms
defined herein:
As used herein, the terms "Assigned Sublease", "Equipment
Notes", "Excepted Payments", "Foreign Lease Agreement", "Foreign Lender",
"Foreign Lessor", "Indenture Supplement", "Note Holder", "Pass Through Trust",
"Pass Through Trust Agreement", "Pass Through Trustee", "Past Due Rate",
"Principal Amount", "Refinancing Transaction", "Refunding Agreement",
"Restatement Date", "Sublease Assignment", "Trust Company" and "Trust Indenture
Estate" shall have the meanings specified in the Indenture; the terms
"Intercreditor Agreement", "Liquidity Facility", "Liquidity Provider" and
"Subordination Agent" shall have the meanings specified in the Intercreditor
Agreement (as defined in the Pass Through Trust Agreement); and the terms "OP
Guarantee", "Lease Amendment No. 1" and "SLV Letter
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Agreement" shall have the meanings specified in the Refunding Agreement.
"Affiliate" shall mean, with respect to any specified Person,
any other Person which, directly or indirectly, owns or controls, is controlled
by or is under common control with such specified Person. Control will be
deemed to exist based on (i) ownership of 25% or more of the voting securities
of a Person or (ii) the power to direct or elect or cause the direction or
election of the management and policies of a Person whether by contract or
otherwise.
"Airbus Industrie" shall mean Airbus Industrie G.I.E., a
groupement d'interet economique formed under the laws of the French Republic,
and its successors and assigns.
"Aircraft" shall mean the Airframe leased hereunder and
described in Lease Supplement No. 1 (or any airframe from time to time
substituted for such Airframe pursuant to Section 11(a)(i) hereof) together
with the (i) two IAE Model V2500 Engines described in Lease Supplement No. 1
(or any Engine substituted therefor hereunder) with respect to such Airframe,
whether or not any such initial or substituted Engines may from time to time no
longer be installed on the Airframe or may be installed on any other airframe,
(ii) Parts or components thereof, (iii) spare parts or ancillary equipment or
devices furnished therewith under this Lease (including any separate equipment
described on one or more Lease Supplements hereto), (iv) the Aircraft Records
and Documents and all other logs, manuals and records with respect to such
Aircraft, and (v) all substitutions, replacements and renewals of any and all
thereof.
"Aircraft Records and Documents" shall mean the items
identified in Exhibit B hereto, all of which shall be maintained in the English
language.
"Airframe" shall mean (a) the Airbus Industrie model A320-231
aircraft (except Engines or engines from time to time installed thereon)
described in Lease Supplement No. 1 and leased by Lessor to Lessee hereunder,
and any such model aircraft (except Engines or engines from time to time
installed thereon) which may from time to time be substituted for such aircraft
(except Engines or engines from time to time installed thereon) pursuant to
Section 11(a)(i); and (b) any and all Parts so long as the same shall be
incorporated or installed on or attached to the Airframe, or so long as title
thereto shall remain vested in Lessor in
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accordance with the terms of Section 9 hereof after removal from the Airframe
or, so long as the Foreign Lease Agreement is in effect, in Foreign Lessor in
accordance with Section 13 of the Foreign Lease Agreement; provided, however,
that at such time as an aircraft (except Engines or engines from time to time
installed thereon) shall be deemed part of the property leased hereunder in
substitution for the Airframe pursuant to the applicable provisions hereof and
the replacement Airframe shall have been subjected to the Lien of the Indenture
(if the Lien of the Indenture has not been discharged) and shall be subject to
the Foreign Lease Agreement, the replaced Airframe shall cease to be the
Airframe hereunder.
"Appraisal Procedure" shall mean the following procedure for
determining the "fair market sales value" or "fair market rental value" of the
Aircraft, Airframe, an Engine or a Part. Except as provided in Section 18,
"fair market sales value" or "fair market rental value" shall mean the value
that would be obtained in an arm's-length transaction between an informed and
willing seller or lessor, as the case may be, and an informed and willing buyer
or lessee, as the case may be, both under no compulsion to sell and purchase or
to lease (and other than a lessee in possession or a used equipment scrap
dealer), as the case may be, as such value is determined by an appraisal which
assumes: (i) that such Aircraft, such Airframe, such Engine or such Part is
unencumbered by this Lease (or any sublease) or any of the other Operative
Documents or any of the Financing Documents and the terms thereof; (ii) that
such Aircraft, Airframe, Engine or Part has been maintained in all respects in
accordance with the terms of this Lease (whether or not in fact in such
condition), (iii) that such Aircraft, Airframe, Engine or Part meets the return
conditions specified in Section 16 and Exhibit E (whether or not in fact
meeting such conditions) and (iv) that Lessee has removed the Removable Parts
entitled to be removed under Section 9(b) (it being agreed that no such removal
is permitted in connection with an appraisal pursuant to Section 18) and
replaced any part which was removed from the Aircraft as a result of such
Removable Part being installed; provided, however, that costs of removal from
the location of current use and costs of sale shall not be a consideration in
determining such value except in connection with any determination of "fair
market sales value" or "fair market rental value" pursuant to Section 18; and
provided, further, that any determination of "fair market sales value" or "fair
market rental value" pursuant to Section 18 shall be on an "as is, where is"
basis in its actual condition and
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location subject to this Lease and any sublease and any and all Liens thereon
(other than a Lessor's Lien or Lenders' Lien). Lessor and Lessee shall, except
for any appraisal pursuant to Section 18 in which case only Lessor shall select
such appraiser (which appraiser does not have to be acceptable to Lessee),
select an independent nationally-recognized aircraft appraiser, mutually
acceptable to each of them, who shall make the determination as to the "fair
market sales value" or "fair market rental value" of such Aircraft, Airframe,
Engine or Part for which such appraisal is to be conducted. If Lessor and
Lessee fail to agree upon a mutually acceptable appraiser within ten (10) days,
then each of Lessor and Lessee shall select an appraiser and such determination
shall be made by such appraisers (if either party shall fail to appoint an
appraiser within ten (10) days after notice from the other party of the
selection of its appraiser, then the appraisal made by the other party's
appraiser shall be determinative). If the two appraisers chosen pursuant to the
preceding sentence fail to agree upon a determination of the "fair market sales
value" or "fair market rental value" of such Aircraft, Airframe, Engine or Part
within twenty (20) days after their appointment, then such appraisers shall
mutually choose a third appraiser within ten (10) days thereafter, provided
that if such appraisers fail to mutually choose a third appraiser within said
10-day period, such appointment shall be made by the American Arbitration
Association (or any successor) in New York, New York, and the three appraisers
so chosen shall each make such determination. The appraisal determined by each
of the three appraisers chosen pursuant to the preceding sentence shall be
averaged and the appraisal furthest from the average of the three appraisals
shall be disregarded. The appraisal determined by each of the two remaining
appraisers shall be averaged and such average shall be the appraised "fair
market sales value" or "fair market rental value" of such Aircraft, Airframe,
Engine or Part. Lessee shall bear all the fees and expenses of the Appraisal
Procedure.
"Approved Broker" shall mean any reputable insurance broker of
recognized responsibility and standing experienced in aircraft insurance.
"Approved Insurers" shall mean any reputable and creditworthy
insurance company of recognized responsibility and standing experienced in
aircraft insurance.
"At Offshore" shall have the meaning specified in the
Indenture.
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"Basic Rent" for the Aircraft shall mean the Basic Rent
specified in Exhibit C and payable throughout the Basic Term for the Aircraft
pursuant to Section 4(a)(i).
"Basic Rent Payment Date" shall mean each day determined in
accordance with Exhibit C upon which a payment of Basic Rent becomes payable.
If a Basic Rent Payment Date shall fall on a day which is not a Business Day,
any payment due on such Basic Rent Payment Date shall be made on the next
succeeding Business Day.
"Basic Term" shall mean the period specified in Lease
Supplement No. 3.
"Business Day" shall mean any day other than a Saturday,
Sunday or other day on which banking institutions in New York, New York or
Hartford, Connecticut are authorized or required by Law to be closed.
"Buyer Furnished Equipment" shall mean the equipment which was
to be furnished by Xxxxxxx, Inc. or, if applicable, Original Head Lessee and
installed on the Aircraft pursuant to Clause 18 of the Purchase Agreement, and
any similar equipment furnished to Lessee.
"Certificated Air Carrier" shall mean any corporation (except
the United States Government) domiciled in the United States of America and
holding a Certificate of Convenience and Necessity issued under Section
41102(a) of the Federal Aviation Act by the Department of Transportation or any
predecessor or successor agency thereto, or, in the event such Certificates
shall no longer be issued, any corporation (except the United States
Government) domiciled in the United States of America and legally engaged in
the business of transporting for hire passengers or cargo by air predominantly
to, from or between points within the United States of America, and, in either
event, operating commercial jet aircraft, which also is a citizen of the United
States (as defined in Section 40102 of the Federal Aviation Act) holding an air
carrier operating certificate issued by the Secretary of Transportation
pursuant to chapter 447 of the Federal Aviation Act for aircraft capable of
carrying 10 or more individuals or 6,000 pounds or more of cargo so as to fall
within the purview of 11 U.S.C. Section 1110 or any analogous statute.
"Civil Reserve Air Fleet Program" shall mean the Civil Reserve
Air Fleet Program administered by the United States Government and authorized
under 10 U.S.C. Section 9511, et
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seq., as amended, or any substantially similar or substitute program of the
United States Government.
"Claims" shall have the meaning specified in Section 13.
"Code" shall mean the Internal Revenue Code of 1986, as
amended and the rules and regulations promulgated thereunder.
"Commonly Controlled Person" shall mean an entity, whether or
not incorporated, which is under common control with Lessee within the meaning
of Section 414(b) or (c) of the Code.
"Consent and Guaranty" shall mean the Amended and Restated
Consent and Guaranty of Airbus Industrie, dated as of May 1, 1985, as amended
and restated as of December 30, 1988, in the form attached to the Purchase
Agreement.
"Default" shall mean an event or condition which would
constitute an Event of Default with the lapse of time or the giving of notice
or both.
"Delivery Date" shall mean December 29, 1989, being the date
the Aircraft was delivered to and accepted by the Original Head Lessee as
Lessee hereunder for all purposes of this Lease.
"$" and "dollars" shall mean the lawful currency of the United
States of America.
"Engine" shall mean (i) each of the two IAE Model V2500
engines listed by manufacturer's serial number in Lease Supplement No. 1 and
initially installed on the Airframe covered by such Lease Supplement, whether
or not from time to time thereafter no longer installed on the Airframe or
installed on any other aircraft or airframe, and (ii) any replacement engine
which may from time to time be substituted, pursuant to Section 6(a), 11(a),
11(b) or 16(c), for any Engine leased hereunder; together in each case with any
and all Parts incorporated or installed in or attached thereto or any and all
Parts removed therefrom so long as title thereto after removal from such Engine
shall remain vested in Lessor in accordance with the terms of Section 9 hereof
(or so long as the Foreign Lease Agreement is in effect, in Foreign Lessor in
accordance with Section 13 of the Foreign Lease Agreement). Except as
otherwise set forth herein, at such time as a replacement engine shall be
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so substituted and leased hereunder and the replacement engine shall have been
subjected to the Lien of the Indenture (if the Lien of the Indenture has not
been discharged) and shall have been subjected to the Foreign Lease Agreement
if in effect, such replaced Engine shall cease to be an Engine hereunder. The
term "Engines" means, as of any date of determination, both Engines then leased
hereunder.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended, as from time to time in effect.
"Event of Default" shall have the meaning specified in any one
or more clauses in Section 17.
"Event of Loss" shall mean any of the following events with
respect to the Aircraft, Airframe or either Engine: (a) loss of such property
or the use thereof due to theft or disappearance for a period in excess of
sixty (60) consecutive days, but in no event later than the last day of the
Term; (b) destruction or damage of such property that renders repair uneconomic
or such property permanently unfit for normal use by Lessee (or, if a Permitted
Sublease is in effect, the Permitted Sublessee) for any reason whatsoever; (c)
any loss or disappearance of or damage to or destruction of such property which
results in an insurance settlement with respect to such property on the basis
of an actual or a constructive total loss; (d) the condemnation, confiscation,
appropriation, seizure or requisition of title to any such property by any
Governmental Entity which results in the loss of title by Lessor for ten (10)
days or more but excluding requisition for use or hire which does not involve
requisition of title; (e) the condemnation, confiscation, appropriation,
seizure or requisition of the use of any such property by any Governmental
Entity (other than a requisition for use by the federal government of the
United States or any instrumentality or agency thereof bearing the full faith
and credit of the United States of America), which in any such case shall have
resulted in the loss of possession thereof by Lessee for a period in excess of
the earlier of ninety (90) consecutive days or the last day of the Term (or for
such shorter period ending on the date which is the next Business Day after the
date of receipt of an insurance settlement with respect to such property on the
basis of a total loss); (f) the requisition for use of such property by the
federal government of the United States or any agency or instrumentality
thereof bearing the full faith and credit of the United States of America,
which purports
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to or does continue beyond the Term; (g) as a result of any law, rule,
regulation, order or other action by the FAA, the Department of Transportation
or any other Governmental Entity having jurisdiction, the use of such Aircraft,
Airframe or Engine in the normal course of Lessee's (or, if a Permitted
Sublease is in effect, the Permitted Sublessee's) business of air
transportation of passengers shall have been prohibited for a period of six (6)
consecutive months, unless Lessee (or the Permitted Sublessee), prior to the
expiration of such six-month period, shall have undertaken and shall be
diligently carrying forward all steps which are necessary or desirable to
permit such normal use of such item of equipment by Lessee (or the Permitted
Sublessee), or, in any event, if such normal use shall have been so prohibited
by any such Governmental Entity for a period of twelve (12) consecutive months
or is continuing on the last day of the Term; or (h) as otherwise provided
herein. An Event of Loss with respect to the Aircraft shall be deemed to have
occurred if an Event of Loss occurs with respect to the Airframe which is a
part of such Aircraft. An Event of Loss with respect to an Engine shall not,
absent an Event of Loss with respect to the Airframe, be deemed an Event of
Loss with respect to the Airframe.
"Excluded Property" shall have the meaning set forth in
Section 9(b) hereto.
"Expiration Date" shall mean the date specified in Lease
Supplement No. 3, on which date the Basic Term of this Lease shall expire.
"FAA" shall mean the Federal Aviation Administration of the
United States Department of Transportation or any successor agency.
"FAA Bills of Sale" shall mean, collectively, (i) the Xxxx of
Sale for the Aircraft on AC Form 8050-2, dated the Delivery Date, from
Manufacturer's Subsidiary to AT Offshore, and (ii) the Xxxx of Sale for the
Aircraft on AC Form 8050-2, dated the Delivery Date, from AT Offshore to
Lessor.
"Federal Aviation Act" shall mean the sections of Title 49 of
the United States Code relating to aviation, as amended and in effect from time
to time, or any similar legislation of the United States of America enacted in
substitution or replacement thereof.
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"Financials" shall mean Lessee's most recent fiscal year-end
audited consolidated balance sheet and statements of income and cash flow for
the period then ending, copies of which for the fiscal year ended December 31,
1996, have been provided to Lessor prior to the date hereof.
"Financing Documents" shall mean the Lease Agreement, each
Lease Supplement, the Lease Amendment No. 1, the Trust Agreement, each Trust
Supplement, the Indenture, each Indenture Supplement, the Foreign Lease
Documents, the Refunding Agreement, the Equipment Notes issued under the
Indenture, the Intercreditor Agreement, each Liquidity Facility, each Pass
Through Trust Agreement and each supplement thereto and any certificate
delivered or entered into in accordance with the foregoing, as amended,
supplemented or otherwise modified.
"Foreign Air Carrier" shall mean any air carrier listed in
Exhibit F-1, as amended, supplemented or otherwise modified from time to time,
whose principal place of business and legal domicile at the time of entering
into the applicable sublease is located in a country listed on Exhibit F-2, as
amended, supplemented or otherwise modified from time to time, and not
prohibited by the terms of the insurance then in effect, with which the United
States has diplomatic or, such as in the case of Taiwan, similar relations, in
each case which is obligated under the applicable sublease to perform all
maintenance required by applicable foreign governmental standards made
mandatory to the Aircraft by such jurisdiction and, to the extent not
inconsistent therewith, all FAA-airworthiness directives and other requirements
made mandatory to the Aircraft by the FAA.
"Foreign Lease Documents" shall mean the Foreign Financing
Documents, as defined in the Indenture.
"Foreign Lessee" shall mean GPA HK-320-B, Limited.
"GAAP" shall mean United States generally accepted accounting
principles and practices consistently applied as in effect from time to time,
which shall include the official interpretations thereof by the Financial
Accounting Standards Board. All accounting terms not otherwise defined herein
shall have the meanings assigned to such terms in accordance with GAAP.
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15
"Governmental Entity" shall mean and include (i) any national
government, political subdivision thereof, or local jurisdiction therein; (ii)
any board, commission, department, division, organ, instrumentality, court, or
agency of any thereof, however constituted; and (iii) any association,
organization, or institution of which any entity described in (i) or (ii) above
is a member or to whose jurisdiction any such entity is subject or in whose
activities any such entity is a participant but only to the extent that any
entity described in clause (i), (ii) or (iii) has jurisdiction over Lessor,
Lessee, Indenture Trustee, Note Holders, any sublessee, the Aircraft or its
operations.
"Head Lessor's Lien" shall mean a "Lessor's Lien" under and as
defined in the Original Head Lease.
"IAE" shall mean IAE International Aero Engines AG, a company
organized and existing under the laws of Switzerland.
"Indemnitee" shall mean Foreign Lessor, Foreign Lessee,
Foreign Lender, Lessor (in its individual capacity and as trustee under the
Trust Agreement), the Trust Estate, Owner Participant, the general partners
(and not the limited partners, if any) of Owner Participant, the Trust
Indenture Estate, Indenture Trustee (in its individual capacity and as trustee
under the Indenture), each Pass Through Trust, each Pass Through Trustee (in
its individual capacity and as trustee under the Pass Through Trusts), the
Subordination Agent and each Liquidity Provider, and their respective
successors and permitted assigns, and any combination thereof and their
respective officers, directors, agents, servants, employees, subsidiaries,
Affiliates and shareholders.
"Indenture" shall mean the First Amended and Restated Trust
Indenture and Security Agreement [GPA 1989 BN-8] dated as of June __, 1997, as
the same may be further amended, supplemented or modified from time to time,
between Indenture Trustee and Lessor. The term "Indenture" shall also include
the Indenture Supplements entered into pursuant to the terms of the Indenture.
"Indenture Trustee" shall mean the bank or trust company
serving as Indenture Trustee under the Indenture, and its successors and
assigns.
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16
"Interest Rate" shall mean (i) with respect to the portion of
any payment of Rent that may be required by the Indenture to be paid to the
holders of any outstanding Equipment Notes issued thereunder, a per annum rate
of interest equal to the Past Due Rate applicable thereto under and as defined
in the Indenture computed on the basis of a 360-day year and twelve 30-day
months and (ii) with respect to any other amount, a per annum rate of interest
equal to the sum of the rate of interest publicly announced by Citibank, N.A.,
at its principal office in New York City, as its prime or similar base rate
from time to time in effect from the date the amount becomes due to the date it
is paid in full, plus 2%, computed on the basis of a year of 365 or 366 days,
as the case may be, and actual number of days elapsed.
"Law" shall mean and include (i) any statute, rule, decree,
constitution, regulation, order, judgment or other directive of any
Governmental Entity; (ii) any treaty, pact, compact or other agreement to which
any Governmental Entity is a signatory or party; (iii) any judicial or
administrative interpretations of the application of any Law described in (i)
or (ii) above; and (iv) except where expressly excluded herein, any amendment
or revision of any Law described in (i), (ii), or (iii) above.
"Lease Agreement," "this Lease Agreement," "this Lease," "this
Agreement," "herein," "hereunder," "hereby," "hereof" or other like words shall
mean this Lease as originally executed and as amended, supplemented or
otherwise modified from time to time, including, without limitation, by one or
more Lease Supplements, as a whole and not to any particular Section or other
subdivision, and any reference to a "Section" or an "Exhibit" shall refer to a
Section or an Exhibit of this Lease, as so amended, supplemented or modified,
unless expressly provided to the contrary.
"Lease Identification" shall have the meaning set forth in
Section 6(e) hereto.
"Lease Supplement" shall mean Lease Supplement No. 1, Lease
Supplement No. 2 and Lease Supplement No. 3 and each subsequent Lease
Supplement entered into hereunder.
"Lease Supplement No. 1" shall mean Lease Supplement [GPA 1989
BN-8] No. 1 dated the Delivery Date between Lessor and Original Head Lessee, as
Lessee.
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"Lease Supplement No. 2" shall mean Lease Supplement [GPA 1989
BN-8] No. 2 dated December 29, 1994 between Lessor and Original Head Lessee, as
Lessee.
"Lease Supplement No. 3" shall mean Lease Supplement [GPA 1989
BN-8] No. 3, substantially in the form of Exhibit D-1 hereto, entered into
between Lessor and Lessee on the Restatement Date for the purpose of confirming
the leasing of the Aircraft hereunder.
"Lenders' Lien" shall mean any Lien or disposition of title
attributable to Indenture Trustee in its individual capacity (and not as
Indenture Trustee) on or in respect of (as the case may be) the Aircraft or any
other portion of the Trust Estate or the Trust Indenture Estate arising as a
result of (i) Claims against Indenture Trustee in its individual capacity (and
not as Indenture Trustee) not related to its interest in the Aircraft or the
administration of the Trust Estate or the Trust Indenture Estate pursuant to
the Indenture, whether under Section 9-207(2)(e) of the Uniform Commercial Code
or otherwise, (ii) acts or omissions of Indenture Trustee in its individual
capacity (and not as Indenture Trustee) not contemplated hereunder or under the
other Operative Documents, or acts or omissions of Indenture Trustee in its
individual capacity (and not as Indenture Trustee) which are in violation of
any of the Operative Documents, or (iii) Taxes imposed on or Claims against
Indenture Trustee in its individual capacity (and not as Indenture Trustee)
which are excluded from indemnification by Lessee, or (iv) Claims against
Indenture Trustee in its individual capacity (and not as Indenture Trustee)
arising out of the voluntary or involuntary transfer by Indenture Trustee in
its individual capacity (and not as Indenture Trustee) of all or any portion of
its interest in the Aircraft, the Airframe, any Engine, the Trust Estate, the
Trust Indenture Estate or the Operative Documents (except a Claim resulting
from the exercise of remedies under and in accordance with the Indenture or for
a transfer provided for in the Operative Documents).
"Lessee" shall have the meaning set forth in the Recitals
hereto.
"Lessor" shall have the meaning set forth in the Recitals
hereto.
"Lessor's Lien" shall mean any Lien or disposition of title
affecting the Aircraft, the Airframe, any Engine or any Part arising as a
result of (i) any claim against
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Lessor, Owner Participant, any partner of the Owner Participant, Trust Company
or any of their Affiliates not related to the transactions contemplated by this
Lease or the other Operative Documents, the Financing Documents, the Foreign
Lease Documents or the Purchase Documents; (ii) any affirmative act of Lessor,
Owner Participant, any partner of the Owner Participant, Trust Company or any
of their Affiliates not expressly contemplated by this Lease or the other
Operative Documents, the Financing Documents or the Purchase Documents or not
permitted without consent (which consent has not been granted) by any party
hereto or thereto or that is in violation of any term of this Lease or the
other Operative Documents, the Financing Documents or the Purchase Documents;
(iii) Taxes imposed against the Trust Estate, Trust Company, Lessor, Owner
Participant, any partner of the Owner Participant or any of their Affiliates or
the consolidated group of taxpayers of which any of them is a member which are
not to be indemnified against by Lessee under the Operative Documents, the
Purchase Documents or the Financing Documents or by Original Head Lessee under
the Original Head Lease Tax Indemnification Agreement; (iv) claims against the
Trust Estate, Trust Company, Owner Participant, any partner of the Owner
Participant or Lessor or any of their Affiliates arising out of the transfer of
all or any part of their respective interest in the Aircraft, the Airframe,
either Engine, the Trust Estate, the Operative Documents or the Financing
Documents other than any transfers or dispositions pursuant to Sections 2, 6,
9, 11, 16, 18, 19 or 20 (except Liens resulting from a transfer not permitted
by such Section) of this Lease or pursuant to Section 10 of the Refunding
Agreement or pursuant to similar types of provisions in the Foreign Lease
Agreement; provided, however, that there shall be excluded from this definition
and Lessor shall not be required to remove any Lien which would otherwise
constitute a Lessor's Lien, if it is being diligently contested in good faith
so long as neither such proceedings nor Lien involves a material danger of the
sale, forfeiture or loss of the Aircraft or adversely affects Lessee's rights
under Section 21(f); and provided, further, that Lessor's Liens shall not
include the Lien of the Indenture or Lenders' Liens or Liens contemplated by
the Foreign Lease Documents.
"Lien" shall mean any mortgage, chattel mortgage, pledge,
lien, charge, encumbrance, lease, exercise of rights, security interest, lease
in the nature of a security interest, statutory right in rem, or claim of any
kind, including any thereof arising under any conditional sale
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agreement, equipment trust agreement or title retention agreement.
"Lien of the Indenture" shall mean the Lien created by the
Indenture on the Trust Indenture Estate.
"Maintenance Program" shall mean (i) the America West
Maintenance Program approved by the FAA for America West Airbus model A320-231
aircraft in effect on the date hereof or as modified with the approval of the
FAA without affecting, or any other FAA approved maintenance program which does
not affect, the return condition standards set forth in Section 16 and Exhibit
E or (ii) if the Aircraft is subject to a Permitted Sublease to a Foreign Air
Carrier, any other maintenance program for the Aircraft which is approved by
the aviation authority of the country of registry and complies with the
requirements applicable to maintenance of the Aircraft contained in the
definition of Foreign Air Carrier. The Maintenance Program shall encompass
scheduled maintenance, condition monitored maintenance, and on-condition
maintenance of the Airframe, Engines, and components of the Aircraft,
including, but not limited to, servicing, testing, preventive maintenance,
repairs, structural inspections, structure life improvements, system checks,
overhauls, approved modifications, service bulletins, engineering orders,
airworthiness directives, and corrosion control inspections and treatments.
All modifications and supplements to the Maintenance Program shall be provided
to Lessor upon its reasonable request and Lessor shall be given reasonable
access to the Maintenance Program upon its request.
"Manufacturer" shall mean, collectively, Manufacturer's
Subsidiary, IAE, Airbus Industrie or, as the case may be, any one or more
thereof as may be applicable in any given circumstance, together in each case
with any subcontractor or supplier thereof.
"Manufacturer's Subsidiary" shall mean AVSA, S.A.R.L., a
French societe a responsabilite limitee, which as of the date hereof is owned
by Airbus Industrie.
"Maximum Foreign Use Percentage" shall have the meaning
specified in Exhibit C.
"Mortgage Convention" shall mean the Convention for the
International Recognition of Rights in Aircraft, signed (ad referendum) at
Geneva, Switzerland, on June 19, 1948, and amended from time to time, but
excluding the terms
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of any adhesion thereto or ratification thereof containing reservations to
which the United States of America does not accede.
"Net Worth" shall mean, with respect to any Person, such
Person's stockholders' equity minus any intangible assets.
"Operative Documents" shall mean this Lease, each Lease
Supplement, any sublease, the Tax Indemnification Agreement, the Financing
Documents, the SLV Letter Agreement, and any certificate delivered or entered
into pursuant to the foregoing, as amended, supplemented or otherwise modified.
"Original Head Lease" shall mean this Aircraft Lease Agreement
[GPA 1989 BN-8], with respect to the Aircraft, dated as of December 19, 1989,
between Lessor, as lessor, and the Original Head Lessee, as lessee, as amended,
supplemented or otherwise modified and as in effect immediately prior to the
Restatement Date, as more particularly described in Annex I attached hereto.
"Original Head Lease Tax Indemnification Agreement" shall mean
the Head Lease Tax Indemnification Agreement [GPA 1989 BN-8], dated as of
December 19, 1989, and amended and restated as of the Restatement Date, between
the Original Head Lessee and Owner Participant, as amended, supplemented or
otherwise modified from time to time.
"Original Head Lessee" shall mean GPA Leasing USA Sub I, Inc.,
a Connecticut corporation.
"Original Sublease" shall mean the Initial Sublease (as
defined in the Original Head Lease) as in effect immediately prior to the
Restatement Date.
"Other Leases" shall mean the Amended and Restated Aircraft
Lease Agreement [GPA 1989 BN-7] amended and restated as of the Restatement Date
between Wilmington Trust Company as Owner Trustee, Lessor, and America West
Airlines, Inc. as Lessee, the Amended and Restated Aircraft Lease Agreement
[GPA 1989 BN-9] amended and restated as of the Restatement Date between
Wilmington Trust Company as Owner Trustee, Lessor, and America West Airlines,
Inc. as Lessee and the Amended and Restated Aircraft Lease Agreement [GPA 1989
BN-11] amended and restated as of the Restatement Date between Wilmington Trust
Company as Owner Trustee, Lessor,
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and America West Airlines, Inc. as Lessee, each as amended, supplemented or
otherwise modified from time to time.
"Other Letters of Credit" shall mean any and all letters of
credit pursuant to Section 8(l) of the Other Leases.
"Owner Participant" shall mean _______________, as Owner
Participant under the Trust Agreement, and its successors and permitted
assigns.
"Owner Trustee" shall mean Wilmington Trust Company, as Owner
Trustee under the Trust Agreement, and its successors and assigns.
"Parent" shall mean GPA Group plc, a public limited company
organized and existing under the laws of Ireland.
"Partial Assignment" shall mean the A320 Partial Assignment,
Assumption, Release and Amendment Agreement, dated as of December 30, 1988,
among Parent, Xxxxxxx, Inc., and Manufacturer's Subsidiary, as amended,
supplemented or otherwise modified.
"Participation Agreement" shall mean the Participation
Agreement [GPA 1989 BN-8], dated as of December 19, 1989, among Original Head
Lessee, Parent, Owner Participant, Owner Trustee, Indenture Trustee and the
"Lender" named therein, as amended, supplemented or otherwise modified from
time to time and as in effect immediately prior to the Restatement Date.
"Parts" shall mean all appliances, components, parts,
instruments, appurtenances, accessories, furnishings and other equipment of
whatever nature (excluding complete Engines or engines), including Buyer
Furnished Equipment, which may now or from time to time be incorporated or
installed in or attached to or were provided by the Manufacturer with the
Airframe or any Engine or so long as title thereto shall remain vested in
Lessor in accordance with the terms of Section 9 hereof after removal from such
Airframe or Engine or, so long as the Foreign Lease Agreement is in effect,
Foreign Lessor in accordance with Section 13 of the Foreign Lease Agreement.
Except as otherwise set forth herein, at such time as a replacement part shall
be substituted for a Part in accordance with Section 9 hereof, the Part so
replaced shall cease to be a Part hereunder.
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22
"Payment Location" shall have the meaning set forth in Exhibit
C, as the same may be changed from time to time by Lessor as provided in
Section 4(c).
"Permitted Lien" shall mean any Lien referred to in clauses
(i) through (vii) of the first sentence of Section 14 hereof.
"Permitted Sublease" shall have the meaning specified in
Section 6(a)(iii)(1).
"Permitted Sublessee" shall mean a Certificated Air Carrier
or, after the Restricted Use Period, (a) any Foreign Air Carrier, (b) the
United States Government or an agency or instrumentality thereof which bears
the full faith and credit of the United States of America or (c) any other
Person approved in writing by the Owner Participant and the Indenture Trustee.
"Person" shall mean and include any individual person,
corporation, partnership, firm, joint stock company, joint venture, trust,
estate, unincorporated organization, association, Governmental Entity, or
organization or association of which any of the above is a member or a
participant.
"Purchase Agreement" shall mean the Amended and Restated
Airbus A310/A320 Purchase Agreement, dated as of May 1, 1985, as amended and
restated as of December 30, 1988 (insofar as the same relates to Model A320
Aircraft), between Manufacturer's Subsidiary and Xxxxxxx, Inc., including the
Consent and Guaranty, together with Letter Agreements, Exhibits and Appendices
thereto, as partially assigned to Parent pursuant to the Partial Assignment, to
which Airbus Industrie, as guarantor, has consented, and as the same may from
time to time be further amended, supplemented or otherwise modified to the
extent permitted by the terms thereof.
"Purchase Documents" shall mean the Purchase Agreement, the
Partial Assignment and any other agreement, document or certificate delivered
or entered into pursuant to the foregoing, as amended, supplemented or
otherwise modified.
"Removable Part" shall have the meaning set forth in Section
9(b).
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"Renewal Rent" shall mean the rent payable pursuant to Section
20.
"Renewal Rent Payment Date" shall mean each day determined in
accordance with Exhibit C upon which a payment of Renewal Rent becomes payable.
If a Renewal Rent Payment Date shall fall on a day which is not a Business Day,
any payment due on such Renewal Rent Payment Date shall be made on the next
succeeding Business Day.
"Renewal Term" shall mean the period described in Section 20
following the end of the Basic Term if Lessee shall have exercised its renewal
option in accordance with Section 20.
"Rent" shall mean Basic Rent or Renewal Rent, as the case may
be, and Supplemental Rent, collectively.
"Replacement Airframe" and "Replacement Engine" shall have the
meanings specified in accordance with their description in Section 11.
"Replacement Period" shall have the meaning specified in
Section 11.
"Responsible Officer" shall mean, with respect to Lessee, any
of the Chief Executive Officer, Chief Financial Officer, Chief Operating
Officer or Controller.
"Restricted Use Period" shall have the meaning specified in
Exhibit C.
"Return Occasion" shall mean the event that occurs when
possession of the Aircraft is to be returned from Lessee to Lessor at the end
of the Term of this Lease or upon Lessor taking possession pursuant to Section
18 or for any other reason.
"Specified Investments" shall mean (i) direct obligations of
the United States Government, the obligations of which bear the full faith and
credit of the United States; (ii) obligations fully guaranteed by the United
States; (iii) certificates of deposit issued by any commercial bank
incorporated under the laws of the United States or one of the States thereof
(but not exceeding $10,000,000 in principal amount or deposits at any given
time for any one bank) having a combined capital surplus and undivided income
of at least $750,000,000 and having a rating of "B" or better from Xxxxxxxx
BankWatch, Inc.;
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(iv) repurchase agreements (but not exceeding $10,000,000 in principal amount
or deposits at any given time for any one bank) with any financial institution
having combined capital surplus and undivided income of at least $750,000,000
and fully collateralized by an obligation of the type described in clauses (i)
through (iii) as collateral pursuant to which an entity referred to in clause
(iii) above or another financial institution having a net worth of at least
$750,000,000 and having a rating of "B" or better from Xxxxxxxx BankWatch, Inc.
is obligated to repurchase any such obligation not later than ninety (90) days
after the purchase of any such obligation; and (v) money market funds which
invest solely in obligations described in clause (i) or (ii); provided that if
all of the above investments are unavailable, the entire amounts to be invested
may be used to purchase Federal funds from an entity described in clause (iii)
above; and provided further that no investment shall be eligible as a
"Specified Investment" unless the final maturity or date of return of such
investment is on or before the date which is ninety (90) days from the date of
purchase thereof.
"Stipulated Loss Value" shall mean as of the applicable date
during the Basic Term the amount set forth on Exhibit A hereto and, thereafter,
the amount described in Section 20 (it being understood and agreed that the
amounts set forth in Exhibit A take into account fully the amount and
application of each installment of Basic Rent or Renewal Rent on each
Stipulated Loss Value Date [(other than a Stipulated Loss Value Date that is a
Basic Rent Payment Date or Renewal Rent Payment Date) so that no additional
credit of such Basic Rent or Renewal Rent is to be made in respect thereof
except as expressly provided herein on a Basic Rent Payment Date or a Renewal
Rent Payment Date)]. In the event that it is necessary to determine a separate
Stipulated Loss Value for the Airframe or an Engine, such Stipulated Loss Value
shall be based on the ratio that the original cost to Lessor of the Airframe or
such Engine bears to Lessor's Cost (as set forth in the Original Head Lease)
for the Aircraft.
"Stipulated Loss Value Date" shall mean each monthly date
listed, or with respect to any Renewal Term determined as set forth, on Exhibit
A hereto.
"Supplemental Rent" shall mean any and all amounts,
liabilities and obligations other than Basic Rent and Renewal Rent which Lessee
assumes or agrees to pay to Lessor or any other Indemnitee hereunder or under
any other Operative Document, including, without limitation, (i) any
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payment of Stipulated Loss Value and any payment provided for in Section 11 or
18; (ii) any payment of indemnity required by Section 10 or 13 hereof; (iii)
any payment of an amount equal to average daily Basic Rent or Renewal Rent in
connection with an extension of the Term of this Lease as a result of (a) an
incipient Event of Loss and the operation of Section 11 hereof or (b) the need
to correct any failure of the Aircraft to satisfy the requirements of Section
16 and Exhibit E hereof; (iv) [Intentionally Left Blank]; (v) an amount equal
to any payment due to the Owner Trustee in respect of fees or expenses as
provided in Section 21(j) hereof; (vi) an amount equal to any payment due to
the Indenture Trustee in respect of fees or expenses as provided in the
Indenture and/or Section 21(j) hereof; (vii) the Pro Rata Share of any payment
due to any Pass Through Trustee in respect of fees or expenses pursuant to the
Pass Through Trust Agreement; (viii) the Pro Rata Share of any payment due to
the Subordination Agent in respect of fees, compensation, costs or expenses
pursuant to the Intercreditor Agreement; (ix) an amount equal to the amount
specified in clause (b) of the fourth paragraph of Section 2.02 of the
Indenture; and (x) to the extent permitted by applicable Law, interest at the
Interest Rate calculated: (1) on any part of any installment of Basic Rent or
Renewal Rent, or average daily Basic Rent referred to in clause (iii) of this
definition of "Supplemental Rent", as the case may be, not paid on the due date
thereof for the period for which the same shall be overdue and (2) on any
Supplemental Rent not paid when due hereunder from and including the due date
until the same shall be paid. As used herein, "Pro Rata Share" means as of any
date of determination a fraction the numerator of which is the aggregate
Principal Amount then outstanding of the Equipment Notes issued under the
Indenture and the denominator of which is the aggregate principal balance then
outstanding of all "equipment notes" issued under the Indentures (as defined in
the Intercreditor Agreement).
"Tax Indemnification Agreement" shall mean the Amended and
Restated Sublease Tax Indemnification Agreement [GPA 1989 BN-8], dated as of
September 21, 1990, and as amended and restated as of the Restatement Date
between Original Head Lessee and Lessee, as the same may be amended,
supplemented or otherwise modified from time to time.
"Taxes" shall have the meaning specified in Section 10(a).
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"Taxing Authority" shall have the meaning specified in Section
10(a).
"Term" shall mean, collectively, the Basic Term specified in
Lease Supplement No. 3 and, if Lessee extends the Term in accordance with
Section 20, the Renewal Term, in either case as extended or deemed extended as
a result of the occurrence of an event described in clause (iii) to the
definition of "Supplemental Rent" in this Lease, for which the Aircraft is
leased hereunder pursuant to Section 2.
"Trust Agreement" shall mean the Trust Agreement [GPA 1989
BN-8] dated as of December 19, 1989 as amended by Trust Supplement No. 1 and as
further amended by Trust Supplement No. 2 between Lessor, in its individual
capacity, and Owner Participant, as beneficiary, as the same may be amended,
supplemented or otherwise modified from time to time. The term "Trust
Agreement" shall also include each Trust Supplement.
"Trust Estate" shall have the meaning specified in the Trust
Agreement.
"Trust Supplement" shall mean Trust Supplement No. 1 and Trust
Supplement No. 2 and each subsequent Trust Supplement entered into thereunder
and any further supplement to the Trust Agreement.
"Trust Supplement No. 1" shall mean Trust Agreement Supplement
[GPA 1989 BN-8] No. 1 dated the Delivery Date between Lessor and Owner
Participant for the purpose of bringing the Aircraft and the Original Head
Lease into the Trust Estate.
"Trust Supplement No. 2" shall mean Trust Agreement Supplement
[GPA 1989 BN-8] No. 2 dated the Restatement Date between Lessor and Owner
Participant conforming the references in the Trust Agreement to this Agreement.
"United States Government" shall mean the federal government
of the United States of America and any board, commission, department,
division, organ, instrumentality, court or agency thereof.
"Wet Lease" shall mean any arrangement whereby Lessee agrees
to furnish the Aircraft or the Airframe and Engine or engines installed thereon
at that time to a third party pursuant to which such Aircraft or the Airframe
and
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Engine or engines (i) shall be operated solely by regular employees of Lessee
possessing all current certificates and licenses required under the Federal
Aviation Act (it is understood that cabin attendants need not be regular
employees of Lessee) and Lessee otherwise maintains operational control and
possession thereof, and (ii) shall be maintained by Lessee in accordance with
its normal maintenance practices and this Lease, and otherwise the insurance
required hereunder shall be maintained and the Aircraft shall be used and
operated in accordance with this Lease.
Section 2. Agreement to Lease. Lessor hereby agrees to lease
the Aircraft to Lessee, and Lessee hereby agrees to lease the Aircraft from
Lessor, on the terms and subject to the conditions set forth in this Lease.
Section 3. Delivery and Acceptance; Term.
(a) Time of Delivery. The Aircraft was delivered to
Lessee, and Lessee accepted delivery of the Aircraft, on December 29, 1989.
(b) [Intentionally Left Blank]
(c) Acceptance of Aircraft. The Aircraft leased
hereunder was delivered to Lessee "AS IS," "WHERE IS" and SUBJECT TO EACH AND
EVERY DISCLAIMER OF WARRANTY AND REPRESENTATION AS SET FORTH IN SECTIONS 5(a)
AND (b) HEREOF.
Lessee hereby agrees that it has accepted the Aircraft for all
purposes of this Lease and Lessee's acceptance of the Aircraft was conclusive
evidence that, as between Lessor and Lessee, the Aircraft was in all respects
satisfactory to Lessee and was in compliance with this Lease.
(d) Term of Lease. The Basic Term of this Lease shall
commence on the Delivery Date and shall continue until the Expiration Date;
provided, however, that the Term of this Lease may be earlier terminated
pursuant to the provisions hereof.
Section 4. Rent.
(a) Rent. Lessee covenants and agrees to pay the following
as Rent hereunder:
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(i) Basic Rent. The Basic Rent, as set forth in
Exhibit C throughout the Basic Term hereof, in consecutive installments, in
arrears as set forth on Schedule I attached to Exhibit C, due and payable on
each Basic Rent Payment Date to the Lessor; and
(ii) Supplemental Rent. Any and all Supplemental
Rent, which shall be due and payable ten (10) Business Days after demand unless
otherwise specifically provided, except for Supplemental Rent constituting
interest on overdue amounts, which shall be due and payable on demand. In the
event of any failure on the part of Lessee to pay any Supplemental Rent when
due, Lessor shall have all rights, powers and remedies provided for herein or
by law or equity or otherwise in the case of nonpayment of Basic Rent or
Renewal Rent. Lessee's obligation to pay Supplemental Rent which is due and
owing pursuant to the terms hereof shall survive the expiration or termination
of Lessee's obligation to pay Basic Rent or Renewal Rent hereunder.
(b) Minimum Payments. Notwithstanding any
provision in this Lease or in any other Operative Document to the contrary,
under all circumstances and in any event, (i) the Stipulated Loss Value,
together with the payment of Supplemental Rent and all other Rent then due
hereunder, as of any time and as of the date of any payment thereof shall (both
before and after giving effect to any reductions therefrom) be in an amount at
least sufficient to pay in full as of such time or date the aggregate unpaid
principal amount of the Equipment Notes then outstanding and all accrued and
unpaid interest (assuming interest has been timely paid) thereon, and (ii)
Basic Rent payable on any Basic Rent Payment Date shall at least equal the
aggregate amount of principal and interest due and payable on the Equipment
Notes on such Basic Rent Payment Date. It is agreed, however, that no
installment of Basic Rent or Stipulated Loss Value shall be increased or
adjusted by reason of (A) any attachment or diversion of Rent on account of any
Lessor's Lien or Lenders' Lien, (B) any modification of the terms of the
Equipment Notes or the other Financing Documents made without the prior written
consent of Lessee or (C) the acceleration of any Equipment Note due to the
occurrence of any "Indenture Event of Default" (as defined in the Indenture)
which does not constitute an Event of Default hereunder. It is further agreed
that nothing in this Lease or any other Operative Document shall be deemed to
constitute a guaranty of the value, utility or useful life of the Aircraft or a
guaranty in respect of interest,
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principal or any other amounts payable in respect of or under the Equipment
Notes.
(c) Date, Place and Method of Payment. If any date on
which a payment of Rent becomes due and payable is not a Business Day, the Rent
otherwise due on such date shall be due and payable on the next succeeding
Business Day. All Basic Rent, Renewal Rent and Supplemental Rent payable under
this Lease shall be paid by wire transfer in immediately available currency of
the United States of America, no later than 12:00 p.m. (noon), New York City
time, on the date payable hereunder, and, so long as the Lien of the Indenture
shall not have been discharged, to or as directed by Indenture Trustee in
accordance with the payment instructions set forth in Exhibit C hereto or at
such other address in the City of New York or Hartford, Connecticut as
Indenture Trustee may direct by thirty (30) days prior written notice to
Lessee, except for all Excepted Payments. All Excepted Payments, and, upon
discharge of the Lien of the Indenture, all payments of Rent thereafter made
hereunder, shall be paid in such immediately available funds no later than
12:00 p.m. (noon), New York City time, on the date payable hereunder, to Lessor
or to Owner Participant, as appropriate, in accordance with the payment
instructions set forth in Exhibit C or at such other address as Lessor may
direct by thirty (30) days prior written notice to Lessee.
(d) Prohibition Against Setoff, Counterclaim, Etc. This
Lease is a net lease. Lessee's obligations to pay all Rent and to perform all
other obligations hereunder are absolute and unconditional and shall not be
affected or reduced by any circumstances, including, without limitation, (i)
any setoff, counterclaim, recoupment, defense, or other right which Lessee may
have against Lessor, Original Head Lessee, Owner Participant, Indenture
Trustee, any Note Holder, any Manufacturer, any Person providing services with
respect to the Aircraft, or any other Person, for any reason whatsoever
(whether in connection with the transactions contemplated hereby or otherwise),
including, without limitation, any breach by Lessor of its representations,
warranties or covenants contained herein or in the other Operative Documents;
(ii) any defect in the title, airworthiness, eligibility for registration under
the Federal Aviation Act, condition, design, operation, or fitness for use of,
or any damage to or loss or destruction of, the Aircraft (subject to the
provisions of Section 11(a)(ii) hereof), any interruption or cessation in the
use of or possession thereof by or availability to Lessee for
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any reason whatsoever, whether arising out of or related to an act or omission
of Lessee, Lessor, Original Head Lessee, Owner Participant, Indenture Trustee,
any Note Holder, any Manufacturer, any Person providing services with respect
to the Aircraft or any other Person; (iii) any Liens with respect to the
Aircraft; (iv) the invalidity or unenforceability or lack of due authorization
or other infirmity of this Lease or any sublease or any absence of right, power
or authority of Lessor, Original Head Lessee, Lessee or Indenture Trustee to
enter into this Lease or the Indenture, as the case may be; (v) any insolvency,
bankruptcy, reorganization, or similar proceedings by or against Lessor,
Original Head Lessee, Lessee, any sublessee, Indenture Trustee or any Note
Holder; (vi) any Taxes; or (vii) any other circumstance or happening of any
nature whatsoever, whether or not similar to any of the foregoing; it being the
expressed intention of Lessor and Lessee that all Rent payable hereunder shall
be payable in all events, unless the obligation to pay the same shall be
terminated pursuant to the express provisions of this Agreement.
Except as expressly set forth elsewhere in this Agreement,
Lessee hereby waives, to the extent permitted by applicable Law, any and all
rights which it may now have or which at any time hereafter may be conferred
upon it, by statute or otherwise, to terminate, xxxxx, cancel, quit, reduce,
defer, suspend or surrender this Lease or the Aircraft or any obligation
imposed upon Lessee hereunder or under the other Operative Documents
(including, without limitation, payment of Rent), except in accordance with the
terms hereof.
Each payment of Rent made by Lessee shall be final. Lessee
will not seek to recover all or any part of any payment of Rent for any reason
whatsoever except manifest error.
If for any reason whatsoever this Lease shall be terminated in
whole or in part by operation of Law, except as specifically provided herein,
Lessee waives all rights (if any) to any diminution in its Rent obligations
hereunder and nonetheless agrees to pay to Indenture Trustee or Lessor as
provided in Section 4(c) hereof an amount equal to each Basic Rent or Renewal
Rent, as the case may be, payment and any Supplemental Rent payment at the time
such payments would have become due and payable in accordance with the terms
hereof had this Lease not been terminated in whole or in part, and so long as
such payments are made and all other terms and conditions hereof are complied
with by Lessee,
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Lessor and Lessee will deem this Lease to remain in full force and effect.
The foregoing shall not, however, be construed as a waiver of
Lessee's other rights to seek damages, specific performance, other remedies at
law or equity or any combination thereof, as against the Original Head Lessee,
Lessor, Indenture Trustee or any other Person having an interest herein through
the Original Head Lessee, Lessor, Indenture Trustee or any other Person as
shall be liable therefor, on account of any failure of the Original Head
Lessee, Lessor, Indenture Trustee or any other such Person to perform its
express obligations under this Lease and the other Operative Documents, or to
enforce any judgment obtained therefor.
Section 5. Representations, Warranties and Covenants.
(a) Warranties and Disclaimer of Warranties. THE
AIRCRAFT WAS DELIVERED AND IS BEING LEASED BY LESSOR TO LESSEE "AS IS" AND
"WHERE IS". LESSEE EXPRESSLY AGREES THAT IT TOOK THE AIRCRAFT ON SUCH BASIS.
LESSOR HAS NOT AND SHALL NOT BE DEEMED TO HAVE MADE, BY VIRTUE OF HAVING LEASED
THE AIRCRAFT UNDER THIS LEASE OR BY HAVING ACQUIRED THE AIRCRAFT OR DONE OR
FAILED TO DO ANY ACT OR ACQUIRED OR FAILED TO ACQUIRE ANY STATUS UNDER OR IN
RELATION TO THIS LEASE, AND NEITHER LESSOR NOR OWNER PARTICIPANT HAS MADE, AND
LESSOR FOR ITSELF AND OWNER PARTICIPANT, HEREBY SPECIFICALLY DISCLAIMS, ANY
GUARANTY, REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE
(EXCEPT AS HEREINBELOW PROVIDED), AIRWORTHINESS, VALUE, CONDITION, DESIGN,
OPERATION, MERCHANTABILITY, OR FITNESS FOR USE FOR A PARTICULAR OR ANY PURPOSE
OF THE AIRCRAFT, OR AS TO THE QUALITY OF THE MATERIAL OR WORKMANSHIP OF THE
AIRCRAFT, THE ABSENCE THEREFROM OF LATENT OR OTHER DEFECTS WHETHER OR NOT
DISCOVERABLE, THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR
COPYRIGHT OR AS TO ANY OTHER GUARANTY, REPRESENTATION OR WARRANTY WHATSOEVER,
EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRCRAFT, INCLUDING WITHOUT LIMITATION
ANY LIABILITY IN TORT, OBLIGATION OR LIABILITY ARISING FROM NEGLIGENCE, STRICT
LIABILITY, ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE OR DEALING
OR USAGE OR TRADE, OR LOSS OR INTERRUPTION OF USE, PROFIT, OR BUSINESS, OR
OTHER CONSEQUENTIAL DAMAGES; AND LESSEE HEREBY WAIVES, RELEASES, RENOUNCES AND
DISCLAIMS EXPECTATION OF OR RELIANCE UPON ANY SUCH GUARANTY, REPRESENTATION OR
WARRANTIES. NEITHER LESSOR NOR ANY OTHER INDEMNITEE SHALL HAVE ANY
RESPONSIBILITY OR LIABILITY TO LESSEE OR ANY OTHER PERSON, REGARDLESS OF ANY
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NEGLIGENCE (OTHER THAN ITS OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT WHICH IS
NOT ATTRIBUTABLE TO ITS INTEREST IN THE AIRCRAFT) OF LESSOR OR ANY OTHER
INDEMNITEE, AND LESSEE HEREBY WAIVES, RELEASES, RENOUNCES AND DISCLAIMS ANY
RIGHTS OR REMEDIES, WITH RESPECT TO (i) ANY LIABILITY, LOSS OR DAMAGE CAUSED OR
ALLEGED TO BE CAUSED DIRECTLY OR INDIRECTLY BY THE AIRCRAFT OR BY ANY
INADEQUACY THEREOF OR DEFICIENCY OR DEFECT THEREIN OR BY ANY OTHER CIRCUMSTANCE
IN CONNECTION THEREWITH, (ii) THE USE, OPERATION OR PERFORMANCE OF THE AIRCRAFT
OR ANY RISKS RELATING THERETO, (iii) ANY INTERRUPTION OF SERVICE, LOSS OF
BUSINESS OR ANTICIPATED PROFITS OR DIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES
OR (iv) THE DELIVERY, OPERATION, SERVICING, MAINTENANCE, REPAIR, IMPROVEMENT OR
REPLACEMENT OF THE AIRCRAFT. THE WARRANTIES AND REPRESENTATIONS SET FORTH IN
THIS SECTION 5(a) ARE EXCLUSIVE AND IN LIEU OF ALL OTHER REPRESENTATIONS OR
WARRANTIES WHATSOEVER WITH RESPECT TO THE AIRCRAFT, EXPRESS OR IMPLIED, AND
LESSOR SHALL NOT BE DEEMED TO HAVE MADE ANY OTHER IMPLIED WARRANTIES, OR
GUARANTEES, INCLUDING BUT NOT LIMITED TO ANY IMPLIED WARRANTY OF
MERCHANTABILITY, ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE,
COURSE OF DEALING OR USAGE OF TRADE, OR ANY IMPLIED WARRANTY OF FITNESS FOR A
PARTICULAR OR ANY USE, EXCEPT THAT: (A) Lessor represents and warrants that
(x) on the Delivery Date Lessor had, and on the Restatement Date Lessor has,
the right to lease the Aircraft hereunder and (y) on the Delivery Date the
Aircraft was free of Head Lessor's Liens and on the Restatement Date the
Aircraft is free of Lessor's Liens and Head Lessor's Liens and (B) Lessor
covenants that it shall not create, incur, assume or suffer to exist any
Lessor's Lien on the Aircraft.
(b) Representations and Warranties of Lessor. Lessor
hereby represents and warrants, as of the Restatement Date that its
representations and warranties set forth in Section 9(b) of the Refunding
Agreement were true when made and continue to be true and correct.
(c) No Amendments to Financing Documents. Lessor
covenants and agrees that Lessor will not, without the prior written consent of
Lessee, amend, modify, supplement or waive any provision of any Financing
Document in such a way as to materially increase Lessee's obligations hereunder
or materially reduce Lessee's rights hereunder.
The representations, warranties and covenants of Lessor under
Sections 5(a) and 5(b) and this Section 5(c) shall survive the execution and
delivery of this Lease and the delivery of the Aircraft and the Restatement
Date.
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(d) Suppliers' Warranties. So long as a Default or an
Event of Default has not occurred and is continuing and provided that the
Aircraft continues to be maintained, modified and repaired as required
hereunder, Lessor hereby assigns or, if by their terms not assignable, agrees
otherwise to make available to Lessee the right to exercise in Lessee's name
such rights as Lessor may have or may subsequently obtain (but without
representation or warranty by or recourse to Lessor) with respect to any
product warranty, service life policy, trademark, patent or copyright
infringement indemnity, or airframe or propulsion system performance guaranty,
of Airbus Industrie, the Manufacturer's Subsidiary, IAE or any subcontractor or
vendor with respect thereto under the Purchase Agreement (except those which
were given directly to Parent, the Original Head Lessee or any of their
Affiliates and are not directly related to the operator's use of the Aircraft),
to the extent that the same may be assigned or otherwise made available to
Lessee, and Lessor agrees to exert its reasonable efforts, at Lessee's expense
and upon its request, to enforce such rights as Lessor may have with respect
thereto for the benefit of Lessee; provided, however, that upon and during the
continuance of a Default or an Event of Default, such assignment or other
rights which are otherwise made available to Lessee shall immediately and
automatically without further action be deemed cancelled and, to the extent of
any remaining interest held by Lessee, deemed reassigned to Lessor and all such
rights shall revert to Lessor automatically including all claims thereunder
whether or not perfected and all amounts payable shall be paid to and held by
Lessor. In no event, however, shall Lessee have any right to amend, supplement
or otherwise modify the Purchase Agreement (by change order or otherwise). In
connection with the foregoing, Lessee agrees to be bound by and comply with all
applicable terms, conditions and limitations of the provisions of the Purchase
Agreement.
Section 6. Possession and Use.
(a) Possession.
(i) Lease, Assignment and Transfer. LESSEE WILL
NOT ASSIGN THIS LEASE OR ANY RIGHTS OR OBLIGATIONS HEREUNDER OR INTEREST HEREIN
(EXCEPT AS PROVIDED IN SECTION 8(e) BELOW) OR SUBLEASE, WET LEASE OR OTHERWISE
IN ANY MANNER TRANSFER, DELIVER OR RELINQUISH POSSESSION OR USE OF THE
AIRCRAFT, AIRFRAME OR ANY ENGINE OR INSTALL ANY ENGINE OR PERMIT ANY ENGINE TO
BE INSTALLED ON ANY AIRFRAME OTHER
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THAN THE AIRFRAME; provided, that, so long as no Event of Default or Default
shall have occurred and be continuing or would result therefrom and so long as
the action to be taken shall not adversely affect Lessor's title to or other
interest in, or the Lien of the Indenture on, the Aircraft, the Airframe or
either of the Engines or this Lease or the insurance required to be maintained
hereunder and Lessee is otherwise in full compliance with Section 12, and so
long as all necessary approvals of the FAA and any other Governmental Entity
having jurisdiction have been obtained, then Lessee, without the prior written
consent of Lessor, may, only to the extent provided below and subject to the
limitations of Sections 6(a)(ii) and 6(a)(iii) below:
(1) subject any Engine to a normal interchange,
maintenance, servicing or pooling agreement or similar arrangement
with a Permitted Sublessee, in each case customary in the airline
industry of which Lessee is a part and entered into in the ordinary
course of its business; provided that no transfer of the registration
of any Engine shall be effected in connection therewith; and provided,
further, that (A) no such agreement or arrangement contemplates,
results in or requires the transfer of title to any Engine, and (B) if
Lessor's or Foreign Lessor's (so long as the Foreign Lease Agreement
is in effect) title to any Engine shall be divested under any such
agreement or arrangement, such divestiture shall be deemed to be an
Event of Loss with respect to such Engine and not an Event of Default
and Lessee shall comply with Section 11(b) hereof in respect thereof;
(2) deliver possession of the Aircraft, the Airframe or
any Engine to the manufacturer thereof, or in accordance with the
Maintenance Program to an FAA certified repair station, for testing,
service, storage, repair, maintenance, inspection or overhaul work on
such Aircraft, Airframe or Engine or any part thereof or for
alterations or modifications in or additions to such Aircraft,
Airframe or Engine to the extent required or permitted by the terms of
Section 9 hereof;
(3) transfer possession of the Aircraft or the Airframe
to the United States of America or any instrumentality or agency
thereof pursuant to a sublease;
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(4) (i) subject the Airframe to the Civil Reserve Air Fleet
Program and transfer possession of the Airframe or any Engine to the
United States Government pursuant to the Civil Reserve Air Fleet
Program, so long as Lessee shall promptly notify Lessor upon
transferring possession of the Airframe or any Engine to the United
States Government pursuant to the Civil Reserve Air Fleet Program and
provide Lessor with the name and address of the Contracting Office
Representative for the Military Airlift Command of the United States
Air Force to whom notices must be given; or
(ii) subject the Airframe to (A) a service contract with
the United States Government, a copy of which shall be provided to
Lessor, providing for possession to be held by the United States
Government for a period not extending beyond the end of the Term, or
(B) a requisition for use by the United States Government not
constituting an Event of Loss;
(5) install an Engine on an airframe (other than the
Airframe) owned by Lessee free and clear of all Liens except (A)
Permitted Liens and Liens which apply only to engines (other than the
Engines), appliances, parts, instruments, appurtenances, accessories,
furnishings and other equipment (other than Parts) installed on such
airframe (but not to the airframe as an entirety) and (B) the rights
of participants under normal interchange agreements which are
customary in the airline industry and do not contemplate, permit,
result in or require the transfer of title to the airframe or engines
installed thereon;
(6) install an Engine on an airframe leased to Lessee or
owned by Lessee subject to a conditional sale or other security
agreement; provided that: (A) such airframe is free and clear of all
Liens except the rights of the parties to the lease or conditional
sale or other security agreement covering such airframe and except
Liens of the type permitted by clauses (A) and (B) of Section
6(a)(i)(5) and the Lien of any mortgage which provides that each
Engine leased to Lessee hereby shall not become subject to the Lien
thereof or to any rights of any party thereunder other than Lessee
(with respect to Lessee's rights expressly granted hereunder),
notwithstanding the installation of such Engine on any airframe
subject to the Lien of such mortgage, unless and until Lessee shall
become the
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owner of such Engine and Lessor shall have no further interest
therein, all pursuant to the express terms of this Lease; and (B)
there shall be in effect a written agreement of the lessor or secured
party of such airframe (which may be contained in the lease or
conditional sale or other security agreement covering such airframe)
substantially similar in effect to the agreement of Lessor in Section
6(b) below whereby such lessor or secured party effectively and
expressly agrees that neither it nor its successors or assigns will
acquire or claim any right, title or interest in any Engine by reason
of such Engine being installed on such airframe at any time while such
Engine is subject to this Lease or is owned by Lessor, and a copy of
such agreement shall be provided to Lessor upon written request;
(7) install an Engine on an airframe owned by Lessee,
leased to Lessee or purchased by Lessee subject to a conditional sale
or other security agreement under circumstances where neither Section
6(a)(i)(5) or Section 6(a)(i)(6) is applicable; provided that such
installation shall be deemed an Event of Loss with respect to such
Engine and Lessee shall comply with Section 11(b) hereof in respect
thereof, Lessor not intending hereby to waive any right or interest it
may have to or in such Engine under applicable Law until compliance by
Lessee with such Section 11(b);
(8) enter into a Wet Lease for the Aircraft or the
Airframe and engines installed thereon in the ordinary course of
Lessee's business for a period not extending beyond the Term; provided
that if Lessee shall enter into any Wet Lease for a period of more
than six months (including renewal options) Lessee shall provide to
Lessor written notice of such Wet Lease (such notice to be given at
least ten (10) Business Days prior to entering into such Wet Lease);
or
(9) sublease the Aircraft or the Airframe to any
Permitted Sublessee on the terms and conditions set forth in Section
6(a)(iii) below.
(ii) Certain Limitations on Transfers. With
respect to any transfer pursuant to Section 6(a)(i):
(1) the rights of any transferee that receives possession
by reason of a transfer permitted by Section
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6(a) hereof (other than the transfer of an Engine which is deemed to
have been an Event of Loss) and any Wet Lease shall be expressly
subject and subordinate to all the terms of this Lease and the Lien of
the Indenture (if it has not been discharged);
(2) Lessee's obligations hereunder and under the other
Operative Documents shall continue in full force and effect and Lessee
shall remain primarily liable hereunder for the performance of all of
the terms of this Lease to the same extent as if such transfer had not
occurred and no provision of this Lease shall be deemed a waiver of
the Lessor's rights hereunder or under the other Operative Documents
nor discharge or diminish any of Lessee's obligations hereunder or
under the other Operative Documents;
(3) During the Restricted Use Period, no Wet Lease,
Permitted Sublease or other relinquishment of possession of the
Aircraft, the Airframe or any Engine pursuant to the terms of this
Section 6(a) shall be permitted if such Wet Lease, Permitted Sublease
or other relinquishment of possession would cause the Aircraft, the
Airframe or such Engine to be "tax-exempt use property" within the
meaning of Section 168(h) of the Code or cease to be "Section 38
property" within the meaning of Section 48(a) of the Code (as
determined after the application of Section 47(a)(7) of the Code);
(4) The term of any transfer, Wet Lease, Permitted
Sublease or other relinquishment of possession shall not extend beyond
the Basic Term or the Renewal Term (if Lessee shall have exercised its
option to renew this Lease in accordance with the terms hereof);
(5) No transfer, Wet Lease, Permitted Sublease or other
relinquishment of possession of the Aircraft, the Airframe or any
Engine shall in any way discharge or diminish any of Lessee's
obligations to Lessor or any other Person hereunder for which
obligations Lessee shall remain primarily liable;
(6) The sublessee under any Permitted Sublease, in its
consent thereto, shall confirm that from and after the occurrence and
continuance of an Event of Default and, unless an Event of Default
specified in Section 17(e), (f) or (g) of this Lease has occurred and
is continuing, this Lease being deemed or declared
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in default, Lessor (and, so long as the Lien of the Indenture shall
not have been discharged, Indenture Trustee) shall be entitled to
enforce directly and in its own name all representations, warranties,
indemnities, covenants and agreements under the applicable Permitted
Sublease; and
(7) Each Permitted Sublease shall (A) provide that (I)
the Aircraft or Airframe may not be operated or used other than as
provided in this Lease and shall be maintained and operated as
required hereunder, (II) Lessor may avoid or terminate such sublease
following an Event of Default hereunder and (III) to the extent not
accomplished by an assignment of the Permitted Sublease, upon the
occurrence of an Event of Default hereunder, Lessee's rights under
such Permitted Sublease shall automatically be deemed assigned to
Lessor; and (B) be a "net lease" in accordance with industry practice
and shall be comparable to, or more restrictive than, this Lease and
under such Permitted Sublease (except a sublease to the United States
Government or a Foreign Air Carrier after the Restricted Use Period),
Lessee as lessor under such Permitted Sublease, must be entitled to
the same benefits under 11 U.S.C. Section 1110 as Lessor is entitled
hereunder and such Permitted Sublease shall contain provisions
regarding such Section 1110 which are substantially the same as the
related provisions of this Lease. In addition, from and after the
occurrence and continuance of an Event of Default, all rent and other
amounts payable by the Permitted Sublessee under such Permitted
Sublease shall be paid directly to Indenture Trustee and, upon
discharge of the Lien of the Indenture, to Lessor.
(iii) Permitted Subleases. With respect to any
sublease pursuant to Sections 6(a)(i)(3) or (4) (to the extent permitted by
Law) or Section 6(a)(i)(9) above:
(1) Lessee may sublease the Aircraft or the Airframe to a
Permitted Sublessee (each of which shall constitute a "Permitted
Sublease") if (A) in any such case, the Permitted Sublessee under such
sublease is not subject to a proceeding or final order under
applicable bankruptcy, insolvency or reorganization laws on the date
such sublease is entered into, (B) in the event that the Permitted
Sublessee under such sublease is a Foreign Air Carrier (other than a
Foreign Air Carrier principally based in Taiwan), the United
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States maintains diplomatic relations with the country in which such
proposed Permitted Sublessee is principally based at the time such
sublease is entered into (or, in the case of a sublease to a proposed
Permitted Sublessee principally based in Taiwan, maintains diplomatic
relations at least as good as those in effect on the Restatement Date)
and (C) in the event that the Permitted Sublessee under such sublease
is a Foreign Air Carrier, Lessor and the Indenture Trustee shall have
received an opinion of counsel to Lessee, in form and substance
reasonably satisfactory to Owner Participant and the Indenture
Trustee, to the effect that (I) the terms of the proposed sublease
will be legal, valid, binding and (subject to customary exceptions in
foreign opinions generally) enforceable against the proposed Permitted
Sublessee in the country in which the Permitted Sublessee is
principally based, (II) there exist no possessory rights in favor of
the Permitted Sublessee under such sublease under the laws of such
Permitted Sublessee's country of domicile that would, upon bankruptcy
or insolvency of or other default by Lessee, prevent the return or
repossession of the Aircraft in accordance with the terms of this
Lease, (III) (unless Lessee shall have agreed or is required to
provide insurance covering the risk of requisition of use of the
Aircraft by the government of the country of such Permitted
Sublessee's country of domicile) the laws of such Permitted
Sublessee's country of domicile require fair compensation by the
government of such jurisdiction payable in currency freely convertible
into dollars for the loss of use of the Aircraft in the event of the
requisition by such government of such use, (IV) the Permitted
Sublessee is either not entitled to sovereign immunity, or has
effectively waived such sovereign immunity, with respect to its rights
and obligations under the proposed sublease; (V) the laws of such
Permitted Sublessee's country of domicile would give recognition to
Lessor's title to the Aircraft, to the registry of the Aircraft in the
name of the Lessor (or Lessee, as "lessee", or the proposed Permitted
Sublessee, as "sublessee", as appropriate) and to the Lien of the
Indenture; (VI) it is not necessary under the laws of such Permitted
Sublessee's country of domicile, solely as a consequence of such
subleasing and without giving effect to any other activity of Owner
Participant, Owner Trustee or Indenture Trustee or any Affiliate
thereof, as the case may be, for the Owner Trustee, the Owner
Participant or the Indenture Trustee to qualify
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to do business in such jurisdiction; and (VII) if the Owner
Participant so requests, (x) under the laws of such Permitted
Sublessee's country of domicile there is no tort liability of the
owner of an aircraft not in possession thereof (it being agreed that
in the event this opinion cannot be given in a form reasonably
satisfactory to Owner Participant, such opinion shall be waived if
insurance reasonably satisfactory to Owner Participant is provided to
cover such risk), and (y) such other matters as the Owner Participant
reasonably requests, provided, however, that no sublease shall extend
beyond the expiration of the Basic Term or any Renewal Term then in
effect.
Any Permitted Sublease shall expressly provide that the rights
of any Permitted Sublessee shall be expressly subject and subordinate to all
the terms of this Lease and to the Lien of the Indenture (if it has not been
discharged), including, without limitation, the covenants contained in Sections
6(c), 6(d) and 6(e) hereof and Lessor's rights to repossession pursuant to
Section 18 hereof and to avoid or terminate such Permitted Sublease upon such
repossession, and Lessee shall remain primarily liable hereunder for the
performance of all of the terms of this Lease to the same extent as if such
Permitted Sublease had not occurred. No Permitted Sublease shall in any way
discharge or diminish any of Lessee's obligations to Lessor hereunder or under
the other Operative Documents or constitute a waiver of Lessor's rights or
remedies hereunder or under the other Operative Documents, and such rights
shall continue as if such Permitted Sublease had not occurred. Any Permitted
Sublease shall expressly prohibit any further sub-sublease or assignment or any
other similar transfer of the Aircraft, Airframe or any Engine or rights
thereto by the Permitted Sublessee. Lessee shall provide to the Owner
Participant and the Indenture Trustee (i) written notice of any Permitted
Sublease hereunder (such notice to be given not later than ten Business Days
prior to entering into any Permitted Sublease with any proposed Permitted
Sublessee), and (ii) a copy of each Permitted Sublease together with an
assignment, as security for Lessee's obligations hereunder, of such Permitted
Sublease, and if Lessor or the Indenture Trustee so requests, a consent thereto
from such Permitted Sublessee, in form and substance reasonably satisfactory to
Lessor and the Indenture Trustee, within ten (10) Business Days following the
effective date of such Permitted Sublease.
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(b) Reciprocal Recognition of Rights. In the event the
lessor or secured party of any airframe leased to Lessee (or a Permitted
Sublessee) or owned by Lessee (or a Permitted Sublessee) is subject to a
conditional sale or other security agreement in accordance with Section
6(a)(i)(6) hereof, and the lease or conditional sale or other security
agreement covering such airframe also covers an engine or engines owned by the
lessor under such lease or subject to a security interest in favor of the
secured party under such conditional sale or other security agreement, Lessor
hereby agrees for the benefit of such lessor or secured party that Lessor will
not acquire or claim, as against such lessor or secured party, any right, title
or interest in any such engine as the result of such engine being installed on
the Airframe at any time while such engine is subject to such lease or
conditional sale or other security agreement and owned by such lessor or
subject to a security interest in favor of such secured party. Lessor also
hereby agrees for the benefit of the mortgagee under any mortgage complying
with Section 6(a)(i)(6) hereof, relating to installation of an Engine on an
airframe leased to Lessee (or a Permitted Sublessee), that Lessor will not
acquire or claim, as against such mortgagee, any right, title or interest in
any engine subject to the lien of such mortgage as the result of such engine
being installed on the Airframe at any time while such engine is subject to the
lien of such mortgage.
(c) Lawful Insured Operations. Lessee will not permit
the Aircraft, the Airframe or any Engine to be serviced, repaired, maintained,
used or operated in violation of any Law of any Governmental Entity having
jurisdiction, or contrary to the Manufacturers' operating manuals or
instructions, or in violation of any airworthiness certificate or limitation,
license or registration issued by any such authority or any manufacturer's
specifications, service bulletins or other requirements, including, without
limitation, any manufacturer's requirements as may be applicable to keep in
full force and effect each material warranty, product or performance guaranty,
service life policy or the like, in each case, to the extent made mandatory for
Part 121 operators similarly situated to Lessee or the Permitted Sublessee if
the Aircraft is registered with the FAA, or the applicable laws of any other
jurisdiction in which the Aircraft may then be registered in accordance with
Section 11 of the Refunding Agreement, unless the validity thereof is being
contested in good faith and by appropriate proceedings, but only so long as
such proceedings do not involve any danger of sale,
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forfeiture or loss of the Aircraft or impair the interest of Lessor therein or
impair the validity or priority of the Lien of the Indenture or result in a
risk of criminal liability of Lessor, Owner Participant or Indenture Trustee
and are not inconsistent with any insurance required to be maintained by Lessee
hereunder. In the event that such Law or other requirement requires alteration
of the Aircraft during the Basic Term or the then-current Renewal Term, Lessee
shall comply therewith at its sole expense and shall maintain the same in
proper condition for operation under such Laws and other requirements. Lessee
shall not operate in any manner or locate in any place the Aircraft, or suffer
or permit the Aircraft to be operated by a Permitted Sublessee or otherwise in
any manner or located by a Permitted Sublessee or otherwise in any place (i)
unless the Aircraft is covered by insurance or United States Government
indemnity as required by the provisions hereof or (ii) contrary to the terms of
such insurance or United States Government indemnity or (iii) which prohibits
the operation or location therein of Aircraft owned by a United States citizen.
Lessee also agrees not to operate or locate the Aircraft or suffer or permit
the Aircraft to be operated or located in any area excluded from coverage by
any insurance policy issued pursuant to the requirements of this Lease or in
any war zone unless insured or indemnified by the United States of America
therefor, except in the case of operation pursuant to a sublease or contract
with, or as a result of a requisition (not constituting an Event of Loss) by,
the United States of America, and then only if Lessee has obtained insurance or
an indemnity (in lieu of such insurance) from the United States of America
covering such risks, in the amounts and otherwise as required by this Lease.
Lessee shall in no event permit the Aircraft, the Airframe or any Engine to be
used, located, operated or maintained in Hong Kong or the People's Republic of
China.
(d) Maintenance. Lessee, at its own cost and expense,
shall: (i) perform or cause to be performed all service, repair, maintenance,
overhaul, inspections, alterations, modifications, and testing (A) in
accordance with good airline industry practice and in such manner to provide
complete data and documentation necessary to substantiate certification, (B) as
may be necessary and required under, and in compliance with, applicable Law,
including, without limitation, FAA rules, regulations and other requirements,
any other applicable rules, regulations and requirements by any other
applicable Governmental Entity, the Maintenance Program, airworthiness
directives having a compliance date during the Term, and the service
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bulletins and other requirements of any manufacturer, including, without
limitation, such requirements as may be applicable to keep in full force and
effect any and all material warranties, product and performance guaranties,
service life policies, indemnities or the like, (C) except during any period
that a Permitted Sublease is in effect, in the same manner and with the same
care, including regard for the status and technical condition of the Aircraft,
as shall be the case with respect to similar aircraft and engines owned by
Lessee without discrimination and as if Lessee owned the Aircraft and was going
to use the Aircraft in continued regular customer service after the expiration
of the Term, and consistent with good industry practice, and during any period
in which a Permitted Sublease is in effect, in the same manner and with the
same care, including regard for the status and technical condition of the
Aircraft, as shall be the case with respect to similar aircraft and engines
owned by such Permitted Sublessee without discrimination and as if the
Permitted Sublessee owned the Aircraft and was going to use the Aircraft in
continued regular customer service after the expiration of the Permitted
Sublease, and consistent with good industry practice, provided, however, that
in all circumstances the Aircraft shall be maintained by Lessee (or any
Permitted Sublessee) in accordance with maintenance standards required by, or
substantially equivalent to those required by the central civil aviation
authority of the country of registry, and, to the extent not inconsistent
therewith, the FAA and (D) so as to keep the Aircraft in as good a condition as
when delivered to Lessee, ordinary wear and tear excepted, and in good
operating condition; (ii) keep the Aircraft or cause the Aircraft to be kept in
such condition as is necessary to enable the airworthiness certification of
such Aircraft to be maintained in good standing at all times under the Federal
Aviation Act and any other applicable law, or the applicable laws of any other
jurisdiction in which the Aircraft may be registered in accordance with Section
11 of the Refunding Agreement (provided that if any grounding is fleetwide in
nature and so long as Lessee or a Permitted Sublessee is contesting in good
faith such grounding, Lessee shall not be deemed in violation of this
maintenance covenant); and (iii) maintain in English all records, logs and
other materials required by, and in a manner acceptable to, the FAA or any
other Governmental Entity having jurisdiction and as provided under the
Maintenance Program and Lessee's recordkeeping policies.
(e) Registration and Insignia. Lessee shall cause the
Aircraft at all times, at its expense, to be duly
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registered during the Restricted Use Period and, subject to Section 11 of the
Refunding Agreement, thereafter under the Federal Aviation Act in the name of
Lessor or any successor or assignee, so long as (i) while the Aircraft is
registered under the Federal Aviation Act, each of the Lessor or its successors
or assigns is a "citizen of the United States" as defined in Section
40102(a)(15) of the Federal Aviation Act and (ii) the applicable parties to the
Refunding Agreement cooperate with Lessee with respect thereto as reasonably
requested by Lessee. Lessee shall not register the Aircraft or permit the
Aircraft to be registered under any Laws other than the Federal Aviation Act at
any time except as provided in Section 11 of the Refunding Agreement and shall
cause the Indenture to be duly recorded and maintained of record as a duly
perfected mortgage on the Aircraft and this Lease at all times. At any time
after the Restricted Use Period, Lessor, upon compliance with all of the terms
of Section 11 of the Refunding Agreement, shall, at the request and sole
expense of Lessee, cooperate with Lessee to take all actions reasonably
required to change the registration of the Aircraft to another country.
Lessee agrees at its expense to place such appropriate
insignia, plates and other identification ("Lease Identification") in the
cockpit of the Aircraft and on each Engine showing title thereto and the Lien
of the Indenture as designated by Lessor and as Lessor may from time to time
reasonably request. Unless otherwise requested, upon delivery of the Aircraft,
Lessee shall fasten or cause to be fastened in the cockpit of the Airframe in a
location reasonably adjacent to and not less prominent than the airworthiness
certificate for the Aircraft, and on each Engine (if not prohibited by
applicable Law), a Lease Identification in the form set forth in Exhibit C
hereto or with any other appropriate information in any other form subsequently
designated by Lessor to Lessee. Except as provided herein, Lessee will not
allow the name of any Person to be placed on the Aircraft or either Engine as a
designation that would be reasonably interpreted as a claim of ownership or
Lien; provided, however, that Lessee may cause the Airframe and Engines to have
placed thereon the customary colors and insignia of Lessee or any Permitted
Sublessee under a Permitted Sublease.
Section 7. Inspection.
During the Term of this Lease, Lessee shall furnish to Lessor,
Owner Participant and Indenture Trustee
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such information concerning the location, condition, use and operation of the
Aircraft as Lessor, Owner Participant or Indenture Trustee may reasonably
request. Lessee shall permit, or cause any sublessee to permit, any person
designated by Lessor, Owner Participant or Indenture Trustee on reasonable
prior notice at reasonable times to visit, inspect and survey the Aircraft
(including, without limitation, a visual "walk around" inspection which may
include going on board the Aircraft, and inspecting the Aircraft during
maintenance checks when panels and bays are open and subject to view), its
condition, use, and operation, and the records maintained in connection
therewith, and to visit and inspect the properties and to discuss the affairs,
finances and accounts of Lessee with the principal officers of Lessee,
provided, that so long as no Default or Event of Default has occurred hereunder
inspections shall be endeavored to be performed during regularly scheduled
maintenance checks of the Aircraft. Each such inspection or survey shall be
conducted so as to not unreasonably interfere with the business of Lessee or
the maintenance or operation of the Aircraft. Upon Lessor's, Owner
Participant's or Indenture Trustee's request, Lessee will notify such Person of
the next scheduled maintenance check for the Airframe or any Engine. Lessor,
Owner Participant and Indenture Trustee shall have no duty to make any such
inspection and shall not incur any liability or obligation by reason of not
making any such inspection. Lessor's, Owner Participant's or Indenture
Trustee's failure to object to any condition or procedure observed or
observable in the course of an inspection hereunder shall not be deemed to
waive or modify any of the terms of this Lease with respect to such condition
or procedure.
Section 8. Additional Covenants of Lessee.
Lessee covenants and agrees that:
(a) Financial Information. Lessee agrees to furnish
Lessor, until the expiration or other termination of the Term of this Lease,
the following:
(i) within sixty (60) days following the end of
each quarter of Lessee's fiscal year, except the last such quarter of such
year, commencing after the Restatement Date, a copy of Lessee's Quarterly
Report on Form 10-Q as filed with the Securities and Exchange Commission or, if
Lessee no longer files such report, an unaudited consolidated balance sheet of
Lessee and its consolidated
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subsidiaries prepared by it as of the close of the period ended, together with
the related statements of income and cash flows for such period, and in each
case certified by a Responsible Officer of Lessee as having been prepared in
accordance with GAAP and as fairly presenting the financial condition and
results of operations and changes in financial position for such period then
ended in accordance with such principles and practices (subject to normal
year-end audit adjustments);
(ii) within one hundred five (105) days after the
close of each fiscal year of Lessee, a copy of Lessee's Annual Report on Form
10-K as filed with the Securities and Exchange Commission or, if Lessee no
longer files such reports, an audited consolidated balance sheet, income
statement, and cash flow statement of Lessee and its consolidated subsidiaries,
as of the close of such fiscal year, and in each case as certified by
independent public accountants, including their certificate and accompanying
comments, as having been prepared in accordance with GAAP and as fairly
presenting the financial condition and results of operations and changes in
financial position for such period then ended in accordance with such
principles and practices, without qualification as to the scope of the audit or
non-conformity with GAAP;
(iii) promptly upon their becoming available, copies
of all reports on Form 8-K filed by Lessee under the Securities Exchange Act of
1934, as amended, and each other statement, report or circular (other than the
exhibits thereto and any registration statements on Form S-8 or its equivalent)
generally distributed to creditors or shareholders;
(iv) prior to the expiration date of each policy
of insurance required to be maintained hereunder, a certificate signed by the
Approved Broker of Lessee as to the due compliance with the insurance
provisions of Section 12 hereof with respect to the Aircraft, together with
certificates of insurance evidencing such insurance and the opinion provided
for in Section 12(f);
(v) together with each set of financial
statements referred to in clauses (i) and (ii), a certificate signed by a
Responsible Officer of Lessee, to the effect that such officer has reviewed the
relevant terms of this Lease and has made, or caused to be made under his or
her supervision, a review of the transactions and condition of Lessee during
the accounting period covered by
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such financial statements, and that such review has not disclosed the existence
during such accounting period, nor does such officer have any knowledge of the
existence, as at the date of such certificate, of any condition or event which
constitutes a Default or an Event of Default, or, if such condition or event
which constitutes a Default or an Event of Default existed or exists,
specifying the nature and period of existence thereof and what action Lessee
has taken or is taking or proposes to take with respect thereto or any event
classified as an accident by the National Transportation Safety Board, or if
such event has occurred, information about such event;
(vi) as soon as practicable after becoming aware
thereof, notice of damage or destruction to the Aircraft, either Engine or any
Part with a repair or replacement cost (including labor charges) in excess of
$1,000,000;
(vii) immediately after Lessee knows or should know
of the occurrence thereof, notice of a Default; and
(viii) from time to time such other information as
Lessor may reasonably request.
(b) Maintenance of Corporate Existence. Except as
provided in Section 8(e) below, during the term of this Lease, Lessee will
preserve and maintain its corporate existence and its rights, privileges,
licenses and franchises material to Lessee's ability to perform its obligations
hereunder in each applicable jurisdiction.
(c) Maintenance of Status. Lessee is, and shall remain
so long as it shall be the Lessee under this Lease, a "citizen of the United
States" as defined in Section 40102(a)(15) of the Federal Aviation Act, and
Lessee is and shall maintain its status at all times as a Certificated Air
Carrier, including, without limitation, its status so as to fall within the
purview of 11 U.S.C. Section 1110 or any analogous statute.
(d) Payment of Taxes. Lessee will pay or cause to be
paid all Taxes imposed upon it, or upon its income or profits, or upon any
property belonging to it, on or prior to the due date thereof, including any
extensions which have been duly obtained or granted; provided, however, that
Lessee shall not be required to pay any such Taxes, the payment of which is
being diligently contested in good faith and by appropriate proceedings with
appropriate reserves so
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long as there is no material possibility that either failure to pay such Taxes
or such contest may result in any loss, sale, confiscation, forfeiture or
seizure of the Aircraft, the Airframe or either Engine or any criminal
liability on the part of Lessor, Indenture Trustee or any Note Holder.
(e) Consolidation, Merger, Etc. Lessee shall not
liquidate or dissolve; and Lessee shall not consolidate with or merge into or
with any other corporation or other Person, and Lessee shall not convey,
transfer, lease or otherwise dispose of all or substantially all of its
property and other assets (in one or a series of transactions) to any
corporation or other Person, unless:
(i) the Person formed by or surviving such
consolidation or merger or the Person which acquires by conveyance, transfer,
lease or other disposition all or substantially all of such property and other
assets or stock (the "Successor Entity"): (A) shall be a corporation organized
and existing under the Laws of the United States of America or any State
thereof or the District of Columbia; (B) immediately after giving effect to
such transaction, shall be Lessee or shall have acquired or succeeded to all or
substantially all of such property and other assets (including, without
limitation, all or substantially all of Lessee's property and other assets) as
an entirety and, unless the Owner Participant otherwise agrees, shall have a
Net Worth of not less than Lessee's Net Worth immediately prior to such
transaction; (C) shall be a "citizen of the United States" of America as
defined in Section 40102(a)(15) of the Federal Aviation Act and a Certificated
Air Carrier; and (D) shall execute and deliver to Lessor and Indenture Trustee
such recordations and filings with any Governmental Entity and such other
documents as Lessor determines shall be reasonably necessary or advisable
(including, without limitation, to preserve and protect the interests of the
Lessor and the priority of the Lien of the Indenture (if it has not been
discharged)) to evidence, or in connection with, such consolidation, merger,
sale, lease, transfer or other disposition and an agreement, in form and
substance reasonably satisfactory to Lessor, which is a legal, valid, binding
and enforceable assumption by such Successor Entity of the due and punctual
performance and observance of each covenant and condition of this Lease and the
other Operative Documents to which Lessee is a party and agreement to be bound
thereby, and an officer's certificate to such effect, and to the effect that
the other requirements of this paragraph have been satisfied, and a legal
opinion from
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counsel to such effect and otherwise in such form and substance reasonably
satisfactory to Lessor; and
(ii) prior to and immediately after giving effect
to such transaction, no Default or Event of Default shall have occurred and be
continuing.
No such permitted disposition to a Successor Entity shall relieve or release
Lessee of or from any obligations hereunder or under the other Operative
Documents.
(f) Information. Within 60 days after the end of each
calendar year and within 60 days of a request by Lessor or Owner Participant,
or such shorter period as may be set forth in any written request by the
Internal Revenue Service for information or documents, Lessee shall furnish in
writing to Lessor or Owner Participant such information and documents (or
copies thereof) regarding the Aircraft as may be reasonably requested by Lessor
or Owner Participant or the Internal Revenue Service in order to permit Lessor
to file its Federal and state income tax returns (or to permit the filing of
the Federal and state income tax returns of any affiliated group of
corporations filing a consolidated return of which Lessor is a member), or to
maintain or defend any claims related thereto and promptly, after reasonable
notice, furnish to Lessor or Owner Participant such information as may be
reasonably requested by Lessor or Owner Participant or the applicable
Governmental Entity as may be required to enable Lessor or Owner Participant to
file any reports required to be filed by it with any Governmental Entity
because of its ownership or other interest in the Aircraft, the Airframe or the
Engines.
(g) Place of Business. At all times while this Lease is
in effect, Lessee will not, without thirty (30) days prior written notice to
Lessor and Indenture Trustee (so long as the Lien of the Indenture shall not
have been discharged), change its chief executive office (as such term is
defined under Article 9 of the Uniform Commercial Code as adopted in Arizona)
or location of its books and records, from 0000 Xxxx Xxx Xxxxxx Xxxxxxxxx,
Xxxxxxx, Xxxxxxx 00000,
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or such subsequent location of which Lessee shall have so notified Lessor and,
if applicable, Indenture Trustee.
(h) Certain Limitations on Use. Lessee shall use the
Aircraft, Airframe or Engines only in commercial passenger operations and
related cargo operations. Unless Owner Participant otherwise agrees, during
the Restricted Use Period, Lessee shall not use the Aircraft, Airframe or
Engines or permit the Aircraft, Airframe or Engines to be used "predominantly
outside the United States" within the meaning of Section 48(a)(2) of the Code.
In addition, until the expiration of the Term or termination of the Foreign
Lease Agreement, Lessee will not locate or use or permit the location or use of
the Aircraft in, to or from Hong Kong or the People's Republic of China or in
such manner that the percentage of the income, deduction or credit attributable
to the Aircraft, Airframe or Engines for federal income tax purposes during any
taxable year of the Lessor considered to be from foreign sources exceeds the
Maximum Foreign Use Percentage. Unless the Owner Participant otherwise agrees,
prior to permitting the Aircraft to be operated in any member state of the
European Union or other European country, Lessee shall deliver to Lessor (i) a
representation and warranty to the effect that Lessee (or any Permitted
Sublessee) has no knowledge of any dispute with Eurocontrol or other relevant
air traffic control authority over delinquent charges payable by it and (ii) a
letter from Lessee (or any Permitted Sublessee) addressed to Eurocontrol or
other relevant air traffic control authority pursuant to which Lessee (or such
Permitted Sublessee) authorizes the addressee to issue to Lessor, upon Lessor's
request from time to time, a statement of account of all sums due by Lessee (or
such Permitted Sublessee) to the authority in respect of all aircraft
(including, without limitation,the Aircraft) operated by Lessee (or such
Permitted Sublessee).
(i) Section 1110. Lessee acknowledges that Lessor would
not have entered into this amended and restated Lease unless it had available
to it the benefits of a lessor under Section 1110 of Title 11 of the United
States Code. Lessee covenants and agrees with Lessor that to better ensure the
availability of such benefits, Lessee shall support any motion, petition or
application filed by Lessor with any bankruptcy court having jurisdiction over
Lessee, whereby Lessor seeks recovery of possession of the Aircraft under said
Section 1110 and shall not in any way oppose such action by Lessor unless
Lessee shall have complied with the requirements of said Section 1110 to be
fulfilled in order to entitle Lessee to continued use and possession of the
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Aircraft hereunder. The acknowledgement, covenant and agreement contained in
this Section 8(i) shall continue in full force and effect and survive the
expiration or other termination of this Lease and are expressly made for the
benefit of and shall be enforceable by the Lessor, the Owner Participant and,
if the Lien of the Indenture has not been discharged, the Indenture Trustee.
(j) Permits and Licenses. Lessee shall make or obtain,
and maintain in full force and effect, each and every consent, license,
approval, notice, registration, filing or other action with any Governmental
Entity (i) necessary or advisable in connection with the operation or use of
the Aircraft, the Airframe, any Engine or Part or the execution, delivery or
performance of this Lease or the enforcement thereof against Lessee or (ii)
necessary in connection with the execution, delivery or performance of the
Operative Documents (other than the Lease) to which Lessee is a party or the
enforcement thereof against Lessee.
(k) Security Opinion; Annual Certificate. (i) During
such times that the Aircraft is registered under the Federal Aviation Act,
Lessee shall furnish to Lessor and to Indenture Trustee:
(1) (X) prior to the expiration of the time period
covered by the opinion of counsel rendered on the
Restatement Date, any opinion of counsel rendered
pursuant to Section 11(C) of the Refunding Agreement,
and any opinion of counsel rendered pursuant to this
Section 8(k)(i) and (Y) upon any change in Law that
would render the opinion of counsel rendered on the
Restatement Date or such immediately preceding
opinion of counsel inaccurate, an opinion of counsel
with respect to Lessee and the FAA reasonably
satisfactory to each addressee of such opinion (which
counsel may be internal legal counsel of Lessee and
FAA counsel) stating, in the opinion of such counsel,
that such action has been taken with respect to the
recording, filing, re- recording and refiling of (i)
the appropriate Operative Documents and any
supplements and amendments thereto and (ii) such
other appropriate documents, as is necessary to
maintain the perfection of Lessor's title to and/or
interest in and Indenture Trustee's security interest
in the Aircraft and the
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Operative Documents for such period of time as
reflects the then-current applicable Law, reciting
the details of such actions; or
(2) at any time that an opinion is not required pursuant
to Section 8(k)(i)(1), annually, a certificate
reasonably satisfactory to each recipient thereof
signed by a Responsible Officer of Lessee certifying
that no such action is necessary to maintain the
perfection of such title and/or interest and security
interest.
(ii) During such times that the Aircraft is registered under
any Laws other than the Federal Aviation Act, Lessee shall furnish to Lessor
and to Indenture Trustee annually (but in any case, (X) prior to the expiration
of the time period covered by any opinion of counsel rendered pursuant to
Section 11(C) of the Refunding Agreement and any opinion of counsel rendered
pursuant to this Section 8(k)(ii) and (Y) promptly upon any change in Law that
would render such immediately preceding opinion of counsel inaccurate), an
opinion of counsel reasonably satisfactory to each addressee of such opinion
stating, in the opinion of such counsel, that such action has been taken with
respect to the recording, filing, re-recording and refiling of (i) the
appropriate Operative Documents and any supplements and amendments thereto and
(ii) such other appropriate documents, as is necessary to maintain the
perfection of Lessor's title to and/or interest in and Indenture Trustee's
security interest in the Aircraft and the Operative Documents for such period
of time as reflects the then-current applicable Law, reciting the details of
such actions.
(l) Letter of Credit. As security for the obligations to
Lessor, Lessee shall provide to Lessor, as named beneficiary thereof, one or
more irrevocable standby letters of credit, in form and substance acceptable to
Lessor in its sole and absolute discretion (the "Letter of Credit"), including,
without limitation, as to renewal provisions, with a face amount available for
drawdown at all times equal to the amount set forth on Exhibit C (the "Face
Amount"), which Letter of Credit shall:
(i) provide that the full amount thereof shall be
available for drawdown thereunder and payable in New York, New York, on demand
at any time, if a Default under Section 17(e), (f) or (g) or an Event of
Default has
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occurred, which amount may be applied, retained or utilized as provided in the
penultimate paragraph of this Section 8(l);
(ii) be maintained in full force and effect at all
times until ninety-one (91) days after the Expiration Date with a commercial
bank acceptable to Lessor, in its sole and absolute discretion, having a
long-term unsecured debt rating of "A" or better by Standard & Poor's Rating
Group (if the issuing bank's credit rating is lower than such rating, Lessee
shall replace such Letter of Credit issuer within five Business Days of any
such reduction in rating with a commercial bank meeting such rating
requirement), provided, that the Letter of Credit set forth in Exhibit D-2
issued by The Industrial Bank of Japan, Limited, will be acceptable to Lessor
for so long as The Industrial Bank of Japan, Limited maintains a long term
unsecured debt rating at least equal to its rating on the date hereof;
(iii) be expressly designated as transferrable and
assignable; and
(iv) permit partial drawings. If the Letter of
Credit is still in effect at the end of the Term, or the Lessor is holding
proceeds of the Letter of Credit that were retained and not applied as provided
herein, then Lessor shall return the Letter of Credit to Lessee or terminate
it, and/or return any retained and unapplied proceeds, ninety-one (91) days
following the date of such expiration or other termination of this Lease so
long as no Default or Event of Default has occurred or is continuing hereunder
or under any Other Lease, upon payment in full of all amounts then due and
owing to Owner Trustee and Owner Participant under the Operative Documents.
If an Event of Default has occurred or is continuing under
this Lease or an Event of Default has occurred or is continuing under any Other
Lease (as therein defined), in addition to any other rights and remedies Lessor
may have hereunder, under any Other Lease, any sublease and any and all other
remedies available at Law (including, without limitation, the Uniform
Commercial Code as adopted in New York) or equity and upon exercising its
rights under the Letter of Credit and any Other Letters of Credit, Lessor shall
be entitled, in each case as it may elect in its sole and absolute discretion,
to (i) hold any amounts drawn under the Letter of Credit or Other Letters of
Credit as security for Lessee's obligations under this Lease
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or the Other Leases, (ii) retain any amounts drawn under the Letter of Credit
or Other Letters of Credit for its own account and apply (including, without
limitation, by way of set off against) such drawn amounts as it may elect (it
being understood that amounts not so applied will be held as security for
Lessee's obligations under this Lease and the Other Leases) to remedy any
breach by Lessee of this Lease or any other Operative Documents or Other Leases
or (iii) recompense Lessor, Owner Participant or any of their respective
Affiliates for any loss, damage, cost or expense or other Claim due or owing
hereunder or under the Other Leases; provided, however, that in the case of any
drawing in respect of any claim for the payment of Rent, Lessee's right to
apply the same to such claim shall be limited to amounts which would (absent
such Event of Default) be distributable under the Indenture at the time such
payment is made to Lessor, Owner Participant or any of their respective
Affiliates (and shall not include any amounts distributable to Indenture
Trustee in its individual capacity or to the Note Holders); provided further,
however, that neither the amount so applied at any one time nor the aggregate
amount so applied at different times shall reduce the amount of any installment
or payment of Rent (whether upon the termination of the Lease or otherwise)
payable by Lessee to an amount insufficient to pay in full the amounts required
to be paid on account of the principal of and any interest on the Equipment
Notes or otherwise owing to a Note Holder. Lessee shall not be entitled to any
refund or credit with respect to any amounts so applied. Any amount retained
shall be considered the property of Lessor and Lessor may commingle such amount
with its general funds and Lessee, further, hereby absolutely and irrevocably
disclaims, to the maximum extent permitted by applicable Law, any interest
therein. Lessee shall not be entitled to any interest or other earnings on
such retained amount and such amount shall not be refundable.
On application of all or any portion of the amounts drawn
under the Letter of Credit or any Other Letters of Credit in accordance with
this Section 8(l) or the Other Leases, Lessee shall on demand reinstate the
amount of the Letter of Credit or Other Letters of Credit, as the case may be,
to its or their full Face Amount or provide to Lessor one or more additional
Letters of Credit meeting the requirements of this Section 8(l), so that the
Letter of Credit and each of the Other Letters of Credit at all times equals
the original Face Amount provided for herein. During such times as Lessor
shall elect to hold all or part of the proceeds of the Letter of Credit or
Other Letters of Credit as security for Lessee's obligations to Lessor under
the Lease and the Other Leases, Lessee shall not be obligated to reinstate the
amount of the Letter of
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Credit or Letters of Credit, as the case may be, in respect of the proceeds so
held.
Section 9. Replacement of Parts; Alterations, Modifications
and Additions.
(a) Replacement of Parts. Lessee, at its own cost and
expense, will promptly replace, or cause to be replaced, all Parts which may
from time to time become worn out, lost, stolen, destroyed, seized,
confiscated, damaged beyond repair or permanently rendered unfit for use for
any reason whatsoever. In addition, in the ordinary course of maintenance,
service, repair, overhaul or testing, Lessee (or, if a Permitted Sublease is in
effect, a Permitted Sublessee) may at its own cost and expense remove any
Parts, whether or not worn out, lost, stolen, destroyed, seized, confiscated,
damaged beyond repair or permanently rendered unfit for use, provided that
Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) shall
replace at its own cost and expense such Parts as promptly as possible. All
replacement Parts shall be free and clear of all Liens (except for pooling
arrangements to the extent permitted by paragraph (c) of this Section and
Permitted Liens), be in at least the equivalent or better modification status
and service bulletin accomplishment status, be fully interchangeable as to
form, fit and function and shall be in as good operating condition as, and have
a value, remaining useful life and utility at least equal to, the Parts
replaced (assuming such replaced parts were in the condition and repair in
which they were required to be maintained by the terms hereof).
All Parts which are at any time removed from the Aircraft
shall remain the property of Lessor (provided that, so long as the Foreign
Lease Agreement is in effect, title to such Parts shall remain with the Foreign
Lessor), subject to the Lien of the Indenture if it has not been discharged,
and subject to this Lease no matter where located until such time as such Parts
shall be replaced by parts which have been incorporated or installed in or
attached to the Aircraft and which meet the requirements for replacement Parts
specified above. Immediately upon any replacement Part becoming incorporated
or installed in or attached to the Aircraft as above provided, or as provided
in Section 9(c), without further act, (i) title to the removed Part shall
thereupon vest in Lessee free and clear of all rights of Lessor, Indenture
Trustee, Owner Participant and Note Holders and shall no longer be deemed a
Part hereunder, (ii) title to such replacement Part shall thereupon vest in
Lessor (or, so long as the Foreign Lease Agreement is in effect, Foreign
Lessor) and become subject to the Lien of the Indenture if it has not been
discharged, and (iii) such
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replacement Part shall become subject to the Lien of the Indenture (if it has
not been discharged) and this Lease and be deemed a Part for all purposes
hereof to the same extent as the Part which it has replaced.
(b) Alterations, Modifications and Additions. Lessee, at
its own cost and expense, shall make or cause to be made such alterations and
modifications in and additions to the Airframe and each Engine to the extent
made mandatory for Lessee (or a sublessee) in respect of the Aircraft, Engines
or Parts from time to time to meet the applicable standards of the FAA or under
any Law of any Governmental Entity having jurisdiction or issued by the
manufacturer of the Airframe, Engines or Parts. In addition, so long as no
Default or Event of Default has occurred and is continuing, Lessee (or, if a
Permitted Sublease is in effect, a Permitted Sublessee), at its own expense,
may from time to time make such alterations and modifications in and additions
to the Airframe and either Engine as Lessee (or, if a Permitted Sublease is in
effect, a Permitted Sublessee) may deem desirable in the proper conduct of its
business, provided, no such alteration, modification or addition diminishes the
value, remaining useful life or utility, or impairs the condition or
airworthiness, of the Airframe, either Engine or any Part below that
immediately prior to such alteration, modification or addition assuming that
the Airframe, Engines and Parts were then of the value, utility and remaining
useful life and in the condition and airworthiness required by the terms of
this Lease. Except as otherwise provided herein, title to all Parts
incorporated or installed in or attached or added to the Aircraft as the result
of such alteration, modification or addition, shall immediately vest in Lessor
(or, so long as the Foreign Lease Agreement is in effect, Foreign Lessor) and
become subject to the Lien of the Indenture (if it has not been discharged) and
this Lease, without the necessity for any further act of transfer, document or
notice. Notwithstanding the foregoing sentence of this Section 9(b), Lessor
agrees that so long as no Default or Event of Default shall have occurred and
be continuing Lessee (or, if a Permitted Sublease is in effect, a Permitted
Sublessee) may, at such time during the Term for the Aircraft, remove any Part
of such Aircraft, provided, that (i) such Part is in addition to, and not in
replacement or substitution for, any Part originally incorporated or installed
in or attached to, or delivered with, the Aircraft on the Delivery Date or any
Part in replacement of, or substitution for, any such originally incorporated,
installed, attached or delivered Part, (ii) such Part is not required to be
incorporated or
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installed in or attached or added to the Aircraft pursuant to the terms of
Section 6 or this Section 9 or to maintain the insurance required by Section 12
and (iii) such Part can be removed from the Aircraft without causing any
material damage thereto and without diminishing or impairing the value,
utility, remaining useful life, condition or airworthiness which the Aircraft
would have had at such time had such alteration, modification or addition not
occurred. Upon the removal by Lessee of any such Part as provided in the
preceding sentence, title thereto shall, without further act, vest in Lessee
(or, if a Permitted Sublease is in effect, a Permitted Sublessee) and such Part
shall no longer be deemed part of the Aircraft (such a part is herein called a
"Removable Part"). Any Part not removed by Lessee as above provided prior to
the return of the Aircraft to Lessor hereunder, whether pursuant to Section 16,
Section 18 or otherwise, shall remain the property of Lessor (provided that, so
long as the Foreign Lease Agreement is in effect, title to such Parts shall
remain with the Foreign Lessor).
If any Removable Part is (i) owned by any third party and
leased to Lessee (or, if a Permitted Sublease is in effect, a Permitted
Sublessee), (ii) sold to Lessee (or, if a Permitted Sublease is in effect, a
Permitted Sublessee) subject to a conditional sale contract or other security
interest or (iii) leased to Lessee (or, if a Permitted Sublease is in effect, a
Permitted Sublessee) pursuant to a lease which is subject to a security
interest in favor of any third party, then Lessor will not acquire or claim, as
against such lessor, conditional vendor or secured party, any right, title or
interest in any such Removable Part as the result of such Removable Part being
installed on the Aircraft; provided, however, that (A) Lessor's inability to so
acquire or claim is subject to the express condition that such lessor,
conditional vendor, or secured party shall have agreed in writing (which
agreement may be contained in the lease, conditional sale agreement or security
agreement) not to acquire or claim, as against Lessor, any right, title or
interest in the Aircraft, or any Part other than its interest in such Removable
Part by reason of such Removable Part being installed thereon, and (B) any
Removable Part not removed by Lessee upon the termination or expiration of this
Lease, at such time, shall become the property of Lessor, or Foreign Lessor, as
the case may be, and be subject to this Lease, and provided, further, that (1)
if removal of any such Part shall affect the operation of the Aircraft in any
way whatsoever, Lessee shall replace such Part with an owned Part of the same
value, utility and remaining useful life and (2) Lessee shall repair any
unsightly area of the
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Aircraft as a result of such removal and make all other repairs which are
advisable and result from such removal.
In the event Lessee (or, if a Permitted Sublease is in effect,
a Permitted Sublessee) replaces a Part which is not required to be replaced
under Section 9(a) or 9(b) hereof, Lessee (or, if a Permitted Sublease is in
effect, a Permitted Sublessee) may remove the replacement Part so long as it
reinstalls the original Part and such original Part is free and clear of all
Liens, other than Permitted Liens, is in at least the same modification status
and service bulletin accomplishment status, is fully interchangeable as to
form, fit and function, has been overhauled, repaired and inspected by an
agency acceptable to the FAA or other Governmental Entity having jurisdiction,
and is in as good operating condition as, and has a utility, remaining useful
life and a value at least equal to that of such Part when it was removed from
the Aircraft.
Notwithstanding any other provision hereof, and without
limiting the foregoing, Lessee (or, if a Permitted Sublease is in effect,
Permitted Sublessee) may install in the Aircraft audio visual, entertainment or
telephonic equipment (including seats with such equipment installed therein)
(any or all of which are hereafter referred to as "Excluded Property") in the
ordinary course of business, and Lessor shall not claim or acquire title
thereto and the rights of the owners thereof therein shall not constitute a
default hereunder; provided that (i) any such Excluded Property shall be
removed prior to the date of a Return Occasion without causing any damage to
the Aircraft and without diminishing or impairing the value, utility, remaining
useful life or condition which the Aircraft would have had at such time had
such Excluded Property not been installed, (ii) any equipment or seats which
such Excluded Property replaces shall be properly stored with the interests of
Lessor and, if the Lien of the Indenture is in effect, the Indenture Trustee,
duly noted thereon and acknowledged by any applicable bailee or warehouse, and
properly reinstalled on the Aircraft prior to the date of a Return Occasion,
and (iii) Lessee (or such Permitted Sublessee) shall make all repairs which are
required as a result of such removal and/or reinstallation.
In no event shall Lessor bear any liability or cost for any
alteration, modification, or addition, or for any grounding or suspension of
certification of the Aircraft, or for any loss of revenue arising therefrom.
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(c) Pooling. Any Part removed from the Airframe or
either Engine as provided in Section 9(a) may so long as no Default or Event of
Default shall have occurred and be continuing or would result therefrom be
subjected by Lessee (or, if a Permitted Sublease is in effect, a Permitted
Sublessee) to a normal pooling arrangement customary in the airline industry of
which Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee)
is a part entered into in the ordinary course of Lessee's or such Permitted
Sublessee's business, provided the Part replacing such removed Part shall be
incorporated or installed in or attached to the Aircraft in accordance with
Section 9(a) as promptly as possible, and in any event within sixty (60) days,
after the removal of such removed Part. In addition, any Replacement Part when
incorporated or installed in or attached to the Airframe or any Engine in
accordance with Section 9(a) may be owned by another Person subject to such a
normal pooling agreement; provided, however, that Lessee (or, if a Permitted
Sublease is in effect, a Permitted Sublessee), at its own expense, as promptly
thereafter as possible, and in any event within sixty (60) days, either (i)
causes title to such replacement Part to vest with Lessor (or, so long as the
Foreign Lease Agreement is in effect, Foreign Lessor) in accordance with
Section 9(a) (and to be subjected to the Lien of the Indenture if it has not
been discharged) by Lessee (or, if a Permitted Sublease is in effect, a
Permitted Sublessee) acquiring title thereto for the benefit of and
transferring title to Lessor (or, so long as the Foreign Lease Agreement is in
effect, Foreign Lessor) free and clear of all Liens except Permitted Liens,
whereupon such replacement Part shall become subject to this Lease and the Lien
of the Indenture (if in effect) without the necessity for any further act,
document or notice, or (ii) replaces such replacement Part by incorporating or
installing in or attaching to the Aircraft a further replacement Part owned by
Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) free
and clear of all Liens other than Permitted Liens and by causing title to such
further replacement Part to vest in Lessor (or, so long as the Foreign Lease
Agreement is in effect, Foreign Lessor) as above provided and to be subjected
to the Lien of the Indenture if it has not been discharged, whereupon such
replacement Part shall become subject to this Lease and the Lien of the
Indenture (if in effect) without the necessity for any further act, document or
notice.
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Section 10. General Tax Indemnification.
(a) Indemnity. Lessee agrees that each payment of Basic
Rent hereunder shall be free and clear of, and without deduction for, any and
all withholdings on account of Taxes of any nature whatsoever, whether or not
an exclusion pursuant to Section 10(b) applies, except as required by law. If
any such deduction or withholding of Taxes is required with respect to such
payments of Basic Rent, Lessee shall pay an additional amount of Basic Rent
such that the net amount actually received by Lessor, after such deduction or
withholding, will be equal to all such amounts that would be received by Lessor
if no such deduction or withholding had been required, but only to the extent
necessary to ensure that the holders of the outstanding Equipment Notes receive
such amount as may be required by the Indenture. If Lessee pays any amount to
Lessor (or to any taxing authority for the account of Lessor) as a result of
the application of the preceding sentence with respect to any withholding Tax
which is an excluded tax in respect of Lessor pursuant to Section 10(b), then
Lessor (or, in the case of Taxes imposed on the Owner Trustee, the Owner
Participant to the extent such Tax would give rise to a Lessor's Lien for which
the Owner Participant would be liable) shall reimburse Lessee for such
withholding Tax within 30 days of written notice accompanied by evidence of
payment for such withholding Taxes (exclusive of interest, penalties and
additions to Tax) paid by Lessee provided that in any circumstance in which the
Lessor is required to reimburse the Lessee for any such withholding Taxes and
the Lessee has not received such reimbursement from Lessor or the Owner
Participant, then to the extent of such shortfall and so long as no Lease Event
of Default has occurred and is continuing, Lessee shall be entitled to obtain
reimbursement from Lessor by reducing the succeeding payments of Rent payable
to Lessor (other than any portion of Rent that may be required by the Indenture
to be paid to the holders of any outstanding Equipment Notes issued thereunder)
until the aggregate amount of reduction is equal to the sum of the amount of
such shortfall and interest on that amount at the Interest Rate from the date
reimbursement is required to be made until the date of such reduction in Rent.
Except as provided in Section 10(b), and taking into account any payments
received by Lessor pursuant to the second sentence of this Section 10(a),
Lessee agrees to pay, and to indemnify and hold each Indemnitee harmless from,
any and all taxes (including, without limitation, sales, personal property,
transfer, fuel, leasing, use, registration, occupational, license, value added,
excess
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profits, excise, gross receipts, franchise, stamp, income and minimum taxes),
levies, withholdings, assessments or other taxes, duties or charges of any
nature, together with any fines, penalties, charges or interest thereon
(collectively, "Taxes"), howsoever levied or imposed, whether levied or imposed
upon or with respect to or asserted against any Indemnitee, Lessee, the
Aircraft, the Airframe, any Engine or any Part thereof or interest therein, or
otherwise, with respect to any period beginning, or events or circumstances
occurring, on or after the Restatement Date, by any Federal, state or local
government or taxing authority in the United States of America or by any
foreign government or any taxing authority or governmental subdivision of a
foreign country or of a territory or possession of the United States (each such
governmental subdivision or taxing authority referred to as a "Taxing
Authority"):
(i) upon or with respect to, based upon or measured
by (A) the Aircraft, the Airframe, any Engine or any Part thereof,
or interest therein, (B) the manufacture, purchase, ownership,
delivery, leasing, acceptance, rejection, assigning, possession,
use, operation, location, settlement of any insurance claim, sale,
mortgaging, pledging, financing, subleasing, rental, retirement,
abandonment, registration, preparation, installation,
modification, repair, maintenance, replacement, transportation,
storage, transfer of title, return or other disposition of the
Aircraft, the Airframe, any Engine or any Part thereof or interest
therein; (C) the rentals, receipts, income or earnings arising
therefrom (including without limitation the Rent) or (D) interest,
principal and other amounts paid or payable with respect to the
Equipment Notes, or
(ii) upon or with respect to the Operative Documents
(including the Equipment Notes), any interest in any thereof, or
any future amendment, supplement, waiver or consent thereto
requested by Lessee with respect to any thereof, or the execution,
delivery, or performance of any thereof, or the acquisition or
subsequent transfer thereof or the issuance of the Equipment Notes
or any other document executed and delivered in connection with
the consummation or confirmation of the transactions contemplated
by the Operative Documents or any Indemnitee's interest in any of
the foregoing, or the execution, amendment,
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supplement, issuance, reissuance, refinancing or delivery of any
of the foregoing, or
(iii) the Trust Indenture Estate or the property, or
the income or other proceeds received with respect to the
property, held by the Indenture Trustee under the Indenture, or
(iv) the payment of the principal of, or interest or
premium on, or other amounts payable with respect to the Equipment
Notes, whether as originally issued or pursuant to any
refinancing, modification or reissuance or any other obligation
evidencing any new loan, or
(v) otherwise with respect to or in connection with
the transactions contemplated by the Operative Documents.
(b) Exclusions. The following Taxes shall not be
subject to indemnification under subsection (a) of this Section 10:
(i) In the case of any Indemnitee, any Taxes imposed
on, based on, or measured by, the gross or net income, receipts,
capital, or net worth, franchises, excess profits or conduct of
business of such Indemnitee (including minimum taxes, withholding
taxes and taxes on or measured by any item of tax preference)
imposed by the Federal government of the United States of America
(other than Taxes included in the calculation of an after-tax
payment, Covered Income Taxes described in subsection (c) of this
Section 10, or Taxes in the nature of sales or use Taxes, license
Taxes or property Taxes),
(ii) In the case of any Indemnitee, Taxes imposed on,
based on, or measured by the income, receipts, capital, or net
worth, franchises, excess profits or conduct of business of such
Indemnitee (including minimum taxes, withholding taxes and taxes
on or measured by any items of tax preference), imposed by any
state, local or foreign government or taxing authority (other than
Taxes included in the calculation of an after-tax payment, Taxes
in the nature of sales Taxes, use Taxes, license Taxes or property
Taxes, and Covered Income Taxes described in subsection (c) of
this Section 10),
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(iii) In the case of any Indemnitee, Taxes which are
the direct result of gross negligence or willful misconduct of
such Indemnitee,
(iv) In the case of any Indemnitee, any Taxes imposed
as a result of a voluntary or involuntary bankruptcy of such
Indemnitee (other than, in the case of Owner Trustee, as a result
of the occurrence of an Event of Default) or any sale, transfer of
title, transfer or other disposition by such Indemnitee or a
related Indemnitee (for such purpose, Owner Trustee, Owner
Participant and the general partners of Owner Participant are
related Indemnitees with respect to each other) of the Aircraft,
the Airframe, any Engine or any Part thereof or interest therein,
or any interest in the Rent or part thereof or any interest in the
Operative Documents or part thereof, unless such sale, transfer or
disposition occurs in connection with (y) an Event of Default and
the exercise by any Indemnitee of its remedies under the Lease or
the Indenture, as the case may be, and (z) the substitution,
pooling or interchange of the Aircraft, the Airframe, any Engine
or any Part pursuant to the terms of the Lease; provided, however,
that in all cases Owner Participant and Owner Trustee shall
consider in good faith such request as Lessee shall make
concerning the appropriate jurisdiction in which such sale,
transfer or disposition shall be made,
(v) In the case of any Indemnitee, Taxes imposed as a
result of a transferee of such Indemnitee of any interest in the
Aircraft, the Airframe, any Engine or any Part or any interest in
the Operative Documents being a foreign entity or not having its
principal office in the United States other than a disposition
attributable to the exercise of default remedies under the Lease,
or in the case of a default caused by the acts or omissions of
Lessee, any sublessee, assignee, or successor of Lessee or person
in possession of the Aircraft, default remedies under the
Indenture,
(vi) Any interest, penalties, fines and additions to
tax imposed on an Indemnitee (other than Taxes that are due and
payable with a return when properly filed) resulting from such
Indemnitee's failure to file returns that are timely and proper,
provided such failure was not attributable to such Indemnitee
contesting any claim in accordance with this Section 10 or to a
failure by Lessee to satisfy its obligations related to such
return,
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(vii) In the case of an Indemnitee other than the
Indenture Trustee or the Trust Indenture Estate, Taxes which arise
out of or are caused by (i) any breach of an obligation required
by the Operative Documents or material misrepresentation of such
Indemnitee, or (ii) a failure by such Indemnitee to fulfill its
contest obligations, provided such failure adversely affects such
Indemnitee's ability to contest, and, in the case of the Indenture
Trustee or the Trust Indenture Estate, Taxes imposed as a result
of a breach of such Indemnitee's representations, warranties or
covenants contained in Section 9(a), 12, or 16 of the Refunding
Agreement in any material respect, or from a failure by such
Indemnitee to fulfill its contest obligations,
(viii) So long as no Event of Default shall have
occurred and be continuing, Taxes attributable to the Aircraft
related to acts or events occurring after the later of the
termination of the Lease and the redelivery of the Aircraft,
(ix) In the case of each Pass-Through Trust, each
Pass-Through Trustee (in its individual capacity and as trustee
under the Pass-Through Trusts), the Subordination Agent and each
Liquidity Provider, United States withholding taxes imposed as a
result of the place of organization or other status of a holder of
an interest in a Pass-Through Trust,
(x) In the case of the Indenture Trustee, each
Pass-Through Trust, each Pass-Through Trustee (in its individual
capacity), the Subordination Agent and each Liquidity Provider,
Taxes imposed with respect to the Equipment Notes as a result of
activities of such Indemnitee unrelated to the transactions
contemplated by the Operative Documents, and
(xi) In the case of a general partner of the Owner
Participant, any Taxes to the extent such Taxes when added to the
Taxes of the same type imposed on Owner Participant and all other
general partners and which are subject to indemnification, exceed
the Taxes that would have been imposed on Owner Participant alone
had Owner Participant been a U.S. corporation (it being understood
that in the case of multiple general partners, the Taxes subject
to this exclusion shall be apportioned pro-rata in accordance with
each general partner's interest in the partnership.
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For purposes of the exclusions provided in this Section
(b), references to "such Indemnitee" shall mean, in the case of Owner
Participant, Owner Participant or any partner of Owner Participant, and in the
case of each general partner of Owner Participant, Owner Participant or any
other partner or partners of Owner Participant.
Notwithstanding anything to the contrary contained in this
Section 10 (other than Section 10(b)(xi)), the provisions of this Section 10(b)
shall not apply to, and Lessee shall hold each Indemnitee harmless against, and
indemnify each Indemnitee on an after-tax basis (as provided under Section
10(e)) for, any Taxes imposed by any Taxing Authority, with respect to any
period beginning, or events or circumstances occurring, on or after the
Restatement Date in connection with or relating to the transactions undertaken
pursuant to the Foreign Financing documents (and any other documents or
agreements relating thereto unless such documents or agreements are or relate
solely to Operative Documents other than the Foreign Financing Documents)
including, without limitation, Taxes based on or measured by gross or net
income or receipts, sales Taxes, value-added Taxes and any Taxes required to be
withheld and paid over to the United States Federal government pursuant to
Subtitle A of the 1986 Code or any successor provisions with respect to any
amounts paid or deemed to be paid to the Foreign Lessor by any Indemnitee
pursuant to the Foreign Financing documents, but excluding any net income taxes
payable to the United States Federal government or any state or local Taxing
Authority as a consequence of a determination that the Lease is not a true
lease for Federal income tax purposes by reason of the terms and conditions of
the Operative Documents or the exercise of any rights specifically granted
thereunder.
(c) Covered Income Tax. For purposes of subsection
(b)(i) and (b)(ii) of this Section 10, a Covered Income Tax means
(i) in the case of any Indemnitee other than the
Indenture Trustee or the Trust Indenture Estate, any Tax based on
or measured by gross or net income, receipts, capital or net
worth, franchises, excess profits or conduct of business (other
than taxes which are in the nature of sales or use taxes, license
taxes or property taxes) imposed on an Indemnitee by any state or
local Taxing Authority in whose jurisdiction such Indemnitee did
not otherwise have sufficient business activities or business
presence to be subject to tax solely as a result of (x) the
operation of the Aircraft in such jurisdiction or (y) the
transactions contemplated by the Operative Documents, to the
extent such taxes are directly attributable to such operation of
the Aircraft or to such transactions. For purposes of determining
whether or not the Indemnitee engaged in business, maintained an
office or other place of
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business or was otherwise located in the jurisdiction of a Taxing
Authority, Indemnitee shall be defined as including all entities
with which such Indemnitee is combined, integrated or consolidated
in such Taxing Authority's jurisdiction;
(ii) in the case of any Indemnitee other than the
Indenture Trustee or the Trust Indenture Estate, any Tax based on
or measured by gross or net income, receipts, capital or net
worth, franchises, excess profits or conduct of business (other
than taxes which are in the nature of sales or use taxes, license
taxes, or property taxes) imposed on such Indemnitee by any
foreign jurisdiction (i) which are imposed as a result of Lessee's
or sublessee's activities in such foreign jurisdiction in
connection with the transactions contemplated by the Operative
Documents or (ii) which are withholding taxes on Basic Rent to the
extent such withholding taxes would otherwise result in Basic Rent
payments being insufficient to cover principal and interest
payments on the Equipment Notes;
(iii) in the case of the Indenture Trustee or the Trust
Indenture Estate any Tax based on or measured by gross or net
income, receipts, capital or net worth, franchises, excess profits
or conduct of business (including minimum taxes, withholding
taxes, and taxes on or measured by any item of tax preference)
imposed on such Indemnitee by a Taxing Authority in or of any
foreign jurisdiction or a territory or possession of the United
States, other than any such Tax which would not have been imposed
in the absence of such Indemnitee's (including for purposes of
this definition, all entities with which such Indemnitee is
combined, integrated, or consolidated in such Taxing Authority's
jurisdiction) engaging in business, maintaining an office or other
place of business or otherwise being located in such jurisdiction
other than merely by reason of such Indemnitee's participation in
the transactions contemplated by the Operative Documents; and
(iv) in the case of the Indenture Trustee or the Trust
Indenture Estate, a tax imposed by any Taxing Authority other than
the Federal government of the United States of America based on,
or measured by gross income or receipts (including minimum taxes,
withholding taxes, and taxes on or measured by any item of tax
preference), to the extent such Tax is
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attributable to the operation or registration of the Aircraft in
such jurisdiction or to the transactions contemplated by the
Operative Documents or is the result of the activities of Lessee,
sublessee, or any Affiliate of either thereof in such
jurisdiction, including residence.
(d) Reports and Returns. In case any report or
return is required to be made by Lessee with respect to any Taxes which are
subject to indemnification by Lessee under this Section 10, Lessee will either
make such report or return in such manner as will show the ownership of the
Aircraft in Owner Trustee or the interest of Owner Participant or its permitted
assigns and send a copy of such report or return to Owner Trustee and Owner
Participant or will notify Owner Trustee or Owner Participant of such
requirement and make such report or return in such manner as shall be
reasonably satisfactory to Owner Participant or Owner Trustee. If actual
notice is given by any taxing authority to an Indemnitee that a report or
return is required to be filed with respect to any such Taxes, the Indemnitee
shall promptly notify Lessee of such required report or return and Lessee shall
either file such report or return in the manner prescribed in the preceding
sentence, or shall use its best efforts to cause such report or return to be
filed by the appropriate entity. Each Indemnitee agrees to respond to any
reasonable request of Lessee for information not within Lessee's control and
within the control of and reasonably available to such Indemnitee with respect
to the filing of any such report or return, but Lessee agrees to pay any
reasonable costs, fees, disbursements or other charges of independent counsel
or independent accountants incurred in connection with such request.
(e) After-Tax Basis. Lessee further agrees that,
with respect to any payment or indemnity under this Section 10 and under
Section 13 hereof, such payment or indemnity shall include the net amount
necessary to hold the recipient of the payment or indemnity harmless on an
after-tax basis from all Taxes required to be paid or credited by such
recipient with respect to such payment or indemnity under the laws of any
Taxing Authority (as determined, in the case of the Owner Participant, on a
hypothetical basis based on the assumption that Owner Participant is subject to
the highest federal corporate income tax rate applicable in the year of payment
and the State Rate (as defined below). For this purpose, "State Rate" shall
mean the actual state and local tax rate imposed upon the Owner Participant,
taking
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into account all available allocations, apportionments, credits and deductions,
such information to be provided by the certification of a Responsible Officer
of Owner Participant (the "Certification"). At the request of the Lessee and
at the Lessee's expense, the accuracy of such information shall be verified by
the firm of certified public accountants regularly employed by the Owner
Participant, or any other national firm of independent certified public
accountants selected by Owner Participant and reasonably acceptable to Lessee.
The Certification as verified as described in the preceding sentence (if
requested by Lessee) shall be conclusive and binding on all parties. In no
event shall Owner Participant be required to make available or disclose any tax
returns or related information to any parties other than the certified public
accountants verifying the Certification.
(f) Tax Benefit. If, by reason of any payment
made to or for the account of an Indemnitee by Lessee pursuant to this Section
10 or Section 13 hereof, such Indemnitee subsequently actually realizes a tax
deduction or credit (including foreign tax credit and any reduction in Taxes)
not previously taken into account in computing the amount of such payment, such
Indemnitee shall promptly pay to Lessee, but only if there shall then be no
Event of Default and if Lessee shall have made all payments then due and owing
to such Indemnitee under the Operative Documents, an amount equal to the sum of
(A) the actual reduction in Taxes, if any, realized by such Indemnitee which is
attributable to such deduction or credit and (B) the reduction calculated on
the same basis as the Gross-Up in Taxes realized by such Indemnitee as a result
of any payment made by such Indemnitee pursuant to this sentence; provided,
however, that such Indemnitee shall not be obligated to make any payment
pursuant to this Section 10 or Section 13 hereof to the extent that the amount
calculated pursuant to (A) above would exceed (x) the amount of all prior
payments by Lessee to such Indemnitee, pursuant to this Section 10 or Section
13 hereof, net of any amount paid in respect of Taxes required to be paid by
such Indemnitee in respect of the receipt or accrual of such amounts received
by such Indemnitee from Lessee, less (y) the portion of all prior payments
computed pursuant to (A) above by such Indemnitee to Lessee hereunder.
(g) Payment. If a claim is made against any
Indemnitee for any Taxes which may be subject to indemnification by Lessee
hereunder and if such Indemnitee has notice thereof, such Indemnitee shall
promptly notify
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Lessee; provided that the failure to provide such notice shall not release
Lessee from any of its obligations hereunder except to the extent Lessee's
right to contest such claim is precluded thereby. Any amount payable as an
indemnity to any Indemnitee or any amount payable to Lessee pursuant to this
Section 10 is to be paid to such party directly, in immediately available
funds, within thirty (30) days after receipt of a written demand therefor from
such Indemnitee or Lessee, as the case may be, except in the case of a payment
to an Indemnitee to the extent that such Taxes are being contested in good
faith pursuant to this Section 10, in which event the payment of such indemnity
shall be made by the due date for the payment of any Taxes that are the subject
of such contest taking into account all extensions of the due date that are
available as a result of the contest. In the event an Indemnitee makes a tax
payment with respect to any such Taxes (other than with funds advanced to such
Indemnitee on an interest-free basis by Lessee pursuant to this Section 10),
Lessee shall reimburse the amount of such payment and also shall pay to the
Indemnitee interest on the amount of such payment by such Indemnitee at the
Interest Rate from the date of any such payment by such Indemnitee to the date
of such reimbursement by Lessee to the Indemnitee hereunder. In the event an
amount is payable to Lessee under this Section 10 or Section 13, the Indemnitee
owing such amount shall pay interest on such amount at the Interest Rate from
the date of receipt by such Indemnitee of any amount giving rise to such
obligation to pay Lessee until the date of payment to Lessee.
(h) Contest. In the event that an Indemnitee
receives a written notice of a claim which, if sustained, would require the
payment of an indemnity by Lessee pursuant to this Section 10, such Indemnitee
shall promptly notify Lessee of such claim and, if requested by Lessee, shall
in good faith contest or shall permit Lessee, if desired by Lessee and, in the
case of a contest involving Owner Participant, permitted by Owner Participant,
and such contest may be conducted in whole or in part separately in the name of
Lessee without involving Taxes of such Indemnitee not indemnified hereunder, to
contest in the name of Lessee and/or the Indemnitee, the validity,
applicability or amount of such Taxes by (x) resisting payment thereof if
practicable, (y) not paying the same except under protest, if protest is
necessary and proper, and (z) if payments be made, using reasonable efforts to
obtain a refund thereof in appropriate administrative and judicial proceedings;
provided, however, that the Indemnitee shall not be required
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to undertake or allow in its name or on its behalf any contest unless the
following conditions are satisfied:
(i) no Event of Default has occurred and is
continuing,
(ii) a threshold amount of $75,000 for any individual
claim and $150,000 for recurring claims is at issue,
(iii) Lessee shall have (a) furnished Indemnitee with a
written opinion of tax counsel selected by Indemnitee and
reasonably acceptable to Lessee to the effect that a reasonable
basis (as defined in ABA Opinion 85-352) exists for the initial
administrative or judicial contest and that the Indemnitee is more
likely than not to prevail in any appeal of a trial court
decision, and (b) agreed to pay Indemnitee for all reasonable
costs and expenses which Indemnitee may incur in contesting such
claim,
(iv) there is no substantial risk of forfeiture of the
Aircraft,
(v) if such contest is to be initiated by the payment
of, and the claiming of a refund for, such Taxes, Lessee shall
advance or cause to be advanced to such Indemnitee (if such
Indemnitee is the Indenture Trustee or the Trust Indenture Estate)
sufficient funds (on an interest-free basis) to make such payments
and shall have agreed to indemnify such Indemnitee against any
adverse tax consequences of such advance,
(vi) no claim shall be appealed to the U.S. Supreme
Court, and
(vii) Lessee shall have admitted its liability to
indemnify Owner Participant should a proposed adjustment prove to
be correct, provided that such admission may be conditioned on a
binding judicial or administrative adjudication of Lessee's
responsibility to indemnify Owner Participant, and provided
further that in no event will such adjudication cause Lessee to
delay in fulfilling its contest obligations.
(i) Refund. If any Indemnitee shall obtain a refund of
all or any part of any Taxes paid by Lessee or from an advance by Lessee, such
Indemnitee shall pay Lessee the amount of such refund together with any
interest paid
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thereon attributable to the Taxes paid or advanced by Lessee less the amount of
any Taxes payable by such Indemnitee in respect of the receipt of such refund
and interest after giving credit to Lessee for any savings by such Indemnitee
in respect to any such Taxes by reason of deductions, credits, allocations or
allowances in respect of the payment of any such Taxes; provided that such
amount shall not be payable before such time as Lessee shall have made all
payments or indemnities then due to the Lessor and the Indemnitee under the
Lease and all other Operative Documents, and provided further that no amount
shall be payable during any period in which an Event of Default under the Lease
has occurred and is continuing unremedied unless this Lease has terminated and
Lessee has paid all amounts due the Lessor thereunder.
(j) Diligence. Lessee shall not be deemed to be in
default under any of the above indemnification provisions of this Section 10 so
long as Lessee or the Indemnitee shall diligently prosecute such contest in
accordance with the provisions of this Section 10. Notwithstanding the
foregoing, if a claim is made against any Indemnitee for any Taxes which, if
successful, would result in the imposition of Taxes under circumstances which
would require Lessee to indemnify such Indemnitee, the Indemnitee shall be
released from its responsibility to contest such claim, or part thereof, if it
agrees in writing not to seek indemnification from Lessee in respect of the
claim, or such part thereof to be contested. In the event an Indemnitee fails
to contest, or refuses to permit Lessee to contest, a claim or part thereof
which the Indemnitee has the obligation to contest or to permit Lessee to
contest under this Section 10, then Lessee shall not be obligated to indemnify
the Indemnitee for such claim or such part thereof.
(k) Affiliated Group. In the event that the
Indemnitee is a member of an affiliated group (within the meaning of Section
1504(a) of the Code) which files a consolidated Federal income tax return, the
term "Indemnitee" shall mean and include such affiliated group.
(l) Survival. The provisions of this Section 10
shall survive the expiration or termination of any of the Operative Documents.
Section 11. Loss, Damage and Requisition.
(a) Event of Loss with Respect to the Airframe.
Subject to the other provisions of this Section 11, upon an
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Event of Loss with respect to the Airframe or the Airframe and any Engines then
installed thereon, Lessee shall forthwith (and, in any event, within five (5)
Business Days after such occurrence) give Lessor written notice of such
occurrence and within thirty (30) days after such occurrence give Lessor
written notice of its election, subject to the terms hereof and of the
Indenture, to perform one of the following two options (it being agreed that if
Lessee shall not have given Lessor notice of such election within thirty (30)
days after such occurrence, Lessee shall be deemed to have elected to perform
the option set forth in the following clause (ii)), provided, that Lessee shall
not have the right to select the option set forth in clause (i) if a Default or
an Event of Default shall have occurred and be continuing at the time of such
election or at the time of replacement or if the Foreign Lease Agreement does
not permit such replacement or requires the payment of additional amounts
thereunder (unless Lessee in its election pays such amounts due as a result
thereof under the Foreign Lease Agreement):
(i) Within one hundred twenty (120) days (the
"Replacement Period") after the date of the Event of Loss (but in no event
later than the last day of the Term) Lessee shall convey, or cause to be
conveyed to Lessor as provided in Section 11(c) hereof, to be subjected to the
Lien of the Indenture if it has not been discharged, and to be leased by Lessee
hereunder in replacement of the Airframe and such Engines then installed
thereon, title to (or, so long as the Foreign Lease Agreement is in effect,
beneficial ownership of) a replacement Airframe (together with the same number
of replacement Engines as the Engines), such replacement Airframe and Engines
(A) to be free and clear of all Liens (it being understood that, upon such
conveyance, such replacement Airframe and replacement Engines may be subject to
Permitted Liens), (B) to have a value, utility and remaining useful life,
determined in accordance with the Appraisal Procedure as provided in Section
11(c) hereof, at least equal to, and to be in at least as good operating
condition as, the Airframe and the Engines, if any, so replaced (assuming the
Airframe and the Engines were maintained in accordance with the requirements of
this Agreement, whether or not they are in fact so maintained), and (C) to be a
like Airbus A320-231 model aircraft with equivalent or better modification
status delivered by the Manufacturer not earlier than June 30, 1988 and, in the
case of Engines, in compliance with Section 11(b); provided that if Lessee
shall not perform its obligation to effect such replacement under this clause
by the end of the Replacement
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Period, Lessee shall then be deemed to have elected to comply, and shall
comply, with the provisions of clause (ii) of this Section 11(a); provided,
further, that the payment specified therein shall be deemed to have become due
and payable on the Stipulated Loss Value Date occurring on or immediately
preceding the last day of the Replacement Period. Upon compliance with the
foregoing, Lessor will, subject to the rights of any insurers, transfer to
Lessee, "AS IS, WHERE IS," without recourse, representation or warranty (except
a warranty that such Airframe and Engines are free and clear of Lessor's Liens,
Head Lessor's Liens and any Lien arising out of the Foreign Lease Agreement),
all of Lessor's right, title and interest, if any, in and to the Airframe and
the Engines suffering the Event of Loss as well as all of Lessor's right, title
and interest in and to any Engine constituting part of the Aircraft and
replaced as provided above but not installed thereon at the time of the Event
of Loss. For all purposes hereof, a replacement Airframe shall be deemed part
of the property leased hereunder and shall be deemed the "Airframe" as defined
herein. No Event of Loss resulting in replacement of the Airframe or Engines
under this Section 11(a)(i) shall result in any reduction of Rent.
(ii) On a Stipulated Loss Value Date on or
before one hundred twenty (120) days after the date of the Event of Loss (or,
if earlier, with respect to insurance proceeds, on the date on which insurance
proceeds with respect to the Event of Loss are received by the loss payee)
Lessee shall pay to Lessor in immediately available funds the sum of (A) the
Stipulated Loss Value of the Aircraft as shown on Exhibit A for such Stipulated
Loss Value Date, plus all Basic Rent or Renewal Rent, as the case may be,
payable on each Basic Rent Payment Date or Renewal Rent Payment Date,
respectively, prior to the date of payment of such Stipulated Loss Value which
has not been paid when due, [plus, if such Stipulated Loss Value Date is also a
Basic Rent Payment Date or a Renewal Rent Payment Date, the amount of Basic
Rent or Renewal Rent, as the case may be, payable by Lessee on such Stipulated
Loss Value Date, or, if such Stipulated Loss Value Date occurs after the last
day of the Term,] plus an amount equal to the average daily Basic Rent or
Renewal Rent, as the case may be, in effect on the last day of the Term, for
each day from and including the last day of the Term to and excluding such
Stipulated Loss Value Date, and (B) all Supplemental Rent payable, whereupon
(1) the obligation of Lessee to pay Basic Rent or Renewal Rent, as the case may
be, hereunder with respect to the Aircraft for any period commencing after the
date on which such
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Stipulated Loss Value is paid shall terminate; provided that Lessee shall
remain liable for, and shall pay on or before the date the Stipulated Loss
Value and Supplemental Rent are paid, all payments of Basic Rent or Renewal
Rent, as the case may be, for the Aircraft due on or before the date of such
payment of Stipulated Loss Value and Supplemental Rent, (2) the Term shall
terminate with respect to such Aircraft, and (3) Lessor will, subject to the
rights of any insurers, transfer to Lessee, "AS IS, WHERE IS," without
recourse, representation or warranty (except a warranty that such Airframe and
Engines are free and clear of Lessor's Liens and Liens arising out of the
Foreign Lease Agreement), all of Lessor's right, title and interest, if any, in
and to the Airframe and Engines suffering the Event of Loss, as well as all of
Lessor's right, title and interest, if any, in and to any Engine constituting
part of the Aircraft but not installed thereon at the time of the Event of
Loss.
(b) Event of Loss with Respect to an Engine. Upon an
Event of Loss with respect to an Engine only, Lessee shall give Lessor prompt
written notice thereof and shall, at its own cost and expense, within sixty
(60) days after such occurrence pay all amounts due under the Foreign Lease
Agreement as a result thereof and convey or cause to be conveyed to Lessor as
replacement for the Engine suffering an Event of Loss, title to (or, so long as
the Foreign Lease Agreement is in effect, beneficial ownership of) another IAE
Model V2500 engine of like model and equivalent or better modification status
or, at Lessee's option, an IAE engine of an improved model, in each such case
which has a value, remaining useful life and utility determined in accordance
with the Appraisal Procedure at least equal to such Engine and is suitable for
installation and use on the Airframe without diminishing the value, remaining
useful life or utility of such Airframe, free of all Liens (it being understood
that, upon such conveyance, such replacement Engine may be subject to Permitted
Liens) and being in as good operating condition as (including no greater number
of cycles or hours than) the Engine being replaced assuming the Engine being
replaced was serviceable and otherwise in the condition and repair required by
the terms hereof immediately prior to the Event of Loss. Prior to or at the
time of any such conveyance, Lessee, at its own cost and expense, will (i)
furnish Lessor (or, so long as the Foreign Lease Agreement is in effect,
Foreign Lessor) with a full warranty xxxx of sale, in form and substance
reasonably satisfactory to Owner Participant and Indenture Trustee, as
applicable, with respect to such replacement Engine; (ii) cause supplements, in
form and substance reasonably satisfactory
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to Owner Participant and Indenture Trustee (if the Lien of the Indenture has
not been discharged), subjecting such replacement Engine to this Lease, the
Indenture (if then in effect), the Foreign Lease Agreement (if then in effect)
and the Trust Agreement (if in effect), to be duly executed by Lessee, if
applicable, and duly filed for recordation pursuant to the Federal Aviation
Act; (iii) furnish Lessor and Indenture Trustee (if the Lien of the Indenture
has not been discharged) with such evidence of title to such Replacement Engine
and of compliance with the insurance provisions of Section 12 hereof with
respect to such Replacement Engine as Owner Participant or Indenture Trustee
(if the Lien of the Indenture has not been discharged) may reasonably request;
(iv) furnish Owner Participant and Indenture Trustee (if the Lien of the
Indenture has not been discharged) with an opinion of Lessee's counsel
addressed to such parties and to Lessor to the effect that title to (or, so
long as the Foreign Lease Agreement is in effect, beneficial ownership of) such
Replacement Engine has been duly conveyed to Lessor free and clear of all Liens
(except Permitted Liens), the replacement of the Engine suffering the Event of
loss with the Replacement Engine is in accordance with the provisions of this
Agreement and Foreign Lease Agreement (if then in effect), and the Replacement
Engine is subject to the Lien of the Indenture (if it has not been discharged),
the instruments subjecting such Replacement Engine to the Lien of the Indenture
and the Lease, and subjecting to any relevant Assigned Sublease and Sublease
Agreement, as the case may be, have been duly filed for recordation pursuant to
the Federal Aviation Act or any other law then applicable to the registration
of the Aircraft, and no further action, filing or recording of any document is
necessary in order to establish and perfect, in the United States and, if the
Aircraft is registered outside the United States, in the jurisdiction of
registration, the legal title to such Replacement Engine and the Lien of the
Indenture on such Replacement Engine; (v) furnish a certificate signed by a
Responsible Officer of Lessee certifying that, upon consummation of such
replacement, no Default or Event of Default will exist hereunder; (vi) furnish
such documents and evidence with respect to Lessee, Owner Participant or
Indenture Trustee (if the Lien of the Indenture has not been discharged), as
such parties or their respective counsel may reasonably request in order to
establish the consummation of the transactions contemplated by this Section
11(b), the taking of all corporate proceedings in connection therewith and
compliance with the conditions set forth in this Section 11(b), in each case in
form and substance satisfactory to such party; (vii) furnish such Uniform
Commercial Code financing statements covering the Replacement Engine as may be
requested by Lessor or Indenture Trustee (if the Lien of
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the Indentures has not been discharged); (viii) furnish Owner Participant with
an opinion of tax counsel mutually satisfactory to Owner Participant and Lessee
and which opinion is reasonably satisfactory to Owner Participant to the effect
that such replacement will have no adverse tax consequences to Lessor and Owner
Participant; (ix) furnish the appraisal referred to above; and (x) furnish
Owner Trustee and Indenture Trustee with the opinion of counsel to Lessee
specified in Section 5.06(a)(5)(i) of the Indenture. Upon full compliance by
Lessee with the terms of this Section 11(b), Lessor will, subject to the rights
of any insurers, transfer to Lessee, "AS IS, WHERE IS" without recourse,
representation or warranty (except a warranty that such Engine is free and
clear of Lessor's Liens, Head Lessor's Liens and any Lien arising out of the
Foreign Lease Documents), all of Lessor's right, title and interest, if any, in
the Engine which suffered the Event of Loss. For all purposes hereof, each
such Replacement Engine shall be deemed an "Engine" as defined herein and shall
be deemed part of the same Aircraft as was the Engine replaced thereof. No
Event of Loss covered by this Section 11(b) shall result in any reduction in
Rent.
(c) Conveyance of Replacement Airframe. Prior to or
at the time of any conveyance of a replacement Airframe pursuant to Section
11(a) above, Lessee, at its own cost and expense, will furnish Lessor with the
following documents which shall have been duly authorized, executed and
delivered by the respective parties thereto and shall be in full force and
effect on said date: (i) a full warranty xxxx of sale, in form and substance
satisfactory to Owner Participant and Indenture Trustee (if the Lien of the
Indenture has not been discharged), and an AC Form 8050-2 Xxxx of Sale (or such
other form of xxxx of sale as may be approved by the FAA on said date),
executed by the owner thereof, in favor of Lessor or, so long as the Foreign
Lease Agreement is in effect, the Foreign Lessor, and cause supplements,
reasonably satisfactory to Owner Participant and Indenture Trustee (if the Lien
of the Indenture has not been discharged), to this Lease, the Foreign Lease
Agreement (if then in effect), the Indenture (if then in effect) and the Trust
Agreement (if then in effect), with respect to such replacement Airframe and to
be duly filed for recordation pursuant to the Federal Aviation Act or other
applicable Governmental Entity; (ii) the certificate specified in Section 12(f)
hereof demonstrating compliance with the insurance requirements of Section 12
with respect to the replacement Airframe and Engines; (iii) an opinion
(addressed to Indenture Trustee, Lessor, and Owner
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Participant) of Lessee's counsel (and such other evidence of title as Owner
Participant or Indenture Trustee (if the Lien of the Indenture has not been
discharged) may reasonably request) to the effect that, upon such conveyance,
Lessor will acquire good title to (or, so long as the Foreign Lease Agreement
is in effect, beneficial ownership of) such replacement Airframe free and clear
of all Liens (it being understood that, upon such conveyance, such replacement
Airframe may be subject to Permitted Liens), that such replacement Airframe
will be leased hereunder and under the Foreign Lease Agreement (if then in
effect) to the same extent as the Airframe replaced thereby and will be subject
to the Lien of the Indenture (if it has not been discharged), the instruments
subjecting such Replacement Airframe and Replacement Engine to the Lien of the
Indenture and the Lease, and subjecting to any relevant Assigned Sublease and
Sublease Assignment, as the case may be, have been duly filed for recordation
pursuant to the Federal Aviation Act or any other law then applicable to the
registration of the Aircraft, and no further action, filing or recording of any
document is necessary in order to establish and perfect, in the United States
and, if the Aircraft is registered outside the United States, in the
jurisdiction of registration, the legal title to such Replacement Airframe and
Replacement Engine and the Lien of the Indenture on such Replacement Airframe
and Replacement Engine, and that Lessor, and Indenture Trustee as assignee of
Lessor, is entitled to the benefits of Section 1110 of Title 11 of the United
States Code with respect to such replacement airframe and engines to the same
extent as with respect to the Airframe and Engines then installed thereon prior
to such replacement; (iv) a certificate signed by a Responsible Officer of
Lessee certifying that, upon consummation of such replacement, no Default or
Event of Default will exist hereunder; (v) such documents and evidence with
respect to Lessee, Owner Participant or Indenture Trustee (if the Lien of the
Indenture has not been discharged), as such parties or their respective counsel
may reasonably request in order to establish the consummation of the
transactions contemplated by this Section 11(c), the taking of all corporate
proceedings in connection therewith and compliance with the conditions set
forth in this Section 11(c), in each case in form and substance satisfactory to
each such party, including evidence that the Aircraft of which the replacement
Airframe is a part has been duly certificated by the FAA as to type and
airworthiness in accordance with the terms of this Lease and application for
registration of such replacement Airframe in the name of Lessor has been duly
made with the FAA or other applicable
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Governmental Entity and Lessee has temporary or permanent authority to operate
the replacement Airframe; (vi) furnish such Uniform Commercial Code financing
statements covering the replacement Airframe as may be reasonably requested by
Lessor or Indenture Trustee; (vii) furnish Owner Participant with an opinion of
tax counsel mutually satisfactory to Owner Participant and Lessee and which
opinion is reasonably satisfactory to Owner Participant to the effect that such
replacement will have no adverse tax consequences to Lessor and Owner
Participant; (viii) an appraisal prepared in accordance with the Appraisal
Procedure which confirms that the replacement Airframe and any replacement
Engine has a value, utility and remaining useful life at least equal to that of
the Airframe and Engines which suffered the Event of Loss assuming that the
same were maintained in accordance with the requirements of this Lease whether
or not they are in fact so maintained; and (ix) furnish Owner Trustee and
Indenture Trustee with the opinion of counsel to Lessee specified in Section
5.06(a)(5)(i) of the Indenture. Upon full compliance by Lessee with the terms
of this Section 11(c), Lessor will, subject to the rights of any insurers,
transfer to Lessee "AS IS, WHERE IS," without recourse, representation or
warranty (except a warranty that such Airframe is free and clear of Lessor's
Liens, Head Lessor's liens, and liens arising out of the Foreign Lease
Documents), all of Lessor's right, title and interest in and to the Aircraft
which suffered the Event of Loss. No Event of Loss with respect to the
Aircraft under the circumstances contemplated by the terms of this Section
11(c) shall result in any reduction in Rent.
For all purposes of this Lease, each such replacement
Aircraft (together with any Engines constituting part of the Aircraft being
replaced as to which an Event of Loss has not occurred) shall be deemed part of
the property leased hereunder and shall be deemed the "Aircraft" as defined
herein.
(d) Application of Proceeds and Payments. Any
payments received at any time by Lessor or by Lessee from any insurer
(including a Governmental Entity providing an indemnity in lieu thereof) with
respect to an Event of Loss shall be applied in the manner specified in
Sections 12(c) and (e) hereof. Subject to Section 11(f) below, any payments
(other than insurance or such indemnity proceeds) received at any time by
Lessor or Lessee from any Governmental Entity or other Person with respect to
an Event of Loss will be applied as follows (after reimbursement of Lessor,
Indenture Trustee and Owner Participant for their reasonable out-of-pocket
costs and expenses):
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(i) unless clause (ii) below is applicable,
so much of such payments as shall not exceed the Stipulated Loss Value and
other payments required to be paid by Lessee pursuant to Section 11(a)(ii) of
this Lease shall be paid to Lessor in reduction of Lessee's obligation to pay
such Stipulated Loss Value and other payments, if not already paid by Lessee,
or, if already paid by Lessee, shall (unless a Default or an Event of Default
shall have occurred and be continuing) be applied by Lessor to reimburse Lessee
for its payment of such Stipulated Loss Value and other payments and the
balance, if any, of such payment remaining thereafter shall be paid over to, or
retained by, Lessor; or
(ii) if such payments are received as a result
of an Event of Loss with respect to the Airframe or an Engine which is being
replaced pursuant to Section 11(a)(i) or Section 11(b) hereof, all such
payments shall be paid over to, or retained by, Lessee if Lessee shall have
fully performed or, concurrently therewith fully performs, the terms of
Sections 11(a)(i) and (c) or Section 11(b) hereof, as the case may be, and of
Section 15 hereof with respect to the Event of Loss for which such payments are
made and if no Default or Event of Default shall have occurred and be
continuing.
(e) Requisition for Use by Government with Respect to
the Aircraft. Subject to Section 11(f) below, in the event of the requisition
for use by a Governmental Entity of the Aircraft, the Airframe or an Engine
(other than a requisition constituting an Event of Loss), Lessee shall promptly
notify Lessor and Indenture Trustee (if the Lien of the Indenture has not been
discharged) thereof and all of Lessee's obligations under this Lease with
respect to such Airframe or Engine shall continue to the same extent as if such
requisition had not occurred. All payments received by Lessor or Lessee from
the Governmental Entity for the use of such Airframe or Engine during the Term
shall be paid over to, or retained by, Lessee if no Default or Event of Default
shall have occurred and be continuing; and all other payments received by
Lessor or Lessee from the Governmental Entity shall be paid over to, or
retained by, Lessor. If the Airframe and such Engines or engines are not
returned by the end of the Term, an Event of Loss shall be deemed to have
occurred on the last day of the Term and, on the last day of the Term, Lessee
shall either pay to Lessor the amount provided herein for an Event of Loss to
the Airframe and such Engines or engines on such date or provide a replacement
Aircraft and Engine on such date in the condition provided for in Section 16
and Exhibit E. In the
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event of the requisition for use by the Governmental Entity of any Engine
without the requisition for use of the Airframe, Lessee will replace such
Engine hereunder by complying with the terms of Section 11(b) to the same
extent as if an Event of Loss had occurred with respect to such Engine, and
thereafter any payments received by Lessor or Lessee from the Governmental
Entity with respect to such requisition shall be paid over to, or retained by,
Lessee.
(f) Application in Default. Any amount referred to
in clause (i) or (ii) of Section 11(d) or Section 11(e) which is otherwise
payable to Lessee shall not be paid to Lessee, or, if it has been previously
paid to or retained by Lessee, shall be paid by Lessee to Lessor, if at the
time of such payment or retention a Default or an Event of Default shall have
occurred and be continuing. In such case, all such amounts shall be paid to
and held by Indenture Trustee so long as the Lien of the Indenture shall not
have been discharged and thereafter by Lessor as security for the obligations
of Lessee, or, at the option of Lessor or the Indenture Trustee, as the case
may be, applied by Lessor or the Indenture Trustee, as the case may be, toward
payment of any of Lessee's obligations at the time due hereunder, as Lessor or
the Indenture Trustee, as the case may be, may elect, including, without
limitation, by reason of this Lease being declared or deemed in default. At
such time as there shall not be continuing any such Event of Default or
Default, all such amounts at the time held by Lessor or Indenture Trustee in
excess of the amount, if any, which Lessor or Indenture Trustee has elected for
application as provided above, shall be paid to Lessee.
Section 12. Insurance.
(a) Public Liability and Property Damage Insurance.
Lessee will carry and maintain in effect, or cause to be carried and maintained
in effect, at its own cost and expense, with Approved Insurers, comprehensive
aircraft and general public liability insurance (including, without limitation,
contractual liability, liability war risk and passenger legal liability
products, completed operation liability covering maintenance of aircraft, but
excluding manufacturer's product liability insurance), and property damage
insurance with respect to the Aircraft, in an amount not less than three
hundred fifty million dollars ($350,000,000), combined single limit, per
occurrence or such higher amount, and of such type and terms, as are
customarily carried by prudent Certificated Air Carriers, similarly situated to
Lessee, operating aircraft of similar
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size and engines and as hereinafter provided. Each and any policy of insurance
carried in accordance with this Section 12(a), and each and any policy obtained
in substitution or replacement for any of such policies, (i) shall designate
Lessor (in both its individual and trustee capacity), Owner Participant, the
general partners of Owner Participant, Indenture Trustee (in both its
individual and trustee capacity), Foreign Lessor, Foreign Lessee, Foreign
Lender and the other Indemnitees and their respective permitted assigns, as
additional insureds as their interests may appear (but without imposing upon
any such Person any obligation imposed upon the insured, including, without
limitation, the liability to pay any premiums for any such policies), (ii)
shall expressly provide that, in respect of the interests of Lessor, Owner
Participant, the general partners of Owner Participant, Indenture Trustee,
Foreign Lessor, Foreign Lessee, Foreign Lender and the other Indemnitees and
their respective permitted assigns, in such policies, the insurance shall not
be invalidated as to an insured or additional insured by any act or omission of
Lessee or any other insured or additional insured and shall insure Lessor,
Owner Participant, the general partners of Owner Participant, Indenture
Trustee, Foreign Lessor, Foreign Lessee, Foreign Lender and the other
Indemnitees and their respective permitted assigns, regardless as to any
insured or additional insured of any breach or violation by Lessee or any other
insured or additional insured of any warranty, declaration or condition
contained in such policies, (iii) shall provide that if such insurance is
cancelled for any reason whatsoever, or is changed in any adverse way with
respect to the interests of Lessor, Owner Participant, the general partners of
Owner Participant, Indenture Trustee, Foreign Lessor, Foreign Lessee, Foreign
Lender and the other Indemnitees or if such insurance is allowed to lapse for
non-payment of premium, such cancellation, change or lapse shall not be
effective as to Lessor, Owner Participant, the general partners of Owner
Participant, Indenture Trustee, Foreign Lessor, Foreign Lessee, Foreign Lender
and the other Indemnitees, and their respective permitted assigns, until thirty
(30) days, in each instance (seven (7) days or such lesser period of time as is
the insurance industry standard for war/allied perils coverage), after notice
to Lessor, Owner Participant, the general partners of Owner Participant,
Foreign Lessor, Foreign Lessee, Foreign Lender and Indenture Trustee from such
insurer or insurers, of such prospective cancellation, change or lapse, (iv)
shall include coverage for any country in or over which the Aircraft is located
or operated, and (v) shall provide that, as against Lessor, Owner
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Participant, the general partners of Owner Participant, Indenture Trustee,
Foreign Lessor, Foreign Lessee, Foreign Lender and the other Indemnitees, and
their respective permitted assigns, each insurer shall waive any rights of
set-off, counterclaim or any other deduction, whether by attachment or
otherwise, and waives any rights it may have to be subrogated to any right of
any insured against Lessor, Owner Participant, the general partners of Owner
Participant, Indenture Trustee, Foreign Lessor, Foreign Lessee, Foreign Lender
or the other Indemnitees, or their respective permitted assigns, with respect
to the Aircraft. Each liability policy shall be primary without right of
contribution from any other insurance which may be carried by Lessor, Owner
Participant, the general partners of Owner Participant, Indenture Trustee,
Foreign Lessor, Foreign Lessee, Foreign Lender or the other Indemnitees, or
their respective permitted assigns, and shall expressly provide that all of the
provisions thereof shall operate in the same manner as if there were a separate
policy covering each insured, provided, that such policies shall not operate to
increase the insurer's limit of liability. Lessee shall cause its insurers to
agree that the indemnity and hold harmless provisions of Section 13 are insured
as a contractual assumption of liability by Lessee's insurers, subject to the
terms, coverage, conditions, limitations and exclusions of the policy of
insurance. Without limiting the foregoing, the type and amount of the
insurance carried by Lessee hereunder shall be no less in amount and no less
comprehensive or favorable to Lessor, Owner Participant, the general partners
of Owner Participant, Indenture Trustee, Foreign Lessor, Foreign Lessee,
Foreign Lender and the other Indemnitees than that carried by Lessee with
respect to other A320-231 aircraft or similar-size aircraft owned or leased by
Lessee.
(b) Insurance Against Loss or Damage. Lessee, at its
own expense, will maintain in effect, or cause to be carried and maintained in
effect, with Approved Insurers "all-risk" ground and flight aircraft hull
insurance (which shall include, but not be limited to, hijacking, a
disappearance clause and coverage against strikes, riots, commotions or labor
disturbances, air piracy, malicious acts or acts of sabotage and unlawful
seizure or wrongful exercise of control of the Aircraft in flight by a person
on board such Aircraft acting without the consent of Lessee) covering the
Aircraft, and "all-risk" coverage including transit insurance with respect to
Engines and Parts while not installed on such Aircraft or an aircraft, which in
each case considering all policy terms, limitations and
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exclusions is of the type, terms and amount customarily maintained by prudent
Certificated Air Carriers similarly situated to Lessee and operating similar
size aircraft and engines and as hereinafter provided. Lessee shall also
maintain, or cause to be maintained, war risk and allied perils hull insurance
reasonably acceptable to Lessor with Approved Insurers. In addition, at least
ten (10) Business Days (or, in the case of an emergency, at least two (2)
Business Days) prior to permitting the Aircraft, Airframe or Engines to be
operated or located outside of the United States of America, other than in
Canada or Mexico, Lessee shall notify Lessor thereof. If Owner Participant or
Indenture Trustee reasonably requests at any time and if such insurance is then
customarily being obtained by or for Persons leasing or financing
similarly-sized aircraft operating on similar routes to operators located in
the jurisdiction of Lessee's or, if a Permitted Sublease is in effect, the
Permitted Sublessee's jurisdiction of domicile, Lessee shall pay or reimburse
Lessor for political risk, repossession, expropriation, confiscation and
similar insurance as Lessor may arrange or cause to be arranged; provided that
Indenture Trustee shall not be obligated to request such insurance and shall
not be liable for any failure to request such insurance. Anything herein to
the contrary notwithstanding, at all times while the Aircraft is subject to
this Lease, the insurance required by this Section 12(b) shall be for an amount
on an "agreed value" basis not less than the Stipulated Loss Value from time to
time determined for the Aircraft. Without limiting the foregoing, the type and
amount of insurance carried by Lessee hereunder shall be no less comprehensive
or favorable to Lessor, Owner Participant, Indenture Trustee and the other
Indemnitees than that carried by Lessee with respect to similar-size aircraft
owned or leased by Lessee.
Each and any policy of insurance obtained and maintained
pursuant to this Section 12(b), and each and any policy obtained in
substitution or replacement for any such policies, (i) shall designate Lessor
as owner of the Aircraft, shall designate, so long as the Lien of the Indenture
has not been discharged, Indenture Trustee and, thereafter, Lessor, as sole
loss payee, as provided below and shall designate Lessor, Owner Participant,
Indenture Trustee (in both its individual capacity and its trustee capacity)
and the other Indemnitees and their respective permitted assigns as additional
insureds, as their respective interests may appear (but without imposing upon
Lessor, Owner Participant, Indenture Trustee and the other Indemnitees and
their respective permitted assigns, any
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obligation imposed upon the insured, including, without limitation, the
liability to pay any premiums for any such policies), (ii) shall expressly
provide that, in respect of the interests of such an additional insured and its
permitted assigns, in such policies, the insurance shall not be invalidated as
to an insured by any act or omission of Lessee or any other additional insured,
and shall insure each such additional insured and its permitted assigns,
regardless of any breach or violation of any warranty, declaration or condition
contained in such policies by the Lessee or another additional insured, (iii)
shall provide that if such insurance is cancelled for any reason whatsoever, or
is changed in any adverse way with respect to the interests of Lessor, Owner
Participant, Indenture Trustee and to the other Indemnitees and their
respective permitted assigns, or if such insurance is allowed to lapse, such
cancellation, change or lapse shall not be effective as to Lessor, Owner
Participant, Indenture Trustee, the other Indemnitees or their respective
permitted assigns, until thirty (30) days (seven (7) days or such lesser period
of time as is the insurance industry standard for war/allied perils coverage)
after written notice to Lessor, Owner Participant and Indenture Trustee from
such insurer or insurers, as the case may be, of such prospective cancellation,
change or lapse, (iv) shall include coverage for any country in or over which
the Aircraft may at any time be located or operated, (v) shall provide that, as
against Lessor, Owner Participant, Indenture Trustee, Foreign Lessor, the other
Indemnitees and their respective permitted assigns, each insurer shall waive
any rights of set-off, counterclaim or any other deduction, whether by
attachment or otherwise, and waives any rights it may have to be subrogated to
any right of any insured against Lessor, Owner Participant, Indenture Trustee,
Foreign Lessor, and the other Indemnitees and their respective permitted
assigns, with respect to the Aircraft, (vi) shall provide that in the event of
any damage or loss which is an Event of Loss hereunder and which results in a
payment, such payment shall be payable directly to Indenture Trustee as sole
loss payee, so long as the Lien of the Indenture shall not have been discharged
and thereafter to Lessor, as sole loss payee, and (vii) shall provide that in
the event of any damage or loss which is not an Event of Loss hereunder and
which results in a payment, such payment shall be payable directly to Indenture
Trustee, as sole loss payee for the account of all interests, so long as the
Lien of the Indenture shall not have been discharged and thereafter to Lessor,
as sole loss payee for the account of all interests. The insurance required
under this Section 12(b) may
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incorporate deductible amounts which shall not exceed one million dollars
($1,000,000).
Each of Lessor, Owner Participant, the general partners of
Owner Participant and Foreign Lessor shall have the right to carry additional
and separate excess or contingent insurance for its own benefit at its own
expense, without, however, thereby limiting Lessee's obligations under this
Section 12, and Lessee shall not carry any such insurance if it would conflict
with or adversely affect other insurance carried by Lessor, Foreign Lessor,
Owner Participant or the general partners of Owner Participant with respect to
the Aircraft. Lessee shall have the right to carry insurance in excess of the
amounts required hereunder and the proceeds of such excess insurance shall be
payable to Lessee, provided, however, that such insurance does not conflict
with or adversely affect the insurance required hereunder or any excess or
contingent insurance carried by Lessor, Foreign Lessor, Owner Participant or
the general partners of Owner Participant. Lessee shall give Lessor reasonable
prior written notice of any insurance to be carried by Lessee in addition to
that required to be carried by Lessee as provided herein.
In the event that separate policies are maintained to
cover "all-risk" ground and flight aircraft, hull and war risks and allied
perils insurance, Lessee shall include a 50/50 provisional claims settlement
clause as contained in the policies of insurance maintained by Lessee with
respect to all other aircraft in Lessee's fleet, and a copy of the 50/50
provisional claims settlement clause in effect on the Restatement Date shall be
attached to the insurance certificate issued on the Restatement Date.
(c) Application of Insurance Proceeds for an Event of
Loss. It is agreed that insurance payments which arise from insurance required
to be carried by Lessee pursuant to this Section 12 and received as the result
of the occurrence of an Event of Loss shall be applied as follows (after
reimbursement of Lessor, Owner Participant, Indenture Trustee and Foreign
Lessor for their reasonable out-of-pocket costs and expenses):
(i) unless clause (ii) below is applicable,
so much of such payments as shall not exceed the Stipulated Loss Value and
other payments required to be paid by Lessee pursuant to Section 11(a)(ii) of
this Lease shall be paid to Indenture Trustee so long as the Lien of the
Indenture has not been discharged and thereafter to Lessor in reduction of
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Lessee's obligation to pay such Stipulated Loss Value and any other payments if
not already paid by Lessee, or, if already paid by Lessee, shall (unless a
Default or an Event of Default shall have occurred and be continuing) be
applied by Indenture Trustee or Lessor, as the case may be, to reimburse Lessee
for its payment of such Stipulated Loss Value and other payments and the
balance, if any, of such payment remaining thereafter shall be paid over to, or
retained by, Lessor; or
(ii) if such payments are received as a result
of an Event of Loss with respect to the Airframe or an Engine which is being
replaced pursuant to Section 11(a)(i) or Section 11(b) hereof, all such
payments shall be paid over by the Indenture Trustee or Lessor, as the case may
be, to, or retained by, Lessee if Lessee shall have fully performed or,
concurrently therewith fully performs, the terms of Section 11(a)(i) and (c) or
Section 11(b) hereof, as the case may be, and of Section 15 hereof with respect
to the Event of Loss for which such payments are made and if no Default or
Event of Default shall have occurred and be continuing.
(d) Application of Insurance Proceeds for Other than
an Event of Loss. The insurance payments of any property damage loss to the
Airframe or any Engine not constituting an Event of Loss with respect thereto
will be applied in payment for the actual costs of repairs or for replacement
property which Lessee has incurred in accordance with the terms of Section 9,
11 or 12(c) of this Lease against such documentation evidencing payment by
Lessee as Lessor may reasonably request to reimburse Lessee for such repairs or
replacements already paid for by Lessee, and any balance remaining after
compliance with such Sections with respect to such loss shall be paid to
Lessor. Lessee shall be entitled to receive from the insurer any insurance
proceeds not in excess of five hundred thousand dollars ($500,000) as soon as
such funds are paid and shall promptly receive such additional insurance
proceeds from the loss payee upon invoices for repair work in progress,
replacement parts which are ordered or for work completed as provided above in
this Section 12(d). Any amount referred to in this Section 12(d) which is
payable to Lessee shall not be paid to Lessee if at the time of such payment
any Default or Event of Default shall have occurred and be continuing, but
shall be held by Lessor as security for the obligations of Lessee under this
Lease or applied as provided in Section 12(e).
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(e) Application in Default. Any amount referred to
in clause (ii) of Section 12(c) or Section 12(d) which is otherwise payable to
Lessee shall not be paid to Lessee, or if it has been previously paid to or
retained by Lessee, shall be paid by Lessee to Indenture Trustee, so long as
the Lien of the Indenture shall not have been discharged, and thereafter to
Lessor, if at the time of such payment or retention a Default or an Event of
Default shall have occurred and be continuing. In such case, all such amounts
shall be paid to and held by Indenture Trustee, so long as the Lien of the
Indenture shall not have been discharged, and thereafter held by Lessor as
security for the obligations of Lessee, or, at the option of Indenture Trustee
or Lessor, applied by Indenture Trustee or Lessor toward payment of any of
Lessee's obligations at the time due hereunder, including, without limitation,
by reason of this Lease being declared or deemed declared in default, as
Indenture Trustee or Lessor may elect. At such time as there shall not be
continuing any such Event of Default or Default, all such amounts at the time
held by Indenture Trustee or Lessor in excess of the amount, if any, which
Indenture Trustee or Lessor has elected for application as provided above,
shall be paid to Lessee.
(f) Certificates. On or before the Delivery Date,
and thereafter on any renewal by the Lessee of the insurance required hereby
(but in no event less than once in every twelve (12) month period), Lessee will
furnish to Lessor and Indenture Trustee a certificate executed and delivered by
an Approved Insurer or the Approved Broker, describing in reasonable detail,
and in accordance with customary practice, insurance carried on the Aircraft
and Lessee shall also furnish an opinion or report by the Approved Insurer or
the Approved Broker certifying that the insurance then maintained on the
Aircraft complies with the terms of this Lease. Lessee will cause the Approved
Broker to agree to advise Lessor, Owner Participant and Indenture Trustee in
writing at least thirty (30) days (seven (7) days or such lesser period of time
as is the insurance industry standard for war/allied perils coverage) prior to
the expiration, non-renewal, termination or cancellation for any reason
(including, without limitation, failure to pay premium therefor) or material
modification of any such insurance.
In the event Lessee shall fail to maintain insurance as
herein provided, Lessor, Owner Participant or Indenture Trustee at their
respective options, may provide such insurance and, in such event, Lessee
shall, upon
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demand, reimburse Lessor, as Supplemental Rent, or any other such other Person
who may have provided such insurance, for the cost thereof.
(g) Reinsurance. Lessee (or if a Permitted Sublease
is in effect, the Permitted Sublessee) may carry primary insurance outside of
the aviation insurance markets in New York, London or Paris if the relevant
primary insurer shall have obtained reinsurance and such reinsurance (i) is on
the same terms as the original insurance and includes the provisions required
by this Agreement; (ii) provides in case of any bankruptcy, insolvency,
liquidation, dissolution or similar proceedings of or affecting the original
insurer that the reinsurers' liability will be to make such payment as would
have fallen due under the relevant policy of reinsurance if the original
insurer had (immediately before such bankruptcy, insolvency, liquidation,
dissolution or similar proceedings) discharged its obligations in full under
the original insurance policies in respect of which the then relevant policy of
reinsurance has been effected; and (iii) contains a "cut-through" clause in the
following form (or otherwise, satisfactory to Owner Participant): "The
Reinsurers and the Reinsured hereby mutually agree that in the event of any
claim arising under the reinsurances in respect of a total loss or other claim
where as provided by the Amended and Restated Aircraft Lease Agreement [GPA
1989 BN-8] dated as of June __, 1997 and made between Wilmington Trust Company,
as Owner Trustee, and America West Airlines, Inc. such claim is to be paid to
the person named as sole loss payee under the primary insurances, the
Reinsurers will in lieu of payment to the original insured, its successors in
interest and assigns pay to the person named as sole loss payee under the
primary insurances effected by the original insured that portion of any loss
due for which the Reinsurers would otherwise be liable to pay the original
insurer (subject to proof of loss), it being understood and agreed that any
such payment by the Reinsurers will (to the extent of such payment) fully
discharge and release the Reinsurers from any and all further liability in
connection therewith."
(h) Storage. During any period that the Aircraft is
in storage or otherwise grounded, Lessee may carry or cause to be carried, in
lieu of the insurance required by Sections 12(a) and (b) above, insurance
otherwise conforming with the provisions of said Sections 12(a) and (b) except
that the scope of the risk and the type of insurance, and the amount of the
insurance in the case of the insurance described in Section 12(a) above (but
not the amount of
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insurance to be carried under Section 12(b) above), shall be the same as from
time to time applicable to similar size passenger aircraft that comprise
Lessee's fleet in similar storage or grounding, and in any event (including,
without limitation, at any time when there shall be in existence a Permitted
Sublease), the same as from time to time customarily carried by
similarly-situated, prudent Certificated Air Carriers for passenger aircraft of
similar size as the Aircraft in similar storage or grounding.
(i) Amounts Held. So long as no Default or Event of
Default has occurred and is continuing, any amount held by Lessor or Indenture
Trustee, as the case may be, until application by Lessor or Indenture Trustee,
as the case may be, pursuant to this Section 12 shall be invested as provided
in Section 21(h) hereof.
(j) After the Term. Lessee shall continue to
maintain at its expense the insurance described in Section 12(a) for three
years after the expiration or termination of the Basic Term or Renewal Term, if
Lessee has elected to renew the Lease in accordance with Section 20, covering
each Indemnitee as its interest may appear and specifically insuring the
indemnity contained in Section 13 to the extent of the coverage of such policy.
(k) Governmental Indemnity. In lieu of certain of
the insurance described in Section 12 above, Lessee may provide a United States
governmental indemnity, to the extent and subject to the terms and conditions
specified in Section 6(c).
Section 13. General Indemnity.
Lessee hereby agrees to indemnify, reimburse, defend and
hold harmless each Indemnitee on a net after-tax basis, as provided in Section
10(e), within fifteen (15) days after demand from and against any and all
claims (whether or not based on strict liability), damages (whether direct,
indirect, incidental, special or consequential), losses, charges, fees,
liabilities, obligations, demands, suits, judgments, actions and other legal
proceedings (whether civil or criminal), penalties, fines, other sanctions, and
any reasonable costs and expenses in connection herewith, including, without
limitation, costs and expenses set forth in Section 21(j) hereof and reasonable
attorney's fees and expenses of whatever kind or nature (any and all of which
are hereafter referred to as "Claims") imposed on, or asserted by or against,
or suffered
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or incurred by, any Indemnitee, from (and including) the Restatement Date,
including, without limitation, injury, death or property damage of passengers,
shippers and others, environmental control, noise and pollution regulations,
which in any way may result from, pertain to, or arise in any manner out of, or
are in any manner related to (1) the Operative Documents, the Purchase
Documents or the Financing Documents (exclusive of the Foreign Lease Documents
except as expressly provided herein or as otherwise would be covered by the
occurrences described in the following clause (2)(A)) or any of the
transactions contemplated thereby; (2) the Aircraft, the Airframe, any Engine
or any engine used in connection with the Airframe or any Part thereof,
including, but not limited to, (A) the importation, exportation, condition,
manufacture, design, purchase, ownership, registration, reregistration,
deregistration (other than any deregistration caused by the failure of the
registered owner of the Aircraft to be a "citizen of the United States" as
defined under the Federal Aviation Act and the regulations thereunder or to
file the documentation necessary to continue FAA registration of the Aircraft),
delivery, nondelivery, assignment, leasing, subleasing, sub-subleasing,
acceptance, rejection, possession, repossession, control, return, financing,
Liens (excluding Lessor's Liens, Head Lessor's Liens and Lenders' Liens, but
including the Lien of the Indenture), use, performance, modification,
maintenance, overhaul, operation, pooling, interchange, repair, testing, sale,
return or other disposition or application of the Aircraft, the Airframe, any
Engine, any engine used in connection with the Airframe or any Part (including,
but not limited to, latent and other defects whether or not discoverable by
Lessee or Lessor, Claims related to any actual or alleged violation of Law,
loss or damage to any property of passengers, shippers or otherwise or any
Claim related to patent, copyright, trademark or other infringement) either in
the air or on the ground, and including, without limitation, any interest
therein of an Indemnitee or imposition of a Lien thereon (excluding Lessor's
Liens, Head Lessor's Liens and Lenders' Liens but including the Lien of the
Indenture), or the rentals, receipts or earnings therefrom (including, without
limitation, the Rent and any other amounts paid or payable with respect
thereto); or (B) any defect in the Aircraft, the Airframe, any Engine, any
engine used in connection with the Airframe or any Part thereof arising from
the material or any article used therein, whether from the design, testing or
use thereof from any maintenance, service, repair, overhaul or testing of such
Aircraft, Airframe, Engine, engine or Part, or otherwise regardless of when
such
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defect shall be discovered, whether or not such Aircraft, Airframe, Engine,
engine or Part is at the time in the possession of Lessee, and regardless of
where such Aircraft, Airframe, Engine, engine or Part may then be located; or
(3) the breach of any representation, warranty or covenant made by Lessee
hereunder or under any of the other Operative Documents or any Default or Event
of Default; provided, however, that the indemnity provided for in this Section
13 shall not apply to any portion of a Claim of an Indemnitee to the extent it
results from: (i) the gross negligence or willful misconduct of such
Indemnitee or any of its directors, officers, employees, servants or agents
(except any such gross negligence or willful misconduct as may be attributed to
an Indemnitee due to its interest in the Aircraft, the Airframe, an Engine, any
Operative Document, any Purchase Document or any Financing Document), (ii) the
material breach of any express representation, warranty or covenant made by
such Indemnitee herein or in any other Operative Document, or the Financing
Documents (not resulting from a breach by Lessee of any of its representations,
warranties or covenants in the Operative Documents or in the Financing
Documents), (iii) any Taxes, whether or not Lessee is required to indemnify
such Taxes under Section 10 hereof or the Tax Indemnification Agreement (it
being understood that Section 10 hereof and the Tax Indemnification Agreement
exclusively provide for Lessee's liability with respect to Taxes), (iv) any
Claim which relates solely to events which occurred prior to but excluding the
Restatement Date (other than Claims related to the condition, manufacture or
design of the Aircraft) and any Claim concerning payment for or the ownership
of Buyer Furnished Equipment, (v) an underlying act which occurs after the
Aircraft has been returned to Lessor in accordance with the terms hereof and
the Term of this Lease has been terminated or has expired and the return is not
related to an Event of Default, (vi) as to such Indemnitee, an underlying act
which occurs after a disposition or other transfer (voluntary or involuntary)
by such Indemnitee of all or any part of its interest in the Aircraft, the
Airframe, any Engine, or any Part, or in the Financing Documents, the Purchase
Documents or the Operative Documents, except as contemplated under or pursuant
to the Operative Documents, the Financing Documents or the Purchase Documents
and except as resulting from the exercise of its remedies during the period
while an Event of Default has occurred and is continuing and prior to the time
such Indemnitee has received payment of all amounts owing to it hereunder or
thereunder and except any Claim which is alleged or does relate to the period
prior to such
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disposition or (vii) the authorization or giving or withholding of any future
amendments, supplements, waivers or consents with respect to any of the
Financing Documents, the Purchase Documents or the Operative Documents, which
amendments, supplements, waivers or consents were not requested by Lessee or
are not required to give effect to the provisions of the Operative Documents,
the Financing Documents or the Purchase Documents (provided, however, in no
event will Lessee be liable for any Claims resulting from, pertaining to or
arising from or related to Lessor's granting or creating a Lessor's Lien or the
granting or creation of a Head Lessor's Lien). Upon full payment of the
indemnities herein, Lessee shall be subrogated to all rights and remedies which
such Indemnitee may have against any third party against whom such Indemnitee
has the right to assert a Claim which arises under any action described in this
Section 13 (except Claims under such Indemnitee's own insurance policies or
under the indemnification provisions of any of the Financing Documents).
Without limiting Lessee's liability under this Section 13,
Lessee hereby waives and releases any Claim now or hereafter existing against
any Indemnitee, on account of any Claims for or on account of or arising or in
any way connected with injury to or death of personnel of Lessee or loss or
damage to property of Lessee or the loss of use of any property which may
result from or arise in any manner out of or in relation to the importation,
exportation, ownership, purchase, registration, reregistration, deregistration
(except as to Owner Participant or Lessor as and to the extent such Indemnitee
is responsible under the Refunding Agreement for Claims related to such
deregistration), delivery, non-delivery, assignment, leasing, subleasing,
manufacture, acceptance, rejection, possession, return, financing, performance,
modification, maintenance, condition, use, operation, pooling, interchange,
repair, testing, sale, return or other disposition of the Aircraft, the
Airframe, any Engine or any engine used in connection with the Airframe or any
Part thereof, either in the air or on the ground, or which may be caused by any
defect in such Aircraft, Airframe, Engine, engine or Part from the material or
any article used therein or from the design or testing thereof, or use thereof
or from any maintenance, service, repair, overhaul, or testing of such
Aircraft, Airframe, Engine, engine or Part, claims for infringement, loss of or
injury to any person, loss of or damage to any property or environmental
damage, regardless of when such defect may be discovered, whether or not such
Aircraft, Airframe, Engine, engine or Part is at the
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time in the possession of Lessee, and regardless of the location of such
Aircraft at any such time except to the extent that such Claim results from (i)
the gross negligence or willful misconduct of such Indemnitee (except any such
gross negligence or willful misconduct as may be attributed to an Indemnitee
due to its interest in the Aircraft, the Airframe, an Engine, any Operative
Document, any Purchase Document or any Financing Document), (ii) the material
breach of any of its express representations, warranties or covenants
hereunder, under any other Operative Document or Financing Document (not
resulting from a breach by Lessee of any of its representations, warranties or
covenants in the Operative Documents or in the Financing Documents), (iii) any
Taxes, whether or not Lessee is required to indemnify such Taxes under Section
10 hereof or the Tax Indemnification Agreement (it being understood that
Section 10 hereof and the Tax Indemnification Agreement exclusively provide for
Lessee's liability with respect to Taxes), (iv) any Claim which relates solely
to events which occurred prior to but excluding the Restatement Date (other
than Claims related to the condition, manufacture or design of the Aircraft)
and any Claim concerning payment for or the ownership of Buyer Furnished
Equipment, (v) an underlying act which occurs after the Aircraft has been
returned to Lessor in accordance with the terms hereof and the Term of this
Lease has been terminated or has expired and the return is not related to an
Event of Default, (vi) an underlying act which occurs after a disposition or
other transfer (voluntary or involuntary) by such Indemnitee of all or any part
of its interest in the Aircraft, the Airframe, any Engine, or any Part, or in
the Financing Documents, the Purchase Documents or the Operative Documents
(except as contemplated under or pursuant to the Operative Documents, the
Financing Documents or the Purchase Documents and except as resulting from the
exercise of its remedies during the period while an Event of Default has
occurred and is continuing and prior to the time such Indemnitee has received
payment of all amounts owing to it hereunder and except any Claim which is
alleged or does relate to the period prior to such disposition), (vii) the
authorization or giving or withholding of any future amendments, supplements,
waivers or consents with respect to any of the Financing Documents, the
Purchase Documents or the Operative Documents, which amendments, supplements,
waivers or consents were not requested by Lessee or are not required to give
effect to the provisions of the Operative Documents, the Financing Documents or
the Purchase Documents or (viii) a Lessor's Lien, a Head Lessor's Lien or a
Lenders' Lien attributable to such Indemnitee.
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Each Indemnitee shall, at Lessee's sole cost and expense
and with Lessee's cooperation, be entitled to conduct the defense of any Claim
against it; provided, however, that Lessee shall, at the request of any
Indemnitee and so long as no Event of Default has occurred and is continuing,
assume and conduct promptly and diligently, at its sole cost and expense, the
defense of such Indemnitee against any Claim of a third party with counsel
reasonably acceptable to such Indemnitee; and provided, further, however, that
Lessee shall have the right as well as the obligation to assume such defense to
the extent required under the terms of the applicable insurance policies so
long as no Default or Event of Default has occurred and is continuing. In the
event Lessee shall so assume the defense of any Claim, such Indemnitee shall
cooperate with Lessee in defending such Claim, but any expenses incurred by
such Indemnitee in connection therewith shall either be paid by Lessee to such
Indemnitee in advance, or reasonable security shall be provided by Lessee to
such Indemnitee for such payments. Neither Lessee nor an Indemnitee shall
enter into a settlement or other compromise with respect to any Claim which
Lessee or such Indemnitee is defending hereunder in excess of $100,000 without
the prior written consent of the other, which consent shall not be unreasonably
withheld.
Each Indemnitee agrees to give Lessee prompt notice of any
Claims by a third party hereunder following such Indemnitee's actual knowledge
of such Claims by third parties, but the failure of such Indemnitee to give the
notice required by this Section 13 shall not constitute a release by Lessor or
such Indemnitee of, or reduce, any of the obligations or liabilities of Lessee
to such Indemnitee in respect of any such Claim or otherwise affect the
obligations or liabilities of Lessee to any Indemnitee in respect of any such
Claim, except to the extent that Lessee's ability to control the defense
thereof where Lessee has the right to control the defense thereof is materially
prejudiced as a result solely of such failure of such Indemnitee to give such
notice.
An Indemnitee or Lessee shall supply the other with such
information requested by the other as is reasonably necessary or advisable for
the other to control the defense of a Claim to the extent permitted by this
Section.
Nothing in this Section shall be construed as a guaranty
by Lessee of payments due pursuant to any indebtedness incurred with respect to
the purchase of the Aircraft or of the residual value of the Aircraft.
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Notwithstanding anything herein or in any other Operative
Document to the contrary, with respect to any Claim for which any Indemnitee is
entitled to indemnification under more than one provision of this Lease or any
other Operative Document, such Indemnitee shall be entitled to recovery for
such Claim only pursuant to one such provision as it may select in its sole
discretion (and, for the avoidance of doubt, such Indemnitee shall not be
entitled to any double recovery for the same Claim).
The indemnities contained in this Section 13 shall
continue in full force and effect notwithstanding the expiration or other
termination of this Lease or any of the other Operative Documents and are
expressly made for the benefit of and shall be enforceable by each Indemnitee.
Section 14. Liens.
Lessee shall not directly or indirectly create, incur,
assume, or suffer to exist any Lien on or with respect to the Aircraft, the
Airframe, any Engine or any Part thereof, title thereto, or any interest of
Lessor therein or in this Lease, except (i) the respective rights of Lessor,
Lessee, Owner Participant, Indenture Trustee, Foreign Lessor and any other
Indemnitee as herein provided or provided under the other Operative Documents
or the Financing Documents; (ii) Head Lessor's Liens, Lessor's Liens and
Lenders' Liens and Liens arising out of the Foreign Lease Documents; (iii)
Liens for Taxes either not yet due or being diligently contested in good faith
by appropriate proceedings in accordance with Section 10 and so long as
adequate reserves are maintained with respect to such Liens and only so long as
neither such proceedings nor such Liens involve any material danger of the
sale, forfeiture or loss of any of the Aircraft, the Airframe or any Engine or
any Part, or any interest of Lessor, Foreign Lessor or Indenture Trustee
therein or any risk of criminal liability of Lessor, Foreign Lessor or
Indenture Trustee; (iv) inchoate materialmen's, mechanics', workmen's,
repairmen's employees', or other like inchoate Liens arising in the ordinary
course of business for sums not overdue by more than 45 days or being
diligently contested in good faith and only so long as neither such proceedings
nor any such Liens involve any material danger of the sale, forfeiture or loss
of any of the Aircraft, the Airframe or any Engine or any Part, or any interest
of Lessor, Foreign Lessor or Indenture Trustee therein; (v) the rights of other
Persons to the extent expressly permitted by the provisions of Section 6(a),
9(c) or 19; (vi) Liens arising out of any
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judgment or award against Lessee (or any Permitted Sublessee) unless the
judgment or award shall not, within thirty (30) days after the entry thereof,
have been discharged, vacated, reversed, or execution thereof stayed pending
appeal or shall not have been discharged, vacated or reversed within thirty
(30) days after the expiration of such stay and only so long as such Liens
shall not involve any material danger of the sale, forfeiture or loss of any of
the Aircraft, the Airframe or any Engine or any Part, or any interest of
Lessor, Foreign Lessor or Indenture Trustee therein and provided that the
execution of such judgment or award or an attachment relating thereto shall not
have occurred within such thirty (30) day period; and, (vii) any other Lien
with respect to which Lessee (or a Permitted Sublessee) shall have provided a
bond adequate in the reasonable opinion of Indenture Trustee (if the Lien of
the Indenture has not been discharged) and Owner Participant. Lessee shall
promptly, at its own expense, take or cause to be taken such action as may be
necessary to duly discharge any Lien (except for the Liens referred to in
clauses (i) through (vii) of this Section 14) directly or indirectly created,
incurred, assumed, or suffered to exist by Lessee if the same shall arise at
any time.
Section 15. Protection of Title and Further Assurances.
Forthwith upon the execution and delivery of this Lease,
the Indenture, the Trust Agreement, Lease Supplement, Indenture Supplement and
Trust Supplement, and any other supplement from time to time required by the
terms hereof, Lessee will cause this Lease, the Indenture, the Trust Agreement,
Lease Supplement, Indenture Supplement, Trust Supplement and such other
supplements to be duly filed and recorded, and maintained of record, in
accordance with the applicable laws of the government of registry of the
Aircraft. If any filing or recording is reasonably necessary to protect the
interests of Lessor, Foreign Lessor or Indenture Trustee, Lessee shall, at its
own cost and expense (except it shall be at Lessor's expense if in connection
with a change in ownership of the Aircraft or any other transfer or assignment
by Lessor other than as contemplated hereunder or under the Financing Documents
or in connection with an Event of Default) and upon request by Lessor, cause
any financing statements and any and all additional instruments and other
documents, so far as permitted by applicable Law, to be kept, filed, and
recorded and to be re-executed, refiled and re-recorded at all times in the
appropriate office pursuant or in relation to any
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applicable Laws of any Governmental Entity, to protect and preserve the rights
and interests of Lessor, Foreign Lessor or Indenture Trustee hereunder, under
the Indenture and in the Aircraft, and Lessee shall furnish to Lessor and
Indenture Trustee, evidence, reasonably satisfactory to Lessor and Indenture
Trustee, of each such filing or refiling and recordation and re-recordation.
Without limiting the foregoing, Lessee shall do or cause
to be done, at Lessee's cost and expense (except it shall be at Lessor's
expense if in connection with a change in ownership of the Aircraft or any
other transfer or assignment by Lessor other than as contemplated hereunder or
under the Financing Documents or in connection with an Event of Default), any
and all acts and things within its control which may be required under the
terms of the Mortgage Convention to protect and preserve the title of Lessor or
as applicable, Foreign Lessor, the Lien of the Indenture, this Lease, and the
interests of Lessor, Foreign Lessor and Indenture Trustee within the
jurisdiction of any signatory which has ratified the Mortgage Convention in
such jurisdiction and in the territories thereof in which Lessee, any Permitted
Sublessee or any wet lessee may operate the Aircraft, as Lessor may reasonably
request. Lessee shall also do or cause to be done, at its own expense (except
it shall be at Lessor's expense if in connection with a change in the ownership
of the Aircraft or any other transfer or assignment by Lessor other than as
contemplated hereunder or under the Financing Documents or in connection with
an Event of Default), any and all acts and things which may be required under
the terms of any other Law involving any jurisdiction in which Lessee, any
Permitted Sublessee or any wet lessee may operate the Aircraft, which Lessor
may reasonably request, to protect and preserve the title of the Lessor or as
applicable, Foreign Lessor, this Lease, the Indenture and Lessor's, Foreign
Lessor's and Indenture Trustee's interest in the Aircraft and under any of the
Operative Documents or Financing Documents within any such jurisdiction.
In addition, at Lessee's expense, Lessee will promptly and
duly execute and deliver to Lessor or Indenture Trustee, as applicable, such
further documents and assurances and take such further actions as Owner
Participant or Indenture Trustee may from time to time reasonably request in
order to more effectively carry out the intent and purpose of this Lease and
the other Operative Documents and the Financing Documents and to protect the
rights and remedies created or intended to be created in
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favor of Lessor, Foreign Lessor or Indenture Trustee hereunder and the other
Operative Documents and the Financing Documents including, without limitation,
if reasonably requested by Owner Participant or Indenture Trustee, at the
expense of Lessee (except it shall be at Lessor's expense if in connection with
a change in the ownership of the Aircraft or any other transfer or assignment
by Lessor or Indenture Trustee other than as contemplated hereunder or under
the Financing Documents or in connection with an Event of Default), the
execution and delivery of supplements or amendments hereto in recordable form,
subjecting to this Lease, the Indenture, the Foreign Lease Agreement and the
other Financing Documents, any replacement Aircraft or Engine and the recording
or filing of counterparts thereof in accordance with the laws of any
appropriate jurisdiction.
Section 16. Return of Aircraft and Records.
(a) Return. On any Return Occasion, Lessee, at its
own expense and risk, shall return the Aircraft to Lessor (or any Person
designated by Lessor) in at least the condition specified in this Section and
Exhibit E hereto at any Lessee system location in the continental United States
selected by Lessor, or such other location as Lessor and Lessee may agree,
fully equipped with all required Engines, or other engines owned by Lessee
(which shall thereupon become Engines as hereinafter provided) meeting the
conditions specified in this Section and Exhibit E, duly installed thereon by
delivering the same to the Lessor at such location. Lessee shall comply with
Section 11(b) and this Section 16 with respect to any engines installed on the
Aircraft returned to Lessor hereunder and meeting the conditions described
herein which were not originally installed on the Aircraft.
(b) Status Upon Return. Upon any Return Occasion
hereunder, the Aircraft shall be: (i) free and clear of all Liens, except for
the Lien of the Indenture, Head Lessor's Liens, Lessor's Liens, Lenders' Liens
and Liens arising out of the Foreign Lease Agreement, (ii) duly certified as an
airworthy aircraft by the FAA under Part 121 of the regulations promulgated
under the Federal Aviation Act and with a current and valid Airworthiness
Certificate installed on the Aircraft, unless such certificate shall have been
suspended or revoked as a result of the suspension or revocation of the
registration of the Aircraft under the Federal Aviation Act due to the
ineligibility of the Aircraft to be registered in the name of Lessor under the
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Federal Aviation Act (whether by means of a voting trust agreement or
otherwise) in which case the Aircraft shall nevertheless meet all conditions
for such certification and for the issuance of such certificate; (iii) in full
airworthy condition for over water and EROPS operation according to the FAA
standards required to allow the Aircraft to be operated under, and in full
compliance with, such Airworthiness Certificate and Part 121 of the regulations
promulgated under the Federal Aviation Act for such operation, such compliance
to be by means of such mechanical repairs or modifications or such inspections
as may be required thereby, but not by operational restrictions, by logbook
entries or other method of acceptance of such restrictions; (iv) in full
compliance with Lessee's Maintenance Program; (v) to the extent the owner of
the Aircraft is a "citizen of the United States" within the meaning of Section
40102(a)(15) of the Federal Aviation Act and reasonably cooperative with Lessee
at Lessee's expense with respect to effecting such registration, duly
registered in the name of the Lessor or other then owner of the Aircraft under
the Federal Aviation Act; (vi) in full compliance with the maintenance and
operation provisions of this Lease and all FAA airworthiness directives,
mandatory service bulletins and equivalent requirements which by their terms
require compliance on or before the last day of the Term (without regard to any
deferral, waiver, deviation or exemption granted by the FAA specifically to
Lessee delaying such compliance); (vii) in good and airworthy operating
condition, and in the same condition (including, without limitation, in a
passenger configuration suitable for passenger revenue service) as when
delivered to Lessee hereunder, ordinary wear and tear excepted, with no open or
outstanding deferred maintenance items, scheduled or unscheduled, with all
systems and components fully serviceable and operational and with no placards
restricting operation or use, and (viii) with all remaining warranties,
indemnities, policies and guarantees referred to in Section 5(d) made available
to Lessor in a manner and by documents in form and substance reasonably
satisfactory to Lessor.
(c) Engines. In the event any engine not owned by
Lessor shall be installed on the Aircraft on any Return Occasion, without
limiting Lessee's obligations under the Tax Indemnification Agreement, such
engine shall be of the same model and equivalent modification status as the
Engines or, at Lessee's option, an IAE engine of an improved model suitable for
installation and use on the Airframe without diminishing the value, remaining
useful life or utility of
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such Airframe, in each such case having a value, remaining useful life and
utility at least equal to (as determined in accordance with the Appraisal
Procedure), and be in an operating condition as good as the Engines, assuming
the Engines were in the condition and repair as required by the terms hereof
immediately prior to such termination and shall conform to the return condition
requirements set forth in this Section 16 and Exhibit E, and Lessee, at its own
expense and concurrently with such delivery, shall cause such engine to become
an Engine by complying with Section 11(b) hereof. Lessee's obligation to
comply with the terms of this Section 16(c) shall be conditioned on Lessor's
transferring to Lessee all of Lessor's right, title and interest in and to any
Engine not installed on the Aircraft at the Return Occasion "AS IS, WHERE IS,"
without any representation, warranty or recourse of any kind whatsoever,
express or implied, except a warranty that such Engine is free and clear of
Lessor's Liens and Liens arising out of the Foreign Lease Agreement.
(d) Records and Documents. Upon the return of the
Aircraft, Lessee shall deliver to Lessor (i) all logs, manuals and data, and
inspection, modification, overhaul and other records, related to the Aircraft,
including, without limitation, those required to be maintained with respect
thereto under applicable rules and regulations of the FAA, together with a
detailed description of the Maintenance Program then applied to the Aircraft
and shall provide Lessor and its designees access to the Maintenance Program
which is sufficient for a Person to maintain the Aircraft under an FAA approved
maintenance program after the Term or to transition maintenance to another
program, including, without limitation, another registry, or, in the event an
Event of Default shall have occurred, to continue to maintain the Aircraft
under the Maintenance Program, in each case as Lessor may reasonably request,
and all documentation with respect to the Aircraft set forth on Exhibit B or
otherwise delivered to Lessee at delivery thereof, and (ii) all records
necessary or required by the FAA to certify and place the Aircraft on an FAA or
other country's, as the case may be, approved maintenance program. All of the
foregoing shall, at Lessee's expense, be up-to-date and in the latest revision
status as of the last day of the Term, including, without limitation, all
software and other electronically-held materials which have been supplied by or
on behalf of Manufacturer, Manufacturer's Subsidiary or Original Head Lessee,
which must be updated to the latest revision status as of the last day of the
Term within such software base and all data therein or pertaining thereto shall
be deemed
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property of Lessor and shall be delivered to Lessor. If hard, i.e.,
non-computerized, copies of English language maintenance records are not
available, then Lessee shall cause the appropriate action to be taken with the
pertinent regulatory agencies to ensure that Lessor and the FAA are provided
with all requested necessary and proper guarantees of methods of compliance,
component overhaul and management, scheduling, quality control, serial number
verification, etc. These records shall be all inclusive to the Aircraft,
Airframe, Engines, components, rotables, and assemblies and, as a minimum,
extend to include all activities associated with each of the last completed
maintenance checks, repairs, scheduled inspections and functional tests, and
overhauls performed under Lessee's Maintenance Program. All components and
assemblies identified with safe life limits shall be identified with their
service histories, accumulated cycles or flight hours as applicable and
remaining service lives on a separate listing. All components and assemblies
which are identified on the maintenance records by part numbers and serial
numbers other than the manufacturer's shall be provided with interchange or
cross reference listing necessary to establish complete traceability. All
documentation, flight, and maintenance records as specified by United States
Federal Aviation Regulations 91.173, 91.174, and each paragraph of regulation
121.380 which normally accompany the transfer of an aircraft which has been
operating in regulated commercial air service, shall be delivered to Lessor
with the Aircraft. Any documents or records required to be delivered hereunder
shall be in English.
(e) Condition of Aircraft. Upon any Return Occasion,
Lessee shall return such Aircraft to Lessor in such condition that the Aircraft
shall also comply with each and every condition and requirement set forth
elsewhere in this Lease, including Exhibit E hereto.
(f) Final Inspection. Upon any Return Occasion,
Lessee shall make the Aircraft available to Lessor at the location where the
"block 'C' Check" (or equivalent level designated check or checks) required
hereunder to be performed immediately prior to redelivery is to be performed
for detailed inspection of the documents referred to in paragraph (d) above and
the Airframe, Engines and Parts structure and parts, at Lessee's expense
(excluding compensation to representatives of Lessor), in order to verify that
the condition of such Aircraft complies with the requirements set forth above
(such inspection being hereinafter referred to as the "Final Inspection"). The
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Final Inspection shall be combined with such "block 'C' Check" (or equivalent
level check or checks) and may include such other items as reasonably requested
by Lessor. Lessee shall give Lessor not less than thirty (30) days prior
written notice of the commencement date of such Final Inspection. The period
allowed for the Final Inspection shall be the same period during which such
"block 'C' Check" is being performed and shall have such duration as to permit
the opening of any areas of the Aircraft which are necessary or advisable to
satisfy Lessor as to compliance with the requirements of this Section 16 and
Exhibit E. The Final Inspection shall commence on the date so noticed which
shall be on or before the expiration of the Term with respect to the Aircraft
and shall continue on consecutive days until all activity required above to be
conducted has been concluded. To the extent that any portion of the Final
Inspection extends beyond the expiration of the Term, unless Lessor has
terminated the Lease pursuant to Section 18(g) hereof, the Term with respect to
the Aircraft undergoing the Final Inspection shall be deemed to have been
automatically extended, and all obligations hereunder continued, on a daily
basis until the Final Inspection shall have been concluded and Lessee shall pay
Rent during any such extension in an amount equal to the average daily Basic
Rent or Renewal Rent, as the case may be, paid in respect of the last year of
the Basic Term or Renewal Term, as the case may be (and Stipulated Loss Value
during such extension shall equal the Stipulated Loss Value on the last day of
the Basic Term or Renewal Term, as the case may be); provided, however, that
Lessee shall not be required to pay Rent with respect to the Aircraft during
the period of extension to the extent that Lessor is responsible for the delay
in completion of the Final Inspection. All storage expenses attributable to
any Term extension pursuant to the preceding sentence shall be payable by
Lessee, except that Lessee shall not be liable for any storage expenses which
are incurred after the sixtieth (60th) day after the Term to the extent that
storage continues thereafter due to Lessor's delay in completion of the Final
Inspection.
(g) Aircraft Records and Documents. In order to
enable Lessor to prepare for the Final Inspection of the Aircraft pursuant to
Subsection 16(f) above, Lessee agrees to make available to Lessor at a
maintenance base of Lessee with adequate facilities for short-term maintenance,
where the Final Inspection is to occur, not later than ten (10) days prior to
the commencement of such Final Inspection, the Aircraft Records and Documents
listed in Exhibit B hereto, together with such other documentation (including,
without
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limitation, original airworthiness directive compliance documents and other
work documents) regarding the condition, use, maintenance, or operation as
Lessor may reasonably request or require to substantiate the status of the
Aircraft.
(h) Corrections and Subsequent Corrections. To the
extent that the Aircraft or any Engine fails upon a Return Occasion to conform
to any requirement imposed by this Lease, Lessor may, at its option, (i)
continue the Lease in effect in the manner provided for in Section 16(f) above
with regard to automatic extension until such time as such Aircraft is brought
up to the condition required by this Section 16, including Exhibit E, or (ii)
accept the return of such Aircraft and thereafter have any such nonconformance
corrected, at such time as Lessor may deem appropriate but not to commence
later than ninety (90) days following the return of such Aircraft, at
commercial rates then charged by the Person selected by Lessor to perform such
correction. Lessee's obligations to pay such Supplemental Rent shall survive
the Expiration Date or other termination of this Lease. Nothing set forth in
this paragraph shall constitute a limitation on Lessor's or Owner Participant's
ability to recover from Lessee any damages, expenses or losses pursuant to
Sections 13 or 18 hereof suffered as a result of Lessee's failure to effect the
return of the Aircraft at the time, in the place and in the condition as
specified in this Section 16 and Exhibit E hereto.
(i) Functional Flight Check. Immediately prior to
the expiration of the Term, Lessor will be permitted to conduct a
non-commercial functional flight check flight of no more than two (2) hours
duration in accordance with the Manufacturer's functional flight check
procedures at Lessee's expense to demonstrate the airworthiness of the Aircraft
and proper functioning of all systems and components. A qualified pilot and up
to five (5) other representatives selected by Lessor may take part in such
flight to verify compliance of the Aircraft with the requirements of this
Lease, provided, that Lessor shall be responsible for the charges of such
qualified pilot and representatives. Lessee may combine the functional flight
check provided in this Section 16(i) with the delivery flight specified in
Section 16(a) and such functional flight check shall include the landing. Any
discrepancy or malfunction detected during any functional flight check
(including a functional flight check combined with a delivery flight) shall be
corrected, at Lessee's expense,
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and prior to the expiration of the Term. To the extent that any actions to
correct any such discrepancy or malfunction extend beyond the Term, the
provisions of the first sentence of Section 16(h) shall apply. All storage
expenses attributable to any Term extension pursuant to the preceding sentence
shall be payable by Lessee.
(j) Export Certificate of Airworthiness. Lessee
shall, at Lessee's expense, take such action as Lessor may reasonably request
to assist Lessor in obtaining any required documents in relation to the export
of the Aircraft from the United States (including, without limitation, a valid
and subsisting export certificate of airworthiness with respect to the Aircraft
and export license) and in relation to the deregistration of the Aircraft.
(k) Service Bulletin and Modification Kits. Lessee
shall deliver to Lessor, at no cost to Lessor, all service bulletin kits
furnished without charge by the manufacturer for installation on the Aircraft
which have not been so installed together with appropriate instructions for
installation. In the event such uninstalled kits were purchased or
manufactured by Lessee, then Lessor shall be advised of such kits by Lessee and
have a right of first refusal to purchase such kits at Lessee's cost for a
period of ninety (90) days after return.
(l) Storage Upon Return. Upon any Return Occasion,
Lessee shall, at Lessor's request and at Lessee's risk and expense, in addition
to other storage referred to above, arrange for the parking, storage and
insurance of the Aircraft for a period not exceeding sixty (60) days at such
reasonable location as Lessor requests where Lessee has or can arrange for
storage. Lessee shall pay or cause to be paid all costs and expenses for such
parking, storage and insurance.
(m) Resale/Release Cooperation. During the last
twelve (12) months of the Term, with reasonable notice and at reasonable times,
Lessee will cooperate, and cause any Permitted Sublessee to cooperate, in all
reasonable respects, with the efforts of Lessor to sell or lease the Aircraft
after the end of the Term, by permitting prospective purchasers or lessees,
except to the extent prohibited by applicable Law, to inspect the Aircraft and
the records relating thereto to the extent it does not unreasonably interfere
with the operation or maintenance of the Aircraft or the conduct of Lessee's
business.
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Section 17. Events of Default.
Any one or more of the following occurrences or events
shall constitute an Event of Default (whether any such event shall be voluntary
or involuntary or come about or be effected by operation of Law or pursuant to
or in compliance with any judgment, decree or order of any court or any order,
rule or regulation of any other Governmental Entity):
(a) Lessee shall fail to make (i) any payment of
Basic Rent, Renewal Rent or Stipulated Loss Value to Lessor within three (3)
Business Days after the date on which such payment is due, or (ii) any other
payment of Supplemental Rent due hereunder within ten Business Days after the
date on which such payment is due and Lessee has received written demand
therefor by the party entitled thereto; provided that any failure of Lessee to
pay to Lessor or the Owner Participant when due any Excepted Payments (as
defined in the Indenture) shall not constitute an Event of Default unless
Lessor or Owner Participant delivers notice to Lessee; or
(b) Lessee shall fail to obtain and maintain in full
force and effect any insurance required under the provisions of Section 12
hereof or shall operate the Aircraft outside of the scope or in violation of
the terms of the insurance or United States Government indemnity coverage
required to be maintained with respect to such Aircraft; or
(c) Any representation or warranty made by Lessee
herein or in the Refunding Agreement or in any certificate furnished by Lessee
in connection herewith or therewith is or was incorrect at the time made in any
material respect and such incorrectness shall not have been cured within thirty
(30) days after the receipt by Lessee of a written notice from Lessor or the
Indenture Trustee advising Lessee of the existence of such incorrectness; or
(d) Lessee shall fail to perform or observe any
covenant, condition, or agreement to be performed or observed by it pursuant to
this Lease or the Refunding Agreement, and such failure shall continue uncured
for thirty (30) days after written notice thereof is given by Lessor or
Indenture Trustee to Lessee; provided, however, that if Lessee shall have
undertaken to cure any such failure which arises under the first or second
sentence of Section 6(c) or Section 6(d), as such provisions of
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Section 6 relate to maintenance, service, repair or overhaul, or Section 9, and
notwithstanding the diligence of Lessee in attempting to cure such failure,
such failure is not cured within said thirty (30) day period but is curable
with future due diligence, there shall exist no Event of Default under this
Section 17 so long as Lessee is proceeding with due diligence to cure such
failure and such failure is remedied not later than one hundred eighty (180)
days after receipt by Lessee of such written notice; or
(e) Lessee consents to the appointment of a
custodian, receiver, trustee or liquidator of itself or all or any material
part of Lessee's property or Lessee's consolidated property, or Lessee admits
in writing its inability to, or is unable to, or does not, pay its debts
generally as they come due, or makes a general assignment for the benefit of
creditors, or Lessee files a voluntary petition in bankruptcy or a voluntary
petition seeking reorganization in a proceeding under any bankruptcy or
insolvency Laws (as now or hereafter in effect), or an answer admitting the
material allegations of a petition filed against Lessee in any such proceeding,
or Lessee by voluntary petition, answer or consent seeks relief under the
provisions of any other bankruptcy, insolvency or other similar Law providing
for the reorganization or winding-up of corporations, or provides for an
agreement, composition, extension or adjustment with its creditors, or any
corporate action (including, without limitation, any board of directors or
shareholder action) is taken by Lessee in furtherance of any of the foregoing,
whether or not the same is fully effected or accomplished; or
(f) An order, judgment or decree is entered by any
court appointing, without the consent of Lessee, a custodian, receiver, trustee
or liquidator of Lessee, or of all or any material part of Lessee's property,
or Lessee's consolidated property, or all or any material part of Lessee's
property or Lessee's consolidated property is sequestered, and any such order,
judgment or decree of appointment or sequestration remains in effect,
undismissed, unstayed or unvacated for a period of ninety (90) days after the
date of entry thereof or at any time an order for relief is granted; or
(g) An involuntary petition against Lessee in a
proceeding under the Federal bankruptcy laws or other insolvency Laws (as now
or hereafter in effect) is filed and is not withdrawn or dismissed within
ninety (90) days thereafter or at any time an order for relief is granted in
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such proceeding, or if, under the provisions of any Law providing for
reorganization or winding-up of corporations which may apply to Lessee, any
court of competent jurisdiction assumes jurisdiction over, or custody or
control of, Lessee or of all or any material part of Lessee's property, or
Lessee's consolidated property and such jurisdiction, custody or control
remains in effect, unrelinquished, unstayed or unterminated for a period of
ninety (90) days or at any time an order for relief is granted in such
proceeding; or
(h) Lessee's cessation of business as a commercial
passenger Certificated Air Carrier or, except in either case in connection with
a labor dispute, announcement thereof or Lessee's suspension of its business as
a commercial passenger Certificated Air Carrier, or for any reason the
preponderant business activity of Lessee shall cease to be that of a commercial
passenger Certificated Air Carrier; or
(i) Lessee's loss or suspension of its United States
air carrier license or certificate under Part 121 of the Federal Aviation
Regulations or certificate under Section 41102(a) of the Federal Aviation Act.
Section 18. Remedies.
Upon the occurrence of any Event of Default and at any
time thereafter so long as the same shall be continuing, Lessor may, at its
option, declare by written notice to Lessee this Lease to be in default,
provided, however, that this Lease shall be deemed to be declared in default
automatically without the necessity of such written declaration upon the
occurrence of any Event of Default described in paragraph (e), (f) or (g) of
Section 17 hereof; and at any time thereafter, so long as any outstanding Event
of Default shall not have been remedied, Lessor may do one or more of the
following with respect to all or any part of the Airframe and any or all of the
Engines as Lessor in its sole discretion shall elect, to the extent permitted
by, and subject to compliance with any mandatory requirements of, applicable
Law then in effect:
(a) Demand that Lessee, and Lessee shall upon the
written demand of Lessor and at Lessee's cost and expense, immediately return,
and the Lessee hereby agrees that it shall return promptly all or such part of,
the Aircraft to Lessor in the manner specified in such notice, in which event
such return shall not be delayed for the purposes of
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complying with the return conditions specified in Section 16 and Exhibit E
hereof (none of which conditions shall be deemed to affect Lessor's possession
of the Aircraft) or delayed for any other reason; provided, however, that
Lessee shall remain and be liable to Lessor for amounts provided for herein or
other damages resulting from the Aircraft or any Engine not being in the
condition required by Section 16 and Exhibit E. Notwithstanding the foregoing,
at Lessor's option, Lessee shall be required thereafter to take such actions as
would be required by the provisions of this Lease if such Aircraft were being
returned at the end of the Term hereof with respect to such Aircraft. In
addition, Lessor or Lessor's agent, at its option and to the extent permitted
by applicable Law, may but shall not be obligated to enter upon the premises
where all or any part of the Aircraft, Airframe and/or Engines are located to
take immediate possession of and, at Lessor's option, remove the same (and/or
any engine which is not an Engine but which is installed on the Airframe,
subject to the rights of the owner, lessor or secured party thereof) by summary
proceedings or otherwise, all without liability accruing to Lessor or Lessor's
agent for or by reason of such entry or taking of possession or removal whether
for the restoration of damage to property, or otherwise, caused by such entry
or taking, except direct damages to the extent caused by Lessor's gross
negligence or willful misconduct.
(b) With or without taking possession thereof, sell
or cause to be sold, the Aircraft, Airframe or Engine or any part thereof, or
Lessor's interest therein, at private or public sale, as Lessor in its sole
discretion may determine, or otherwise dispose of, hold, use, operate, or lease
to others, or keep idle the Aircraft, Airframe or Engine, as Lessor in its sole
discretion may determine, all free and clear of any rights of Lessee or any
Permitted Sublessee and except as hereinafter set forth in this Section 18.
Lessor may be the purchaser at any such sale.
(c) Whether or not Lessor shall have exercised, or
shall thereafter at any time exercise, any of its rights under paragraph (a) or
paragraph (b) above, Lessor, by written notice to Lessee specifying a payment
date which shall be a Stipulated Loss Value Date, may demand that Lessee pay to
Lessor, and Lessee shall pay to Lessor, on the Stipulated Loss Value Date
specified in such notice, as liquidated damages for loss of bargain and not as
a penalty (in lieu of the Basic Rent or Renewal Rent, as the case may be, due
for the period commencing after the Stipulated Loss Value Date specified for
payment in such notice), any unpaid
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Rent for the Aircraft to and including the Stipulated Loss Value Date specified
in such notice, plus whichever of the following amounts as Lessor may specify,
in its sole and absolute discretion, in such notice: (i) an amount equal to
the excess, if any, of the sum of the Stipulated Loss Value for the Aircraft,
Airframe or Engine computed as of the date specified in such notice plus, if
such date is a Basic Rent Payment Date or a Renewal Rent Payment Date, an
amount equal to the Basic Rent or Renewal Rent, as the case may be, due on such
date, over the fair market sale value of the Aircraft, Airframe or Engine as of
the date specified in such notice or (ii) an amount equal to the excess, if
any, of the sum of the Stipulated Loss Value for the Aircraft, Airframe or
Engine computed as of the date specified in such notice plus, if such date is a
Basic Rent Payment Date or a Renewal Rent Payment Date, an amount equal to the
Basic Rent or Renewal Rent, as the case may be, due on such date, over the fair
market rental value of the Aircraft for the remainder of the Term as of the
date specified in such notice.
(d) In the event Lessor, pursuant to paragraph (b)
above, shall have sold the Aircraft, Airframe or Engine or its interest
therein, Lessor, in lieu of exercising its rights under paragraph (c) above,
may, if it shall so elect, demand that Lessee pay Lessor, and Lessee shall pay
to Lessor on such demand, as liquidated damages for loss of bargain and not as
a penalty (in lieu of the Basic Rent or Renewal Rent, as the case may be, due
for the period commencing after the Stipulated Loss Value Date immediately
prior to the date such sale occurs), any unpaid Rent due to and including the
date of sale, plus the amount by which the Stipulated Loss Value of such
Aircraft, Airframe or Engine, computed as of such Stipulated Loss Value Date,
exceeds the net proceeds of such sale (after deducting all costs of such sale).
(e) In lieu of exercising its rights under paragraph
(b), (c) or (d) above, by notice to Lessee, Lessor may require Lessee to pay,
on the next Stipulated Loss Value Date, to Lessor, and Lessee hereby agrees
that it will so pay to Lessor, as liquidated damages for loss of a bargain and
not as a penalty (in lieu of the Basic Rent or Renewal Rent, as the case may
be, payable in advance for the period on and after the Stipulated Loss Value
Date), any unpaid Basic Rent or Renewal Rent, as the case may be, for such
Aircraft due and unpaid for any period prior to and including, and any Basic
Rent or Renewal Rent payable on, the Stipulated Loss Value Date, plus, an
amount equal to the
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Stipulated Loss Value for the Aircraft computed as of such Stipulated Loss
Value Date; and upon such payment of liquidated damages and the payment of all
other Rent then due hereunder and the discharge of the Lien of the Indenture
pursuant to Section 10.01 thereof, Lessor shall, at Lessee's expense, transfer,
without recourse or warranty (except as to the absence of Lessor's Liens and
the Lien of the Indenture), all right, title and interest of Lessor in and to
the Aircraft to Lessee or as it may direct and Lessor shall, at Lessee's
expense, execute and deliver such documents evidencing such transfer and take
such further action as Lessee shall reasonably request.
(f) In the event that Lessor, pursuant to paragraph
(b) above, shall have relet the Aircraft, Airframe or Engine under a long term
lease, Lessor, in lieu of exercising its rights under paragraph (c) above with
respect to such Aircraft, Airframe or Engine, may, if it shall so elect, demand
that Lessee pay Lessor, and Lessee shall pay Lessor on such demand, as
liquidated damages for loss of bargain and not as a penalty (in lieu of the
Basic Rent or Renewal Rent, as the case may be, for such Aircraft due after the
time of reletting) any unpaid Rent for such Aircraft due up to the date of
reletting, plus the amount, if any, by which the aggregate Basic Rent or
Renewal Rent, as the case may be, for such Aircraft which would otherwise have
become due over the Basic Term or Renewal Term, as the case may be, discounted
periodically (equal to installment frequency) to present worth as of the date
of reletting at the rate of 8.50% per annum, exceeds the aggregate basic rental
payments to become due under the reletting from the date of such reletting to
the date upon which the Term for such Aircraft, Airframe or Engine would have
expired but for Lessee's default, discounted periodically (equal to installment
frequency) to present worth as of the date of the reletting at the rate of
8.50% per annum.
(g) Cancel, rescind and/or terminate this Lease by
written notice to Lessee which cancellation, rescission and/or termination
shall be effective upon dispatch, whereupon Lessee's right to possess and use
the Aircraft, Airframe or Engine shall immediately cease, however, Lessee shall
be and remain liable for damages and losses suffered by Lessor and all other
amounts payable by Lessee hereunder.
(h) Lessor may exercise any other right or remedy
which may be available to it under applicable laws, or may proceed by
appropriate court action or actions, either at law or in equity, to enforce any
other remedy or right
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Lessor may have hereunder, under the other Operative Documents, at law or in
equity, including, without limitation, proceed by court order to enforce
performance by Lessee of the applicable covenants of this Lease or to recover
damages for the breach thereof.
In addition to the foregoing, Lessee shall be liable
(without duplication of the remedies above and of Lessee's obligations under
Section 10 and Section 13 hereof and subject to the exclusions set forth
therein) for any and all unpaid Rent before, during or after the exercise of
any of the above mentioned remedies (including without limitation interest on
unpaid amounts with respect to all amounts not paid when due, including,
without limitation, any amounts payable pursuant to the foregoing provisions of
this Section 18), and, except as specified above, until satisfaction of all of
Lessee's obligations to Lessor hereunder and for all legal fees and other costs
and expenses incurred by any Indemnitee by reason of the occurrence of any
Event of Default or the exercise of an Indemnitee's remedies with respect
thereto, including all costs and expenses incurred in connection with the
return of the Aircraft in accordance with the terms of Section 16 and Exhibit E
hereof or in placing the Aircraft, Airframe or Engine in the condition and with
airworthiness certification as required by such Section and such Exhibit and
costs and expenses related to the Lease, the Refunding Agreement, the
Indenture, the Pass Through Trust Agreements, the Intercreditor Agreement or
each Liquidity Facility. All liquidated damages payable pursuant to the
foregoing shall bear interest, which shall be payable on the date the payment
of such liquidated damages is due at a rate equal to the Interest Rate from and
including the date due to and excluding the date actually paid.
In effecting any repossession, Lessor, its representatives
and agents, to the extent permitted by applicable Law, (i) shall have the right
to enter upon any premises where it reasonably believes the Aircraft, the
Airframe, an Engine or Part to be located, (ii) shall not be liable, in
conversion or otherwise, for the taking of any personal property of Lessee
which is in or attached to the Aircraft, the Airframe, an Engine or Part which
is repossessed, (iii) shall not be liable or responsible, in any manner, for
any damage or injury to any of Lessee's property in repossessing and holding
the Aircraft, the Airframe, an Engine or Part except for direct damages caused
by Lessor's gross negligence or willful misconduct and (iv) shall have the
right to maintain possession of and dispose
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of the Aircraft, the Airframe, an Engine or Part on any premises owned by
Lessee or under Lessee's control.
If requested by Lessor, Lessee shall, at its sole expense,
assemble and make the Aircraft, the Airframe, an Engine or Part available at a
place designated by Lessor in accordance with Section 16 and Exhibit E hereof.
Lessee hereby agrees that, in the event of the return to or repossession by
Lessor of the Aircraft, the Airframe, an Engine or Part, or otherwise upon the
occurrence of an Event of Default, any rights in any warranty (express or
implied), service life policy, infringement indemnity, performance guaranty or
the like heretofore made available to Lessee or otherwise held by Lessee shall
without further act, notice or writing be deemed automatically cancelled and
shall be enforceable solely by and for the benefit of, and assigned to, Lessor.
Lessee shall be liable to Lessor (without duplication) for all expenses,
disbursements, costs and fees incurred in (i) repossessing, storing,
preserving, shipping, maintaining, repairing and refurbishing the Aircraft, the
Airframe, an Engine or Part to the condition required by Section 16 and Exhibit
E hereof and (ii) preparing the Aircraft, the Airframe, an Engine or Part for
sale or lease, advertising the sale or lease of the Aircraft, the Airframe, an
Engine or Part and selling or releasing the Aircraft, the Airframe, an Engine
or Part. Lessor is hereby authorized and instructed, at its option, to make
expenditures which Lessor considers advisable to repair and restore the
Aircraft, the Airframe, an Engine or Part to the condition required by Section
16 and Exhibit E hereof, all at Lessee's sole expense.
For the purpose of this Section 18, the "fair market
rental value" or the "fair market sales value" of the Aircraft, Airframe, an
Engine or Part shall be determined pursuant to the Appraisal Procedure.
At any sale of the Aircraft, the Airframe, an Engine or
Part pursuant to this Section, Owner Participant may bid for and purchase such
property and Lessee agrees that the amounts paid therefor shall be used in the
computations contemplated herein and Lessee shall remain liable for any
deficiency.
No remedy referred to in this Section is intended to be
exclusive, but, to the extent permitted by Law, each shall be cumulative and in
addition to any other remedy referred to above or otherwise available to Lessor
at law or in equity; and, to the extent permitted by Law, the exercise
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or beginning of exercise by Lessor of any one or more of such remedies shall
not preclude the simultaneous or later exercise by Lessor of any or all of such
other remedies. No waiver by Lessor of any Event of Default shall in any way
be, or be construed to be, a waiver of the same Event of Default in the future
or any other prior or future Event of Default. To the extent permitted by Law,
Lessee hereby waives any right it may have to require Lessor to mitigate
damages in connection with the remedies described in Sections 18(c), (d), (e)
or (f) above.
Lessee hereby irrevocably appoints Lessor as Lessee's
attorney-in-fact (which appointment is coupled with an interest) to execute all
documents deemed necessary to release, terminate and void Lessee's interest in
the Aircraft leased hereunder or otherwise to more effectively carry out
Lessor's rights and remedies and to file said documents for recordation with
the FAA, under the Uniform Commercial Code, and with any other appropriate
Governmental Entity, and otherwise act in Lessee's name and place with respect
to the Aircraft, provided that an Event of Default has occurred and is
continuing and this Lease has been declared or deemed to be in default.
The provisions of this Section 18 shall continue in full
force and effect and survive the expiration or other termination of this Lease
and are expressly made for the benefit of and shall be enforceable by Lessor,
Owner Participant and, if the Lien of the Indenture has not been discharged,
Indenture Trustee.
Section 19. Security for Obligations.
In order to secure the Equipment Notes, Lessor has
created, by the Indenture, a security interest in the Trust Indenture Estate,
including, without limitation, this Lease and all Rent and other sums payable
hereunder, except as provided in the Indenture and subject in each case to
Liens permitted hereunder. The Indenture provides, among other things for the
assignment by Lessor to Indenture Trustee of its right, title and interest in,
to and under this Lease, to the extent set forth in the Indenture, for the
creation of a first-mortgage lien on and perfected security interest in all of
Lessor's right, title and interest in and to the Aircraft in favor of Indenture
Trustee. Lessee hereby consents to such assignment and to the creation of such
mortgage and security interest and acknowledges receipt of copies of the Trust
Agreement and the Indenture, it being understood that such consent shall not
affect any
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requirement or the absence of any requirement for any consent under any other
circumstances. Until the Lien of the Indenture has been discharged, Lessee
will furnish to Indenture Trustee counterparts of all notices and other
writings of any kind required to be delivered hereunder by Lessee to Lessor.
Until the Lien of the Indenture has been discharged, (a) Lessee shall make all
payments of Rent, Stipulated Loss Value and all other amounts payable hereunder
(other than Excepted Payments) to or as directed by Indenture Trustee as
provided in Sections 4(c) and 4(d), and (b) Indenture Trustee shall be entitled
to exercise the rights of Lessor (but not Owner Participant) (other than
Expected Rights) herein as and to the extent provided herein or in the
Indenture and any express reference to Indenture Trustee in any Section of this
Lease shall not give rise to any implication that Indenture Trustee may not
exercise the rights of Lessor in any other Section of this Lease as and to the
extent provided in the Indenture.
The provisions of this Lease and the Refunding Agreement
which require or permit action by, the payment of monies to, the consent or
approval of, the furnishing of any instrument or information to, or the
performance of any other obligation to, Indenture Trustee, shall not be
effective, and the Sections hereof containing such provisions shall be read as
though there were no such requirements or provisions and all moneys otherwise
payable to Indenture Trustee hereunder shall be paid to Lessor, after Lessee
shall have received from Indenture Trustee notice of discharge of the Lien of
the Indenture.
Any payment or performance by Lessee to or as directed by
Indenture Trustee shall constitute payment or performance of such obligation to
Lessor by Lessee under this Lease.
Any payment or performance of an obligation of Lessee
under this Lease by a Permitted Sublessee shall constitute payment or
performance of such obligation by Lessee.
Section 20. Renewal Option. Lessee may renew this Lease
as provided in the following clause (i) and subject to the following clause
(ii):
(i) Exercise of Renewal Option. Provided
that this Lease has not been previously terminated and that no
Default or Event of Default shall have occurred and be continuing
at the time of the giving of
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irrevocable notice hereinafter referred to in this clause (i) or
at the time of the commencement of the Renewal Term, Lessee, at
its option, may renew this Lease for one Renewal Term consisting
of a period equal to five years. The right to renew this Lease
for such Renewal Term pursuant to this clause (i) shall be
exercised upon irrevocable notice from Lessee received by Lessor
of Lessee's election to so renew this Lease not less than twelve
(12) months and not more than twenty-four (24) months prior to the
last day of the Basic Term. The Renewal Rent for the Renewal Term
shall be the "fair market rental value" of the Aircraft for such
Renewal Term (the "renewal fair market rental value") as
determined in accordance with the Appraisal Procedure. For
purposes of this paragraph (i), the Appraisal Procedure shall be
initiated by Lessee no earlier than nine (9) months prior to the
end of the Basic Term. If Lessee shall fail to exercise its
option to extend the term of this Lease for the Renewal Term in
accordance with the provisions of this paragraph, all of Lessee's
rights to extend the Term for such Renewal Term shall expire.
Lessee shall pay all reasonable costs and expenses, including,
without limitation, reasonable legal fees and expenses, incurred
by Lessor, Owner Participant and the Indenture Trustee in
connection with the exercise of such option.
(ii) Provisions Applicable During Renewal
Term. All provisions of this Lease, including, without
limitation, as to Rent and Stipulated Loss Value (which shall be,
with appropriate adjustments, in no event less than the greater of
120% of the "fair market sales value" of the Aircraft as of the
first day of the Renewal Term as determined pursuant to the
Appraisal Procedure or the amount set forth on Exhibit A as of the
end of the Basic Term), shall remain in effect and be applicable
during such Renewal Term, except that Lessee shall pay to the
Lessor, semi-annually in arrears as Renewal Rent on each Renewal
Rent Payment Date, the amount for such Renewal Term as determined
in accordance with clause (i) of this Section 20.
Section 21. Miscellaneous.
(a) Severability, Amendment, and Construction. Any
provision of this Lease which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the
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remaining provisions hereof, and any such prohibition or unenforceability in
any jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction. To the extent permitted by Law, each of Lessor and
Lessee hereby waives any provision of Law which renders any provision hereof
prohibited or unenforceable in any respect. No term or provision of this Lease
may be changed, waived, discharged, or terminated orally, but only by an
instrument in writing expressed to be a supplement or amendment to, or waiver
or termination of this Lease signed by an officer of the party against which
the enforcement of the change, waiver, discharge, or termination is sought.
This Lease shall constitute an agreement of lease, and nothing herein shall be
construed as conveying to Lessee any right, title, or interest in the Aircraft
or any Engine or Part except as a lessee only. Without limiting the foregoing,
the parties hereto agree to treat this Agreement as a lease for United States
federal income tax purposes and Lessee will not file a tax return which is
inconsistent with the foregoing and nothing contained herein shall be construed
as an election by Lessor to treat Lessee as having acquired the Aircraft for
the purpose of the investment credit allowed by Section 38 of the 1954 Code or
any similar or successor statute. The headings in this Lease are for
convenience of reference only and shall not define or limit any of the terms or
provisions hereof.
(b) GOVERNING LAW. THIS LEASE HAS BEEN EXECUTED AND
DELIVERED IN THE STATE OF NEW YORK AND SHALL IN ALL RESPECTS BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL SUBSTANTIVE LAWS OF THE STATE OF
NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY, AND PERFORMANCE
WITHOUT REGARD TO PROVISIONS GOVERNING CONFLICTS OF LAW WHICH MIGHT LEAD TO THE
APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.
(c) Notices. All notices and instructions between
Lessor and Lessee required or permitted under the terms and provisions hereof
shall be in writing and shall be sent to Lessor or Lessee at their respective
addresses set forth in Exhibit C hereto (or such other addresses as the parties
may designate from time to time in writing). All notices, reports or other
documents provided to Lessor or Lessee shall be provided concurrently to
Indenture Trustee (until such time as the Lien of the Indenture is discharged)
and to Owner Participant, at such address as Owner Participant and Indenture
Trustee, respectively, may designate from time to time. All notices and
instructions hereunder shall become effective when received.
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(d) Lessor's Right to Perform for Lessee. If Lessee
fails to make any payment of Rent required to be made by it hereunder or fails
to perform or comply with any covenant, agreement, or obligation contained
herein, Lessor shall have the right but not the obligation to make such payment
or conform or comply with such agreement, covenant, or obligation, and the
amount of such payment and the amount of the reasonable expenses of Lessor
incurred in connection with such payment or the performance thereof or
compliance therewith, together with interest thereon at the Interest Rate,
shall be payable by Lessee to Lessor (as Supplemental Rent) upon demand. The
taking of any such action by Lessor pursuant to this Section 21(d) shall not
constitute a waiver or release of any obligation of Lessee under this Lease,
nor a waiver of any Event of Default which may arise out of Lessee's
nonperformance of such obligation, nor an election or waiver by Lessor or any
remedy or right available to Lessor under or in relation to this Lease.
(e) Counterparts. To the extent, if any, that this
Lease constitutes chattel paper (as such term is defined in the Uniform
Commercial Code as in effect in any applicable jurisdiction), no security
interest in this Lease may be created through the transfer or possession of any
counterpart other than the original counterpart, which shall be identified as
the counterpart containing the receipt therefor executed by or on behalf of
Indenture Trustee on the signature page thereof. Subject to the preceding
sentence, this Lease may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
(f) Quiet Enjoyment. Lessor covenants that, so long
as no Event of Default shall have occurred and be continuing and this Lease has
not been declared or deemed to be in default, Lessor shall not take or cause to
be taken any action to interfere with the right of Lessee to the possession,
use, operation and quiet enjoyment of and other rights with respect to the
Aircraft hereunder, and all rents, revenues, profits and income therefrom, in
accordance with the terms of this Lease without interference from Lessor or any
Person lawfully claiming by or through it, provided that Lessor and Owner
Participant shall not be liable for any such interference by Indenture Trustee,
Pass Through Trustee, Note Holder or any other Person lawfully claiming by or
through them, and provided further, that the foregoing shall not be deemed to
have modified the
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obligations of Lessee pursuant to Section 4(d) hereof, which obligations remain
absolute and unconditional.
(g) Brokers. Lessee and Lessor agree that, except as
provided in the Refunding Agreement, there has been no third party as agent
involved in this Lease and each indemnifies the other from liability for fees,
commissions, or other claims made upon the other due to any such claim.
(h) Investment of Funds. Any monies which are held
by Lessor or Indenture Trustee and are payable to Lessee shall, unless a
Default or an Event of Default shall have occurred and be continuing, be
invested as provided below until paid to Lessee or applied by Lessor or
Indenture Trustee to the extent provided herein. Until paid to Lessee or
applied as provided herein or in the Indenture such monies shall be invested by
Lessor or Indenture Trustee from time to time at the expense of Lessee in
Specified Investments, as directed by Lessee in accordance with the provisions
of Section 3.07 of the Indenture if the Lien of the Indenture shall not have
been discharged and thereafter as provided below. There shall be promptly (but
not more frequently than monthly) remitted to Lessee any gain (including
interest received) realized as the result of any such investment (net of any
fees, commissions and other reasonable expenses, if any, incurred in connection
with such investment) unless a Default or an Event of Default shall have
occurred and be continuing. Lessee will promptly pay to Lessor or Indenture
Trustee, as the case may be, and hold Lessor or Indenture Trustee harmless
from, on demand, the amount of any loss realized as the result of any such
investment (together with any Taxes, fees, commission and other reasonable
expenses, if any, incurred in connection with such investment).
(i) Entire Agreement; Amendment. This Lease
(including the Exhibits hereto), any related letter agreements and the other
Operative Documents, the Financing Documents and the Purchase Documents
(including the Exhibits thereto) and all closing documents delivered in
connection with any of the foregoing embody the entire agreement and
understanding among the parties hereto with respect to the subject matter
hereof. This Lease may be changed, waived, discharged, amended, revised or
terminated only by an instrument in writing signed by the party against which
enforcement is sought.
(j) Expenses. Without limiting Section 13 or 18,
Lessee agrees within fifteen (15) days after demand to pay
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or reimburse Lessor for all reasonable out-of-pocket costs and expenses
(including, without limitation, legal and other professional fees and expenses)
incurred or payable by Lessor in connection with or related to (i) the fees and
expenses of Owner Trustee and Indenture Trustee, (ii) to the extent requested
by or relating to acts or omissions of Lessee or as otherwise provided herein
or to give effect to the provisions hereof, or the other Operative Documents,
the Financing Documents or the Purchase Documents, any future amendments,
supplements or other modifications hereof or thereof, or waivers or consents
hereunder or thereunder, and (iii) any Default or Event of Default or the
enforcement of any of Lessor's rights, remedies or privileges hereunder or at
law or in equity, but not Lessor's legal fees and expenses in connection with
the negotiation and execution of this Lease or the Financing Documents.
(k) Federal Bankruptcy Code. In the event Section
1110 of Title 11 of the United States Code is amended, or if it is repealed and
another statute is enacted in lieu thereof, Lessor and Lessee agree to amend
this Lease and take such other action not inconsistent with this Lease as
Lessor reasonably deems necessary so as to afford to Lessor the rights and
benefits as such amended or substituted statute confers upon owners and lessors
of aircraft similarly situated to Lessor.
(l) U.S. Registration Number. At Lessee's request,
Lessor shall use its best efforts to have the Aircraft registered under the
United States Registration Number designated by Lessee.
(m) Submission to Jurisdiction; Service of Process;
Waiver of Forum Non Conveniens; Waiver of Jury Trial. Each of Lessee and
Lessor hereby irrevocably agrees that any suit, action or proceeding related to
this Lease or any of the other Operative Documents to which it is a party or
the subject matter hereof or thereof or any of the transactions contemplated
hereby and thereby may be instituted in, and submits for itself and its
property to the non-exclusive jurisdiction of, (i) the courts of the State of
New York in New York County and (ii) the United States District Court for the
Southern District of New York. Each of Lessee and Lessor represents and
warrants that it is not currently entitled to, and agrees that to the extent
that Lessee or Lessor hereinafter may acquire, any immunity (including, without
limitation, sovereign immunity) from jurisdiction of any court or from any
legal process, it hereby, to the extent permitted by Law, waives such
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immunity, and agrees not to assert, by way of motion, as a defense, or
otherwise, in any such suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of the above-named courts that it is
immune from any legal process (whether through service or notice, attachment
prior to judgment, attachment in aid of execution, execution or otherwise) with
respect to itself or its property, that the suit, action or proceeding is
brought in an inconvenient forum, that the venue of the suit, action or
proceeding is improper, or that this Lease or any of the other Operative
Documents or the subject matter hereof or thereof or any of the transactions
contemplated hereby and thereby may not be enforced in or by such courts. Each
of Lessee and Lessor hereby generally consents to service of process by
registered mail, return receipt requested, addressed to it at its address set
forth in Exhibit C, or at such other office of Lessee or Lessor as from time to
time may be designated by Lessee or Lessor (as applicable) in writing to Lessee
or Lessor (as applicable), Owner Participant and Indenture Trustee. Each of
Lessee and Lessor hereby agrees that its submission to jurisdiction and its
designation of service of process by mail set forth above is made for the
express benefit of Lessor, Lessee, Owner Participant, Indenture Trustee, each
Note Holder and their successors and assigns (as applicable). Final (after all
appeals) judgment (the enforcement of which has not been stayed) against either
Lessee or Lessor obtained in any suit originally brought in the court of the
State of New York in New York County or in the United States District of New
York shall be conclusive, and, to the extent permitted by applicable Law, may
be enforced in other jurisdictions by suit on the judgment, a certified or true
copy of which shall be conclusive evidence of the fact and of the amount of any
indebtedness or liability of Lessee therein described; provided that the
plaintiff at its option may bring suit, or institute other judicial
proceedings, against Lessee or Lessor, as the case may be, or any of their
assets in the courts of any country or place where such Person or such assets
may be found. EACH OF LESSEE AND LESSOR HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES ANY AND ALL RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF THE OPERATIVE DOCUMENTS OR ANY DEALINGS BETWEEN THEM
RELATING TO THE SUBJECT MATTER OF THE TRANSACTIONS CONTEMPLATED THEREBY OR THE
LESSOR/LESSEE RELATIONSHIP BEING ESTABLISHED, including, without limitation,
contract claims, tort claims, breach of duty claims and other common law and
statutory claims. Lessor and Lessee represent and warrant that each has
reviewed this waiver with its legal counsel, and that each knowingly and
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voluntarily waives its jury trial rights following consultation with such legal
counsel. THIS WAIVER IS IRREVOCABLE, AND THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THE OPERATIVE
DOCUMENTS. In the event of litigation, this Agreement may be filed as a
written consent to a trial by the court.
(n) Limitation on Recourse. The parties hereto agree
that all statements, representations, covenants and agreements made by Lessor
(when made in its capacity as such and not in its individual capacity)
contained in this Agreement, unless expressly otherwise stated, are made and
intended only for the purpose of binding the Trust Estate and establishing the
existence of rights and remedies that can be exercised and enforced against the
Trust Estate. Therefore, no recourse shall be had with respect to anything
contained in this Agreement (except for any express provisions that Lessor is
responsible for in its individual capacity), against Lessor in its individual
capacity or against any institution or person that becomes a successor trustee
or co-trustee or any officer, director, trustee, servant or direct or indirect
parent or controlling Person or Persons of any of them; provided that (i) this
Section 21(n) shall not be construed to prohibit any action or proceeding
against any party hereto for its own willful misconduct or grossly negligent
conduct for which it would otherwise be liable and (ii) nothing contained in
this Section 21(n) shall be construed to limit the exercise and enforcement in
accordance with the terms of this Agreement or such other agreements of rights
and remedies against the Trust Estate. The foregoing provisions of this
Section 21(n) shall survive the termination of this Agreement and the other
Operative Documents.
(o) Successor Trustee. Lessee agrees that in the
case of the appointment of any successor Owner Trustee pursuant to the terms of
the Trust Agreement, such successor Owner Trustee shall, upon written notice by
such successor Owner Trustee, succeed to all the rights, powers and title of
Lessor hereunder and shall be deemed to be Lessor and the owner of the Aircraft
for all purposes hereof without the necessity of any consent or approval by
Lessee (subject to Section 14(d) of the Refunding Agreement) and without in any
way altering the terms of this Lease or Lessee's obligations hereunder. One
such appointment and designation of a successor Owner Trustee shall not exhaust
the right to appoint and designate further successor Owner Trustees pursuant to
the Trust Agreement, but such right may be
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exercised repeatedly as long as this Lease shall be in effect.
(p) Article 2-A of the UCC. The parties hereto agree
that the Original Head Lease, as amended and restated by this Amended and
Restated Aircraft Lease Agreement [GPA 1989 BN-8] (and as otherwise extended,
amended, modified, renewed or supplemented), shall be governed by Article 2-A
of the Uniform Commercial Code of New York.
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IN WITNESS WHEREOF, Lessor and Lessee, each pursuant to
due authority, have each caused this Lease to be executed by its duly
authorized officer as of the day and year first above written.
Lessor:
WILMINGTON TRUST COMPANY,
not in its individual
capacity, except as otherwise
expressly provided herein, but
solely as Owner Trustee
By:
-------------------------------------
Title:
Lessee:
AMERICA WEST AIRLINES, INC.
By:
-------------------------------------
Title:
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ANNEX I
to
Amended and Restated Aircraft Lease Agreement
DESCRIPTION OF ORIGINAL HEAD LEASE
125
EXHIBIT A
to
Amended and Restated Aircraft Lease Agreement
STIPULATED LOSS VALUES
The "Stipulated Loss Value" of the Aircraft leased hereunder during the Term
shall be determined as of the date provided in the Lease and shall be an amount
equal to the amount shown below as of the applicable "Stipulated Loss Value
Date" set forth below.
STIPULATED LOSS VALUES
S/N 66
Stipulated
Loss Value
Date
(1) (2)
____________________
(1) Thereafter, during any (i) Renewal Term or (ii) extension or
deemed extension of the Term of the Lease due to the occurrence of an
event described in clause (iii) to the definition of "Supplemental
Rent" in the Lease, "Stipulated Loss Value Date" shall mean the ___
day of each calendar month.
(2) Thereafter, such amount as determined in accordance with Section
20(ii) of the Lease.
A-1
126
EXHIBIT B
to
Amended and Restated Aircraft Lease Agreement
AIRCRAFT RECORDS AND DOCUMENTS
One original (or, if greater, the number delivered to Lessee)
of each of the following:
A. CERTIFICATES
1. Certificate of Airworthiness (FAA)
2. Lessee to supply Radio License
2a. Certificate of Sanitary Construction
B. AIRCRAFT STATUS RECORDS
3. Log Book (currently on Aircraft)
4. Airframe Maintenance Status (with time-to-go or time
since last)
5. Airworthiness Directive Compliance Report
6. Modification Status report
7. Weighing Report (most recent)
8. Accident and incident report
9. List of Life Limited Components (with time-to-go)
C. AIRCRAFT MAINTENANCE RECORDS (last heavy maintenance visits)
10. Test Flight Reports
11. Job Cards and Work Accomplishment Documents (copies)
12. X-ray pictures (most recent)
B-1
127
D. AIRCRAFT HISTORY RECORDS
13. Log Books
14. Aircraft Maintenance History Cards
15. Mechanical Interruption Summary
E. ENGINE RECORDS (for each engine)
16. Last overhaul and repair documents
17. Airworthiness Directive Compliance Report
18. List of Life Limited Components
19. Modification Status Report
F. APU RECORDS
20. Last Overhaul and Repair Documents
21. Airworthiness Directive Compliance Report
22. List of Life Limited Components
23. Modification Status Report
G. COMPONENT RECORDS
24. Component records maintained in accordance with a
record keeping policy approved by and acceptable to
the FAA to certify the status and maintenance
histories of the components
H. MANUALS
25. Approved Flight Manual
26. Flight Crew Operating Manual
27. Weight and Balance Manual
28. Wiring Diagram Manual
29. Illustrated Parts Catalog
I. MISCELLANEOUS TECHNICAL DOCUMENTS
30. Operations Specification
31. Passenger Cabin Configuration Drawings
B-2
128
J. Any other documents, manuals, reports or related information
delivered with or related to the Aircraft, updated as may be
required to reflect the current aircraft status.
B-3
129
EXHIBIT C
to
Amended and Restated Aircraft Lease Agreement
DEFINITIONS AND VALUES
Basic Rent: During the Basic Term of the Lease, Basic Rent shall be payable in semi-annual
installments, each of which shall be in an amount equal to the amount [and in
________], as set forth in Schedule I hereto.
Basic Rent
Payment Date: Each such date set forth as such on Schedule I hereto.
Letter of Credit
Face Amount: The amount set forth as such on Schedule I hereto
Manufacturer: Airbus Industrie
Maximum Foreign
Use Percentage: The Permitted Percentages as defined in the Tax Indemnification Agreement.
Payment
Location: So long as the Lien of the Indenture shall remain in effect, Fleet National Bank,
Account No. ____ and thereafter (and at all times with respect to Excepted Payments)
to _____, for the account of ________ Account No. ____.
Renewal Rent: During the Renewal Term of the Lease Renewal Rent shall be payable in installments,
semi-annually in arrears.
Renewal Rent
Payment Date: The same day and month during each year of the Renewal Term on which Basic Rent was
due during the Basic Term (the Basic Rent Payment Dates). If a Renewal Rent Payment
Date shall fall on a day which is not a Business Day, any payment due on such
Renewal Rent Payment Date shall be made on the next succeeding Business Day.
C-1
130
Restricted Use
Period: On and after the Delivery Date until and including the last day of the Owner
Participant's seventh full fiscal year after the Delivery Date.
Lease
Identification: A fireproof metal plate bearing the following legend: "Title to this Aircraft is held
by Wilmington Trust Company, not in its individual capacity but solely as Owner
Trustee, as Lessor, which is the registered owner thereof on the U.S. FAA Aircraft
Registry, and which has leased this Aircraft to America West Airlines, Inc., as
Lessee" and, for so long as the Lien of the Indenture shall not have been discharged,
bearing the following additional legend: "Mortgaged to The Chase Manhattan Bank as
Indenture Trustee."
Lessee's
Address: America West Airlines, Inc.
0000 Xxxx Xxx Xxxxxx Xxxxxxxxx
Xxxxxxx, Xxxxxxx 00000
Telex: 755089 (Answerback: AMERWEST)
Telecopier: (000) 000-0000
Attention: Senior Vice President -
Legal Affairs
Lessor's
Address: Wilmington Trust Company
Xxxxxx Xxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Telecopier: (000) 000-0000
Attention: Corporate Trust Administration
C-2
131
EXHIBIT D-1
to
Amended and Restated Aircraft Lease Agreement
LEASE SUPPLEMENT NO. 3
LEASE SUPPLEMENT [GPA 1989 BN-8] NO. 3, dated June ___, 1997,
between WILMINGTON TRUST COMPANY, a Delaware corporation (not in its individual
capacity but solely as Owner Trustee under a Trust Agreement [GPA 1989 BN-8]
dated December 19, 1989, as amended, supplemented, or otherwise modified from
time to time) (together with its successors and assigns, "Lessor"), and AMERICA
WEST AIRLINES, INC., a Delaware corporation (together with its successors,
"Lessee").
Lessor and Lessee have heretofore entered into that certain
Aircraft Lease Agreement [GPA 1989 BN-8] dated as of December 19, 1989, as
Amended and Restated as of June __, 1997 (as further amended, supplemented or
otherwise modified from time to time, herein called the "Lease Agreement", and
the defined terms therein being hereinafter used with the same meaning) and
that certain Lease Supplement [GPA 1989 BN-8] No. 1 dated December 29, 1989
("Lease Supplement No. 1") and that certain Lease Supplement [GPA 1989 BN-8]
No. 2 dated December 29, 1994 ("Lease Supplement No. 2"). The Lease Agreement
provides for the execution and delivery from time to time of a Lease Supplement
substantially in the form hereof for the purpose of leasing the aircraft
described below (or confirming the leasing of the aircraft described below)
under the Lease Agreement as and when delivered by Lessor to Lessee in
accordance with the terms thereof.
The Lease Agreement relates to the aircraft, parts and engines
described below, and a counterpart of the Lease Agreement is attached hereto
and made a part hereof, and this Lease Supplement, together with such
attachment, is being filed for recordation on the date hereof with the FAA as
one document.
NOW, THEREFORE, in consideration of the premises and other
good and sufficient consideration, Lessor and Lessee hereby agree as follows:
1. Lessor hereby confirms that it has leased to Lessee and
Lessee hereby confirms that it has leased from Lessor that certain Airbus Model
A320-231 commercial jet
D-1
132
aircraft airframe and two IAE V2500 engines (each of which Engines has 750 or
more rated takeoff horsepower or the equivalent of such horsepower) described
in Schedule 1 hereto (the "Delivered Aircraft").
2. The Delivery Date of the Delivered Aircraft is December
29, 1989.
3. The Basic Term for the Delivered Aircraft shall commence
on the Delivery Date and shall end on the Expiration Date, which shall be July
5, 2013 unless the Lease Agreement is extended or deemed extended or terminated
prior thereto in accordance with the terms thereof.
4. Lessee hereby agrees to and confirms its obligation to pay
Rent (as defined in the Lease Agreement) in the amounts and at the times
provided in the Lease Agreement.
5. Lessee hereby confirms to Lessor that (i) the Delivered
Aircraft and each Engine installed thereon or belonging thereto have been duly
marked in accordance with the terms of Section 6(e) of the Lease Agreement, and
(ii) Lessee has accepted the Delivered Aircraft for all purposes of Lease
Supplement No. 1, as further supplemented by Lease Supplement No. 2, hereof and
of the Lease Agreement, and the Delivered Aircraft is (A) as far as Lessee
reasonably ascertained from the acceptance procedures provided for in the
Purchase Agreement, airworthy, in accordance with specifications, and in good
working order and repair, it being understood that Lessee by this confirmation
is not giving any warranty of any kind with respect to the Aircraft, and (B)
free and clear of all Liens except Permitted Liens.
6. All of the terms and provisions of the Lease Agreement,
including, without limitation, as to governing Law, are hereby incorporated by
reference in this Lease Supplement No. 3 to the same extent as if fully set
forth herein.
7. This Lease Supplement No. 3 may be executed in any number
of counterparts; each of such counterparts, except as provided in Section 21(e)
of the Lease Agreement, shall for all purposes be deemed to be an original, and
all such counterparts shall together constitute but one and the same Lease
Supplement. To the extent, if any, that this Lease Supplement constitutes
chattel paper (as such term is
D-2
133
defined in the Uniform Commercial Code as in effect in any applicable
jurisdiction), no security interest in this Lease Supplement may be created
except by the transfer or possession of the counterpart containing the printed
receipt therefor executed by Indenture Trustee on the signature page hereof.
D-3
134
IN WITNESS WHEREOF, Lessor and Lessee have each caused this
Lease Supplement No. 3 to be duly executed by its duly authorized officer on
the day and year first above written.
Lessor:
WILMINGTON TRUST COMPANY, not
in its individual capacity,
except as otherwise expressly
provided herein, but solely as
Owner Trustee
By:_________________________
Title:
Lessee:
AMERICA WEST AIRLINES, INC.
By:__________________________
Title:
D-4
135
The undersigned acknowledges receipt of this original
counterpart of the foregoing Lease Supplement on this _______ day of June, 1997
and consents to the terms hereof.
The Chase Manhattan Bank, not in
its individual capacity, but
solely as Indenture Trustee
By:___________________________
Title:
X-0
000
XXXXXXXX 1
to
LEASE SUPPLEMENT NO. 3
Airbus Model A320-231
Airframe
U.S. Registration No. Manufacturers
Serial No.
N627AW 66
Installed
IAE
Engines
Model No. Serial No.
V2500 V0033
V2500 V0041
X-0
000
XXXXXXX X-0
to
Amended and Restated Aircraft Lease Agreement
LETTER OF CREDIT
D-7
138
EXHIBIT E
to
Amended and Restated Aircraft Lease Agreement
RETURN CONDITION REQUIREMENTS
In addition to the requirements set forth in Section 16 of the
Lease, on any Return Occasion with respect to the Aircraft, Lessee, at its own
cost and expense, shall return the Aircraft in compliance with the following:
(1) The Aircraft shall have at all times theretofore been
maintained and modified in accordance with Sections 6(d) and 9 hereof with the
same care, maintenance status and consideration for the technical condition of
the Aircraft as if such Aircraft were owned and were to have been kept in
continued regular service by Lessee, without discrimination as to any other
similar aircraft owned or leased by Lessee.
(2) The Aircraft shall be clean by good commercial airline
standards as on the Delivery Date with only such modifications to the Aircraft
as are permitted under this Lease.
(3) The Aircraft shall have installed the full complement of
Engines (as used herein the term "Engines" includes engines for which title
will be transferred to Lessor pursuant to Section 16(c)) and other equipment,
parts, components, accessories, and loose equipment subleased hereunder or
substituted therefor, each such item functioning in accordance with its
intended use.
(4) Lessee, at Lessor's request, shall activate any systems
installed on the Aircraft previously deactivated by Lessee and shall assure
each such system is properly functioning for its intended use.
(5) Each Engine shall have just completed a hot and cold
section baroscope and/or radiographic isotope inspection by Lessor (at Lessee's
cost and expense) of the low and high pressure compressors and turbine area,
and shall have just completed engine condition runs, and any discrepancies
detected shall be corrected at Lessee's cost and expense in accordance with the
Manufacturer's maintenance policies and procedures.
(6) Lessee's name, logo, and all other exterior markings shall
have been removed in a good and workmanlike manner from the Aircraft and the
Aircraft shall have been
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repainted in a good and workmanlike manner in the livery specified by Lessor.
(7) The Aircraft shall have simultaneously with such return
completed a "block 'C' Check" or the equivalent level designated check or
checks (inclusive of all phases of a "block 'C' Check" or equivalent level
designated check if the Maintenance Program is a "phase" program), in
accordance with Lessee's Maintenance Program such that all inspections and
airworthiness directives having terminating actions due within the next "block
'C' Check" or equivalent level designated check(s), and all other actions as
per the Manufacturer's minimum recommendations in its then current maintenance
planning document for such check or checks, shall have been accomplished
immediately prior to redelivery.
(8) Neither the Aircraft nor any Engine shall have any
scheduled or unscheduled open or deferred maintenance items or placards.
(9) No Engine shall be on "Watch" and each Engine shall comply
with Lessee's Maintenance Program without waiver, deviations or exceptions.
(10) Each landing gear assembly shall have no less than 50% of
allowable hours or cycles, whichever is the more limiting factor, under
Lessee's Maintenance Program, remaining until the next scheduled overhaul or
replacement.
(11) Each Engine shall have not less than 5,000 hours or 5,000
cycles, whichever is the more limiting factor, remaining on any hour or cyclic
limited part, and each Engine shall have not more than 5,000 hours or 5,000
cycles, whichever is the more limiting factor, since the last engine compressor
refurbishment, and each Engine shall have not more than 2,500 hours or 2,500
cycles, whichever is the more limiting factor, since its last turbine
restoration, based on Lessee's historical experience of engine on-wing service
life or based on Lessee's hard time engine overhaul limit if in effect. The
Engine hour and cycle limits described herein shall be in accordance with
Lessee's Maintenance Program and the manufacturer's mandatory hour and cyclic
life limits and presumes an hour-to-cycle ratio of two (2.0) hours to one (1)
cycle. If the actual hour-to-cycle ratio is less than 2.0:1, then the cyclic
limit amounts described herein shall be increased proportionately.
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(12) Each cycle, time or calendar controlled component in
accordance with Lessee's Maintenance Program or the Manufacturer's mandatory
life limits shall have no less than twelve months or 5,000 hours or 5,000
cycles, whichever is the more limiting factor, remaining until the next
scheduled overhaul or replacement or 100% of the allowable time if less than
twelve months.
(13) The Airframe shall be returned to Lessor with not less
than fifty percent (50%) of the total scheduled period between scheduled Major
Structural Inspections of the most comprehensive type (currently referred to as
an "eight year" heavy structural inspection" or "8C" inspection under the
Manufacturer's maintenance planning document in effect on the Delivery Date)
with respect to allowable hours, cycles or calendar months, whichever is the
more limiting factor, remaining until the next scheduled Major Structural
Inspection of the most comprehensive type, including, without limitation, the
replacement of any safe-life limited parts, required in accordance with the
Lessee's then current Maintenance Program or the Manufacturer's mandatory life
limits and, therefore, at a minimum, having just completed a "four-year heavy
structural inspection" or "4C" inspection as referred to in the Manufacturer's
maintenance planning document in effect on the Delivery Date.
(14) All software associated with or relating to any on-board
avionic equipment must be delivered to Lessor and be in a condition complying
with the Manufacturer's then recommended standards.
(15) Each oil tank on the Aircraft shall be full and the
fuel tanks shall contain as much fuel as such tanks contained at the time the
Aircraft was accepted by Lessee, or, in the case of insufficient quantities, an
appropriate payment will be made by Lessee at the then current market price of
oil or fuel, as the case may be.
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EXHIBIT F-1
to
Amended and Restated Aircraft Lease Agreement
FOREIGN AIR CARRIERS
Aer Lingus
Air Canada
Air France (Compagnie Nationale Air France)
Air New Zealand, Ltd.
All Nippon Airways
Alitalia - Italy's World Airlines
Ansett Airlines of Australia
Australian Airlines
Austrian Airlines (Oesterreichische Luftverkehrs AG)
British Airways
Canadian Airlines International Ltd.
Deutsche Lufthansa Aktiengesellschaft (Lufthansa German Airlines)
Finnair Oy
Iberia
Japan Air Lines, Co., Ltd (JAL)
KLM - Royal Dutch Airlines (Koninklijke Luchtvaart Maatschappij)
Korean Air
Malaysian Airlines
QANTAS
Sabena Belgian World Airlines (Societe Anonyme Belge
D'Exploitation De La Navigation Aerienne)
Scandinavian Airlines Systems (SAS)
Singapore Airlines
Swissair (Swiss Air Transport Company Ltd.)
TAP Air Portugal (Transportes Aeros Portugeses)
Thai Airways International Ltd.
Varig S.A. (Viacao Aerea Rio Grandense S.A.)
(a) Lessor may at any time, by written notice to Lessee, propose
the deletion of particular airlines from the above list of Foreign Air Carriers
(as the same may be amended pursuant to this provision) based upon Lessor's
reasonable judgment. Lessee may at any time, by written notice to Lessor,
propose the addition of particular airlines to such list of Foreign Air
Carriers based upon Lessee's reasonable judgment and which are comparable to
the above airlines.
(b) If Lessee has not objected in writing to the deletion of a
particular airline proposed by Lessor as provided in paragraph (a) of this
Exhibit, or if Lessor has not objected in writing to the addition of a
particular
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airline proposed by Lessee as provided in paragraph (a), in each case within 30
days after receipt of notice of such proposal, the list of Foreign Air Carriers
shall be deemed amended without further act to delete or add such airline. If
Lessee or Lessor delivers a timely objection in writing to a proposal made by
the other pursuant to paragraph (a), each party agrees to consult promptly at
the request of the other in a good-faith effort to resolve the disagreement
through negotiation; provided, however, that an airline which Lessor has
proposed to delete shall be deleted from such list if there will be at least
twenty (20) (or such lesser number as Lessor and Lessee shall reasonably
determine, if the number of airlines of a type similar to the airlines listed
above which may be included within the definition of Foreign Air Carriers is
substantially reduced as a result of consolidation in the airline industry)
other airlines remaining on such list after giving effect to such deletion and
any other deletions then proposed by Lessor.
(c) Notwithstanding any other provision hereof, no addition shall
be made, and an airline shall be deleted from such list if, such airline would
not be permitted to be a lessee under the provisions of the Lease, and no
deletion of an airline from the list of Foreign Air Carriers pursuant to this
Exhibit shall affect any existing sublease or other agreement providing for
transfer of possession of the Aircraft, the Airframe or any Engine or Part
which was permitted under the Lease at the time entered into, or preclude any
subsequent renewal or extension of such sublease or other agreement.
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143
EXHIBIT F-2
to
Amended and Restated Aircraft Lease Agreement
PERMITTED FOREIGN SUBLESSEE DOMICILES
Argentina Malta
Australia Mexico
Austria Morocco
Bahamas Netherlands
Belgium New Zealand
Brazil Norway
Canada Paraguay
Chile Philippines
Denmark Portugal
Egypt Republic of China (Taiwan)*
Finland Singapore
France South Africa
Germany South Korea
Greece Spain
Hungary Sweden
Iceland Switzerland
India Thailand
Indonesia Tobago
Ireland Trinidad
Italy United Kingdom
Japan Uruguay
Luxembourg Venezuela
Malaysia
------------------------
* So long as on the date of entering into the proposed sublease such
country and the United States of America have diplomatic relations at
least as good as those in effect on the Restatement Date.
(a) Lessor may at any time, by written notice to Lessee,
propose the deletion of a particular country from the above list of Permitted
Foreign Sublessee Domiciles (as the same may be amended pursuant to this
provision) based upon Lessor's reasonable judgment. Lessee may at any time, by
written notice to Lessor, propose the addition of particular countries which
are comparable to the above countries to such list of Permitted Foreign
Sublessee Domiciles based upon Lessee's reasonable judgment.
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144
(b) If Lessee has not objected in writing to the deletion
of a particular country proposed by Lessor as provided in paragraph (a) of this
Exhibit, or if Lessor has not objected in writing to the addition of a
particular country proposed by Lessee as provided in paragraph (a), in each
case within 30 days after receipt of notice of such proposal, the list of
Permitted Foreign Sublessee Domiciles shall be deemed amended without further
act to delete or add such country. If Lessee or Lessor delivers a timely
objection in writing to a proposal made by the other pursuant to paragraph (a),
each party agrees to consult promptly at the request of the other in a
good-faith effort to resolve the disagreement through negotiation.
(c) Notwithstanding any other provision hereof, no
deletion of a country from the list of Permitted Foreign Sublessee Domiciles
pursuant to this Exhibit shall affect any existing sublease or other agreement
providing for transfer of possession of the Aircraft, the Airframe or any
Engine or Part which was permitted under the Lease at the time entered into, or
preclude any subsequent renewal or extension of such sublease or other
agreement.
F-2
