CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO A REQUEST FOR CONFIDENTIAL TREATMENT
EXHIBIT 10.17
EXECUTION COPY
AIRCRAFT LEASE AGREEMENT
Dated as of
December 23, 2004
between
XXXXX FARGO BANK NORTHWEST, N.A.,
NOT IN ITS INDIVIDUAL CAPACITY, BUT SOLELY AS
TRUSTEE UNDER THE TRUST AGREEMENT
as
Lessor
and
COMPANIA PANAMENA DE AVIACION, S.A.
as
Lessee
in respect of one
Boeing B737-800 Aircraft
Manufacturer's Serial Number 29670
INDEX
CLAUSE PAGE
TABLE OF CONTENTS
PAGE
1. INTERPRETATION......................................................... 6
1.1 DEFINITIONS....................................................... 6
1.2 CONSTRUCTION:..................................................... 30
2. REPRESENTATIONS AND WARRANTIES......................................... 31
2.1 LESSEE'S REPRESENTATIONS AND WARRANTIES:.......................... 31
2.2 LESSEE'S FURTHER REPRESENTATIONS AND WARRANTIES:.................. 35
2.3 REPETITION:....................................................... 36
2.4 LESSOR'S REPRESENTATIONS AND WARRANTIES:.......................... 37
2.5 REPETITION:....................................................... 38
3. CONDITIONS PRECEDENT................................................... 38
3.1 CONDITIONS PRECEDENT:............................................. 38
3.2 FURTHER CONDITIONS PRECEDENT:..................................... 41
3.3 LESSEE CONDITIONS PRECEDENT:...................................... 41
3.4 WAIVER:........................................................... 42
3.5 POST-CLOSING MATTERS:............................................. 42
4. COMMENCEMENT........................................................... 43
4.1 LEASING:.......................................................... 43
4.2 DELIVERY:......................................................... 43
4.3 DELAYED DELIVERY:................................................. 43
4.4 TERMINATION FOR NON-DELIVERY:..................................... 44
4.5 PURCHASE OF AIRCRAFT:............................................. 44
5. PAYMENTS............................................................... 44
5.1 SECURITY DEPOSIT AND LETTER OF CREDIT:............................ 44
5.2 RENTAL PERIODS:................................................... 45
5.3 RENT:............................................................. 45
i
PAGE
5.4 SUPPLEMENTAL RENT:................................................ 45
5.5 PAYMENTS:......................................................... 51
5.6 DEFAULT INTEREST:................................................. 51
5.7 WITHHOLDING:...................................................... 51
5.8 TAX INDEMNITY:.................................................... 52
5.9 SALES TAX:........................................................ 52
5.10 VALUE ADDED TAX:.................................................. 53
5.11 PAYMENTS; TAX REPORTS; INFORMATION:............................... 53
5.12 CONTEST OF CLAIM FOR TAX.......................................... 55
5.13 INDEMNITIES TO BE PAID ON AN AFTER-TAX BASIS/SURVIVAL:............ 58
5.14 ABSOLUTE OBLIGATIONS:............................................. 58
5.15 SECURITY:......................................................... 59
5.16 CURRENCY INDEMNITY:............................................... 60
5.17 SETOFF:........................................................... 61
6. MANUFACTURER'S WARRANTIES.............................................. 61
7. LESSOR'S COVENANTS..................................................... 62
7.1 QUIET ENJOYMENT:.................................................. 62
7.2 LESSOR OBLIGATIONS FOLLOWING FINAL EXPIRY DATE:................... 62
7.3 UNAPPLIED SUPPLEMENTAL RENT:...................................... 63
7.4 MAINTENANCE CONTRIBUTIONS:........................................ 63
7.5 CLAIMS FOR REIMBURSEMENT:......................................... 64
8. LESSEE'S COVENANTS..................................................... 65
8.1 DURATION:......................................................... 65
8.2 INFORMATION:...................................................... 65
8.3 LAWFUL AND SAFE OPERATION:........................................ 67
8.4 OUTGOINGS:........................................................ 68
8.5 SUB-LEASING:...................................................... 69
8.6 INSPECTION:....................................................... 70
8.7 TITLE:............................................................ 70
8.8 GENERAL:.......................................................... 72
8.9 NON-DISCRIMINATION:............................................... 74
ii
PAGE
8.10 RECORDS:.......................................................... 74
8.11 PROTECTION:....................................................... 75
8.12 MAINTENANCE AND REPAIR:........................................... 77
8.13 PERMANENT REPLACEMENT OF ENGINES AND PARTS:....................... 79
8.14 REMOVAL AND INTERCHANGE OF ENGINES:............................... 80
8.15 REMOVAL AND INTERCHANGE OF PARTS:................................. 81
8.16 TEMPORARY INSTALLATION OF ENGINES AND PARTS:...................... 81
8.17 POOLING OF ENGINES AND PARTS:..................................... 82
8.18 EQUIPMENT CHANGES:................................................ 82
8.19 THIRD PARTY:...................................................... 83
9. INSURANCE.............................................................. 83
9.1 INSURANCES:....................................................... 83
9.2 REQUIREMENTS...................................................... 84
9.3 STANDARDS......................................................... 84
9.4 CHANGE............................................................ 84
9.5 INSURANCE COVENANTS............................................... 85
9.6 RENEWAL OF INSURANCES............................................. 86
9.7 FAILURE TO INSURE................................................. 86
9.8 CONTINUING INSURANCE FOR INDEMNITY................................ 87
10. INDEMNITY.............................................................. 87
10.1 GENERAL:.......................................................... 87
10.2 NOTIFICATION:..................................................... 89
10.3 CONTEST:.......................................................... 89
10.4 SUBROGRATION:..................................................... 90
10.5 DURATION:......................................................... 91
11. EVENTS OF LOSS......................................................... 91
11.1 EVENTS OF LOSS.................................................... 91
11.2 REQUISITION:...................................................... 92
12. RETURN OF AIRCRAFT..................................................... 93
12.1 RETURN:........................................................... 93
12.2 FINAL INSPECTION:................................................. 93
iii
PAGE
12.3 NON-COMPLIANCE:................................................... 93
12.4 ACKNOWLEDGEMENT:.................................................. 94
12.5 REDELIVERY MAINTENANCE ADJUSTMENT:................................ 94
12.6 EXPORT DOCUMENTS:................................................. 94
12.7 MAINTENANCE PROGRAM............................................... 95
12.8 FUEL:............................................................. 95
13. DEFAULT................................................................ 95
13.1 EVENTS:........................................................... 95
13.2 RIGHTS AND REMEDIES:.............................................. 100
13.3 POWER OF ATTORNEY:................................................ 104
14. ASSIGNMENT............................................................. 105
14.1 ASSIGNMENT BY LESSEE:............................................. 105
14.2 ASSIGNMENT BY LESSOR:............................................. 105
14.3 GRANTS OF SECURITY INTERESTS:..................................... 106
15. MISCELLANEOUS.......................................................... 107
15.1 SURVIVAL:......................................................... 107
15.2 WAIVERS, REMEDIES CUMULATIVE:..................................... 107
15.3 DELEGATION:....................................................... 107
15.4 CERTIFICATES:..................................................... 107
15.5 APPROPRIATION:.................................................... 107
15.6 SEVERABILITY:..................................................... 108
15.7 REMEDY:........................................................... 108
15.8 EXPENSES:......................................................... 108
15.9 TIME OF ESSENCE:.................................................. 109
15.10 NOTICES:.......................................................... 109
15.11 LAW AND JURISDICTION:............................................. 110
15.12 SOLE AND ENTIRE AGREEMENT:........................................ 112
15.13 INDEMNITIES:...................................................... 113
15.14 COUNTERPARTS:..................................................... 113
15.15 LANGUAGE:......................................................... 113
15.16 NO BROKERS:....................................................... 113
iv
PAGE
15.17 CONFIDENTIALITY:.................................................. 113
15.18 LIABILITY OF LESSOR LIMITED:...................................... 114
16. DISCLAIMERS AND WAIVERS................................................ 114
16.1 EXCLUSION:........................................................ 115
16.2 WAIVER:........................................................... 116
16.3 DISCLAIMER OF CONSEQUENTIAL DAMAGES:.............................. 116
16.4 CONFIRMATION:..................................................... 116
SCHEDULE 1 PART 1 DESCRIPTION OF AIRCRAFT.................................... 117
SCHEDULE 2 FORM OF ACCEPTANCE CERTIFICATE.................................... 131
SCHEDULE 3 REDELIVERY CONDITIONS AND REDELIVERY MAINTENANCE ADJUSTMENT....... 137
SCHEDULE 4 INSURANCE REQUIREMENTS............................................ 140
SCHEDULE 5 ACKNOWLEDGEMENTS IN CONNECTION WITH FINANCING..................... 144
SCHEDULE 6 FORM OF MONTHLY STATUS REPORT..................................... 150
SCHEDULE 7 ECONOMIC VARIABLES................................................ 152
SCHEDULE 8 FORM OF LEASE SUPPLEMENT NO. 1.................................... 157
SCHEDULE 9 FORM OF IRREVOCABLE POWER OF ATTORNEY............................. 160
SCHEDULE 10 FORM OF COPA HOLDINGS GUARANTEE................................... 1
SCHEDULE 11 AIRWORTHINESS DIRECTIVE COST SHARING FORMULA...................... 13
SCHEDULE 12 FORM of WARRANTY ASSIGNMENT....................................... 14
iv
THIS AIRCRAFT LEASE AGREEMENT (this "Agreement") is made as of the 23rd day of
December, 2004 between:
(1) XXXXX FARGO BANK NORTHWEST, N.A., a national banking association formed
under the federal laws of the United States of America, with its
principal place of business at 000 Xxxxx Xxxx Xxxxxx, Xxxx Xxxx Xxxx,
Xxxx 00000, not in its individual capacity (except when referred to as
"WFB"), but solely as trustee under the Trust Agreement (as defined
below) (the "Lessor"); and
(2) COMPANIA PANAMENA DE AVIACION, S.A., a corporation formed under the
laws of the Republic of Panama with its principal place of business at
Avenida Xxxxx Xxxxxxxxx y Xxxxx 00, Xxxxxxxx 0000, Xxxxxx 0, Xxxxxxxx
of Panama ("Lessee").
WHEREAS: Lessor wishes to lease to Lessee and Lessee is willing to
lease from Lessor the Aircraft on the terms of this Agreement.
IT IS AGREED as follows:
1. INTERPRETATION
1.1 DEFINITIONS
In this Agreement the following expressions have the meanings set out
opposite:
AAC the Autoridad de Aeronautica Civil or any
successor agency charged with supervising
civil aviation in the Republic of Panama.
ACCEPTANCE CERTIFICATE a certificate of the Lessor substantially in
the form set out in Schedule 2.
AFFILIATE as to any Person, any other Person that,
directly or indirectly, is in control of, is
controlled by, or is under common control
with, such Person. For purposes of this
definition, "control" of a Person means the
power, directly or indirectly, either to (a)
vote 50% or more of the securities having
ordinary voting power for the election of
directors (or persons performing similar
functions) of such Person or (b) direct or
cause the direction of the management and
policies of such person, whether by contract
or otherwise.
AFTER-TAX BASIS means, with respect to any amount (an
"Amount") required by any Transaction
Document to be paid on an "After Tax Basis"
6
to or for the benefit of any Person, such
Amount plus an additional amount that will
cause the sum of such amounts, after
subtracting the amount of all Taxes
(including Lessor Taxes) required to be paid
by such Person as a result of the receipt
(actual or constructive) or accrual of such
Amount plus the additional amount payable
pursuant to this sentence (net of any
current actual reduction in such Person's
liability for Lessor Taxes caused by the
payment of such Amount) to be equal to the
amount that such Person would receive if
such Taxes were not required to be paid by
such Person.
AGREED MAINTENANCE PERFORMER unless otherwise agreed by Lessor and
Lessee, a Person approved by the FAA to
perform maintenance and/or modification
services on commercial aircraft and/or
commercial aircraft engines.
AGREED VALUE has the meaning specified in Schedule 7.
AIR AUTHORITY the AAC.
AIRCRAFT the aircraft described in Part 1 of
Schedule 1 (which term includes, unless the
context otherwise requires, all Engines,
Parts and, except in respect of Clause 9 and
Schedule 4 hereof, Aircraft Documents).
AIRCRAFT DOCUMENTS the documents, data, manuals and records
identified in Part 2 of Schedule 1 and all
additions, renewals, revisions and
replacements from time to time made in
accordance with this Agreement.
AIRCRAFT PURCHASE AGREEMENT the aircraft sale and purchase agreement
dated as of October 1, 2003 between the
Initial Purchaser and the Beneficiary
insofar as it relates to the Aircraft
between such parties in connection
therewith.
AIRFRAME the Aircraft, excluding the Engines and
Aircraft Documents.
AIRFRAME 6C/24,000 FLIGHT HOUR means the 6C/24,000 Flight Hour block check
7
BLOCK STRUCTURAL CHECK including inspections, and system check,
all in accordance with the Approved
Maintenance Program. Included are all
routine and non-routine 6C check tasks and
any maintenance or replacement of any part
failing any 6C check routine requirement for
an operational or functional test of the
part while installed on the Aircraft.
AIRFRAME 6C/24,000 FLIGHT HOUR has the meaning specified in Clause
BLOCK STRUCTURAL CHECK 5.4(a)(i).
SUPPLEMENTAL RENT
AIRFRAME 6C/24,000 FLIGHT HOUR has the meaning specified in Schedule 7.
BLOCK STRUCTURAL CHECK SUPPLEMENTAL
RENT RATE
AIRWORTHINESS DIRECTIVE OR AD an airworthiness directive issued by the FAA
and/or the AAC.
ANNUAL EXPIRY DATE each annual anniversary date of the Delivery
Date which occurs before (or on) the Final
Expiry Date.
ANNUAL SUPPLEMENTAL RENT ADJUSTMENT has the meaning specified in Schedule 7.
APPRAISAL PROCEDURE the following procedure for determining the
"fair market rental value" of the Aircraft
or any part thereof pursuant to Clause
13.2(c)(ii)(b): (a) Lessor shall select an
internationally recognized independent
aircraft appraiser experienced in appraising
aircraft of the make and model of the
Aircraft in its sole and absolute discretion
who shall make a determination of "fair
market rental value" of the Aircraft or part
thereof in accordance with the terms hereof
and customary industry practices; and (b)
the fees and expenses of the appraiser shall
be paid by Lessee. "Fair market rental
value" shall mean the value determined by an
appraisal completed on an "as-is" and
"where-is" basis.
APPROVED MAINTENANCE PROGRAM OR an Air Authority approved maintenance
LESSEE'S APPROVED MAINTENANCE program for the Aircraft based on the
8
PROGRAM Maintenance Planning Document, as amended by
Lessee based on Lessee's operating
experience, and encompassing scheduled
maintenance (including block maintenance),
condition-monitored maintenance, and/or
on-condition maintenance of Airframe,
Engines and Parts, including servicing,
testing, preventive maintenance, repairs,
structural inspections, system checks,
overhauls, approved modifications, mandatory
service bulletins, engineering orders,
airworthiness directives, corrosion control,
inspections and treatments.
APU the auxiliary power unit installed on the
Aircraft on the Delivery Date or any
replacement auxiliary power unit installed
in accordance with this Agreement, as
applicable.
APU PERFORMANCE RESTORATION means an off-wing APU shop visits including
disassembly, inspection, component repair
and balancing, testing and re-assembly of
the relevant APU, accomplished in accordance
with the APU manufacturer's component
maintenance manual, with a scheduled Life
Limited Part and Airworthiness Directive
release of no less than 6,000 Cycles and 3
years and on-condition release of no less
than 9,000 Flight Hours and 6,000 Cycles and
3 years.
APU SUPPLEMENTAL RENT has the meaning specified in Clause
5.4(a)(iv).
APU SUPPLEMENTAL RENT RATE has the meaning specified in Schedule 7.
ASSIGNMENT an assignment by Lessor of its right, title
and interest in and to this Agreement in
favor of Financing Parties.
ASSUMED ANNUAL UTILIZATION has the meaning specified in Schedule 7.
ASSUMED ANNUAL UTILIZATION has the meaning specified in Schedule 7.
ADJUSTMENT TABLE
ASSUMED LIBOR RATE has the meaning specified in Schedule 7.
9
ASSUMED RATIO has the meaning specified in Schedule 7.
ASSUMED RATIO ADJUSTMENT TABLE has the meaning specified in Schedule 7.
ASSUMED RENT has the meaning specified in Schedule 7.
BENEFICIARY RBS Aerospace Limited, a limited company
incorporated in Ireland with registered
address at 0 Xxxxxx'x Xxxx Xxxxx, Xxxxxx'x
Xxxx, Xxxxxx 0, Xxxxxxx.
XXXX OF SALE the full warranty xxxx of sale duly executed
and delivered by Initial Purchaser to
Lessor, pursuant to and in accordance with
the terms of the Aircraft Purchase
Agreement.
BOEING The Boeing Company, a Delaware corporation.
BUSINESS DAY means, in the case of payments, any day
(other than a Saturday or Sunday) on which
banks are open for business in New York
City, New York, USA or, in all other cases,
any day (other than a Saturday or Sunday) on
which banks are open for business in Xxx
Xxxx Xxxx, Xxx Xxxx, XXX, Xxxxxx, Xxxxxxx,
Xxxxxx, Xxxxxxx and in the Republic of
Panama.
COMMONLY CONTROLLED ENTITY an entity, whether or not incorporated, that
is under common control with Lessee within
the meaning of Section 4001 of ERISA or is
part of a group that includes Lessee and
that is treated as a single employer under
Section 414 of the Internal Revenue Code.
COPA HOLDINGS GUARANTEE a guarantee agreement substantially in the
form of Schedule 10.
COUNTRY OF INCORPORATION Republic of Panama.
COUNTRY OF REGISTRATION Republic of Panama.
CROSS-DEFAULT AMOUNT has the meaning specified in Schedule 7.
CYCLE one takeoff and landing of the Aircraft.
10
DAMAGE NOTIFICATION THRESHOLD has the meaning specified in Schedule 7.
DEFAULT any Event of Default and any event which
with the giving of notice or lapse of time,
or both, would constitute an Event of
Default.
DELIVERY the delivery of the Aircraft by Lessor to
Lessee pursuant to this Agreement.
DELIVERY DATE the date on which Delivery of the Aircraft
occurs in accordance with this Agreement.
DELIVERY LOCATION Boeing Field, Seattle, Washington or such
other location as Lessor and Lessee may
agree.
DELTA Delta Air Lines, Inc.
DISCOUNT RATE has the meaning specified in Schedule 7.
DOLLAR(S) AND $ the lawful currency of the United States of
America.
ENGINE whether or not installed on the Aircraft:
(a) each engine of the manufacture and
model specified in Part 1 of
Schedule 1 which Lessor delivers to
Lessee with the Aircraft on the
Delivery Date, such engines being
described as to serial numbers on
the Certificate of Acceptance; or
(b) any engine which has replaced that
engine, title to which has or
should have, passed to Lessor in
accordance with this Agreement;
and in each case includes all modules and
Parts from time to time belonging to or
installed in that engine but excludes any
properly replaced engine title to which has,
or should have, passed to Lessee pursuant to
this Agreement.
ENGINE CYCLE the operation of an engine installed on an
aircraft from and
11
including a take-off to and including the
landing of that aircraft.
ENGINE EVENT OF LOSS the occurrence with respect to an Engine
only, whether or not installed on the
Airframe, of any of those events described
in the definition of Event of Loss.
ENGINE FLIGHT HOUR each hour or part thereof (rounded to the
nearest 1/100th of an Hour) that an engine
is operated, elapsing from the moment the
wheels of the airframe on which such engine
is installed leave the ground until the
wheels of such airframe next touch the
ground.
ENGINE LLP SUPPLEMENTAL RENT has the meaning specified in Clause
5.4(a)(ii).
ENGINE LLP SUPPLEMENTAL RENT RATE has the meaning specified in Schedule 7.
ENGINE MANUFACTURER means CFM International, Inc.
ENGINE PERFORMANCE RESTORATION means an off-wing engine shop visit
including performance restoration or full
overhaul of core modules of the relevant
Engine, accomplished in accordance with the
Engine manufacturer's workscope planning
guide as customized for Lessee, with a
scheduled Life Limited Part and
Airworthiness Directive release of no less
than 7,500 Cycles and 3 years and
on-condition release of no less than 11,000
Flight Hours and 7,500 Cycles and 3 years.
ENGINE SUPPLEMENTAL RENT has the meaning specified in Clause
5.4(a)(iii).
ENGINE SUPPLEMENTAL RENT RATE has the meaning specified in Schedule 7.
ERISA means the Employee Retirement Income
Security Act of 1974, as amended.
EVENT OF DEFAULT an event specified in Clause 13.1.
EVENT OF LOSS with respect to the Aircraft, the Airframe
or an Engine:
(a) the actual or constructive total
loss of such property (including
any damage
12
to such property which results in
an insurance settlement on the
basis of a total loss, or
requisition for use or hire which
results in an insurance settlement
on the basis of a total loss);
(b) such property being destroyed,
damaged beyond repair or
permanently rendered unfit for
normal use for any reason
whatsoever;
(c) the requisition of title, or other
compulsory acquisition, capture,
seizure, deprivation, confiscation
or detention (collectively, a
"requisition") for any reason of
such property by the government of
the Country of Registration or
other authority, but excluding
requisition for use or hire not
involving requisition of title; or
(d) the hijacking, theft, condemnation,
confiscation, seizure or
requisition (other than a
requisition of title) for use or
hire of such property for (i) more
than sixty (60) days; or (ii) if
earlier, a period ending on the
Final Expiry Date.
If an Event of Loss occurs with respect to
the Airframe, an Event of Loss with respect
to the Aircraft (including the Airframe and
the Engine) shall be deemed to have
occurred.
EXCLUDED COUNTRY (x) Iraq and Libya, and (y) any country to
which the use of the Aircraft is prohibited
by (i) the Dual-Use and Related Goods
(Export Control) Regulations 1996 pursuant
to the Xxxxxxxx Xxxxxxxxxxx Xxx 0000, (ii)
the Dual-Use and Related Goods (Export
Control) (Amendment) Regulations 1997
pursuant to the Xxxxxxxx Xxxxxxxxxxx Xxx
0000, (iii) the United States Export
Administration Act 1979 (as amended), (iv)
any successor legislation for and/or the
export administration regulations
promulgated under the foregoing
13
or (iv) any sanctions orders or legislation
from time to time promulgated by any of the
United Nations, the European Union or any
Government Entity of the Country of
Registration or any other country having
jurisdiction over Lessor or RBS, the effect
of which prohibits the use of Boeing
aircraft operated by Lessee on flights to
and from such country.
FAA the Federal Aviation Administration of the
United States of America and any successor
thereof.
FAR means the Federal Aviation Regulations set
forth in Title 14 of the United States Code
of Federal Regulations, as amended and
modified from time to time.
FINAL DELIVERY DATE December 31, 2005.
FINAL EXPIRY DATE the date falling 90 months after the
Delivery Date, or if earlier the date on
which:
(a) Lessor receives the Agreed Value
and other amounts then due and
payable to it by Lessee following
an Event of Loss pursuant to Clause
11; or
(b) the Term of this Agreement shall
end in accordance with Clause 13.2.
FINAL INSPECTION has the meaning specified in Clause 1.1 of
Schedule 3 hereto.
FINANCIAL INDEBTEDNESS means any indebtedness in respect of:
(a) moneys borrowed or raised;
(b) any liability under any debenture,
bond, note, loan stock, acceptance,
documentary credit or other
security;
(c) obligations under finance leases;
(d) the acquisition cost of any asset
to the extent payable before or
after the time
14
of acquisition or possession, not
being indebtedness in respect of
the purchase of goods or services
in the ordinary course of trading,
payment for which is deferred for a
period of not greater than thirty
(30) days or, in respect of goods
or services the purchase price of
which is not material, ninety (90)
days; or
(e) any guarantee, indemnity or similar
assurance against financial loss of
any person in respect of the above.
FINANCING PARTIES RBS and such other Persons as may from time
to time provide to Owner and/or Lessor debt,
equity or other forms of financing with
respect to the Aircraft, and/or for whose
benefit security over, or rights relating
to, the Aircraft and/or this Agreement is
granted by Owner and/or Lessor, with or
without recourse, whether at the request of
Owner and/or Lessor. FINANCING PARTIES'
REPRESENTATIVE such Person, if any, as may
be designated as such from time to time in a
written notice from Lessor to Lessee.
FLIGHT HOUR each hour (computed to the nearest hundredth
of an hour) elapsing from the moment the
wheels of the Aircraft leave the ground on
take off until the wheels of the Aircraft
next touch the ground.
GAAP means generally accepted accounting
principles in effect from time to time in
the Republic of Panama provided such
standards are consistent with international
accounting standards; otherwise, in
accordance with international accounting
standards; or, should at any time, Lessee or
Guarantor, as applicable, elect, at its sole
discretion to maintain their financial
statements in accordance with US GAAP,
generally accepted accounting principles
from time to
15
time in effect in the United States.
GENEVA CONVENTION means the Convention on the International
Recognition of Rights in Aircraft signed at
Geneva, Switzerland on 19 June 1948, and
amended from time to time.
GOVERNING LAW the laws of the State of New York.
GOVERNMENT ENTITY (a) any national government, political
subdivision thereof, or local
jurisdiction therein;
(b) any instrumentality, board,
commission, court, or agency of any
thereof, however constituted; and
(c) any association, organization, or
institution of which any of the
above is a member or to whose
jurisdiction any thereof is
subject.
GUARANTOR Copa Holdings, S.A.
HABITUAL BASE Republic of Panama.
HEAD LEASE if Owner is not the same entity as Lessor,
any aircraft lease agreement between Owner
and Lessor in respect of the Aircraft.
INDEMNIFIED TAX has the meaning specified in Clause 5.11(b).
INDEMNITEE each of the following: (i) Beneficiary,
(ii) Initial Purchaser (but only for claims
arising against Initial Purchaser solely as
a result of Initial Purchaser being a party
in the chain of title and where no act or
omission of Initial Purchaser, its
successors, assigns, officers, or employees,
allegedly contributed to the event leading
to indemnification requirement), (iii)
Lessor and Owner, (iv) each Financing Party,
(v) each security trustee or other Financing
Parties' Representative, and (vi) each
shareholder, Subsidiary, Affiliate,
beneficiary, member, director, officer,
agent and employee of any of the
16
Persons described in items (i) - (v).
INITIAL PURCHASER means Delta.
INSURANCES has the meaning specified in Clause 9.1
INTERNAL REVENUE CODE the U.S. Internal Revenue Code of 1986, as
amended.
INTEREST RATE the rate equal to LIBOR during the
applicable period plus three and one-half
percent (3.5%) per annum, but not to exceed
the maximum amount permitted by law.
JAA the body referred to as the "Joint Aviation
Authority" established by the members of the
European Civil Aviation Conference. The term
"JAA" shall also include the European
Aviation Safety Agency ("EASA") as the
context admits or requires.
LANDING GEAR the landing gear assembly of the Aircraft
meaning the complete strut assembly,
consisting of inner and outer cylinders and
all associated parts that comprise each
landing gear assembly as listed in the
Aircraft Documents including side struts,
braces, uplock and downlock mechanisms, and
electrical wiring and hydraulic hardware but
excluding ratable parts including, without
limitation, wheels, tires, brakes,
transducers and switch assemblies.
LANDING GEAR SUPPLEMENTAL RENT has the meaning specified in Clause
5.4(a)(v).
LANDING GEAR SUPPLEMENTAL RENT RATE has the meaning specified in Schedule 7.
LEASE SUPPLEMENT NO. 1 means a Lease Supplement No. 1 to this
Agreement substantially in the form of
Schedule 8 hereto, duly completed and
executed by Lessor and Lessee.
LESSEE CONTROLLED CONTEST has the meaning specified in Clause 5.11(c).
LESSEE POWER OF ATTORNEY means a Lessee Power of Attorney
17
substantially in the form of Schedule 9.
LESSOR LIEN (a) a Mortgage, an Assignment and any
other charge, pledge, lien,
security interest, hypothecation or
encumbrance whatsoever from time to
time created by or through Owner,
Lessor or Beneficiary in connection
with the financing of the Aircraft;
(b) any other security interest or
encumbrance in respect of the
Aircraft which results from acts or
omissions of or claims against
Owner, Lessor or Beneficiary not
related to the transactions
contemplated by or permitted under
this Agreement or from claims for
which Lessee is not responsible
under this Agreement; and
(c) liens in respect of the Aircraft
for Lessor Taxes.
LESSOR TAX any of the following Taxes:
(a) any Tax imposed (by withholding or
otherwise) on, or calculated by
reference to, the gross or net
income (including any minimum Tax
or personal holding company tax),
profits (including any excess
profits Tax or accumulated earnings
Tax), gains, gross or net receipts,
capital, or net worth, corporate
franchise or conduct of business of
a Tax Indemnitee by any
jurisdiction under the laws of
which such Tax Indemnitee is
incorporated or otherwise organized
or in which such Tax Indemnitee has
an office or other fixed place of
business or is engaged in business,
provided that "Lessor Taxes" shall
not include (i) any Sales Tax or
(ii) any Tax imposed by any
Government Entity or other taxing
authority of any jurisdiction if
and to the extent that
18
such Tax is a result of any
connection between Lessee or the
Aircraft, the Airframe, any Engine
or any Part or any interest in any
thereof with the jurisdiction
imposing the Tax, including,
without limitation, any one or more
of the following: (A) the
registration, use, operation, or
presence of the Aircraft, the
Airframe, any Engine or any Part or
any interest in any thereof in the
jurisdiction imposing the Tax, or
(B) the incorporation or other
organization of Lessee or any
Specified Person under the law of
the jurisdiction imposing the Tax,
or (C) the management, residence,
presence, place of business, acts,
activities or transactions of
Lessee or any Specified Person in
the jurisdiction imposing the Tax,
or (D) the payment of any amount
payable by or for the account of
Lessee or any Specified Person
pursuant to any Transaction
Document in or from the
jurisdiction imposing the Tax; or
(b) Taxes imposed with respect to any
period commencing (and, in the case
of (i), ending) or event occurring
(i) prior to the Delivery Date or
(ii) after the Final Expiry Date
and in either case, unrelated to
Lessor's dealings with Lessee with
respect to the transactions
contemplated by this Agreement; or
(c) any Tax imposed by any Government
Entity in the Country of
Registration on or with respect to
the sale, assignment, transfer or
other disposition of all or any
part of (i) Lessor's or Owner's
right, title and interest in the
Aircraft or this Agreement, (ii)
any Tax Indemnitee's interest in
Lessor or any Transaction Document
and (iii) any Financing
19
Party's loan to the Owner relating
to, or security over, or rights
relating to, the Aircraft other
than any sale, assignment, transfer
or other disposition that occurs in
connection with (w) an Event of
Loss, or (x) an exercise of
remedies after the occurrence and
during the continuance of an Event
of Default, or (y) a substitution
or replacement of the Aircraft, the
Airframe, any Engine or any Part,
or (z) the maintenance, repair or
pooling of the Aircraft, the
Airframe, any Engine or any Part;
or
(d) any Tax caused directly by the
gross negligence or willful
misconduct of any Tax Indemnitee
(other than any gross negligence
caused by an act or omission of
Lessee or any Specified Person) or
the breach by Lessor of any
covenant of Lessor in this
Agreement; or
(e) any Tax imposed on or payable by a
Tax Indemnitee to the extent caused
directly by, and would not have
been imposed but for, the existence
of a Lessor Lien; or
(f) with respect to any Tax Indemnitee,
Taxes imposed to the extent the
same results from the failure by
such Tax Indemnitee to pay, or to
file any required Tax return or to
provide required information in
respect of, any Tax on a proper and
timely basis (provided, however,
that, with respect to any Tax
required to be paid or any Tax
return required to be filed solely
as a result of the transactions
contemplated by the Transaction
Documents, such Person has before
the due date for payment of such
Tax or the filing of such Tax
return either received a written
demand therefor or
20
otherwise been made aware in
writing of the imposition of such
Tax and the due dates for payment
thereof or the filing of such Tax
return as applicable) other than
where any such failure arises as a
result of any breach by Lessee of
any provision of, or the default by
Lessee in the performance of, its
obligations under this Agreement or
as a result of any Event of Default
occurring or otherwise arising as a
result of the willful misconduct or
gross negligence of Lessee; or
(g) in the case of a transferee of a
Tax Indemnitee, Taxes to the extent
that the aggregate amount of such
Taxes exceeds the aggregate amount
of the Taxes that would have been
imposed on or payable by the
transferor Tax Indemnitee and for
which Lessee would have been
required to indemnify the
transferor Tax Indemnitee pursuant
to Clause 5.7, 5.8, 5.9 or 5.10
under applicable laws in effect on
the date of transfer; or
(h) Any Tax to the extent increased or
not reduced as a result of the
failure of a Tax Indemnitee to file
any Tax Document, to supply a tax
identification number or to comply
with any certification of tax
residence or other documentation
requirement of applicable law, in
each case, that is a condition to
the allowance of any exemption
from, reduction in rate of, or
other relief from, such Tax,
provided that (1) Lessee shall have
given such Tax Indemnitee timely
written notice of such requirement
and shall have delivered to such
Tax Indemnitee such forms as may be
necessary to comply with such
requirement and accompanying
21
instructions issued by the relevant
Government Entity or other tax
authority as to the proper
completion thereof and (2) such Tax
Indemnitee is entitled under
applicable law to provide the
requested certification or other
documentation; provided, however,
that such Tax Indemnitee shall not
be required to comply with any such
certification, information,
documentation, reporting or other
requirement if such Tax Indemnitee
determines in its sole discretion
exercised in good faith that such
compliance may result in any
adverse consequences to such Tax
Indemnitee.
LIBID in relation to any period and
amount in respect of which an
interest rate is to be determined
pursuant thereto, LIBOR for such
amount and such period minus 12.5
basis points (but in no event shall
LIBID be less than zero).
LIBOR in relation to any period and amount in
respect of which an interest rate is to be
determined pursuant hereto:
(a) the offered rate (if any) appearing
on page 3750 (or its successor or
replacement page) of the Telerate
Screen for dollars for the
specified period at 11:00 a.m. on
the Quotation Date therefor; or
(b) if no such rate is available on
page 3750 (or its successor or
replacement page) of the Telerate
Screen, the rate determined by
Lessor to be the arithmetic mean
(rounded upwards, if not already
such a multiple, to the nearest
whole multiple of one sixteenth of
one percent) of the rates (as
notified to Lessor) at which each
of the Reference Banks (on the
basis that at least two Reference
Banks so notify Lessor) was
offering to prime
22
banks in the London Interbank
Market, on the Quotation Date,
deposits in dollars for the
specified period;
for the purposes of this definition,
SPECIFIED PERIOD means the period having a
duration equal to or as close as practicable
to the relevant period in respect of which
LIBOR fails to be determined in relation to
any unpaid sum.
LIFE LIMITED PARTS any Part that has a pre-determined life
limit as mandated by the manufacturer of
such Part, the FAA or any other Governmental
Entity having jurisdiction over matters
relating to airworthiness, which requires
any such Part to be discarded upon reaching
such life limit.
LOSSES any and all cost, expense (including any and
all legal fees and expenses and the fees and
expenses of other professional advisers),
claims, proceedings, losses, liabilities,
obligations, damages (whether direct,
indirect, special, incidental or
consequential), suits, judgments, fees,
penalties or fines (whether criminal or
civil) of any kind or nature whatsoever,
including any of the foregoing arising or
imposed with or without any Indemnitee's
fault or negligence, whether passive or
active or under the doctrine of strict
liability.
MAINTENANCE PLANNING DOCUMENT the recommended maintenance program for the
OR MANUFACTURER'S MAINTENANCE Aircraft issued and in effect from time to
PLANNING DOCUMENT time by the Manufacturer.
MAJOR CHECKS means any C check, multiple C check or
heavier check (including associated
structural inspections and corrosion
prevention and control items) for the
Aircraft as set out in the Approved
Maintenance Program.
MANDATORY ORDER OR MO a mandatory order issued by the FAA and/or
the AAC.
MANUFACTURER Boeing.
23
MAXIMUM DEDUCTIBLE AMOUNT has the meaning specified in Schedule 7.
MINIMUM LIABILITY COVERAGE has the meaning specified in Schedule 7.
MINIMUM WAR RISK COVERAGE has the meaning specified in Schedule 7.
MONTH is a reference to a period starting on one
day in a calendar month and ending on the
numerically corresponding day in the next
calendar month (and references to "months"
shall be construed accordingly) save that,
where any such period would otherwise end on
a non-Business Day, it shall end on the next
Business Day, provided that if a period
starts on the last Business Day in a
calendar month or if there is no numerically
corresponding day in the month in which that
period ends, that period shall end on the
last Business Day in that later month.
MORTGAGE any Mortgage over the Aircraft granted by
Lessor in favor of the Financing Parties.
OTHER AGREEMENTS any aircraft lease agreement (other than
this Agreement) or other aircraft financing
agreement made or to be made between (i)
Lessee, and (ii) Lessor, Beneficiary or any
Affiliate of Lessor or Beneficiary or any
trustee for the benefit of Lessor or
Beneficiary or for the benefit of any
Affiliate of Lessor or Beneficiary.
OWNER Lessor or such other Person notified in
writing by Lessor to Lessee.
PART whether or not installed on the Aircraft or
any Engine:
(a) any component, furnishing or
equipment (other than a complete
Engine) furnished with the Aircraft
on the Delivery Date; and
(b) any other component, furnishing or
equipment (other than a complete
Engine) title to which has, or
should have, passed to Owner
pursuant to this
24
Agreement;
but excludes any such items title to which
has, or should have, passed to Lessee
pursuant to this Agreement.
PARTICIPATION AGREEMENT the Participation Agreement dated as of the
date hereof between Beneficiary, Lessor and
Lessee.
PERMITTED LIEN (a) any lien for any Tax (i) which has
not been assessed or (ii) if
assessed, which is not yet due and
payable or (iii) if assessed and
due and payable, which is being
contested in good faith by
appropriate proceedings in
accordance with applicable law;
(b) any lien of a repairer, mechanic,
carrier, hangar-keeper or other
similar lien arising in the
ordinary course of business or by
operation of law in respect of
obligations which are not overdue
or are being contested in good
faith by appropriate proceedings in
accordance with applicable law;
but only if (in the case of both
(a) and (b)) (i) adequate resources
have been provided by Lessee, or
adequate reserves have been
established and are maintained in
the accounting records of Lessee in
accordance with GAAP, for the
payment of the Taxes or
obligations; and (ii) such
proceedings, or the continued
existence of the lien, do not give
rise to any material likelihood of
the sale, forfeiture or other loss
of the Aircraft or any interest
therein or of criminal liability on
Owner, Lessor, Beneficiary or any
Financing Party;
(c) any Lessor Lien; and
(d) any lien arising out of any
judgment or
25
award against Lessee so long as
such judgment or award shall,
within 45 days after the entry
thereof, have been discharged or
vacated, or execution thereof
stayed pending appeal or shall have
been discharged, vacated or
reversed within 45 days after the
expiration of such stay, and so
long as during any such 45 day
period, there is not, or any such
judgment or award does not involve,
any material risk of the sale,
forfeiture or loss of the Aircraft,
Airframe, any Engine, or any of the
Aircraft Documents or any interest
therein or any discernable risk of
criminal liability or any material
risk of civil penalty against
Owner, Lessor, Beneficiary or any
Financing Party.
PERSON any individual person, corporation, company,
partnership, limited liability company,
firm, joint stock company, joint venture,
trust, estate, unincorporated organization,
association, Government Entity, or other
entity, or any commercial or other
arrangement or relationship that is deemed
to be an entity for the purpose of any
applicable law.
PRICE ESCALATION ADJUSTMENTS has the meaning specified in Schedule 7.
QUOTATION DATE means, in relation to any period in respect
of which LIBOR is to be determined, the day
two Business Days before the beginning of
such period.
RBS Royal Bank of Scotland plc.
REDELIVERY DATE the Final Expiry Date.
REDELIVERY LOCATION Miami International Airport, Miami, Florida,
or such other location in the continental
United States of America as Lessor and
Lessee may agree.
26
REFERENCE BANKS means The Royal Bank of Scotland plc, Bank
of America NT&SA and Citibank N.A.
REFUND has the meaning specified in Clause 5.11(d).
RENT all amounts payable pursuant to Clause 5.3.
RENT ADJUSTMENT FACTOR has the meaning specified in Schedule 7.
RENT COMMENCEMENT DATE the date on which Lessor tenders the
Aircraft for Delivery to Lessee under and in
accordance with Clauses 4.1 and 4.2.
RENT DATE the first day of each Rental Period.
RENTAL PERIOD each period ascertained in accordance with
Clause 5.2.
RETURN CONDITIONS means the conditions specified in
Schedule 3.
SALES TAX any Tax that is, or is in the nature of, a
sales, use, rental, leasing, value added,
turnover, services, goods and services,
consumption, transaction privilege, or
similar Tax.
SCHEDULED DELIVERY DATE Month of May 2005.
SECURITY DEPOSIT all amounts payable pursuant to Clause 5.1.
SECURITY DEPOSIT AMOUNT has the meaning specified in Schedule 7.
SECURITY INTEREST any mortgage, charge, pledge, lien, security
interest, assignment, hypothecation, right
of setoff or other agreement or arrangement
having the effect of creating an encumbrance
other than a Permitted Lien.
SELLER Boeing.
SIMILAR LAWS any federal, state, local, non-U.S. or other
laws or regulations that are similar to
Section 406 of ERISA or Section 4975 of the
Internal Revenue Code.
SOLVENT when used with respect to any Person, means
that, as of any date of determination, (a)
the amount of the "present fair saleable
value" of
27
the assets of such Person will, as of such
date, exceed the amount of all "liabilities
of such Person, contingent or otherwise", as
of such date, as such quoted terms are
determined in accordance with applicable
Panamanian and U.S. federal and state laws
governing determinations of the insolvency
of debtors, (b) the present fair saleable
value of the assets of such Person will, as
of such date, be greater than the amount
that will be required to pay the liability
of such Person on its debts as such debts
become absolute and matured, (c) such Person
will not have in its good faith opinion, as
of such date, an unreasonably small amount
of capital with which to conduct its
business, and (d) such Person will be able
to pay its debts as they mature. For
purposes of this definition, (i) "debt"
means liability on a "claim", and (ii)
"claim" means any (x) right to payment,
whether or not such a right is reduced to
judgment, liquidated, unliquidated, fixed,
contingent, matured, unmatured, disputed,
undisputed, legal, equitable, secured or
unsecured or (y) right to an equitable
remedy for breach of performance if such
breach gives rise to a right to payment,
whether or not such right to an equitable
remedy is reduced to judgment, fixed,
contingent, matured or unmatured, disputed,
undisputed, secured or unsecured.
SPECIFIED PERSON any sublessee or any other Person that uses
or has the right to use or has possession or
custody of the Aircraft, the Airframe, any
Engine or any Part, or any shareholder,
Subsidiary, Affiliate, contractor, director,
officer, agent or employee of any of the
foregoing.
SUBSIDIARY (a) in relation to any reference to
accounts, any company whose
accounts are consolidated with the
accounts of Lessee in accordance
with GAAP;
(b) for any other purpose an entity
from
28
time to time:
(i) of which another has
direct or indirect control
or owns directly or
indirectly more than 50
percent of the voting
share capital; or
(ii) which is a direct or
indirect subsidiary of
another under the laws of
the jurisdiction of its
incorporation.
SUPPLEMENTAL RENT all amounts payable pursuant to Clause 5.4.
SUPPLEMENTAL RENT RATE any of the Airframe 6C/24,000 Flight Hour
Block Structural Check Supplemental Rent
Rate, the Engine LLP Supplemental Rent Rate,
the Engine Supplemental Rent Rate, the APU
Supplemental Rent Rate and the Landing Gear
Supplemental Rent Rate.
TAX any present and future tax (including,
without limitation, any gross receipts,
gross or net income, franchise, doing
business, sales, transfer, business,
occupation, fuel, leasing, turnover, excess
profits, registration, capital gains,
import/export, use, rental, leasing, value
added, goods and services, consumption,
transaction privilege, excise, property,
license, documentary or stamp tax), duty,
levy, assessment, impost, withholding or
other similar charge, and any penalty,
additions to tax, fine, surcharge or
interest relating thereto, imposed by any
Government Entity or other taxing authority
in any jurisdiction or by any international
or multinational authority.
TAX CLAIM has the meaning specified in Clause 5.12(a).
TAX DOCUMENT has the meaning specified in Clause 5.11(b).
TAX INDEMNITEE each of the following: (i) Owner,
(ii) Beneficiary, (iii) Lessor, (iv) each
Financing Party, (v) each security trustee
or other Financing Parties' Representative,
and
29
(vi) each shareholder, Subsidiary,
Affiliate, beneficiary, member, director,
officer, agent and employee of any of the
Persons described in items (i) - (v).
TAX SAVING has the meaning specified in Clause 5.11(d).
TERM OR LEASE TERM the period commencing on the Delivery Date
and ending on but excluding the next
succeeding Annual Expiry Date or, if
earlier, on the Final Expiry Date, provided
that the Term shall be automatically renewed
on each Annual Expiry Date for consecutive
periods of one year's duration up until and
including the Final Expiry Date, subject to
the provisions of Clauses 11 and 13.2.
TRANSACTION DOCUMENTS this Agreement, the Participation Agreement,
the Trust Agreement, the Aircraft Purchase
Agreement, the Warranty Assignment, the Xxxx
of Sale, the Acceptance Certificate, Lease
Supplement No. 1, the Lessee Power of
Attorney and the Copa Holdings Guarantee,
and all documents, instruments and
certificates delivered pursuant hereto or
thereto.
TRUST AGREEMENT means the Trust Agreement dated the date
hereof between Beneficiary, as trustor, and
Xxxxx Fargo Bank Northwest, N.A., as
trustee.
UCC Uniform Commercial Code, as the same may be
in effect in any applicable jurisdiction
within the United States.
UNUSED SUPPLEMENTAL RENT an amount equal, from time to time, to all
Supplemental Rent paid by Lessee and not
repaid to, or as directed by, Lessee by
Lessor or applied to Lessee's obligations as
provided under this Agreement.
WARRANTY ASSIGNMENT a Warranty Assignment substantially in the
form of Schedule 12.
1.2 CONSTRUCTION:
(a) In this Agreement, unless the contrary intention is stated, a
reference to:
30
(i) each of "Lessor" or "Lessee" or any other Person
includes without prejudice to the provisions of this
Agreement any successor in title to it and any permitted
assignee;
(ii) words importing the plural form shall apply to the
singular and vice versa;
(iii) any document shall include that document as amended,
novated, supplemented or otherwise modified from time to
time and includes all exhibits, appendices, attachments
and supplements thereto;
(iv) a "law" (1) includes any statute, decree, constitution,
regulation, order, judgment or directive or requirement
of any Government Entity; (2) includes any treaty, pact,
compact or other agreement to which any Government
Entity is a signatory or party; (3) includes any
judicial or administrative interpretation or application
thereof and (4) is a reference to that provision as
amended, substituted or reenacted;
(v) a Clause or a Schedule is a reference to a clause of or
a schedule to this Agreement; and
(vi) the words "include," "includes," and "including" are
deemed to be followed by the words "without limitation"
whether or not such words appear;
(b) the headings in this Agreement are to be ignored in construing
this Agreement.
2. REPRESENTATIONS AND WARRANTIES
2.1 LESSEE'S REPRESENTATIONS AND WARRANTIES:
Lessee represents and warrants to Lessor that:
(a) STATUS: Lessee is a corporation duly incorporated and validly
existing under the laws of the Country of Incorporation and
has the corporate power to own its assets and carry on its
business as it is being conducted and is the holder of all
necessary air transportation and other licenses or permits
required in connection therewith and with the use and
operation of the Aircraft;
(b) POWER AND AUTHORITY: Lessee has the corporate power to enter
into and perform, and has taken all necessary corporate action
to authorize the entry into, performance and delivery of, this
Agreement and each of the
31
other Transaction Documents to which it is a party and the
transactions contemplated hereby and thereby;
(c) LEGAL VALIDITY: this Agreement and each of the other
Transaction Documents to which it is a party has been duly
authorized by Lessee, each of this Agreement and the
Participation Agreement has been duly executed and delivered
by Lessee and each of this Agreement and the Participation
Agreement does, and each of the other Transaction Documents
when executed and delivered by Lessee (subject to execution
and delivery by the other parties thereto) will, constitute a
legal, valid and binding obligation of Lessee, enforceable
against Lessee in accordance with its terms, except as
enforceability may be limited, by applicable bankruptcy,
insolvency or other laws affecting creditors' rights generally
and/or general principles of equity;
(d) NON-CONFLICT: the entry into and performance by Lessee of, and
the transactions contemplated by, this Agreement does not and
will not:
(i) conflict with any laws binding on Lessee;
(ii) conflict with the constitutional documents of Lessee; or
(iii) conflict with or result in default under any indenture,
mortgage, contract, agreement or other document which is
binding upon Lessee or any of its assets or result in
the creation of any Security Interest over any of its
assets (other than the Security Deposit);
(e) AUTHORIZATION: all authorizations, consents, registrations and
notifications required under the laws of the Country of
Incorporation and the Country of Registration and any other
relevant jurisdictions in connection with the entry into and
performance by Lessee of, and the validity and enforceability
against Lessee of, this Agreement and the other Transaction
Documents to which it is a party and the transactions
contemplated hereby and thereby, have been (or will on or
before the Delivery Date have been) obtained or effected (as
appropriate) and are (or will on their being obtained or
effected be) in full force and effect, except as provided in
Section 8.11(f);
(f) NO IMMUNITY:
(i) Lessee is subject to civil and commercial law with
respect to its obligations under this Agreement and the
other Transaction Documents; and
(ii) neither Lessee nor any of its assets is entitled to any
right of immunity from suit, jurisdiction, attachment
prior to judgment, attachment in
32
aid of execution, set-off, execution or other legal
process, and the entry into and performance of this
Agreement and the other Transaction Documents by Lessee
constitute private and commercial acts;
(g) ACCOUNTS: the audited consolidated financial statements of
Lessee and its Subsidiaries most recently delivered to Lessor:
(i) have been prepared in accordance with GAAP; and
(ii) fairly represent the consolidated financial condition of
Lessee and its Subsidiaries as at the date thereof;
(h) FULL DISCLOSURE: its audited financial statements referred to
in Clause 2.1(g) provided to Lessor by Lessee for the purposes
of this Agreement do not contain any untrue or materially
misleading statement of a material fact;
(i) MATERIAL ADVERSE EFFECT: No event has occurred since December
31, 2003 which constitutes, or which with the giving of notice
and/or lapse of time or both would constitute, a contravention
of, or default under, any agreement or instrument by which
Lessee or Guarantor or any of their assets are bound or
affected, being a contravention or default which might either
have a material adverse effect on the financial condition,
business, assets or operations of Lessee or Guarantor or on
their ability to observe and perform their obligations under
the Transaction Documents;
(j) TAXES:
(i) Lessee has filed or caused to be filed in such manner as
is required by law or regulation all Tax returns which
Lessee is required by any applicable law to file with
any Government Entity or other taxing authority, and has
paid or caused to be paid all Taxes reported on such
returns to be due or which have become due pursuant to
any notice, demand or assessment received by Lessee or
any of its Affiliates, except for any such notice,
demand or assessment (A) which is being contested in
good faith in accordance with the applicable law, (B)
which does not and will not involve a material risk of
sale, forfeiture or loss of the Aircraft, the Airframe,
any Engine or any Part, and (C) for which an adequate
reserve has been established and maintained in the
accounting records of Lessee in accordance with GAAP;
(ii) no material claim for any Tax has been asserted against
Lessee by any Government Entity or other taxing
authority other than claims that are included in the
liabilities for Taxes in the audited consolidated
financial statements described in Clause 2.1(g) or
33
which are being contested in good faith by appropriate
proceedings and with respect to which appropriate
reserves have been maintained to the extent required by
GAAP and which arose after the date of such audited
consolidated financial statements and which does not and
will not involve a material risk of sale, forfeiture or
loss of the Aircraft;
(iii) all applicable customs duties and Sales Taxes in respect
of the Aircraft, its sale to Lessor and lease hereunder
to Lessee on the Delivery date, have been paid;
(iv) there is no Tax of the Country of Incorporation or the
Country of Registration, or any taxing authority of
either thereof or therein which is imposed in respect of
any payment to be made by Lessee to Lessor pursuant to
the Transaction Documents, or is imposed on or by virtue
of the execution, delivery or performance of the
Transaction Documents; and
(v) there is no Tax of the Country of Incorporation or the
Country of Registration, or any taxing authority of
either thereof or therein which is imposed in respect of
any payment to be made to Lessee pursuant to the
Transaction Documents, or is imposed on any Lender on or
by virtue of the execution, delivery or performance of
the Transaction Documents;
(k) NO DOING BUSINESS: neither Lessor nor Beneficiary is or will
be deemed to be resident, domiciled or carrying on business in
The Republic of Panama or be subject to taxation in The
Republic of Panama by reason only of the execution,
performance and/or enforcement of any of the Transaction
Documents;
(l) ENFORCEMENT: in any execution proceedings taken in The
Republic of Panama for the enforcement of the Transaction
Documents, the courts of The Republic of Panama will give
effect to and enforce any final (non-appealable) judgment
granted in the United States, without re-examination or
re-litigation of any matter adjudicated therein, provided that
if a final and conclusive judgment in respect of any of the
Transaction Documents is given by a foreign court of competent
jurisdiction to deal with any action arising therefrom, such
judgment would be recognized and enforced in the Courts of the
Republic of Panama without retrial of the originating action
by instituting exequatur proceedings in the Supreme Court of
Panama and upon determination by such tribunal that: (i) the
courts of the judgment country would in similar circumstances
recognize a final and conclusive judgment of the Courts of the
Republic of Panama; (ii) the judgment has been issued as a
consequence of an action "in personam"; (iii) the judgment was
rendered after personal service on the defendant;
34
(iv) the cause of action upon which judgment was based does
not contravene public policy of Panama; and (v) the documents
evidencing the judgment are in authentic form according to the
laws of the judgment country and have been duly legalized by
Panamanian Consul; and no filing, recording, registering of or
with respect to the Transaction Documents will be necessary in
the Republic of Panama in order to protect, preserve or
perfect the validity and enforceability of the Transaction
Documents, and the interests thereby created, except as stated
in Section 8.11(f);
(m) POWER OF ATTORNEY: the Lessee Power of Attorney remains in
full force and effect;
(n) UCC MATTERS: the "location" of Lessee, for purposes of Section
9-307 of the Uniform Commercial Code of the State of New York,
is in the State of Florida;
(o) SOLVENCY: Lessee is Solvent; and
(p) ERISA: (A) the execution, delivery and performance of the
Transaction Documents will not involve any transaction in
connection with which a civil penalty could be assessed
pursuant to Section 502 of ERISA, any tax could be imposed
under Section 4975 of the Internal Revenue Code; or a
violation of any Similar Laws could result and (B) neither
Lessee nor any Subsidiary or Commonly Controlled Entity (i)
maintains, contributes to or has any liability in respect of,
(ii) is obligated to maintain or contribute to, or has, at any
time within the five years preceding the date of this
representation, maintained, contributed to or had any
liability in respect of or (iii) has been obligated to
maintain or contribute to, any employee benefit plan that is
subject to Title IV of ERISA.
2.2 LESSEE'S FURTHER REPRESENTATIONS AND WARRANTIES:
Lessee further represents and warrants to Lessor that:
(a) NO DEFAULT: no Default has occurred and is continuing or would
result from the entry into or performance of this Agreement
and the other Transaction Documents;
(b) REGISTRATION:
(i) except for (x) the filing of UCC financing Statements
with regard to the Lease, and the Security Deposit in
the District of Columbia, all of which shall have been
accomplished on or before the Delivery Date, and (y) the
filing and recordation of this Agreement, the Lease
Supplement No. 1 and the Xxxx of Sale as provided in
Clause 8.11(f), it is not necessary or advisable under
35
the laws of the Country of Incorporation, the Country of
Registration or the Habitual Base in order to ensure the
validity, effectiveness and enforceability of this
Agreement or the other Transaction Documents or to,
establish, perfect or protect the property rights of
Lessor in or with respect to the Aircraft or any Engine
or Part, or the Security Deposit, that this Agreement or
any other Transaction Document or any other document or
instrument relating thereto be filed, registered or
recorded or that any other action be taken; and
(ii) upon completion of the filings referenced in Clause
2.2(b)(i) and the recordation, registration or indexing
of the instruments so filed by the appropriate
Government Entities, under the laws of the Country of
Incorporation, the Country of Registration and the
Habitual Base and the other jurisdictions referred to in
Clause 8.11(f), the property rights of Lessor and
Beneficiary in the Aircraft, the Lease and the Security
Deposit will be fully established and perfected;
(c) LITIGATION: no litigation, arbitration or administrative
proceedings are pending or to its knowledge threatened against
Lessee in any jurisdiction which reasonably may be expected to
have a material adverse effect upon its financial condition or
business or its ability to perform its obligations under this
Agreement;
(d) PARI PASSU: the obligations of Lessee under this Agreement
rank at least pari passu with all other present and future
unsecured and unsubordinated obligations (including contingent
obligations) of Lessee, with the exception of such obligations
as are mandatorily preferred by law and not by virtue of any
contract;
(e) MATERIAL ADVERSE CHANGE: there has been no material adverse
change in the consolidated financial condition or operations
of Lessee and its Subsidiaries or the financial condition or
operations of Lessee since the date as to which the financial
statements most recently provided to Lessor on or prior to the
Delivery Date were drawn up; and
(f) NO BROKERS: Lessee has not engaged the services of a broker or
similar representative or agent for the purposes of procuring
the leasing of the Aircraft pursuant to this Agreement.
2.3 REPETITION:
The representations and warranties in Clause 2.1 and Clause 2.2 will
survive the execution of this Agreement. The representations and
warranties contained in Clause 2.1 and Clause 2.2 will be deemed to
be repeated by Lessee on the
36
Delivery Date and the representations set forth in Clause 2.1(a)
through (h), (j)(iii), (1), (m) and (n) will be deemed to be
repeated by Lessee on each Rent Date with reference to the facts and
circumstances then existing.
2.4 LESSOR'S REPRESENTATIONS AND WARRANTIES:
Lessor (as to clauses (b), (c), (d), (e), (f), (g) and (h) and WFB
(as to clauses (a), (b), (c), (d), (e), (f), (g) and (h)) represents
and warrants to Lessee that:
(a) STATUS: WFB is a national banking association duly
incorporated and validly existing under the federal laws of
the United States and has the corporate power to own its
assets and carry on its business as it is being conducted;
(b) POWER AND AUTHORITY: each of Lessor and WFB has the corporate
power to enter into and perform, and has taken all necessary
corporate action to authorize the entry into, performance and
delivery of, this Agreement and the other Transaction
Documents to which it is a party and the transactions
contemplated by this Agreement and the other Transaction
Documents to which it is a party;
(c) LEGAL VALIDITY: each of the Transaction Documents to which it
is a party has been duly authorized, executed and delivered by
it, and constitutes its legal, valid and binding obligations,
enforceable against it in accordance with their respective
terms except insofar as enforceability may be limited by (i)
applicable bankruptcy, insolvency or other laws affecting
creditors' rights generally or (ii) general principles of
equity;
(d) NON-CONFLICT: the entry into and performance by it of, and the
transactions contemplated by, this Agreement and the other
Transaction Documents to which it is a party do not and will
not:
(i) conflict with any laws, rules or regulations binding on
it;
(ii) conflict with the constitutional documents of Lessor or
WFB; or
(iii) conflict with any indenture, mortgage, contract or other
document which is binding upon it or any of its assets;
(e) AUTHORIZATION: all authorizations, consents, registrations and
notifications required under the laws of the State of Utah,
the State of New York (the place of closing) and the federal
laws of the United States in connection with the entry into,
performance, validity and enforceability of, and the
transactions contemplated by, this Agreement and the other
Transaction Documents to which it is a party have been (or
will on or before the Delivery Date have been) obtained or
effected (as appropriate)
37
and are (or will on their being obtained or effected be) in
full force and effect;
(f) NO IMMUNITY:
(i) it is subject to civil commercial law with respect to
its obligations under this Agreement and the other
Transaction Documents to which it is a party; and
(ii) neither it nor any of its assets is entitled to any
right of immunity and the entry into and performance of
this Agreement and the other Transaction Documents to
which it is a party by it constitute private and
commercial acts;
(g) TITLE: At the time of Delivery, Lessor shall have good title
to the Aircraft, free and clear of any Liens;
(h) NO BROKERS: Lessor has not engaged the services of a broker or
similar representative agent for the purposes of this
Agreement and the transactions contemplated herein;
2.5 REPETITION:
The representations and warranties in Clause 2.4 will survive the
execution of this Agreement and will be deemed to be repeated by
Lessor on the Delivery Date with reference to the facts and
circumstances then existing.
3. CONDITIONS PRECEDENT
3.1 CONDITIONS PRECEDENT:
Lessor's obligation to deliver and lease the Aircraft under this
Agreement is subject to satisfaction of each of the following
conditions:
(a) receipt by Lessor and Beneficiary from Lessee of the following
satisfactory in form and substance to Lessor:
(i) TRANSACTION DOCUMENTS: each Transaction Document shall
have been duly executed and delivered by each party
thereto other than Lessor;
(ii) CONSTITUTIONAL DOCUMENTS: a copy of the constitutional
documents of Lessee and the Guarantor;
(iii) RESOLUTIONS: a copy of a resolution of the board of
directors of Lessee and Guarantor, in each case
approving the terms of, and the transactions
contemplated by, this Agreement and the other
38
Transaction Documents to which it is a party, resolving
that it enter into this Agreement and the other
Transaction Documents to which it is a party, and
authorizing execution of this Agreement and the other
Transaction Documents to which it is a party and
consummation of the transactions contemplated hereby and
thereby;
(iv) OPINIONS: (i) an opinion reasonably satisfactory in form
and substance to Lessor (based on New York law) by
Xxxxxxxxx Traurig, P.A., (ii) an opinion reasonably
satisfactory in form and substance to Lessor (based on
Panamanian law) by Xxxxxxx Xxxxx & Xxxxx, Panamanian
counsel to Lessee, (iii) at Lessor's cost, an opinion
reasonably satisfactory in form and substance to
Beneficiary by Xxxxxx, Xxxxxx & Asvat, Panamanian
counsel to the Lessor and Beneficiary, with respect to
Panamanian law; and (iv) at Lessor's cost, a
jurisdictional review by Xxxxxx, Xxxxxx & Asvat,
Panamanian counsel to Lessor and Beneficiary, as to the
rights of creditors and lessors of aircraft under
Panamanian law, satisfactory in form and substance to
Beneficiary;
(v) APPROVALS: evidence of the issuance of each approval,
license and consent which is required in relation to, or
in connection with the performance by Lessee of any of
its obligations under this Agreement and the other
Transaction Documents;
(vi) LICENSES: copies of Lessee's air transport license, air
operator's certificates and all other material licenses,
certificates and permits required by Lessee in relation
to, or in connection with, the operation of the
Aircraft;
(vii) CERTIFICATE: a certificate of a duly authorized officer
of Lessee:
(a) setting out a specimen of the signature of each
Person authorized to execute documents on behalf
of Lessee pursuant to the resolutions referred to
in Clause 3.1(a)(iii);
(b) certifying that each copy of each document
specified in Clause 3.1(a)(ii) and (iii) is
correct, complete and in full force and effect;
and
(c) certifying as to the matters stated in Clause
3.2(a), (b) and (d);
(viii)UCC FINANCING STATEMENTS: UCC financing statements with
respect to the Aircraft and this Agreement in a form
acceptable to Lessor shall have been prepared for filing
with the appropriate Government Entity in the District
of Columbia;
39
(ix) PAYMENTS: all sums due to Lessor under this Agreement
on or before the Delivery Date including, without
limitation, the first payment of Rent and the full
amount of the Security Deposit;
(x) INSURANCES: a certificate of insurance and broker's
letter of undertaking satisfactory to Lessor and
evidencing that Lessee is taking the required steps
to ensure due compliance with the provisions of this
Agreement as to Insurances with effect on and after
the Delivery Date,
(xi) FINANCIAL STATEMENTS: the latest available financial
statements and accompanying documents of Lessee as
described in Clause 8.2(b)(i) and (ii);
(xii) TITLE: Initial Purchaser shall have transferred good
title to the Aircraft to Lessor and Lessor shall have
received a signed original of the Xxxx of Sale;
(xiii) AUTHORIZATION: the Aircraft shall have been certified
by the FAA as to type and airworthiness for export to
Panama, and Lessee shall have permanent or temporary
authority to operate the Aircraft, and copies of
relevant documents shall have been delivered to
Lessor;
(xiv) PROCESS AGENT: a letter from the process agent
appointed by Lessee in this Agreement accepting that
appointment;
(xv) ACCEPTANCE CERTIFICATE: the Acceptance Certificate,
dated, fully completed, and executed by Lessee on
behalf of Lessor;
(xvi) IMPORT: evidence that any required import license,
and all customs formalities relating to the import of
the Aircraft into the Habitual Base have been
obtained or complied with (if no such licenses or
formalities are required, a statement to that effect
included in the legal opinion described in paragraph
(ii) will satisfy Lessee's obligation under this
paragraph (ix)), and evidence that the import of the
Aircraft into the Habitual Base is exempt from Taxes,
or that any such Taxes have been paid in full;
(xvii) POWERS OF ATTORNEY: the Lessee Power of Attorney; and
(xviii) REGISTRATION, RECORDINGS: receipt by Lessor of
evidence that on the Delivery Date the Aircraft has
been provisionally registered under the laws of the
Country of Registration and that this Agreement,
Lease Supplement No. 1 and the Xxxx of Sale will be
recorded with the Public Registry of Panama as
required by Section 8.11(f), and that all filings,
registrations, recordings and other actions have been
or will be taken which are necessary or
40
advisable to ensure the validity, effectiveness and
enforceability of this Agreement and the other
Transaction Documents and to protect the rights and
interests of Lessor in the Aircraft;
(xix) MANUFACTURER DELIVERY DOCUMENTS: receipt by Lessor of
originals of the Manufacturer delivery documents,
including certified copies of the relevant bills of sale
(FAA and full warranty);
(xx) GENERAL: such other documents and financial information
as Lessor may reasonably request in order to (i)
consummate or give effect to the transactions
contemplated by this Agreement and the Transaction
Documents and (ii) assess the financial and commercial
condition of Lessee, present and future, and Lessor's
being satisfied in its sole discretion with such
financial and commercial condition.
3.2 FURTHER CONDITIONS PRECEDENT:
The obligations of Lessor to deliver and lease the Aircraft under
this Agreement are subject to the further conditions precedent that:
(a) the representations and warranties of Lessee under Clauses 2.1
and 2.2 are correct and would be correct if repeated on
Delivery of the Aircraft under this Agreement;
(b) no Default has occurred and is continuing or would reasonably
be expected to result from the leasing of the Aircraft to
Lessee under this Agreement;
(c) no change shall have occurred after the date of the execution
and delivery of this Agreement in laws that in the case of
Lessor or Beneficiary, in the reasonable opinion of counsel,
would make it illegal for such Person to participate in this
transaction or to make its Loan available to Lessor; and
(d) no action or proceeding or governmental action shall have been
instituted or threatened before any court or governmental
agency, nor shall any order, judgment or decree have been
issued or proposed to be issued by any court or governmental
agency at the time of the Delivery Date to set aside,
restrain, enjoin or prevent the completion and consummation of
this Agreement or the other Transaction Documents or the
transactions contemplated hereby and thereby.
3.3 LESSEE CONDITIONS PRECEDENT:
Lessee's obligation to accept delivery and to lease the Aircraft are
subject to the following additional conditions precedent:
41
(a) receipt by Lessee on or before the Delivery Date of:
(i) a certificate signed by a duly authorized officer of
Lessor certifying that Lessor's representations and
warranties in Clause 2.4 are true and correct on the
Delivery Date as if given on such date;
(ii) each of this Agreement, Lease Supplement No. 1 and the
Participation Agreement, duly executed and delivered by
Lessor, and the Warranty Assignment duly executed and
delivered by the parties thereto;
(iii) Initial Purchaser shall have transferred good title to
the Aircraft to Lessor and Lessor shall have received a
signed original of the Xxxx of Sale;
(iv) the Aircraft shall have been certified by the FAA as to
type and airworthiness for export to Panama, and Lessee
shall have permanent or temporary authority to operate
the Aircraft, and copies of relevant documents shall
have been delivered to Lessor; and
(v) receipt by Lessee of all documents required to operate
the Aircraft in Panama.
(b) Lessor shall have tendered delivery of the Aircraft to Lessee
in accordance with Clauses 4.1 and 4.2.
3.4 WAIVER:
(a) The conditions specified in Clauses 3.1 and 3.2 are for the
sole benefit of Lessor and may be waived or deferred in whole
or in part by Lessor. Such waiver or deferral may be subject
to such conditions as shall be accepted by Lessee.
(b) The conditions specified in Clause 3.3 are for the sole
benefit of Lessee and may be waived or deferred in whole or in
part by Lessee. Such waiver or deferral may be subject to such
conditions as shall be accepted by Lessor.
3.5 POST-CLOSING MATTERS:
Lessee shall, at its sole cost and expense, provide to Lessor (i)
evidence that the UCC Financing Statement referenced in Clause
2.2(b)(i)(y) has been duly filed with the appropriate Government
Entity in the District of Columbia (which evidence may take the form
of a filed-stamped copy of such UCC financing statement), (ii)
evidence that the AAC has issued a permanent registration
42
certificate for the Aircraft as required by Section 8.11(f)(iii) and
(iii) an opinion of Panamanian counsel to Lessee as to the making of
proper filings as required by Section 8.11(f)(i).
4. COMMENCEMENT
4.1 LEASING:
(a) Subject to satisfaction of the conditions set forth in Clauses
3.1 and 3.2, Lessor will lease the Aircraft to Lessee and
Lessee will take the Aircraft on lease for the Term, which
shall commence on the Delivery Date immediately upon transfer
of title to the Aircraft from Seller to Lessor, and which
leasing shall be unconditionally and irrevocably evidenced by
Lessee's execution and delivery of Lease Supplement No. 1; and
(b) Lessee will be responsible for all risks associated with any
loss of or damage to the Aircraft or caused by the operation
of the Aircraft from the execution of Lease Supplement No. 1
until the return of the Aircraft to Lessor pursuant to the
terms of this Agreement.
4.2 DELIVERY:
Lessor shall deliver the Aircraft to Lessee immediately following
delivery thereof by the Manufacturer. Immediately following Lessor's
purchase of the Aircraft from Seller, Lessor will tender the
Aircraft for Delivery to Lessee and Lessee will unconditionally and
irrevocably effect acceptance of the Aircraft by execution and
delivery to Lessor of the duly completed and executed Lease
Supplement No. 1, notwithstanding any delay in Delivery after the
Scheduled Delivery Date, subject to Section 4.4. Simultaneously with
Lessor's purchase of the Aircraft, Lessee will execute, as agent of
Lessor, and deliver to Delta the Acceptance Certificate. Upon
execution and delivery by Lessee of Lease Supplement No. 1, Lessee's
acceptance of the Aircraft under this Agreement shall be
unconditional and irrevocable for all purposes. Lessor will include
Lessee, and Lessee will participate, in all stages of the acceptance
procedure of the Aircraft from the Manufacturer and Lessee shall be
satisfied that the Aircraft as delivered from Manufacturer meets the
delivery conditions set forth on Schedule 1 hereof.
4.3 DELAYED DELIVERY:
It is intended that the Delivery Date will be the Scheduled Delivery
Date. However, Lessor shall not be responsible for any loss or
damages, including without limitation loss of profit, arising from
or in connection with any delay in the delivery of or failure to
deliver the Aircraft to Lessee under this Agreement on the Scheduled
Delivery Date for any reason whatsoever. Notwithstanding any such
delay, Lessor shall not be excused from its obligation to Deliver
the Aircraft to Lessee unless such delay resulted from any cause
which is outside the control of Lessor.
43
4.4 TERMINATION FOR NON-DELIVERY:
The parties agree that if Delivery of the Aircraft has not occurred
for any reason whatsoever including, without limitation, any
circumstance described in Clause 4.2 or 4.3 above, on or before the
Final Delivery Date, then unless the parties shall have agreed in
writing to extend the Delivery Date and the Final Delivery Date,
this Agreement shall immediately terminate. Upon such termination,
neither party will have any further obligations or liability under
this Agreement other than pursuant to Clause 15.8 except that Lessor
will repay the amount of the Security Deposit.
4.5 PURCHASE OF AIRCRAFT:
Lessee agrees that Lessor's obligation to deliver the Aircraft to
Lessee under the terms of this Agreement is expressly subject to
Lessor obtaining good title to the Aircraft from Initial Purchaser
pursuant to the Aircraft Purchase Agreement.
5. PAYMENTS
5.1 SECURITY DEPOSIT AND LETTER OF CREDIT:
(a) PAYMENT: Lessee shall pay to Lessor a Security Deposit in cash
in the amount defined as the Security Deposit Amount in
Schedule 7 hereof in the following installments:
(i) US**Material Redacted** at the time this Agreement is
executed;
(ii) US**Material Redacted** three months prior to Delivery
Date; and
(iii) the balance to be paid no later than three Business Days
prior to Delivery Date.
(b) CONCERNING THE SECURITY DEPOSIT:
(i) The Security Deposit shall be deposited in a designated
account of the Lessor maintained at the Royal Bank of
Scotland, New York Branch or such other account in the
United States as Lessor shall designate in writing.
Lessor will not hold the Security Deposit as agent or on
trust for Lessee or in any similar fiduciary capacity.
(ii) Lessee may provide the Security Deposit in the form of a
letter of credit, issued by a bank satisfactory to
Lessor, having a term of no more than one year, and
otherwise in form and substance (including the
designation of the presentment location) satisfactory to
Lessor.
44
(c) CONCERNING THE LETTER OF CREDIT:
If at any time prior to the Final Expiry Date, the long-term
unsecured unsubordinated and unguaranteed debt obligations as
rated by Xxxxx'x Investors Services Inc. or Standard & Poor's
Corporation of the then current bank issuing the letter of
credit shall be less than A2 and A respectively or shall be on
creditwatch by either of such agencies, Lessee shall procure
that the relevant letter of credit is replaced by a letter of
credit by another bank acceptable to Lessor (in its sole
discretion).
5.2 RENTAL PERIODS:
The Term will be divided into Rental Periods. The first Rental
Period will commence on the Delivery Date, and each subsequent
Rental Period will commence on the date succeeding the last day of
the previous Rental Period. Each Rental Period will end on but
exclude the numerically corresponding day in the next Month except
that if a Rental Period would otherwise overrun the Final Expiry
Date, it will end on the Final Expiry Date.
5.3 RENT:
(a) TIME OF PAYMENT: Lessee will pay to Lessor Rent in advance on
each Rent Date. Payment must be initiated in such manner as to
ensure that Lessor receives credit for the payment on the Rent
Date. If a Rental Period begins on a non-Business Day, the
Rent payable in respect of that Rental Period shall be paid on
the Business Day immediately following the date on which such
Rental Period commences.
(b) AMOUNT: The Rent payable in respect of each Rental Period
shall be the Assumed Rent based on the Assumed LIBOR Rate and
will be adjusted upward or downward by the Rent Adjustment
Factor. On each Rent Calculation Date (as defined below), the
Rent shall be calculated and set for the six consecutive
Rental Periods immediately following such Rent Calculation
Date. For purposes of this Clause 5.3(b), "Rent Calculation
Date" shall mean the date that falls three days prior to the
Delivery Date and each six-month anniversary thereof;
provided, however, if such date or any such anniversary
thereof is not a Business Day, then the Rent Calculation Date
shall be the immediately preceding Business Day.
5.4 SUPPLEMENTAL RENT:
(a) AMOUNT: Lessee will pay Supplemental Rent to Lessor in
relation to each calendar month (or part of a month) of the
Term, on the 10th day following the end of that calendar month
(except that the last payment of Supplemental Rent during the
Term shall be paid on the Final Expiry Date), calculated as
follows:
45
(i) AIRFRAME: in respect of an Airframe 6C/24,000 Flight
Hour Block Structural Check, an amount equal to the
Airframe 6C/24,000 Flight Hour Block Structural Check
Supplemental Rent Rate, pro-rated on a per diem basis,
if applicable, for any calendar month which falls
partially within the Term and partially outside the Term
(the "Airframe 6C/24,000 Flight Hour Block Structural
Check Supplemental Rent");
(ii) ENGINE LIFE-LIMITED PARTS: in respect of the
Life-Limited Parts for each Engine, an amount equal to
the Engine LLP Supplemental Rent Rate for each Engine
Cycle operated by that Engine during that calendar month
("Engine LLP Supplemental Rent"); provided, however,
Lessee shall have no obligation to make any payment of
Engine LLP Supplemental Rent in respect of any period
during which the Engine installed on the Aircraft is
subject to a maintenance cost per hour agreement or
similar arrangement with the Agreed Maintenance
Performer so long as (x) such agreement or arrangement
is approved in advance (i.e., before the enrollment of
the Engine installed on the Aircraft in any such
agreement or arrangement) in writing by Lessor (such
approval not to be unreasonably withheld), and (y) in
the event that the Engine installed on the Aircraft is
enrolled in any such agreement or arrangement before
Lessor approves such agreement or arrangement, or in the
event that any Engine enrolled in any such agreement or
arrangement is to be installed on the Aircraft before
Lessor approves such agreement or arrangement, then
Lessee shall pay and continue to pay Engine LLP
Supplemental Rent in accordance with this subclause for
all periods prior to the time at which Lessee obtains
Lessor's written approval (which approval shall not be
unreasonably delayed) of the applicable agreement or
arrangement (if ever);and (z) for the avoidance of doubt
it is agreed that at least one of the criteria upon
which such a maintenance cost per hour agreement will be
approved by the Lessor shall be a requirement for that
agreement to expressly include an adequate fund
provision specifically allocated to LLP's to which the
Lessor will have rights of access under certain
conditions, and drawdowns on such LLP fund will not
diminish the adequacy of any fund allocation applicable
to the engine performance restoration.
(iii) ENGINE PERFORMANCE RESTORATION: in respect of each
Engine, an amount equal to the Engine Supplemental Rent
Rate for each Engine Flight Hour (or fraction thereof)
operated by that Engine during that calendar month
("Engine Supplemental Rent"); provided, however, Lessee
shall have no obligation to make any payment of Engine
Supplemental Rent in respect of any period
46
during which the Engine installed on the Aircraft is
subject to a maintenance cost per hour agreement or
similar arrangement with the Agreed Maintenance
Performer so long as (x) such agreement or arrangement
is approved in advance (i.e., before the enrollment of
the Engine installed on the Aircraft in any such
agreement or arrangement) in writing by Lessor (such
approval not to be unreasonably withheld), and (y) in
the event that the Engine installed on the Aircraft is
enrolled in any such agreement or arrangement before
Lessor approves such agreement or arrangement, or in the
event that any Engine enrolled in any such agreement or
arrangement is to be installed on the Aircraft before
Lessor approves such agreement or arrangement, then
Lessee shall pay and continue to pay Engine Supplemental
Rent in accordance with this subclause for all periods
prior to the time at which Lessee obtains Lessor's
written approval (which approval shall not be
unreasonably delayed) of the applicable agreement or
arrangement (if ever);
(iv) APU: in respect of the APU, an amount equal to the APU
Supplemental Rent Rate for each Flight Hour operated by
the APU during that calendar month ("APU Supplemental
Rent"); provided, however, Lessee shall have no
obligation to make any payment of APU Supplemental Rent
in respect of any period during which the APU installed
on the Aircraft is subject to a maintenance cost per
hour agreement or similar arrangement with the APU
manufacturer or Agreed Maintenance Performer so long as
(x) such agreement or arrangement is approved in advance
(i.e., before the enrollment of the APU installed on the
Aircraft in any such agreement or arrangement) in
writing by Lessor (such approval not to be unreasonably
withheld), and (y) in the event that the APU installed
on the Aircraft is enrolled in any such agreement or
arrangement before Lessor approves such agreement or
arrangement, or in the event that any APU enrolled in
any such agreement or arrangement is to be installed on
the Aircraft before Lessor approves such agreement or
arrangement, then Lessee shall pay and continue to pay
APU Supplemental Rent in accordance with this subclause
for all periods prior to the time at which Lessee
obtains Lessor's written approval (which approval shall
not be unreasonably delayed) of the applicable agreement
or arrangement (if ever); and
(v) LANDING GEAR: in respect of the Landing Gear, an amount
equal to the Landing Gear Supplemental Rent Rate,
pro-rated on a per diem basis, if applicable, for any
calendar month which falls partially within the Term and
partially outside the Term ("Landing Gear Supplemental
Rent");
47
provided that with respect to any maintenance cost per
hour agreement described in subclauses (iii) and (iv)
above to be approved by Lessor, such agreement must (or
as otherwise reasonably agreed by Lessor and Lessee)
have (i) payments and maintenance structured on a fully
restored zero-time basis where the Approved Maintenance
Performer will be responsible for the payment of the
redelivery maintenance adjustment provided for in Part 3
of Schedule 3 for all Engine or APU use since the last
Engine Performance Restoration or APU Performance
Restoration, as applicable, during the Lease Term or
since new if no such Engine Performance Restoration or
APU Performance Restoration, as applicable, has been
accomplished during the Lease Term, (ii) payments and/or
corresponding maintenance inclusive of all applicable
airworthiness directives, manufacturer category 1/2/3
service bulletins, and domestic object damage, (iii)
satisfactory restrictions on the use of multiple repair
used serviceable exchange parts, incident materials,
manufacturer approved FAA PMA parts, and parts with
non-manufacturer approved repairs, (iv) satisfactory
flight hour and calendar warranty provisions and
periods, (v) satisfactory test cell performance
guarantees and performance retention guarantees, and
(vi) satisfactory provisions for assignment to Lessor.
(b) ADJUSTMENT: The Supplemental Rent Rates, if applicable,
shall be adjusted after the Delivery Date not more
frequently than annually (with any such adjustment
having retrospective application as appropriate to
reflect the provisions of paragraph (ii) below and the
amount required to give effect to such retrospective
application shall be payable by Lessee upon demand by
Lessor) based on the following:
(i) ANNUAL SUPPLEMENTAL RENT ADJUSTMENT: upwards by
the Annual Supplemental Rent Adjustment commencing
on January 1, 2005 and each annual anniversary
date thereafter; and
(ii) HOUR TO CYCLE RATIO ADJUSTMENT: Lessor and Lessee
acknowledge that the Engine Supplemental Rent Rate
is based upon the assumption that the Aircraft
will operate on the Assumed Ratio. If that
assumption proves to be incorrect at any time for
any period of twelve (12) consecutive months
during the Term based upon Lessee's actual
operating experience during such twelve (12)
months, and in the case of the Assumed Ratio the
hour to cycle ratio differs from the Assumed Ratio
by more than 0.1 during such twelve (12) month
period, (i) Lessor shall have the right, upon
written notice to Lessee, to adjust the Engine
Supplemental Rent Rate (in the case of a decrease
in the ratio below the Assumed Ratio) and (ii)
Lessor will make that adjustment (in the case of
an increase in the ratio above the Assumed Ratio)
in respect of Engine Supplemental Rent payable for
the next year of the Lease Term. The Engine
Supplemental Rent Rate shall be adjusted by
48
calculating the actual engine hour to cycle ratio
for the applicable 12-month period and using that
to select the corresponding Engine Supplemental
Rent Adjusted Value adjustment dollar figure from
the Assumed Ratio Adjustment Table in Schedule 7.
If actual hour to cycle ratio falls outside the
specific ratios set forth in the Assumed Ratio
Adjustment Table in Schedule 7, then the Engine
Supplemental Rent Adjusted Value shall be
determined by extrapolating (or interpolating)
from (or between) the nearest observed values in
the table.
(iii) ANNUAL UTILIZATION ADJUSTMENT: Lessor and Lessee
acknowledge that the Airframe 6C/24,000 Flight
Hour Block Structural Check Supplemental Rent Rate
is based upon the assumption that the Airframe
will operate at the Assumed Annual Utilization. If
that assumption proves to be incorrect at any time
for any period of twelve (12) consecutive months
during the Term based upon Lessee's actual
operating experience during such twelve (12)
months, (i) Lessor shall have the right, upon
written notice to Lessee, to adjust the Airframe
6C/24,000 Flight Hour Block Structural Check
Supplemental Rent Rate (in the case of utilization
above the Assumed Annual Utilization) and (ii)
Lessor, upon written request from Lessee, will
make that adjustment (in the case of an increase
in the utilization below the Assumed Annual
Utilization). The Airframe 6C/24,000 Flight Hour
Block Structural Check Supplemental Rent Rate
shall be adjusted by calculating the actual
Airframe utilization for the applicable 12-month
period and using that to select the corresponding
Airframe Structural Check Reserve Amount from the
Assumed Annual Utilization Adjustment Table in
Schedule 7. If actual utilization falls outside
the specific values set forth in the Assumed
Annual Utilization Adjustment Table in Schedule 7,
then the adjusted value shall be determined by
extrapolating (or interpolating) from (or between)
the nearest observed values in the table.
(c) ADJUSTMENT/ABATEMENT FOR ENGINE EVENT OF LOSS: If
following an Engine Event of Loss the maintenance status
for the replacement Engine (pursuant to Clause 8.13(a))
is such that the Engine LLP Supplemental Rent and Engine
Supplemental Rent held with respect to the Engine which
suffered the Engine Event of Loss differs from that
which corresponds to the maintenance status of such
replacement Engine, Lessor shall calculate the amount of
the adjustment to the amounts of Engine LLP Supplemental
Rent and Engine Supplemental Rent in respect of such
Engine required so that the amounts then held correspond
to the status of the replacement Engine. Any adjustment
which requires an increase in the amounts held as Engine
LLP Supplemental Rent and the Engine Supplemental Rent
shall be promptly paid by Lessee to Lessor in cash. Any
adjustment which
49
requires a decrease in amounts held as Engine LLP
Supplemental Rent and/or Engine Supplemental Rent shall
be effected, so long as no Default or Event of Default
is then in existence by Lessor abating Lessee's payment
of Engine LLP Supplemental Rent and/or Engine
Supplemental Rent in respect of such replacement Engine
until the amounts of Engine LLP Supplemental Rent and/or
Engine Supplemental Rent correspond to the status of the
replacement Engine.
(d) LESSOR'S PROPERTY: Lessee acknowledges and agrees that
Supplemental Rent is additional rent for the leasing of
the Aircraft and not cash collateral or other collateral
security for Lessee's maintenance obligations under this
Agreement. Once paid all Supplemental Rent is the
property of Lessor, it is not refundable to Lessee under
any circumstances whatsoever and Lessee has no interest
therein whatsoever. The foregoing is subject to Lessor's
obligations under and in accordance with Clause 7.4 or
11.1(b) of this Agreement.
(e) SHORTFALLS. In any case in which the amount paid to
Lessee by Lessor pursuant to Clause 7.4 is not
sufficient to pay the cost of such check, overhaul,
inspection, performance restoration or parts
replacement, Lessee shall be obliged to and shall meet
such shortfall from its own resources and shall not
subsequently be permitted to claim reimbursement of such
amounts under this Agreement.
(f) LETTERS OF CREDIT. At Lessee's option and with Lessor's
agreement Lessee may provide at the Delivery Date and
annually thereafter during the Lease Term, letters of
credit issued by a bank acceptable to Lessor, in lieu of
Supplemental Rent, in respect of Aircraft utilization in
Flight Hours, Cycles or calendar months as appropriate
to each maintenance event type. Each letter of credit
shall have validity of 6 months or until issue of a
replacement letter of credit (whichever occurs later).
Payment of the redelivery maintenance adjustments at the
Redelivery Date by Lessee to Lessor pursuant to Clause
12.5 will terminate Lessor's requirement for such
letters of credit. In addition, each letter of credit
shall be issued in a form and from a bank acceptable to
Lessor. The first letter of credit issued at the
Delivery Date shall be for the amount of Supplemental
Rent that would accrue for the first 3 months of
operation with an assumed utilization of 250 Flight
Hours and 83 Cycles per month and the amount of
Supplemental Rent that would have accrued on the last
day of the month prior to the Delivery Date.
Semi-annually thereafter, the letter of credit shall be
the amount of Supplemental Rent that would have accrued
on the last day of the month prior to issue plus that
which would accrue for the following 3 months of
operation with an assumed utilization of 250 Flight
Hours and 83 Cycles per month less any Supplemental Rent
reimbursement that would have occurred in respect of the
maintenance events outlined herein to reduce the
Supplemental Rent balance in respect
50
of that maintenance event by the lesser of (a) the
relevant Supplemental Rent balance and (b) the valid
invoice in respect of that maintenance event.
5.5 PAYMENTS:
All payments by Lessee to Lessor under this Agreement
will be made for value on the due date in Dollars and in
same day funds to the account in the United States as
Lessor may advise Lessee and Beneficiary in writing.
5.6 DEFAULT INTEREST:
If Lessee fails to pay any amount payable under this Agreement on
the due date, Lessee will pay on demand from time to time to Lessor
interest (both before and after judgment) on that amount, from the
due date to the date of payment in full by Lessee to Lessor, at the
Interest Rate. All such interest will be compounded monthly and
calculated on the basis of the actual number of days elapsed and a
360 day year.
5.7 WITHHOLDING:
(a) All payments by Lessee, or with respect to any obligation of
Lessee, under or in connection with any of the Transaction
Documents will be made without setoff or counterclaim, free
and clear of and without deduction or withholding for or on
account of any Tax or other amount, except to the extent that
any such deduction or withholding is required by applicable
law with respect to any Tax;
(b) if any Tax is required by any applicable law to be deducted or
withheld from or with respect to any amount payable by Lessee
or with respect to any obligation of Lessee under any of the
Transaction Documents to or for the benefit of any Tax
Indemnitee, Lessee shall:
(i) unless such Tax is a Lessor Tax, pay such additional
amount as shall be necessary to enable such Tax
Indemnitee to receive, after such deduction or
withholding (including any deduction or withholding with
respect to such additional amount) and after subtracting
the net amount of all Taxes (including Lessor Taxes)
payable by such Tax Indemnitee as a result of such Tax
Indemnitee's receipt or accrual of such additional
amount, the amount which such Tax Indemnitee would have
received if such deduction or withholding had not been
required;
(ii) pay the amount required to be deducted or withheld to
the appropriate Government Entity or other taxing
authority in a timely and proper manner; and
51
(iii) deliver to such Tax Indemnitee, not later than thirty
(30) days after the date on which such payment is paid,
an original receipt issued by the relevant Government
Entity or other taxing authority or other documentation
reasonably acceptable to such Tax Indemnitee verifying
that the obligation described in subclause (ii) has been
timely and properly performed.
5.8 TAX INDEMNITY:
Lessee shall pay, and on demand shall indemnify, protect, defend and
hold harmless each Tax Indemnitee from and against, all Taxes (other
than any and all Lessor Taxes or any Taxes which Lessee would not be
responsible for under Clause 14.2(b)) which are imposed upon,
attributable to, or with respect to, or are required to be paid in
connection with, or as a result of, any of the payments or
transactions or activities contemplated in the Transaction Documents
(regardless of how or when such Taxes are imposed, whether imposed
upon a Tax Indemnitee, Lessee, the Aircraft or otherwise),
including, without limitation, Taxes imposed on or with respect to,
or required to be paid in connection with or as a result of
(directly or indirectly), any of the following: (i) the Aircraft,
the Airframe, any Engine or any Part or any interest in any thereof,
(ii) the purchase, acceptance, delivery, financing, mortgaging,
registration, re-registration, de-registration, importation,
exportation, ownership, leasing, subleasing, wet-leasing,
chartering, presence, management, control, possession, performance,
use, operation, repair, maintenance, condition, service, overhaul,
substitution, replacement, pooling, interchange, removal,
alteration, improvement, modification, refurbishment,
transportation, landing, storage, redelivery, repossession, sale,
transfer of title or other disposition of the Aircraft, the
Airframe, any Engine or any Part or any interest in any thereof, or
(iii) any Rent, receipts, gains, earnings, income, insurance
proceeds, or other amounts paid or payable or received or receivable
with respect to the Aircraft, the Airframe, any Engine or any Part
or any interest in any thereof or the transactions contemplated in
the Transaction Documents, or (iv) any of the Transaction Documents
or any amendment or supplement thereto or the execution, delivery,
filing, recording, performance or enforcement of any thereof.
Each Tax Indemnitee shall, at the expense of Lessee, take
commercially reasonable actions with a view toward mitigating any
event or circumstance which would give rise to or result in a claim
for indemnification pursuant to this Clause 5.8 or a withholding Tax
pursuant to Clause 5.7; provided, however, nothing herein shall
require any Tax Indemnitees to take any action which it shall have
determined, in its sole discretion exercised in good faith, may
result in a material economic, legal or regulatory disadvantage to
such Tax Indemnitee.
5.9 SALES TAX:
52
All amounts payable by Lessee, or with respect to any obligation of
Lessee, under this Agreement and the other Transaction Documents,
are exclusive of any Sales Tax. If any Sales Tax is required by any
applicable law to be paid with respect to any of the transactions,
activities or payments contemplated in any of the Transaction
Documents, Lessee shall (i) pay such Sales Tax to the appropriate
Government Entity or other taxing authority in a timely and proper
manner, and indemnify each Tax Indemnitee from and against such
Sales Tax, in accordance with the provisions of this Clause 5, and
(ii) deliver to Lessor, not later than thirty (30) days after the
date on which such Sales Tax is due, an original receipt issued by
the relevant Government Entity or other taxing authority or other
documentation reasonably acceptable to such Tax Indemnitee verifying
that the obligation described in subclause (i) has been properly
performed.
5.10 VALUE ADDED TAX:
(a) For the purposes of this Clause 5:
(i) VAT means value added tax and any goods and services,
sales or turnover tax, imposition or levy of a like
nature; and
(ii) SUPPLY includes anything on or in respect of which VAT
is chargeable;
(b) Lessee shall pay to Lessor or the relevant taxing authority,
as the case may be, the amount of any VAT chargeable in
respect of any supply for VAT purposes under this Agreement in
a timely and proper manner; and
(c) Each amount stated as payable by Lessee under this Agreement
is exclusive of VAT (if any), and if VAT is payable in respect
of any amount as aforesaid, Lessee shall pay all such VAT and
shall indemnify Lessor against any claims for the same (and
where appropriate Lessee shall increase the payments which
would otherwise be required to be made hereunder so that
Lessor is left in the same position as it would have been in
had no VAT been payable); and Lessee shall provide evidence to
Lessor, if available, in respect of payment of any such VAT.
5.11 PAYMENTS; TAX REPORTS; INFORMATION:
(a) PAYMENTS: Lessee shall pay each Indemnified Tax (as defined in
Clause 5.11(b)) in a timely and proper manner directly to the
relevant taxing authority, to the extent that direct payment
by Lessee is permitted by applicable law, and shall deliver to
the Tax Indemnitee for the account of which Lessee paid such
Tax the original (or a certified copy of an) official receipt
for Lessee's payment of such Tax (if obtainable by Lessee) or
such other documentary evidence of Lessee's payment of such
Tax as is reasonably acceptable to such Tax Indemnitee. Any
additional amount payable by Lessee directly to any Tax
Indemnitee pursuant to Clause 5.7
53
shall be paid together with the payment to which such
additional amount relates. Any amount payable by Lessee
directly to any Tax Indemnitee pursuant to Clause 5.8, 5.9 or
5.10 shall be paid in immediately available funds within ten
(10) days after Lessee receives such Tax Indemnitee's written
demand therefor. Any claim for payment pursuant hereto shall
be made by Lessor or the relevant Tax Indemnitee in writing,
accompanied by a certificate of an officer of such Tax
Indemnitee setting forth in reasonable detail the amount and
method of calculation of the payment so demanded.
(b) REPORTS: If any report, return, certification, statement or
other document (a "Tax Document") is required to be filed by
any Tax Indemnitee with respect to any Tax for which Lessee is
required to indemnify such Tax Indemnitee pursuant to this
Clause 5 (an "Indemnified Tax"), Lessee shall promptly notify
such Tax Indemnitee of such requirement and:
(i) if permitted by applicable law, prepare and file such
Tax Document in a timely and proper manner (except for
any such Tax Document which such Tax Indemnitee notifies
Lessee that such Tax Indemnitee intends to prepare and
file) and deliver a copy of such Tax Document to such
Tax Indemnitee, provided that such Tax Indemnitee
delivers to Lessee, at Lessee's timely written request
and expense, such information within such Tax
Indemnitee's reasonable control as Lessee may reasonably
request and as may be reasonably necessary for Lessee to
prepare such Tax Document; or
(ii) if Lessee is not permitted by applicable law to file
such Tax Document, Lessee shall prepare and deliver to
such Tax Indemnitee a proposed form of such Tax Document
within a reasonable time prior to the time such Tax
Document is required to be filed;
(c) INFORMATION: Lessee shall furnish to each Tax Indemnitee,
promptly after receipt of such Tax Indemnitee's written
request therefor, such documents and other information as such
Tax Indemnitee may reasonably request to enable such Tax
Indemnitee to comply with its Tax reporting, payment, audit
and litigation requirements relating to such Tax Indemnitee's
participation in the transactions contemplated in the
Transaction Documents. Each of Lessor and Beneficiary shall
furnish to Lessee such information maintained in the regular
course of its business as is (i) reasonably requested by
Lessee in writing, (ii) reasonably necessary to enable Lessee
to comply with its Tax reporting, payment, audit and
litigation requirements relating to the transactions
contemplated in the Transaction Documents, and (iii) not
otherwise available to Lessee; provided that Lessor shall not
be required to furnish or disclose to Lessee
54
or any other Person any Tax return or other document relating
to the tax affairs of Lessor or any of its Affiliates; and
(d) REFUNDS; TAX SAVINGS: If and to the extent that a Tax
Indemnitee (x) receives a refund (in cash or as an offset
against any liability for a Lessor Tax) of any Indemnified Tax
previously paid by Lessee or for which Lessee previously paid
an indemnity to a Tax Indemnitee pursuant to Clause 5.7, 5.8,
5.9 or 5.10 (a "Refund"), or (y) actually realizes a reduction
in its liability for any Lessor Tax as a result of any
deduction, Tax credit or other Tax benefit for any Indemnified
Tax paid by Lessee or for which Lessee previously paid an
indemnity to a Tax Indemnitee pursuant to Clause 5.7, 5.8, 5.9
or 5.10 (a "Tax Saving"), such Tax Indemnitee shall pay to
Lessee, the amount of such actual Refund or Tax Saving minus
the net amount of all Taxes payable by such Tax Indemnitee
with respect to the receipt or accrual of such Refund or Tax
Saving and minus all costs and expenses incurred by such Tax
Indemnitee with respect to claiming and obtaining such Refund
or Tax Savings, provided, however, that if a Default or an
Event of Default exists and is continuing, such Tax Indemnitee
may hold the amount then due to Lessee under this Clause
5.11(d) until such Default or Event of Default ceases to
exist, and provided, further, that in no event shall such
payment exceed (i) the amount of all prior payments by Lessee
to such Tax Indemnitee under Clause 5.7, 5.8, 5.9 or 5.10
minus (ii) the amount of all prior payments by such Tax
Indemnitee pursuant to this Clause 5.11(d), but any such
excess shall be carried forward and applied as a credit to
reduce any future indemnity liability of Lessee under Clause
5.7, 5.8, 5.9 or 5.10. If a Tax Indemnitee pays Lessee any
amount under this Clause 5.11(d) and if and to the extent that
it is subsequently determined by the taxing authority having
jurisdiction that such Tax Indemnitee was not entitled to the
Tax Saving or Refund for which such Tax Indemnitee made such
payment to Lessee, such determination shall be treated as the
imposition of a Tax for which Lessee is obligated to indemnify
such Tax Indemnitee pursuant to the provisions of Clause 5.8,
without regard to the exclusion of Lessor Taxes in Clause 5.8.
5.12 CONTEST OF CLAIM FOR TAX
(a) If a claim shall be made for or in respect of any Tax
(including withholding Taxes) for which the Lessee is
obligated pursuant to Clauses 5.7, 5.8, 5.9 or 5.10, to
indemnify such Tax Indemnitee (a "Tax Claim"), such Tax
Indemnitee shall give Lessee written notice of such Tax Claim
as soon as reasonably practicable, provided that any failure
of such Tax Indemnitee to give such notice or any delay by
such Tax Indemnitee in giving such notice shall not affect the
obligations of Lessee under this Clause 5 unless, and only to
the extent that, the failure to promptly provide such notice
results in (A) a material increase in the amount which Lessee
55
is required to indemnify, (B) material additional obligations
for Lessee in defending against such Tax Claim or (C)
precluding or materially prejudicing Lessee's right to defend
any such Tax Claim. If Lessee delivers to such Tax Indemnitee
within thirty days after the date of receipt of such Tax
Indemnitee's notice, a written request that such Tax
Indemnitee contest such Tax Claim (or, in the case of a Lessee
Controlled Contest, permit Lessee to contest such Tax Claim)
and if (and only so long as) the conditions described in
clause 5.12(b) are satisfied, such Tax Indemnitee shall, in
good faith and at Lessee's expense, contest (or, in the case
of a Lessee Controlled Contest, permit Lessee to contest if
permitted by applicable law) the validity, applicability or
amount (as the case may be) of the Taxes that are the subject
of such Tax Claim by (x) resisting payment thereof, (y) not
paying such Taxes except under protest if protest is necessary
and proper, or (z) if payment is made, using reasonable
efforts to obtain a refund thereof in administrative and/or
judicial proceedings permitted by applicable law (including
all appeals, other than, as appellant, an appeal or petition
to the United States Supreme Court or the equivalent court of
any other jurisdiction).
(b) CONDITIONS: A Tax Indemnitee's obligation under Clause 5.12(a)
with respect to any Tax Claim is subject to the satisfaction
of the following conditions at the time the contest is
requested and at all times while the contest (if any) is
continuing: (i) no Default described in Clause 13.1(a) or (g)
or Event of Default shall have occurred and be continuing,
(ii) the amount of the Tax Claim (plus, if the Tax that is the
subject of the Tax Claim is a recurring Tax, the aggregate
amount of all similar Tax Claims with respect to all
subsequent tax periods during the remainder of the Term) shall
exceed the Tax Contest Threshold, (iii) if requested by such
Tax Indemnitee, such Tax Indemnitee shall have received (at
Lessee's expense) from independent tax counsel selected by
Lessee and reasonably acceptable to such Tax Indemnitee a
written opinion that there is a realistic expectation that
such contest will be successful, (iv) Lessee shall have agreed
to pay, and shall be paying, on demand and on an After-Tax
Basis, all reasonable costs and expenses incurred by such Tax
Indemnitee in connection with the contest of such Tax Claim,
(v) if the contest is to be conducted in a manner requiring
payment of the Tax Claim, Lessee shall have advanced to such
Tax Indemnitee, without interest, the amount of the Tax Claim
and shall have agreed to indemnify such Tax Indemnitee on an
After-Tax Basis for any adverse Tax consequences of such
interest-free advance, (vi) Lessee shall have agreed in
writing that the Taxes that are the subject of the Tax Claim
are Indemnified Taxes, except to the extent that the final
determination of such contest demonstrates that such Taxes are
Lessor Taxes and (vii) Lessor shall have determined in good
faith that the action to be taken will not result in any risk
of criminal penalty or any material risk of sale, forfeiture
or loss of, or the creation of any Lien (other than a
Permitted Lien) on, the Aircraft.
56
(c) LESSEE CONTROLLED CONTESTS: For the purposes of this Clause 5,
the words "Lessee Controlled Contest" means a contest pursuant
to this Clause 5.12 involving only Indemnified Taxes, provided
that (i) such contest may be conducted under applicable law in
the name of Lessee and participation by a Tax Indemnitee in
the contest is not required, (ii) no tax return of a Tax
Indemnitee is held open with respect to which such Tax
Indemnitee may reasonably be considered to have an actual or
potential liability for Taxes that are not Indemnified Taxes,
and (iii) no Tax Indemnitee shall then be contesting the same
Tax in the same jurisdiction. Lessee shall, at its expense,
conduct and control any Lessee Controlled Contest and, in the
case of any contest involving a claim for one or more
Indemnified Taxes and a claim for one or more Lessor Taxes,
conduct and control such contest to the extent that it relates
to claims for Indemnified Taxes, but only to the extent that
the contest of the claims for Indemnified Taxes may be and are
severed from the contest of claims for Lessor Taxes (and
Lessor shall, at the request and expense of Lessee, use
reasonable efforts in good faith to obtain such severance),
provided, however, that in no event shall the Lessee be
permitted, or a Tax Indemnitee be required, to take any action
pursuant to this Clause 5.12 unless (and only so long as) the
conditions described in clause 5.12(b) are satisfied. With
respect to any contest conducted by the Lessee, the Lessee
shall retain control over such contest but shall consult in
good faith with Lessor and shall consider in good faith
reasonable requests of Lessor including reasonable requests to
participate in such contest.
(d) TAX INDEMNITEE CONTROLLED CONTESTS: The affected Tax
Indemnitee shall, at the expense of Lessee, conduct and
control any contest (other than a Lessee Controlled Contest)
of a Tax Claim pursuant to this Clause 5.12, provided,
however, that in no event shall the Tax Indemnitee be required
to commence or continue any contest pursuant to this Clause
5.12 unless (and only so long as) the conditions described in
clause 5.12(b) are satisfied. With respect to any contest
conducted by the a Tax Indemnitee, the Tax Indemnitee shall
have sole control over such contest (including choice of
forum) but shall consult in good faith with Lessee and shall
consider in good faith reasonable requests of Lessee including
reasonable requests to participate in such contest.
(e) No Tax Indemnitee shall settle or compromise any Tax Claim or
contest proceeding or (except as permitted by Clause 5.12(a))
refrain from appealing any adverse determination with respect
thereto without the prior written consent of Lessee, provided
that a Tax Indemnitee may in its sole discretion
unconditionally waive in writing its right to the
indemnification provided for in Clause 5.8 with respect to any
Tax Claim and refrain from contesting, or continuing the
contest of, such claim, in which event:
57
(i) Lessee shall have no liability to such Tax Indemnitee
with respect to such Tax Claim (and, if the Indemnified
Tax that is the subject of such Tax Claim is a recurring
Tax, with respect to any corresponding claim with
respect to any other taxable period if and to the extent
that such failure to contest causes the contest of such
corresponding claim to be precluded), and
(ii) the Tax Indemnitee shall refund to Lessee any amounts
theretofore paid or advanced by Lessee with respect to
such Indemnified Tax, excluding all contest costs
described in Clause 5.12(b)(iv) above.
(f) Upon a final determination of a contest pursuant to this
Clause 5.12:
(i) if the amount of the indemnity payable by Lessee
pursuant to this Clause 5 with respect to the contested
Tax Claim exceeds the amount (if any) advanced by Lessee
to the Tax Indemnitee pursuant to Clause 5.12(b)(v),
Lessee shall pay to the Tax Indemnitee the amount of
such excess not later than thirty (30) days after the
day on which Lessee receives the Tax Indemnitee's
written demand for the indemnity payable by the Lessee
after the date of such final determination; or
(ii) if the amount (if any) of the advance made by Lessee to
the Tax Indemnitee pursuant to Clause 5.12(b)(v) exceeds
the amount of the indemnity payable by Lessee to the Tax
Indemnitee pursuant to this Clause 5 with respect to the
contested Tax Claim, the Tax Indemnitee shall pay to
Lessee the amount of such excess not later than thirty
(30) days after the date on which the Lessor receives
the Lessee's written demand therefor after the date of
such final determination.
5.13 INDEMNITIES TO BE PAID ON AN AFTER-TAX BASIS/SURVIVAL:
Any indemnity or other amount payable by Lessee pursuant to Clause
5.7, 5.8, 5.9 or 5.10 shall be paid on an After-Tax Basis.
All the obligations and liabilities of Lessee under this Clause 5
shall survive and remain in full force and effect, notwithstanding
the expiration or earlier termination or cancellation of this
Agreement and the return of the Aircraft to Lessor, until all such
obligations have been fully performed and all such liabilities have
been paid in full.
5.14 ABSOLUTE OBLIGATIONS:
This Agreement is a net lease. Lessee's payment and other
obligations under this Agreement are absolute and unconditional
irrespective of any contingency whatsoever including (but not
limited to):
58
(a) any right of setoff, counterclaim, recoupment, defense or
other right which either party to this Agreement may have
against the other, or which Lessee may have against the
Manufacturer or any other Person for any reason whatsoever;
(b) any unavailability of the Aircraft for any reason (other than
Lessor's failure to properly tender delivery of the Aircraft
in accordance with this Agreement), including, but not limited
to, a requisition of the Aircraft or any prohibition or
interruption of or interference with or other restriction
against Lessee's use, operation or possession of the Aircraft;
(c) any lack or invalidity of title or any other defect in title,
airworthiness, merchantability, fitness for any purpose,
condition, design, or operation of any kind or nature of the
Aircraft for any particular use or trade, or for registration
or documentation under the laws of any relevant jurisdiction,
or any Event of Loss in respect of or any damage to the
Aircraft occurring after Delivery;
(d) any insolvency, bankruptcy, reorganization, arrangement,
readjustment of debt, dissolution, liquidation or similar
proceedings by or against Lessor or Lessee;
(e) any invalidity or unenforceability or lack of due
authorization of, or other defect in, this Agreement or any
other Transaction Document; and
(f) any other cause which but for this provision would or might
otherwise have the effect of terminating or in any way
affecting any obligation of Lessee under this Agreement.
Nothing in this Clause 5.14 will be construed so as to limit
Lessee's right to institute separate legal proceedings or otherwise
independently pursue any claim against Lessor or any other Person in
the event of a breach of Clause 7.1 or to otherwise limit Lessee's
rights and remedies to pursue in a court of law any claim it may
have against Lessor or any other Person.
5.15 SECURITY:
(a) To the fullest extent permitted by law and by way of
continuing security, Lessee grants a security interest in the
Security Deposit and all rights of Lessee to payment thereof,
the debt represented thereby and/or any and all interest of
Lessee therein to Lessor by way of first priority possessory
security interest as security for Lessee's obligations under
this Agreement and the Other Transaction Documents (the
"Secured Liabilities"). Except as expressly permitted or
required under this Agreement, including without limitation as
set forth in Clauses 4.4 and 7.2 hereof, Lessee will not be
entitled to repayment of the Security Deposit. Lessee will not
assign, transfer or otherwise dispose of all or part of its
rights in the
59
Security Deposit and Lessee agrees that it will enter into any
additional documents and instruments necessary or reasonably
requested by Lessor to evidence, create or perfect Lessor's
Security Interest in and to the Security Deposit;
(b) If Lessee fails to comply with any provision of this Agreement
or any Event of Default has occurred and is continuing, Lessor
may immediately or at any time thereafter, without prior
notice to Lessee:
(i) setoff all or any part of the Secured Liabilities
against the liabilities of Lessor in respect of the
Security Deposit; and/or
(ii) apply or appropriate the Security Deposit in or towards
the payment or discharge of the Secured Liabilities in
such order as Lessor sees fit; and/or
(iii) exercise any other remedy or right available under
applicable law.
(c) If Lessor has exercised the setoff described in subclause (b)
above, Lessee shall, following a demand in writing from
Lessor, promptly restore the Security Deposit to the level at
which they stood immediately prior to such setoff.
5.16 CURRENCY INDEMNITY:
(a) Except for Losses suffered or incurred by Lessor and in
respect of which Lessee has an obligation to indemnify Lessor
hereunder, which shall be payable by Lessee to Lessor in the
currency and in the amount in which such Loss is suffered or
incurred, all amounts payable to Lessor under this Agreement
shall be payable in Dollars in New York and payment in Dollars
in New York is of the essence.
(b) If Lessor receives an amount in respect of Lessee's liability
under this Agreement or if such liability is converted into a
claim, proof, judgment or order in a currency other than the
currency (the "contractual currency") in which the amount is
expressed to be payable under this Agreement:
(i) Lessee will indemnify Lessor, on an After-Tax Basis, as
an independent obligation against any loss arising out
of or as a result of such conversion;
(ii) if the amount received by Lessor, when converted into
the contractual currency (at the market rate at which
Lessor is able on the relevant date to purchase the
contractual currency in London or at its option New York
with that other currency), is less than the amount owed
in the contractual currency, Lessee will, forthwith on
60
demand, pay to Lessor an amount in the contractual
currency equal to the deficit; and
(iii) Lessee will pay to Lessor on demand any exchange costs
and Taxes (other than Lessor Taxes) payable in
connection with the conversion;
(c) Lessee waives any right it may have in any jurisdiction to pay
any amount under this Agreement in a currency other than that
in which it is expressed to be payable.
5.17 SETOFF:
Lessor may set off any matured obligation owed by Lessee under this
Agreement or the Other Agreements against any obligation owed by
Lessor to Lessee, regardless of the place of payment or currency. If
the obligations are in different currencies, Lessor may convert
either obligation at the market rate of exchange available in London
or at its option New York for the purpose of the setoff.
6. MANUFACTURER'S WARRANTIES
(a) So long as no Event of Default has occurred which is
continuing, with effect from Delivery, Lessor assigns to
Lessee, and authorizes Lessee to exercise such rights as
Lessor may have under any warranty with respect to the
Aircraft, any Engine or any Part made by any manufacturer,
vendor, sub-contractor or supplier (including compensation for
loss of use of the Aircraft) to the extent that the same may
be assigned or otherwise made available to Lessee. In
furtherance of the foregoing, Lessor shall take such actions,
at Lessee's cost and expense, as Lessee may reasonably request
to make such warranties available to Lessee. Manufacturer
shall deliver its consent to the assignment of any such
warranties upon Delivery of the Aircraft. Lessee will give
Lessor prompt written notice of any warranty claim in excess
of the Warranty Claim Notification Threshold which is settled
with Lessee on the basis of a cash payment other than
reimbursements for work performed directly by Lessee;
(b) If any Default has occurred and is continuing, Lessor may:
(i) retain for its own account any such proceeds previously
paid to Lessor which would have been remitted to Lessee
under this Clause 6 in the absence of such Default; and
(ii) cause any proceeds of any pending claims to be paid to
Lessor, rather than Lessee;
until Lessee shall have cured any such Default whereupon
Lessor shall pay any such proceeds which have not otherwise
been applied to Lessee.
61
(c) On the Final Expiry Date, all rights held by Lessee derived
from any warranties referenced in this Clause 6 (other than in
respect of claims pending or discovered (provided the claim is
filed promptly after the Final Expiry Date) as of the Final
Expiry Date) shall immediately revert to Lessor, without any
further act or deed by any Person; provided, however, Lessee
shall nonetheless take such actions, at Lessee's cost and
expense, as Lessor may reasonably request to ensure that all
such rights are made available to Lessor; and
(d) Notwithstanding anything to the contrary set forth above in
this Clause 6 or elsewhere in this Agreement, nothing in this
Clause 6 shall be deemed to impose any liability or obligation
on Lessor to transfer, assign or otherwise make available to
Lessee any rights with respect to any warranties other than
such rights, if any, as may have been transferred, assigned or
otherwise made available to Lessor.
7. LESSOR'S COVENANTS
7.1 QUIET ENJOYMENT:
Provided no Event of Default has occurred and is continuing, neither
Lessor nor any Person claiming through or under Lessor (excluding a
Person claiming through Lessor with respect to any Losses, Taxes or
other liability for which Lessee is obligated to indemnify Lessor
under this Agreement or for which Lessee is otherwise responsible
under this Agreement) will disturb the quiet use, possession and
enjoyment of the Aircraft by Lessee in accordance with the terms of
this Agreement; but the proper exercise by Lessor of its rights
under or in connection with this Agreement will not constitute such
a disturbance. The foregoing covenant is given by Lessor in lieu of
the rights of Lessee arising under, and Lessee hereby waives and
disclaims any and all rights arising under, Section 2A-211 of the
UCC. Lessee agrees that its only right with respect to a default by
Lessor under this Agreement, including a breach of the foregoing
covenant, is to make a claim against Lessor for actual damages
resulting directly therefrom and in any event subject to Clause 16.3
hereof.
7.2 LESSOR OBLIGATIONS FOLLOWING FINAL EXPIRY DATE:
Within thirty (30) days following the Final Expiry Date, or such
later time as Lessee has paid to Lessor all amounts which may then
be due and payable under this Agreement and/or the Other Agreements,
so long as no Default or Event of Default has occurred and is
continuing, Lessor will pay to Lessee an amount (the "Relevant Cash
Amount") equal to the amount (if any) of the Security Deposit then
held and not applied by Lessor pursuant to Clauses 5.15 or 13.2,
together with Interest (as defined below). Should a Default or Event
of Default have occurred and be then continuing, Lessor shall retain
the Relevant Cash Amount, may apply the same in full or partial
satisfaction of any such Default or Event of
62
Default and shall return such Relevant Cash Amount to Lessee less
any amount so applied promptly after such Default or Event of
Default ceases to exist.
For the purposes of this Clause 7.2, "Interest" means interest at
the rate of six-month Dollar LIBID on an amount equal to the
Relevant Cash Amount for a period equal to the period during which
such amount was held by Lessor (net of any and all Taxes).
7.3 UNAPPLIED SUPPLEMENTAL RENT:
So long as no Default or Event of Default has then occurred and is
continuing, on the Final Expiry Date Lessor shall pay to Lessee an
amount equal to the Unused Supplemental Rent minus the Landing Gear
Supplemental Rent. Should a Default or Event of Default have
occurred and be then continuing, Lessor shall retain the amounts
otherwise payable to Lessee under this Clause 7.3 until such time as
such Default or Event of Default shall have ceased to exist
whereupon it shall promptly pay to Lessee such amounts less any
amount thereof applied in full or partial cure of such Default or
Event of Default.
7.4 MAINTENANCE CONTRIBUTIONS:
(a) Provided no Default has occurred and is continuing, Lessor
will pay (as a separate and independent obligation and not as
a return of Supplemental Rent) the following amounts to the
relevant Agreed Maintenance Performer (or to Lessee, shall
Lessor have received evidence of payment of the relevant
Agreed Maintenance Performer), up to the amount owing to it
(with any remaining balance to be paid to Lessee), by way of
contribution to the cost of maintenance of the Aircraft
performed by any Agreed Maintenance Performer:
(i) AIRFRAME: With respect to the Airframe, the completion,
in accordance with this Agreement, of the Airframe
6C/24,000 Hour Block Structural Check, an amount equal
to the aggregate amount of the Airframe 6C/24,000 Hour
Block Supplemental Rent actually paid by Lessee at the
date such work starts less the aggregate amount
previously paid by Lessor under this sub-clause;
(ii) ENGINE LIFE-LIMITED PARTS: With respect to Life-Limited
Parts within any Engine, the replacement, in accordance
with this Agreement, of those Parts, the lesser of (x)
the amount of that invoice and (y) an amount equal to
the aggregate amount of the Engine LLP Supplemental Rent
actually paid in respect of that Engine paid by Lessee
at the date such work starts less the aggregate amount
previously paid in respect of that Engine by Lessor
under this sub-clause;
63
(iii) ENGINE PERFORMANCE RESTORATION: With respect to any
Engine, the performance, in accordance with this
Agreement, of Engine Performance Restoration in respect
of that Engine, an amount equal to the aggregate amount
of the Engine Supplemental Rent actually paid by Lessee
in respect of that Engine at the date such work starts
less the aggregate amount previously paid in respect of
that Engine by Lessor under this sub-clause;
(iv) APU PERFORMANCE RESTORATION: With respect to the APU,
the performance, in accordance with this Agreement, of
all APU Performance Restoration shop visits, an amount
equal to the aggregate amount of the APU Supplemental
Rent actually paid by Lessee at the date such work
starts less the aggregate amount previously paid by
Lessor under this sub-clause; and
(v) LANDING GEAR: With respect to the Landing Gear, the
performance in accordance with this Agreement, of all
work on the Landing Gear in the nature of overhaul and
requiring removal and disassembly, an amount equal to
the aggregate amount of the Landing Gear Supplemental
Rent actually paid by Lessee at the date such work
starts less the aggregate amount previously paid by
Lessor under this sub-clause.
7.5 CLAIMS FOR REIMBURSEMENT:
Lessee shall promptly submit to Lessor invoices with customary
detail for labor and materials for all maintenance for which
reimbursement is sought under Clause 7.4. Lessor shall, subject as
provided below, pay to Lessee all amounts reimbursable hereunder
within thirty (30) days of actual receipt of (i) an invoice for the
relevant work, (ii) evidence of payment thereof and (iii) the agreed
workscope maintenance plans, the final report and such other
supporting documentation as typically provided by the Agreed
Maintenance Performer, in each case reasonably satisfactory to
Lessor, evidencing the performance of such maintenance.
Notwithstanding the above Lessor and Lessee may agree a mutually
satisfactory mechanism for the acceptance by Lessor of preliminary
invoices. If within ten (10) days following the expiry of such
thirty (30) day period referred to above, Lessor has not provided a
detailed and reasoned explanation to Lessee as to why it is not
satisfied with such invoices and supporting documentation, Lessor
shall be deemed to be so satisfied for the purposes of this Clause
7.5; provided however that no reimbursement shall be made in respect
of (i) components unless they are scheduled to be overhauled at that
check and their lives are fully restored (and if this is not the
case, a pro-rating payment adjustment will be made in respect of
overhauls or replacements that are made before the relevant
component scheduled life limit); (ii) any maintenance resulting from
design faults or damage covered by warranty or caused by accidental
damage, foreign objects, faulty maintenance, operational mishandling
(unless the same shall result in a full
64
restoration) or line related quick engine change (QEC) kit
maintenance (unless such maintenance is carried out at a different
facility to the relevant Airframe check) or line replacement unit
component maintenance; (iii) any cost items which are the costs of
removal, reinstallation, transportation or are exchange, handling or
similar costs or charges; (iv) any cost which is in excess of the
relevant manufacturer's list price for the relevant parts or
maintenance work; or (v) any maintenance, overhaul, renewal,
replacement or repair which may be reimbursable out of any insurance
claim (assuming, for these purposes, that no deductibles applied to
the relevant insurances).
Any overhaul, performance restoration or other work performed by
Lessee or by any Affiliate of Lessee shall be invoiced at Lessee's
or such Affiliate's standard rate in respect of performing such work
(which shall be no higher than the standard rate then prevailing in
the United States aviation industry in respect of performing such
work).
8. LESSEE'S COVENANTS
8.1 DURATION:
The undertakings in this Clause and in Clause 12 will:
(a) except as otherwise stated, be performed at the expense of
Lessee; and
(b) remain in force until the Final Expiry Date in accordance with
this Agreement and thereafter to the extent of any accrued
rights of Lessor in relation to those undertakings.
8.2 INFORMATION:
Lessee will:
(a) notify Lessor promptly of the occurrence of any Event of Loss
and of any Default or any other event which reasonably may be
expected to have a materially adverse effect on Lessee's
ability to perform any of its obligations under this
Agreement;
(b) furnish to Lessor:
(i) as soon as available but not in any event later than 90
days after the last day of each fiscal quarter of
Lessee, the consolidated financial statements of Lessee
as soon as they are available (and comprising a balance
sheet, a profit and loss statement and a statement of
cash flows) prepared for the most recent previous
financial quarter certified by a duly authorized
financial officer of Lessee as being true and correct,
each prepared in accordance with GAAP;
65
(ii) as soon as available but in no event later than 120 days
after the last day of each financial year of Lessee, its
audited consolidated balance sheet as of such day and
its audited consolidated profit and loss statement and
audited consolidated statement of cash flows for the
year ending on such day (each prepared in accordance
with GAAP); and
(iii) on request from time to time, such other information
regarding Lessee as Lessor may reasonably request;
(c) without duplication of the information contained in the
monthly reports furnished pursuant to Clause 8.2(e) below,
promptly furnish to Lessor all information Lessor from time to
time reasonably requests regarding the Aircraft, any Engine or
any Part, its use, location and condition including, without
limitation, the hours available on the Aircraft and any Engine
until the next scheduled Major Check, or Engine overhaul or
shop visit, as the case may be;
(d) on request by Lessor from time to time, furnish to Lessor
evidence reasonably satisfactory to Lessor that all Taxes and
charges incurred by Lessee with respect to the Aircraft,
including without limitation all payments due to the relevant
air traffic control authorities, have been paid and discharged
in full;
(e) within ten days following the end of each calendar month
during the Term, provide Lessor with a monthly report on the
Aircraft and each Engine substantially in the form of Schedule
6 or in such other form as Lessor may reasonably request from
time to time with respect to such calendar month (or portion
thereof falling within the Term);
(f) without duplication of information or reporting provided under
paragraph (e) above, give Lessor not less than 30 days' prior
written notice as to the time and location of all Major
Checks;
(g) without duplication of information or reporting provided under
paragraph (e) above, notify Lessor, promptly, of the removal
of any Engine for the purpose of Engine Performance
Restoration; and
(h) promptly notify Lessor of:
(i) any loss, theft, damage or destruction to the Aircraft,
any Engine or any Part, or any modification to the
Aircraft, if in any such case the potential cost would
reasonably be expected to exceed the Damage Notification
Threshold; and
(ii) any claim or other occurrence likely to give rise to a
claim under the Insurances in excess of the Damage
Notification Threshold and
66
provide, from time to time upon request by Lessor, the
status of any negotiations with the insurance brokers
over any such claim.
8.3 LAWFUL AND SAFE OPERATION:
Lessee will operate the Aircraft only for commercial purposes from
the Delivery Date until the date on which the Aircraft is returned
to Lessor pursuant to this Agreement; provided, that Lessee must
always:
(a) comply with the law for the time being in force in any country
or jurisdiction which may for the time being be applicable to
the Aircraft or, so far as concerns the use and operation of
the Aircraft, an owner or operator thereof, and take all
reasonable steps to ensure that the Aircraft is not used for
any illegal purpose;
(b) not use the Aircraft in any manner contrary to any
recommendation of the manufacturers of the Aircraft, any
Engine or any Part or any recommendation or regulation of the
Air Authority or for any purpose for which the Aircraft is not
designed or reasonably suitable;
(c) ensure that the crew and engineers employed by Lessee have the
qualifications and hold the licenses required by the Air
Authority and applicable law;
(d) use the Aircraft solely in commercial or other operations
primarily in passenger service and in passenger configuration
for which Lessee is duly authorized by the Air Authority and
applicable law;
(e) not use the Aircraft for the carriage of any goods, materials,
livestock or items of cargo which involves a change of
passenger configuration (or is inconsistent with passenger
service and passenger configuration) or which could reasonably
be expected to cause damage to the Aircraft or which would not
be adequately covered by the Insurances, or any item or
substance whose possession or carriage is illegal under any
applicable law. Lessee will comply with any carriage
regulations or restrictions from time to time issued by IATA;
(f) not use the Aircraft for purposes of training, qualifying or
re-confirming the status of cockpit personnel, except for the
benefit of Lessee's cockpit personnel, and then only if the
use of the Aircraft for such purpose is not disproportionate
to the use of other aircraft of the same type operated by
Lessee for such purpose;
(g) not cause or permit the Aircraft to proceed to, or remain at,
any location in an Excluded Country; provided, however, that
no Default shall occur, if, due to climatic or atmospheric
conditions, acts of God or to preserve the Aircraft or any
Engine or Part or to preserve the life or safety of
67
passengers and/or crew, the Aircraft proceeds to an Excluded
Country and the Lessee causes the Aircraft to be removed from
such Excluded Country as soon as practicable after such
conditions shall have ceased to exist;
(h) obtain and maintain in full force all certificates, licenses,
permits and authorizations for the time being required for the
use and operation of the Aircraft, and for the making of
payments required by, and the compliance by Lessee with, its
other obligations under this Agreement;
(i) not use, operate, or locate the Aircraft or suffer or permit
the Aircraft to be used, operated or located (x) in any manner
not covered by the Insurances, or (y)(A) in any recognized or
threatened area of hostilities (unless covered by war risk and
allied perils insurance pursuant to Schedule 4) or (B) in any
area excluded from coverage by the Insurances, or (z) in any
manner which would prejudice the interests of the Indemnitees
in the Insurances, the Aircraft, any Engine or any Part;
(j) not operate, maintain, insure or deal with the Aircraft or any
Engine or Part in a manner which discriminates against the
Aircraft or such Engine or Part, when compared with the manner
in which Lessee operates, maintains, insures or deals with
similar aircraft, engines or parts in Lessee's fleet;
(k) promptly pay or cause to be paid within such period as may be
agreed between Lessee and the relevant Government Entity all
license, registration, navigation and airport fees and charges
assessed and demanded by any Governmental Authority relating
to the Aircraft which if not paid within such period would
give rise to a Lien on the Aircraft other than a Permitted
Lien; and
(l) In the event that the Aircraft is detained or arrested in
connection with outstanding charges incurred during the Lease
Term in connection with (i) the furnishing, issue or provision
of information, directions and other facilities in connection
with the navigation or movement of aircraft (including the
control or movement of vehicles in any part of an airport used
for the movement of aircraft), or (ii) the landing, parking or
taking off of aircraft at airports or for the use of, or
services provided at, airports, then, without prejudice to
Lessor's rights under Clause 13, Lessee agrees that it shall
promptly discharge such charges and procure that such
detention or arrest is lifted. Neither Lessor nor any
Financing Party shall have any liability whatsoever as a
result of any detention or arrest of the Aircraft in respect
of any such charges or in relation to such detention or arrest
or the lifting thereof.
8.4 OUTGOINGS:
68
Lessee will, except as otherwise expressly set forth herein,
promptly pay on an After-Tax Basis:
(a) all license, registration, filing, recording and landing fees
and all other amounts of any nature imposed by any Government
Entity with respect to the Aircraft, including without
limitation, ownership, delivery, leasing, possession, use,
operation, return, sale or other disposition of the Aircraft
(other than any such fees or amounts which are attributable to
a sale or other disposition of any right, title or interest in
or to the Aircraft or this Lease and other Transaction
Documents by Lessor, Owner or Beneficiary except to the extent
such sale or other disposition arise as a result of and during
the continuance of an Event of Default or is required by the
terms of the Transaction Documents); and
(b) all rent, fees, charges and other amounts in respect of any
premises where the Aircraft or any Part thereof is located
from time to time;
(in each case other than Taxes because Lessee's indemnification
obligations with respect to Taxes are set forth in Clauses 5.7, 5.8,
5.9, 5.10 and 5.13) except to the extent that such payment is being
contested in good faith by appropriate proceedings, in respect of
which adequate resources have been provided by Lessee and nonpayment
of which does not give rise to any material likelihood of the
Aircraft or any interest therein being sold, forfeited or otherwise
lost or of criminal liability on the part of Owner, Lessor or any
Financing Party.
8.5 SUB-LEASING:
(a) Except as otherwise set forth in this Clause 8.5, Lessee will
not, without the prior written consent of Lessor, sublease or
otherwise part with possession of the Aircraft, the Engines or
any Part except that Lessee may part with possession (i) with
respect to the Aircraft, the Engines or any Part to the
relevant manufacturers for testing or similar purposes or to
an Agreed Maintenance Performer for testing, service, repair,
maintenance or overhaul work, or alterations, modifications or
additions to the extent required or permitted by this
Agreement; and (ii) with respect to an Engine or Part, as
expressly permitted by this Agreement;
(b) Notwithstanding Clause 8.5(a), Lessee shall be permitted to
wet lease the Aircraft for a term (including renewals) not to
exceed six months, provided the Aircraft (i) shall be operated
solely by regular employees of Lessee (or by personnel
contracted by Lessee in the same manner as with respect to its
other flight operations) possessing all current certificates
and licenses that are required by applicable Regulations,
including by the Country of Registration, and shall remain in
the operational control and possession of Lessee, (ii) shall
be subject to insurance coverage as provided for in this
Agreement, (iii) shall be used and operated in
69
accordance with this Agreement and shall be maintained or
caused to be maintained by Lessee in accordance with the
Approved Maintenance Program and Lessee's normal maintenance
practices and (iv) shall not be subject to any change in its
Habitual Base or Country of Registration.
8.6 INSPECTION:
(a) Lessor and any Person designated by Lessor may at reasonable
times and on reasonable written notice, at their own expense,
visit, inspect and survey the Aircraft, any Engine, any Part
or the Aircraft Documents (or any portion thereof); provided,
however, that (i) any inspection of the Aircraft will not
interfere with the maintenance or operation of the Aircraft,
or otherwise disrupt Lessee's normal business operations, (ii)
any inspection of the Aircraft Documents shall occur only
during normal business hours, (iii) any inspection of the
Aircraft shall occur only during regularly scheduled
maintenance (Lessee to notify Lessor, upon request, of the
next scheduled maintenance) and (iv) Lessor shall not perform
an inspection more than once in any calendar year (except
during the last year of the Lease Term or if a Default or
Event of Default shall have occurred and be continuing, in
which case the frequency of such inspection rights shall be
reasonable but otherwise unlimited). Lessee shall comply with
the reasonable requests of Lessor or its designee during the
course of such inspection including (x) any request to travel
on the flight deck as an observer, subject to any applicable
Regulations and insurances, and (y) any requests to conduct
visual, walk-around inspections of the Aircraft during
regularly scheduled maintenance for the Aircraft and requests
to go on board the Aircraft and/or to open any panels, bays,
etc. during any such walk-around inspection, provided no such
request shall materially affect the date of completion of such
maintenance and return of the Aircraft to revenue service;
(b) Lessee will pay to Lessor on demand all reasonable
out-of-pocket expenses incurred by Lessor in connection with
any such visit, inspection or survey to the extent that such
visit, inspection or survey is made to verify the correction
of defects identified by Lessor during a prior visit,
inspection or survey; and
(c) Lessor will have no duty or liability to make, or arising out
of any such visit, inspection or survey.
8.7 TITLE:
Lessee will:
70
(a) not do or knowingly permit to be done or omit or knowingly
permit to be omitted to be done any act or thing which might
reasonably be expected to jeopardize the title of Owner in and
to the Aircraft or any Engine;
(b) on all occasions when the ownership of the Aircraft, any
Engine or any Part is relevant, make clear to third parties
that title is held by Owner;
(c) not at any time (i) represent or hold out Owner, Lessor,
Beneficiary or the Financing Parties as carrying goods or
passengers on the Aircraft or as being in any way connected or
associated with any operation or carriage (whether for hire or
reward or gratuitously) which may be undertaken by Lessee; or
(ii) pledge the credit of Owner, Lessor, Beneficiary or the
Financing Parties;
(d) ensure that there is always affixed, and not removed or in any
way obscured, a fireproof plate (having dimensions of not less
than 10 cm. x 7 cm.) in a reasonably prominent position on
Aircraft and on each Engine stating:
"THIS [AIRCRAFT/ENGINE] IS OWNED BY XXXXX FARGO BANK
NORTHWEST, N.A., AS TRUSTEE, AND IS LEASED TO Compania
Panamena de Aviacion, S.A."
(e) not create or permit to exist any Security Interest upon the
Aircraft, any Engine or any Part;
(f) not do or permit to be done anything outside the scope of
normal airline operations and procedures which may reasonably
be expected to cause the Aircraft, any Engine or any Part to
become subject to penalty, forfeiture, impounding, detention,
damage or destruction and without prejudice to the foregoing,
if any such penalty, forfeiture, impounding, detention, damage
or destruction occurs, give Lessor notice thereof as promptly
as reasonably practicable and promptly commence and diligently
prosecute all steps necessary to procure the immediate release
of the Aircraft, any Engine or Part, as the case may be;
(g) not abandon the Aircraft, any Engine or any Part;
(h) pay and discharge or cause to be paid and discharged when due
and payable or make adequate provision by way of security or
otherwise for all debts, damages, claims and liabilities
before they give rise to a Security Interest over or affecting
the Aircraft, any Engine or any Part except to the extent the
same are being contested in good faith by appropriate
proceedings during the pendency of such proceedings and
adequate resources therefor have been provided in accordance
with GAAP; and
71
(i) not attempt, or hold itself out as having any power, to sell,
lease (except as permitted by this Agreement) or otherwise
dispose of the Aircraft, any Engine or any Part.
8.8 GENERAL:
Lessee will:
(a) maintain its business as a commercial airline, will preserve
its corporate existence (other than as permitted in Clause
8.8(c)) and will maintain such of its rights, privileges,
licenses and franchises as are required to perform its
obligations under this Agreement;
(b) not change its "location" (as determined with reference to and
for purposes of Section 9-307 of the UCC) in such manner as
would, pursuant to Section 9-307 of the UCC, change the
location for filing financing statements or renewals thereof
from the District of Columbia, except upon 10 days prior
written notice thereof to Lessor;
(c) not consolidate or merge into or with any other corporation or
other Person, and not convey, transfer, lease or otherwise
dispose of all or substantially all of its property and other
assets to, or acquire all or substantially all of the property
or other assets or capital stock of (if such acquisition is
analogous in either purpose or effect to a consolidation or
merger), any corporation or other Person without the prior
written consent of the Lessor, such consent not to be
unreasonably withheld, unless:
(i) the Person formed by such consolidation or into which
Lessee is merged or the Person that acquires by
conveyance, transfer or lease all or substantially all
of the assets of Lessee (the "Lessee Successor"):
(a) has a tangible net worth (determined in accordance
with GAAP) equal to or greater than that of Lessee
immediately prior to such merger or consolidation;
(b) shall execute and deliver to Lessor, Owner and
Beneficiary an agreement in a form reasonably
satisfactory to such Persons containing an
assumption by such Lessee Successor of the due and
punctual performance and observance of each
covenant and condition to be performed or observed
by Lessee under each of the Transaction Documents
to which Lessee is a party, whether actual or
contingent or relating to the period before or
after the date of such assumption; and
72
(c) the Copa Holdings Guarantee shall continue to be
applicable and enforceable in accordance with its
terms;
(ii) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be
continuing;
(iii) Lessee shall have delivered to Lessor, Owner and
Beneficiary (x) a certificate of an officer to the
effect that such consolidation, merger, conveyance,
transfer or lease and the assumption agreement described
in clause (i) above comply with this Clause 8.8(c) and
that all conditions precedent herein provided for
relating to such transaction have been complied with and
that such assumption agreement has been duly authorized,
executed and delivered by the Lessee Successor,
constitutes its legal, valid and binding obligation and
is enforceable against such Lessee Successor in
accordance with its terms, except as the same may be
limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the
rights of creditors generally and by principles of
equity, and (y) an opinion of counsel in form and
substance reasonable satisfactory to Lessor and
Beneficiary; and
(iv) Such filings and recordings shall have been made and
Lessee shall have delivered to Lessor such other
opinions and documents, in each case as either of them
shall reasonably request.
Upon any consolidation or merger, or any conveyance, transfer
or lease of all or substantially all of the assets of Lessee
in accordance with this Clause 8.8(c), the Lessee Successor
shall succeed to, be substituted for, and may exercise every
right and power of, and shall assume every obligation and
liability of, Lessee under this Lease with the same effect as
if the Lessee Successor had been named as Lessee herein. No
such conveyance, transfer or lease of all or substantially all
of the assets of Lessee shall have the effect of releasing
Lessee or any Lessee Successor which shall theretofore have
become such in the manner prescribed in this Clause 8.8(c)
from any liability under the Transaction Documents. Nothing
contained herein shall permit any lease, sublease or other
arrangement for the use, operation or possession of the
Aircraft except in compliance with the applicable provisions
of this Lease.
(d) the obligation of Lessee to pay in U.S. Dollars outside The
Republic of Panama is of the essence to Lessor. If for any
reason any exchange control or other legal prohibition or
restriction shall be imposed by The Republic of Panama with
respect to the payment in U.S. Dollars outside The Republic of
Panama, Lessee shall forthwith obtain any permit,
authorization, waiver or exemption as may be necessary to
permit the free
73
transfer of such U.S. Dollars to designated places outside The
Republic of Panama or obtain all necessary waivers and
exemptions therefrom, and if Lessee shall for any reason,
because of legal restrictions or otherwise, be unable to
obtain such permit, authorization, waiver or exemption, it
shall forthwith make all necessary and satisfactory
arrangements with reputable banking or other financing
institutions to provide satisfactory assurance to Lessor that
all of Lessee's obligations hereunder will be satisfied as
they arise in the manner contemplated by this Lease.
8.9 NON-DISCRIMINATION:
Without limiting any other provision of this Agreement, Lessee will
cause the Aircraft and the Engines to be maintained and used, in
substantially the same manner and with substantially the same care
as used by or on behalf of Lessee with respect to similar aircraft
and engines of like make, model and vintage operated by Lessee.
Lessee also agrees that it will not, nor will it permit anyone to,
discriminate in a manner in any way adverse to the interests of
Lessor, Owner or any Financing Party in the Aircraft (as compared to
other aircraft of the same type operated by or on behalf of Lessee)
with respect to its use, operation or maintenance, modification or
alteration during the Lease Term other than the withdrawal of the
Aircraft from use and operation as is necessary to prepare the
Aircraft for return to Lessor upon such expiration, cancellation or
termination.
8.10 RECORDS:
Lessee will:
(a) procure that accurate, complete and current records of all
flights made by, and all maintenance carried out on, the
Aircraft (including in relation to each Engine and Part
subsequently installed, before the installation) are kept in
English and in such manner as the Air Authority may from time
to time require (including, but not limited to the
requirements of FAR 91.417, FAR 121.380 and the requirements
of the Approved Maintenance Program). The maintenance records
will form part of the Aircraft Documents;
(b) procure access (in house or through third parties) to a
revision service in respect of, and will maintain with
appropriate revisions in English and in accordance with FAR
91.417 and FAR 121.380, all technical publications required by
applicable laws and sound practice of major international air
transport operators in respect of the Aircraft; and
(c) retain the Aircraft Documents and other materials at Lessee's
principal place of business, and subject to applicable law,
regulation and legal process not permit any other person to
have possession of or control over the same without Lessor's
prior written consent, except for an Approved
74
Maintenance Provider while completing maintenance, testing,
repair, modification or other services in respect of the
Aircraft or any Engine or Part.
8.11 PROTECTION:
Lessee will:
(a) take all actions reasonably requested by Lessor that are
within Lessee's control to keep the Aircraft registered with
the Air Authority in the name of Owner;
(b) make any and all filings required to be made with the Air
Authority registry that are within its control and take all
other actions within its control that are requested by Lessor
and necessary or advisable to reflect on the Air Authority
registry any change in the ownership of the Aircraft, or in
the interests of Lessor, Owner or the Financing Parties in
this Agreement or the Aircraft, any modification to the
Aircraft (such as the permanent replacement of any Engine or
Part in accordance with this Agreement) or as a result of any
change in applicable law. Lessor will bear any costs incurred
as a consequence of a transfer by Lessor, Owner or the
Financing Parties of the interests of Lessor, Owner or the
Financing Parties in this Agreement or the Aircraft or a
change in the identity of Lessor, Owner or the Financing
Parties (in each case, unrelated to the replacement of any
Engine or Part by Lessee or a Default), and Lessee will bear
any other costs incurred in complying with this Clause,
including in connection with the replacement of any Engine or
Part by Lessee in accordance herewith; and
(c) do all acts and things (including, without limitation, making
any filing or registration with the Air Authority or any other
Government Entity or as required to comply with the Geneva
Convention where applicable) and execute and deliver all
documents (including, without limitation, any amendment of
this Agreement) as may from time to time be required by
Lessor:
(i) following any change in the ownership or financing of
the Aircraft which is permitted pursuant to Clause 14 or
in the manner of securing Lessor's obligations to the
Financing Parties, in each case at the cost of Lessor;
or
(ii) following any modification of the Aircraft, any Engine
or any Part or the permanent replacement of any Engine
or Part in accordance with this Agreement, so as to
ensure that the rights of Lessor as owner of the
Aircraft and under this Agreement apply with the same
effect as before; or
75
(iii) to establish, maintain, preserve, perfect and protect
the rights of Lessor under this Agreement or in the
Aircraft and, at the cost of Lessor, the rights of any
Financing Party, in particular (without limitation), if
in the Country of Registration there shall be, or shall
be brought into force, any legislative or other
provisions giving effect to the Geneva Convention or
otherwise relating to recognition of rights in aircraft,
Lessee shall at its own cost forthwith do all such acts
as may be necessary to perfect recognition of Lessor's
title to and interest in the Aircraft and, at the cost
of Lessor, the rights of any Financing party as
mortgagee and/or assignee in accordance with such
legislative or other provisions.
If the Country of Incorporation has, or at any time brings
into force, any legislative or other provisions giving effect
to the Convention on International Interests in Mobile
Equipment (the "Convention") and/or the Protocol to the
Convention on International Interests in Mobile Equipment on
Matters Specific to Aircraft Equipment (the "Protocol"),
Lessee at its own cost and expense shall from time to time, do
or cause to be done any and all acts and things which may be
required or desirable (in the reasonable opinion of Lessor) to
ensure that Lessor and, at the cost of Lessor, any Financing
Party have the full benefit of the Convention and/or the
Protocol in connection with the Aircraft and any Engine,
including (but not limited to):
(A) any matters connected with registering, perfecting,
preserving and/or enhancing any international
interest(s) vested in Lessor with respect to the
Aircraft and/or any Engine and constituted by this
Agreement;
(B) entry in to agreements (subordination or otherwise) to
protect and/or enhance and/or improve the priority of
any international interest(s) referred to in the
foregoing paragraph (A); and
(C) excluding in writing the application of any provisions
of the Convention and/or Protocol that Lessor may deem
desirable in connection with the foregoing.
In this sub clause the following terms have the following meanings:
INTERNATIONAL INTEREST has the meaning as expressed in the
Convention and Protocol;
STATE has the meaning as expressed in the Convention and Protocol;
and
76
STATE IN WHICH LESSEE IS SITUATED IN shall be constructed in
accordance with the expression "state in which the debtor is
situated in" as set out in Article 4 of the Convention.
(d) if at any time subsequent to the initial registration of the
Aircraft and the initial filing of Uniform Commercial Code
financing statements, any other filing or any recording or
other act becomes necessary to perfect, protect and preserve
the rights and interests of Lessor hereunder and in the
Aircraft and the Security Deposit, including without
limitation the filing of continuation statements with respect
to filed Uniform Commercial Code financing statements, at its
cost and expense, procure that such filings, recordings and
acts are done pursuant to applicable law. Lessee agrees that
Lessor is hereby authorized to make any filings or recordings
referred to in this paragraph;
(e) not to revoke the Lessee Power of Attorney; and
(f) to cause the following:
(i) the filing of a Spanish language Public Deed with
respect to the Xxxx of Sale, the Trust Agreement, this
Agreement and Lease Supplement No. 1 at the Public
Registry of Panama within 48 hours after the date and
time of Delivery;
(ii) the obtaining of a temporary `certificado de matricula'
from the National Aeronautic Registry of the Civil
Aviation Authority of Panama with respect to the
Aircraft at or before Delivery;
(iii) the obtaining of a permanent `certificado de matricula'
from the National Aeronautic Registry of the Civil
Aviation Authority of Panama promptly, and in any event
within 45 days after Delivery; and
(iv) promptly and in due course after Delivery, a Public
Registry Certificate confirming registration of the
Public Deed referred to in the preceding clause (i).
8.12 MAINTENANCE AND REPAIR:
Lessee will, at its own expense:
(a) keep the Aircraft airworthy (except during any period during
which the Aircraft is undergoing maintenance, repair or
modification as required or permitted hereunder) in all
respects and in good repair and condition;
(b) not change the Approved Maintenance Program without all
necessary approvals from the Air Authority; provided, however,
that if any such
77
change adversely affects the interests of Lessor with respect
to the maintenance status of the Aircraft (or payments in
respect of such status) required pursuant to the provisions of
Clause 12 and Schedule 3 of this Agreement, then the
requirements of such provisions shall be deemed adjusted so
that the maintenance condition of the Aircraft at redelivery
required thereby is not diminished, and the payments to or by
Lessor are not adversely changed from the maintenance
condition and payments that would have been required in the
absence of such change to the Approved Maintenance Program;
(c) provide Lessor with a summary of, access to and information
regarding substantial changes to the Approved Maintenance
Program;
(d) maintain the Aircraft in accordance with the Approved
Maintenance Program through an Agreed Maintenance Performer;
(e) maintain the Aircraft in accordance with the rules and
regulations of the Air Authority applicable to the Aircraft;
(f) comply (or cause compliance) with all Mandatory Orders and
Airworthiness Directives and similar mandatory requirements
applicable to the Aircraft, any Engine or Part having a
compliance date during the Term or existing as of the Final
Expiry Date and having a compliance date within 180 days after
the Final Expiry Date and which are required by the Air
Authority or the FAA (provided that in relation to
Airworthiness Directives Lessor and Lessee agree to the cost
sharing formula set out in Schedule 11);
(g) comply (or cause compliance) with all applicable laws and the
regulations of the Air Authority and other aviation
authorities with jurisdiction over Lessee or the Aircraft, any
Engine or Part regardless of upon whom such requirements are
imposed and which relate to the maintenance, condition, use or
operation of the Aircraft or require any modification or
alteration to the Aircraft, any Engine or Part; and
(h) maintain in good standing a current certificate of
airworthiness (in the appropriate category for the nature of
the operations of the Aircraft) for the Aircraft issued by the
Air Authority except where (i) the Aircraft is undergoing
maintenance, modification or repair required or permitted by
this Agreement; or (ii) the Air Authority shall have withdrawn
or suspended such certificate in respect of all aircraft of
the same model or period of manufacture as the Aircraft (in
which case Lessee shall comply with all directions of the Air
Authority in connection with such withdrawal or suspension).
Lessee will from time to time provide to Lessor a copy of the
certificate of airworthiness promptly after receipt of a
written request.
78
8.13 PERMANENT REPLACEMENT OF ENGINES AND PARTS:
(a) Subject to Clauses 8.14 and 8.16, Lessee shall promptly
procure the replacement of any Engine (an "Original Engine")
which has suffered an Engine Event of Loss, and Lessee may
procure the replacement of any Engine (an "Original Engine")
in order to comply with the requirements of the Return
Conditions, in each case with an engine complying with the
following conditions:
(i) it is of the same manufacturer and model (or, at
Lessee's option, an improved model), it is suitable for
installation and use on the Airframe without impairing
the value or utility of the Airframe and it is
compatible with the remaining installed Engine, it has
equivalent interchangeable modification status,
equivalent or lower flight hours elapsed and cycles
elapsed since Life Limited Parts replacement and since
last Engine Performance Restoration, equivalent
remaining warranty status as the Original Engine and
equivalent or greater value and utility as the Original
Engine; at the time of the engine replacement Lessor or
Lessee, as applicable, shall adjust the Engine
Supplemental Rent to reflect the maintenance utility of
the replacement engine;
(ii) it has become and remains the property of Lessor free
from Security Interests (except Permitted Liens) and on
installation on the Aircraft will without further act be
subject to this Agreement; and Lessee shall supply to
Lessor with an officer's certificate demonstrating full
compliance with this Clause 8.13(a); and
(iii) Lessee has full details of its source and maintenance
records with back to birth traceability on all Life
Limited Parts.
Such replacement Engine shall be deemed an "Engine" as defined
herein for all purposes hereunder. Lessee agrees to promptly
notify Lessor of any such substitution, and provide Lessor
with an officer's certificate confirming full compliance with
this Clause 11.1(e). Lessee agrees to take such action and
execute such documents, including a warranty xxxx of sale, as
Lessor may reasonably request in order that any such
replacement Engine shall be duly and properly titled in the
name of Owner and leased by Lessor hereunder to the same
extent as the Engine thereby. Lessor shall take such action
and shall execute such documents, and shall cause Owner to
take such action and execute such documents, as are reasonably
necessary to convey title to the Engine replaced pursuant to
the preceding sentence to Lessee. Such conveyance shall be
free of and warranted as against Lessor Liens, but otherwise
without representation or warranty, express or implied.
79
(b) Subject to Clause 8.16 hereof, Lessee shall promptly procure
the replacement of any Part which has become time-, cycle- or
calendar-expired, lost, stolen, seized, confiscated,
destroyed, damaged beyond repair, unserviceable or permanently
rendered unfit for use, with a part complying with the
following conditions:
(i) it is of the same manufacturer and model (or, at
Lessee's option, an improved model), it is in as good
operating condition as the replaced Part, it has
equivalent interchangeable modification status and
equivalent or more hours available until the next
scheduled check, inspection, overhaul and shop visit as
the replaced Part and it is of an equivalent or greater
value and utility as the replaced Part;
(ii) it has become and remains the property of Lessor free
from Security Interests (except Permitted Liens) and on
installation on the Aircraft will without further act be
subject to this Agreement; and Lessee shall supply to
Lessor all such title documents as Lessor may require in
good faith to evidence and perfect the same; and
(iii) Lessee has full details of its source and maintenance
records with back to birth traceability as to Life
Limited Parts.
(c) Any Part so replaced, upon satisfaction of the requirements
set forth above, shall become the property of Lessee free and
clear of Lessor Liens.
8.14 REMOVAL AND INTERCHANGE OF ENGINES:
Lessee will:
(a) ensure that no Engine is removed from the Airframe unless it
is promptly replaced as expressly permitted by this Agreement;
(b) ensure that any Engine which is not installed on the Aircraft,
or an aircraft permitted by paragraph (d) below is, except as
expressly permitted by this Agreement, properly and safely
stored (unless installed on another airframe operated by
Lessee as permitted hereunder) and insured, and kept free from
Security Interests (other than Permitted Liens), and either
(i) has been inducted into a repair shop and is undergoing
repair or (ii) unserviceable awaiting repair shop visit for no
longer than 45 days; and
(c) be permitted, if no Event of Default has occurred and is
continuing, to install any Engine on an aircraft operated by
Lessee (or, any permitted sub-lessee), provided that neither
(i) the provisions of any applicable law nor (ii) the terms of
any lease or other agreement or Security Interest to which
such aircraft or engine is subject, prohibit such installation
or will
80
have the effect at any time of divesting or impairing the
title and interests of Lessor as owner and any Financing Party
as mortgagee of such Engine.
Lessee shall obtain from the lessor of any airframe on which an
Engine is installed and from any holder of a Security Interest in
any airframe on which an Engine is installed, an agreement (which
may be in the form of a relevant clause in any lease agreement,
mortgage, security agreement or similar agreement in respect of such
airframe) in writing for the benefit of the Lessor (or directly with
the Lessor) that such Person will respect the interests of Lessor as
owner and lessor, respectively, and of the Financing Parties, in
such Engine and will not acquire or claim any right, title or
interest in such Engine as a result of such Engine being installed
on such other airframe at any time while such Engine is subject to
this Agreement. Provided Lessee shall have received from a lessor of
or secured party holding a Security Interest in any airframe leased
to Lessee or owned by Lessee and subject to a Security Interest
under such an 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 rights, title or
interest in any engine covered by such lease or Security Interest as
a result of any such engine being installed on the Airframe at any
time while such engine is subject to such lease or Security
Interest.
8.15 REMOVAL AND INTERCHANGE OF PARTS:
Lessee will, subject to Clause 8.16:
(a) ensure that no Part is at any time removed from the Aircraft
unless it is promptly replaced by a part complying with Clause
8.13(b);
(b) ensure that any Part which is not installed on the Aircraft
(or any other aircraft as expressly permitted by this
Agreement) is properly and safely stored and insured, and kept
free from Security Interests (other than Permitted Liens); and
(c) be permitted, if no Event of Default has occurred and is
continuing, to install any Part on an aircraft operated by
Lessee (or any permitted sub-lessee), provided that Clause
8.14(d) would be complied with in respect of such Part if it
were an Engine.
8.16 TEMPORARY INSTALLATION OF ENGINES AND PARTS:
Notwithstanding the provisions of Clause 8.13 and Clause 8.15,
Lessee will be permitted, if no Event of Default has occurred and is
continuing, to install, or permit the installation of, any engine or
part on the Aircraft by way of replacement if:
(a) there is not available to Lessee or, where there is a
permitted sublease in place, the sub-lessee thereunder, at the
time and in the place that engine or
81
part is required to be installed on the Aircraft, a
replacement engine or, as the case may be, part complying with
the requirements of Clause 8.13 above;
(b) it would result in a disruption of the operation of the
Aircraft and/or the business of Lessee or, where there is a
permitted sublease in place, the sub-lessee thereunder, to
ground the Aircraft until an engine or part, as the case may
be, complying with the requirements of Clause 8.13 above
becomes available for installation on the Aircraft; and
(c) as soon as practicable after installation of the same on the
Aircraft but, in any event, no later than the earlier of (i)
the next Major Check or Engine Shop Visit (as applicable) or
(ii) the Final Expiry Date, Lessee or, where there is a
permitted sublease in place, the sub-lessee thereunder,
removes any such engine or part and replaces it with the
Engine or Part replaced by it or by an engine or part, as the
case may be, complying with Clause 8.13 above.
8.17 POOLING OF ENGINES AND PARTS:
Without prejudice to its rights pursuant to Clauses 8.14(d) and
8.15(c), Lessee shall not without the prior written consent of
Lessor, which consent shall not be unreasonably withheld or delayed,
permit or enter into any agreement or arrangement for the pooling or
interchange of any Engine or Part with any other Person.
8.18 EQUIPMENT CHANGES:
(a) Lessee shall not make any modification or addition to the
Aircraft (each an "Equipment Change"), except for an Equipment
Change which:
(i) is completed in connection with the post-Delivery
installation of the In-flight
Entertainment/Communications System (IFE) or the
Winglets; or
(ii) is expressly permitted by this Agreement; or
(iii) does not diminish the value, utility, condition, or
airworthiness of the Aircraft and either (aa)
constitutes a modification to the class configuration or
passenger seating in the cabin, or (bb) has a cost of
less than US$250,000, or (cc) has the prior written
approval of Lessor which approval shall not be
unreasonably withheld or delayed; or
(iv) arises due to the requirements of the Air Authority
and/or the FAA or otherwise constitutes an obligation of
Lessee under this Agreement.
82
(b) So long as no Default or Event of Default has occurred and is
continuing, Lessee may remove any Equipment Change to the
extent it is severable from the Aircraft and (i) such
Equipment Change is not required by the Air Authority and/or
the FAA and (ii) such severance will not adversely affect the
value, utility, condition or airworthiness of the Aircraft as
compared to value, utility, condition or airworthiness of the
Aircraft immediately prior to such severance, assuming the
Aircraft was of the value and utility and in the condition and
repair required by the terms of this Agreement; and
(c) Title to Equipment Change, whether or not the removal of which
is permitted pursuant to Clause 8.18(b), will on installation
and until such permitted removal, without further act, vest in
Lessor subject to this Agreement free and clear of all
Security Interests (other than Permitted Liens). Lessee will
at its own expense take all such steps and execute, and
procure the execution of, all such instruments as Lessor may
require and which are necessary to ensure that title so passes
to Lessor according to all applicable laws. At any time when
requested by Lessor, Lessee will provide evidence to Lessor's
satisfaction (including the provision, if required, to Lessor
of bills of sale and legal opinions) that title has so passed
to Lessor. Upon any permitted removal thereof, Lessor will, at
Lessee's cost and upon Lessee's request, provide Lessee with
such documents as Lessee shall reasonably request to cause
title to such modifications to vest in Lessee free and clear
of Lessor Liens but otherwise without representation or
warranty, express or implied.
8.19 THIRD PARTY:
All the obligations of Lessee under this Agreement shall continue in
full force and effect notwithstanding any parting with possession of
the Aircraft by Lessee (other than redelivery of the Aircraft by
Lessee to Lessor pursuant to Clause 12).
9. INSURANCE
9.1 INSURANCES:
(a) Lessee shall, at its own expense, maintain in full force
during the Lease Period insurances in respect of the Aircraft
in terms, amounts, form and substance customarily maintained
by similar carriers operating similar aircraft in similar
circumstances otherwise satisfactory to Lessor (acting
reasonably) complying with the requirements of this Clause 9
and Schedule 4 (the "Insurances", which expression includes,
where the context so admits, any relevant re-insurance(s));
(b) The Insurances shall be effected through such brokers and with
such insurers (in each case which are properly licensed and
are operating in
83
accordance with Panamanian law), and shall be subject to such
deductibles and subject to such exclusions, as may (in each
case) be indicated in Schedule 4 or otherwise satisfactory to
Lessor; and
(c) The Insurances shall be effected either:
(i) on a direct basis with insurers of recognized standing
who normally participate in aviation insurances in the
leading international insurance markets and led by
reputable underwriter(s) satisfactory to Lessor, acting
reasonably (and for such purposes Lessee's current lead
underwriter is deemed to be satisfactory to Lessor); or
(ii) with a single insurer or group of insurers approved by
Lessor who does not fully retain the risk but effects
substantial reinsurance with reinsurers in the leading
international insurance markets and through brokers each
of recognized standing and acceptable to Lessor for a
percentage acceptable to Lessor (acting reasonably) of
all risks insured (and for such purposes Lessee's
current lead underwriter is deemed to be acceptable to
Lessor).
9.2 REQUIREMENTS
Lessor's current requirements as to the Insurances are as specified
in this Clause and in Schedule 4. Lessor may from time to time and
in good faith stipulate other requirements for the Insurances so
that (a) the scope and level of cover are maintained in line with
best industry practice of similar carriers operating similar
aircraft in similar circumstances, and (b) the interests of Lessor
and the other Indemnitees continue to be prudently protected,
provided that other requirements shall not reduce the maximum
deductibles, nor raise the minimum war and allied perils liabilities
amount, unless Lessee shall have raised the same on a fleet wide
basis..
9.3 STANDARDS
Lessee shall be obligated to maintain insurance in respect of the
Aircraft for the purposes of this Agreement which reflects Lloyds'
endorsement AVN67B (as at the date hereof) or the equivalent
thereof. In the event that any provision of AVN67B (as at the date
hereof) conflicts or is otherwise inconsistent with the requirements
of this Clause 9 and Schedule 4 then (so long as it shall be general
industry practice to insure aircraft financed or leased on the basis
of such endorsement) the provisions of AVN67B shall prevail and such
endorsement shall be deemed to satisfy the requirements of this
Agreement.
9.4 CHANGE
84
If at any time Lessor, following a change in circumstances and
acting reasonably, decides to revoke its approval of any insurer or
reinsurer, Lessor and/or its brokers shall consult with Lessee and
Lessee's insurers or, if applicable, brokers regarding whether that
approval should be revoked to protect the interests of the parties
insured. If, following the consultation, Lessor considers that any
change should be made, Lessee shall then, as promptly as reasonably
practicable, arrange or procure the arrangement of alternative cover
satisfactory to Lessor, provided such change is approved by each
other Lessor or secured lender on aircraft in Lessee's fleet
affected by such change and does not otherwise make compliance by
Lessee with the insurance requirements set forth in this Clause 9 or
in Schedule 4 hereto impossible or not practicable.
9.5 INSURANCE COVENANTS
Lessee shall:
(a) ensure that all legal requirements as to insurance of the
Aircraft, any Engine or any Part which may from time to time
be imposed by the laws of the Country of Registration or any
state, from or over which the Aircraft may be flown, in so far
as they affect or concern the operation of the Aircraft, are
complied with, and in particular those requirements compliance
with which is necessary to ensure that:
(i) the Aircraft is not in danger of detention or
forfeiture;
(ii) the Insurances remain valid and in full force and
effect; and
(iii) the interests of the Indemnitees in the Insurances and
the Aircraft or any Part are not thereby prejudiced;
(b) comply with the terms and conditions of each policy of the
Insurances and not do, consent or agree to any act or omission
which:
(i) invalidates or may be reasonably expected to invalidate
the Insurances; or
(ii) renders or may be reasonably expected to render void or
voidable the whole or any part of any of the Insurances;
or
(iii) brings any particular insured liability within the scope
of an exclusion or exception to the Insurances;
(c) not without the prior written approval of Lessor take out any
additional insurance or reinsurance in respect of the Aircraft
which would prejudice the rights of Lessor or any additional
insured in respect of the policies required to be maintained
by Lessee hereunder, unless relating solely to
85
liability insurances, hull total loss, business interruption,
profit commission and deductible risk;
(d) on request, provide to Lessor evidence that the Insurance
premiums have been paid;
(e) not make any modification or alteration to the Insurances
material and adverse to the interests of any of the
Indemnitees;
(f) be responsible for any deductible under the Insurances;
(g) if at any time insurance clause AVN 2000 or its successor is
endorsed on the policies of Insurance, ensure that the
insurance write back clauses AVN 2001 and AVN 2002 as
applicable (or any equivalent clauses) are endorsed on the
policies of Insurance required to be maintained under this
Agreement and give and comply with all representations,
warranties and undertakings required by the insurers or
reinsurers in connection with such clauses; and
(h) provide any other material information and assistance in
respect of the Insurances which Lessor may from time to time
reasonably request for substantial reasons.
9.6 RENEWAL OF INSURANCES
Lessee shall commence renewal procedures in a timely manner prior to
expiry of any of the Insurances, and provide to Lessor:
(a) upon the request of Lessor, a written status report of renewal
negotiations 10 days prior to each expiry date;
(b) confirmation of completion of renewal prior to each expiry
date; and
(c) certificates of insurance (and where appropriate certificates
of reinsurance), and a broker's letter of undertaking in a
form acceptable to Lessor in English, detailing the coverage
and confirming the insurers' (and any reinsurers') agreement
to the specified insurance requirements of this Agreement
within seven days after each renewal date (and, in the case of
the reinsurance certificate and reinsurance broker's letter of
undertaking, within 14 days after each renewal date).
9.7 FAILURE TO INSURE
If Lessee fails to maintain the Insurances in compliance with this
Agreement, Lessee shall:
86
(a) forthwith ground or cause to be grounded the Aircraft and
shall keep or procure that the Aircraft be kept grounded until
such time as the Insurances shall again be in full force and
effect; and
(b) immediately notify Lessor of the non-compliance of the
Insurances and provide Lessor with full details of any steps
which Lessee is taking or proposes to take, in order to remedy
such non-compliance;
and each of the Indemnitees will be entitled but not bound (without
prejudice to any other rights of Lessor under this Agreement):
(i) to pay the premiums due or to effect and maintain
insurances required hereunder but not maintained in
accordance herewith or otherwise remedy Lessee's failure
in such manner (including, without limitation to effect
and maintain an "owner's interest" policy) as Lessor
acting in good faith considers appropriate. Any sums so
expended by Lessor will become immediately due and
payable by Lessee to Lessor together with interest
thereon at the Default Rate, from the date of
expenditure by Lessor up to the date of reimbursement by
Lessee; and
(ii) at any time while such failure is continuing to require
the Aircraft to remain at any airport or to proceed to
and remain at any airport designated by it until the
failure is remedied.
9.8 CONTINUING INSURANCE FOR INDEMNITY
Lessor may require Lessee to effect and to maintain (at no cost to
Lessor) liability insurance after the Final Expiry Date with respect
to its liability under the indemnities in Clause 10 for such period
as Lessor may reasonably require (but in any event for not more than
two years following the Final Expiry Date or until completion of the
next C Check (or equivalent check) with respect to the Aircraft
(whichever is the earlier to occur)) which provides for each
Indemnitee to be named as additional insured. Lessee's obligation in
this Clause shall not be affected by Lessee ceasing to be lessee of
the Aircraft and/or any of the Indemnitees ceasing to have any
interest in respect of the Aircraft.
10. INDEMNITY
10.1 GENERAL:
Lessee agrees to defend, indemnify and hold harmless the
Indemnitees, on demand and on an After-Tax Basis, from and against
any and all Losses (regardless of when the same is made or incurred,
whether before, during or after the Term):
87
(a) which may at any time be imposed, incurred, suffered or
asserted, directly or indirectly as a result of or connected
with the possession, delivery, performance, management,
ownership or possession, registration, control, maintenance,
condition, service, repair, overhaul, leasing, use, operation,
modification, insurance, inspection, testing, design,
sublease, condition or return of, or other matters relating
to, the Aircraft, any Engine or Part (either in the air or on
the ground) whether or not such Losses may be attributable to
any defect in the Aircraft, any Engine or any Part, whether or
not discoverable, or to its design, testing or use or
otherwise, and regardless of when the same arises or whether
it arises out of or is attributable to any act or omission,
negligent or otherwise, of any Indemnitee or to strict
liability; or
(b) which without duplication of recovery arise out of any act or
omission which invalidates or which renders voidable any of
the Insurances; or
(c) which without duplication of recovery may at any time be
suffered or incurred as a consequence of (i) any design,
article or material in the Aircraft, any Engine or any Part,
including any defect in design and regardless of whether it is
discoverable; or (ii) its operation or use during the Term
hereof constituting an infringement of patent, copyright,
trademark, design or other proprietary right; or
(d) which may at any time be suffered or incurred, directly or
indirectly, as a result of any breach by Lessee of any of its
obligations under this Agreement.
but excluding any Losses in relation to a particular Indemnitee to
the extent that such Losses:
(i) are covered pursuant to any other indemnity provision of
this Agreement or in respect of which Lessor has agreed
to not seek reimbursement from Lessee pursuant to an
express provision of this Agreement; or
(ii) arise as a result of the gross negligence (other than
gross negligence imputed to that Indemnitee by reason of
its interest in the Aircraft or this Agreement), willful
misconduct of that Indemnitee or any Indemnitee or
breach of any representation, warranty or obligation
hereunder or under any other Transaction Document; or
(iii) consists of Taxes (but without prejudice to any
Indemnitee's rights under any other provision of this
Agreement relating to Taxes); or
(iv) arise as a result of a Lessor Lien; or
88
(v) represents or constitutes ordinary and usual operation
or overhead expenses of such Indemnitee, except to the
extent that the same arise on the occurrence of an Event
of Default; or
(vi) is attributable to an event or circumstances which occur
after the Final Expiry Date unless such Loss results
from, or arises out of, any act, omission or
circumstance existing during the Term; or
(vii) are attributable to the sale, assignment or other
transfer (voluntary or involuntary) of all or part of
any Indemnitee's interest in or to the Aircraft, any
Engine or Part, this Agreement or any Transaction
Document other than a sale, assignment or other transfer
required by the terms of a Transaction Document, arising
as a result of or otherwise in connection with an Event
of Default or an Event of Loss or if requested by, or
consented to, by Lessee; or
(viii) are costs or expenses of entering into amendments to
this Agreement and/or other Transaction Documents not
required by the terms of a Transaction Document, and not
requested by, or consented to, by Lessee.
10.2 NOTIFICATION:
Lessor shall promptly notify Lessee in writing of any matter for
which Lessee is obligated to indemnify under this Clause 10 (each a
"Claim"); provided, however, the delay or failure of Lessor to give
notice to Lessee in accordance with this Clause 10.2 will not
discharge or release Lessee from any of its indemnity obligations
under Clause 10.1 except, and only to the extent, that such delay or
failure was attributable to circumstances which were, given
reasonable diligence, impractical or impossible for Lessor to avoid
and results in a material increase in the amount which Lessee is
required to indemnify, materially prejudices or precludes Lessee's
right to defend any such Claim or results in material, additional
obligations for Lessee in defending against any suit or proceeding
relating to such matter.
10.3 CONTEST:
Lessor and Lessee will consult with one another to consider what
action may properly be taken to defend or otherwise resist or
mitigate any Claim. Provided no Default or Event of Default shall
have occurred and be continuing, Lessee shall, following such
consultation, have the right to assume and conduct promptly and
diligently the defense of the relevant Indemnitee with respect to
such Claim, and no Claim will be settled by an Indemnitee without
the prior written consent of Lessee (not to be unreasonably withheld
or delayed), provided that:
(a) Lessee shall have consulted, and shall continue to consult,
with Lessor as to the defense and conduct thereof;
89
(b) Lessee shall have made, and continue to make, adequate
provision or reserve with respect to such Claim and any
associated costs and expenses (in accordance with GAAP) and
shall have fully indemnified or agreed to indemnify the
Indemnitees for all costs, liabilities, expenses or damages on
an After Tax Basis arising as a result of such Claim or its
defense by Lessee of such Indemnitee pursuant to this Clause;
provided, however, that Lessee shall not be bound by such an
agreement to indemnify to the extent that it is established
that, in accordance with the terms of this Clause 10, that
Lessee is not liable to such Indemnitees in respect of such
Claim.
(c) without prejudice to Lessee's continued right to contest any
Claim, no Indemnitee shall be prevented by this Clause 10.3
from settling or paying any Claim immediately if such
Indemnitee is required by applicable law to do so but such
Indemnitee shall pay over to Lessee any amount paid by Lessee
by way of indemnity in respect of such settlement or payment
which is later refunded to such Indemnitee if (i) Lessee
agrees that it was liable for such claim under this Clause 10
and (ii) Lessee establishes that it would have been successful
in respect of such contest and (iii) no Default has occurred
and is continuing, and if a Default shall have occurred and be
continuing the same shall be retained by Lessor until such
Default (and any other Default) shall have been cured then
promptly paid to Lessee to the extent not applied in
satisfaction of Lessee's obligations in respect of any
Default; and
Lessor shall be entitled, upon consultation with and prior written
notice to Lessee, to terminate Lessee's participation in the defense
of a Claim where an act or omission of Lessee indicates that the
interests of any Indemnitee have a reasonable likelihood of being
materially adversely prejudiced by Lessee's continued participation
in the defense of such Claim.
10.4 SUBROGRATION:
Upon payment in full to an Indemnitee of any demand for
indemnification under this Agreement, Lessee will be subrogated to
any rights and remedies of such Indemnitee in respect of the Loss in
respect of which such payment has been made (a "Subrogated Claim")
and without warranty as to the enforceability of such rights, and
subject to the following provisions:
(a) such Indemnitee shall, at the sole cost and expense of Lessee,
assist Lessee in any manner reasonably requested by Lessee for
the purpose of enforcing and obtaining the rights and benefits
intended to be conferred by this Clause 10.4 upon Lessee;
90
(b) Lessee shall keep Lessor fully informed of any Subrogated
Claim by Lessee, shall consult with Lessor regarding the
conduct of such Subrogated Claim; and
Unless doing so would materially prejudice Lessee's ability to
recover on such Subrogated Claim, Lessee shall pursue any Subrogated
Claim in its own name, as subrogee to the rights thereto.
10.5 DURATION:
The indemnities contained in this Agreement will continue in full
force after the Final Expiry Date.
11. EVENTS OF LOSS
11.1 EVENTS OF LOSS
(a) PRE-DELIVERY: If an Event of Loss occurs prior to delivery of
the Aircraft to Lessee, this Agreement will immediately
terminate and except as expressly stated in this Agreement
neither party will have any further obligation or liability
under this Agreement other than pursuant to Clause 15.8,
except that Lessor will refund to Lessee the amount of any
Security Deposit and any other amounts paid by or on behalf of
Lessee under this Agreement; and
(b) POST-DELIVERY: If an Event of Loss occurs after delivery of
the Aircraft to Lessee, Lessee will pay the Agreed Value to
Lessor on or prior to the earlier of (i) ninety (90) days
after the Event of Loss; and (ii) the date of receipt of the
insurance proceeds in respect of that Event of Loss. Subject
to the rights of any insurers and reinsurers or other third
party, upon irrevocable payment in full to Lessor of that
amount and all other amounts which are then due and owing to
Lessor under this Agreement, Lessor will without recourse or
warranty (except as to the absence of Lessor Liens) procure
that Owner shall transfer to Lessee all right, title and
interest in and to the Aircraft, all on an as is, where is,
basis, and will at Lessee's expense, execute and deliver such
bills of sale and other documents and instruments as Lessee
may reasonably request to evidence (on the public record or
otherwise) the transfer and the vesting of Owner's rights in
the Aircraft in Lessee, free and clear of (x) all rights of
Owner and Lessor and (y) all Lessor Liens. The receipt by
Lessor of the insurance proceeds in respect of the Event of
Loss on or prior to the date required pursuant to this Clause
11.1(b) shall discharge Lessee from its obligation to pay the
Agreed Value to Lessor, provided such proceeds are not less
than the Agreed Value and are available to Lessor to be
applied to pay such Agreed Value and any excess of insurance
proceeds (and any other amounts if any, paid to Lessor by or
on behalf of Lessee) over and above the Agreed
91
Value, less any other amounts due and owing on the date of
payment of the Agreed Value by Lessee to Lessor hereunder,
shall be promptly refunded to Lessee or as otherwise required
by law. If the insurance proceeds are paid initially to Lessee
and not to Lessor, they may be retained by Lessee if Lessee
shall have paid the Agreed Value and all other amounts then
due and owing to Lessor, otherwise Lessee shall pay the Agreed
Value to Lessor immediately upon the receipt by Lessee of such
proceeds. If Lessee pays the Agreed Value and all other
amounts due and owing to Lessor in accordance with this Clause
11.1(b), Lessor shall promptly assign (and shall procure that
Owner assigns) to Lessee its rights under the Insurances to
receive the insurance proceeds in respect of the Event of Loss
(to the extent that such proceeds shall not have been paid to
Lessee). Additionally, but without duplication, upon receipt
by Lessor of the Agreed Value and any other amounts then due
and owing by Lessee hereunder following an Event of Loss,
Lessor shall pay or cause to be paid to Lessee amounts equal
to any amounts held by Lessor or to its order as Supplemental
Rent less any portion thereof theretofore applied or paid by
Lessor to Lessee or its order in accordance with the terms and
provisions of this Agreement.
11.2 REQUISITION:
During any requisition for use or hire of the Aircraft, any Engine
or Part which does not constitute an Event of Loss:
(a) the Rent and other charges payable under this Agreement will
not be suspended or abated either in whole or in part, and
Lessee will not be released from any of its other obligations
under this Agreement (other than operational obligations with
which Lessee is unable to comply by virtue of the
requisition); and
(b) so long as no Default or Event of Default has occurred and is
continuing, Lessee will be entitled to any hire or other
compensation paid by the requisitioning authority during the
Term. Lessee will, as soon as practicable after the end of any
such requisition, cause the Aircraft to be put into the
condition required by this Agreement. Lessor will be entitled
to all compensation payable by the requisitioning authority in
respect of any change in the structure, state or condition of
the Aircraft arising during the period of requisition, and
Lessor will apply such compensation in reimbursing Lessee for
the cost of complying with its obligations under this
Agreement in respect of any such change; provided, however, if
any Default or Event of Default has occurred and is
continuing, Lessor may apply the compensation or hire in or
towards settlement of any amounts owing by Lessee under this
Agreement or the other Transaction Documents and any excess
thereof shall be applied as described above.
92
12. RETURN OF AIRCRAFT
12.1 RETURN:
On the Final Expiry Date, Lessee will, unless an Event of Loss shall
have occurred, at its expense, redeliver the Aircraft and Aircraft
Documents to Lessor at the Redelivery Location, in a condition
complying with Schedule 3, free and clear of all Security Interests
and Permitted Liens (other than Lessor Liens).
12.2 FINAL INSPECTION:
Immediately prior to redelivery of the Aircraft, Lessee will make
the Aircraft available to Lessor for the Final Inspection, as set
forth in Schedule 3.
12.3 NON-COMPLIANCE:
(a) If at the time of completion of Final Inspection Lessee has
not fully complied with its obligation to redeliver the
Aircraft and Aircraft Documents to Lessor in the condition and
status required under this Agreement (including Schedule 3
hereto), or Lessee fails to make the Aircraft available to
Lessor on a timely basis for inspection and redelivery
pursuant to Clause 12.1 and Schedule 3 hereto, the Term may
be, upon written notice by Lessor acting in good faith in this
regard, extended up to the time when the Aircraft has been
redelivered to Lessor in full compliance with this Agreement,
for the sole purpose of enabling such non-compliance or
failure to be promptly rectified, and during such extension
period:
(i) Lessee shall not use the Aircraft in flight operations
except those related directly to the redelivery of the
Aircraft to Lessor;
(ii) all Lessee's obligations and covenants under this
Agreement will remain in full force until Lessee so
redelivers the Aircraft
(iii)
(A) if such extension is due to any act or omission of
Lessor or any Person claiming through Lessor,
Lessee shall not be obligated to pay Rent during
such extension period and Lessor shall promptly
after receipt of an invoice, reimburse Lessee for
any and all out-of-pocket expenses incurred for
the maintenance of Insurances, maintenance,
storage, testing, inspection, repair and parking
of the Aircraft to the extent such expenses are
attributable to any such act or omission of
Lessor, or
93
(B) otherwise, Lessee shall pay Rent to Lessor during
such extension period at a rate per month equal to
the amount of Rent payable in respect of the last
scheduled Rental Period at a rate per month equal
to the Rent payable in respect of the last
scheduled Rental Period plus, after the first ten
(10) days of such extension period, thirty-five
percent (35%) prorated for actual time elapsed.
(b) Unless otherwise agreed by Lessee and Lessor any extension of
the Term under this Clause 12.3 (other than an extension
arising as a result of an act or omission of Lessor, Owner or
Beneficiary) shall not prejudice Lessor's right to treat such
non-compliance or failure as an Event of Default at any time,
and to enforce such rights and remedies as may be available to
Lessor in respect thereof under the terms of this Agreement or
applicable law. Without limiting the generality of the
foregoing, Lessee's Rent obligation under Clause 12.3(a)(iii)
above shall be without prejudice to (but without duplication
of) Lessor's rights under Clause 13; and
(c) Lessor may elect (either on first tender of the Aircraft by
Lessee or at any time during the said extension period) to
accept redelivery of the Aircraft notwithstanding
non-compliance with Clause 12.1 or Schedule 3, in which case
Lessee will indemnify Lessor on an After-Tax Basis, and
provide cash to Lessor (in an amount satisfactory to Lessor
acting reasonably) as security for that indemnity in respect
of the actual cost to Lessor of putting the Aircraft into the
condition required by this Agreement based upon reasonable
prevailing market labor rates and costs of materials.
12.4 ACKNOWLEDGEMENT:
Provided Lessee has complied with its obligations under this Clause
12 (including Schedule 3), upon redelivery of the Aircraft by Lessee
to Lessor at the Redelivery Location, Lessor will deliver to Lessee
an acknowledgement confirming that Lessee has redelivered the
Aircraft to Lessor in accordance with this Clause 12 (including
Schedule 3).
12.5 REDELIVERY MAINTENANCE ADJUSTMENT:
On the Final Expiry Date, Lessee shall make maintenance adjustment
payments to Lessor on an After-Tax Basis in accordance with Part 3
of Schedule 3 hereto.
12.6 EXPORT DOCUMENTS:
Upon redelivery Lessee shall provide to Lessor all documents
necessary to export the Aircraft from the Habitual Base (including,
without limitation, a valid and subsisting export license for the
Aircraft if required by the relevant Governmental Authorities of the
Habitual Base) and required in relation to the deregistration of the
Aircraft with the Air Authority.
94
12.7 MAINTENANCE PROGRAM
Prior to the Final Expiry Date and upon Lessor's request, Lessee
shall provide Lessor or its agent reasonable access to the Aircraft
Documents (including without limitation all completed maintenance
records) and the Approved Maintenance Program as updated and
maintained by Lessee up to the date of redelivery in order to
facilitate the Aircraft's integration into any subsequent operator's
fleet including a cross-reference of Lessee's Approved Maintenance
Program items including task-cards to the MRB (Maintenance Review
Board) or Manufacturer's Maintenance Planning Document items, as
appropriate.
12.8 FUEL:
Upon redelivery of the Aircraft to Lessor, an adjustment shall be
made in favor of Lessor or Lessee, as the case may be, in respect of
fuel on board on the Delivery Date and the Final Expiry Date at the
lower of the price then prevailing or then available at the
Redelivery Location.
13. DEFAULT
13.1 EVENTS:
Each of the following events will constitute an Event of Default
(whether the occurrence of any such events is voluntary or
involuntary or occurs 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 Government Entity):
(a) NONPAYMENT: Lessee fails to make any payment of Security
Deposit, Rent, Supplemental Rent or Agreed Value or any
payment pursuant to Clause 12.5 within three (3) Business Days
following the due date or, in the case of other sums payable
to Lessor or any other Indemnitee, within ten (10) Business
Days following the date of receipt of demand therefor or the
date otherwise due in accordance with this Agreement;
(b) INSURANCE: Lessee fails to comply with any provision of Clause
9 or any insurance required to be maintained under this
Agreement is cancelled or terminated or notice of cancellation
is given in respect of any such insurance and no substitute
insurance meeting the requirements of Clause 9 and Schedule 4
of this Agreement has been procured;
(c) BREACH: Lessee fails to comply with any provision of this
Agreement that is not otherwise addressed in this Clause 13.1
and, if such failure is capable of remedy, the failure
continues for 30 days after receipt by Lessee of notice from
Lessor to Lessee;
(d) REPRESENTATION: any representation or warranty made (or deemed
to be repeated) by Lessee in or pursuant to this Agreement is
or proves to have
95
been incorrect in any material respect when made or deemed to
be repeated and, if such incorrectness is capable of remedy,
the same continues for 30 days after receipt of notice by
Lessee from Lessor;
(e) CROSS DEFAULT:
(i) Financial Indebtedness of Lessee having a principal
amount in the aggregate in excess of the Cross-Default
Amount (or the equivalent thereof in other currencies)
is or are not paid when due or within any originally
agreed upon applicable grace period relating thereto; or
(ii) any such Financial Indebtedness becomes due prior to the
date when it would otherwise have become due as a result
of an event of default (howsoever described); or
(iii) any event of default, howsoever described, occurs under
any Other Agreement; or
(iv) any event of default, howsoever described, occurs under
any aircraft lease agreement in which Lessee is lessee
and as a result thereof a dispossessory remedy is
exercised by or on behalf of the lessor; provided that,
should the relevant event of default not relate to
payment of rent under such lease, such exercise of a
dispossessory remedy is not frivolous or vexatious under
prevailing circumstances.
(f) BANKRUPTCY, ETC.:
(i) Lessee or Guarantor shall consent to, or commence any
case, proceeding or other action seeking, the
appointment of a custodian, receiver, trustee,
liquidator or other similar official of itself or of a
substantial part of its property, or shall admit in
writing its inability to pay its debts generally as they
come due, or shall suspend payments on its indebtedness
or a moratorium shall be declared in respect of all or a
substantial part of the indebtedness of Lessee or
Guarantor, or a court of competent jurisdiction shall
determine that Lessee or Guarantor is generally not
paying its debts as such debts become due, or Lessee or
Guarantor shall make a general assignment for the
benefit of creditors; or
(ii) Lessee or Guarantor shall file a voluntary petition in
bankruptcy or a voluntary petition or an answer seeking
reorganization, suspension of payments (suspension de
pagos) or relief with respect to it in a proceeding
under any bankruptcy or insolvency or other similar laws
(as now or hereafter in effect) or an answer admitting
the material allegations of a petition filed against
Lessee
96
or Guarantor in any such proceeding, or Lessee or
Guarantor shall, by voluntary petition, answer or
consent, seek relief under the provisions of any now
existing or future bankruptcy, insolvency, liquidation,
receivership, administrative receivership,
administration, suspension of payments or other similar
law providing for the reorganization or winding-up of
debtors, or providing for an agreement, composition,
extension or adjustment with its creditors; or
(iii) if the Lessee or Guarantor convenes a general meeting of
its creditors with a view to a general readjustment or
general rescheduling of its indebtedness (or a
substantial part thereof); or
(iv) if the Lessee or Guarantor becomes or is declared
insolvent (en quiebra) or in suspension of payments
(suspension de pagos) or any application is made to any
court for the Lessee or Guarantor to be declared
insolvent (en quiebra) or in suspension of payments
(suspension de pagos) or the Lessee or Guarantor is
deemed for the purposes of any law of The Republic of
Panama to be unable to pay its debts as they fall due or
to be insolvent; and in the case of any such event which
occurs without the consent of the Lessee, a period of 60
days shall have elapsed without such event being cured,
dismissed, stayed or eliminated; or
(v) an order, judgment or decree shall be entered in any
proceeding by any court of competent jurisdiction
appointing, without the consent of Lessee or Guarantor,
a custodian, receiver, trustee, liquidator or other
similar official of Lessee or Guarantor or any
substantial part of its property, or sequestering any
substantial part of the property of Lessee or Guarantor
(other than for the purposes of amalgamation, merger or
reorganization not involving or arising out of
insolvency), and any such order, judgment or decree or
appointment or sequestration shall remain in force
undismissed, unstayed or unvacated for a period of 60
days after the date of entry thereof; or
(vi) a petition against Lessee or Guarantor in a proceeding
under applicable bankruptcy, insolvency or other similar
laws, as now or hereafter in effect, shall be filed and
shall not be stayed, withdrawn or dismissed within 60
days thereafter, or if, under the provisions of any law
providing for reorganization or winding-up of debtors
which may apply to Lessee or Guarantor, any court of
competent jurisdiction shall assume jurisdiction,
custody or control of Lessee or Guarantor of any
substantial part of its property and such jurisdiction,
custody or control shall remain in force
97
unrelinquished, unstayed or unterminated for a period of
60 days; or
(vii) any additional proceeding similar to those referred to
in paragraph (i), (ii), (iii), (iv), (v) or (vi) above
for the relief of financially distressed debtors under
the laws of the United States or The Republic of Panama
or any other jurisdiction is instituted, taken or
commenced by or against Lessee or Guarantor, voluntarily
or involuntarily, and if involuntarily, has not been
stayed or dismissed within 60 days.
(g) SUSPENSION OF BUSINESS: Lessee ceases to operate as a
regularly scheduled air carrier or suspends such operations
for a period in excess of ninety (90) days other than as a
result of war, insurrection, acts of terrorism, acts of God
(such as fires, floods or earthquakes), labor strife or strike
or regulatory order affecting all similarly situated operators
of similar aircraft or all aircraft of the same type and
vintage as the Aircraft; or
(h) DISPOSAL: Lessee disposes, conveys or transfers all or
substantially all of its assets, liquidates or dissolves or
consolidates or merges with any other Person (whether by one
or a series of transactions, related or not) except as
permitted in Clause 8.8(c); or
(i) DELIVERY: Lessee fails to accept delivery of the Aircraft when
validly tendered pursuant to this Agreement by Lessor; or
(j) REDELIVERY: Lessee fails to return the Aircraft to Lessor on
the Final Expiry Date in accordance with Clause 12 and
Schedule 3, except as otherwise provided in Sub-Clause 12.3;
or
(k) LITIGATION: a judgment for the payment of money not covered by
insurance in excess of the Cross-Default Amount (or the
equivalent thereof in other currencies) shall be rendered
against Lessee or Guarantor and the same shall remain
undischarged for a period of sixty (60) days, unless during
such period, execution of such judgment shall have been
effectively stayed by agreement of the parties involved or by
court order or such judgment shall have been adequately
bonded; or
(l) ASSIGNMENT/TRANSFER/SUBLEASE: Lessee makes or permits any
assignment or transfer of Lessee's interest in this Agreement,
or of Lessee's right to possession of the Aircraft or the
Airframe, or Lessee subleases the Aircraft, the Airframe or
any Engine, in any case except as expressly permitted or
required in this Agreement; or
(m) ARREST/ATTACHMENT: Any arrest is made, or any attachment or
other kind of judicial lien over the Aircraft is registered
(excluding an attachment or
98
judicial lien which constitutes a Permitted Lien), and such
arrest, attachment or judicial lien is not discharged by
Lessee within 60 days thereafter; or
(n) APPROVALS: any consent, authorization, license, certificate or
approval of or registration with or declaration to any
Government Entity required in connection with this Agreement,
including, without limitation:
(i) any authorization required by Lessee to obtain and
transfer freely dollars (or any other relevant currency)
out of any relevant country; or
(ii) any authorization required by Lessee to authorize, or
required in connection with, the execution, delivery,
validity, enforceability or admissibility in evidence of
this Agreement or any other Transaction Document or the
performance by Lessee of its obligations under this
Agreement or any other Transaction Document; or
(iii) the registration of the Aircraft or the Aircraft's
certificate of airworthiness; or
(iv) any airline license or air transport license required by
Lessee,
is withheld, or is revoked, suspended, cancelled, withdrawn,
terminated or not renewed, or otherwise ceases to be in full force
(other than, in the case of subclause (iii) above, as a result of
any act or omission of Lessor or any party claiming by or through
Lessor not resulting from an act or omission of the Lessee) and is
not, as applicable, restored, replaced, returned, re-granted or
renewed within sixty (60) days; or
(o) ADVERSE CHANGE: any event or series of events occurs which, in
the reasonable opinion of Lessor, might reasonably be expected
to have a material adverse effect on the financial condition
or operations of Lessee or on the ability of Lessee to comply
with its obligations under this Agreement; or
(p) UNLAWFUL: it is or becomes unlawful for Lessee (other than as
a result of any act or omission of Lessor or any Person
claiming by or through Lessor not attributable to an act or
omission of Lessee) to perform any of its obligations under
this Agreement or any other Transaction Document, or this
Agreement or any other Transaction Document is or becomes
wholly or partly invalid or unenforceable and the same
continues for a period in excess of sixty (60) days; or
(q) CHANGE OF CONTROL: Any Person or group of Persons acquires
control of Lessee without the prior consent of Lessor, which
consent shall not be
99
unreasonably withheld or delayed. This Section 13.1(q) shall
not apply in the event that a current shareholder or Affiliate
of Lessee acquires control of Lessee. As used herein, the term
"control" shall mean the direct or indirect right to control
in excess of 50% of the voting shares of Lessee.
13.2 RIGHTS AND REMEDIES:
If an Event of Default occurs, Lessor may at its option (and without
prejudice to any of its other rights under this Agreement), at any
time thereafter so long as the same shall be continuing (without
notice to Lessee except as specified or required under applicable
law):
(a) by notice to Lessee and with immediate effect cancel the
leasing of the Aircraft (but without prejudice to the
continuing obligations of Lessee under this Agreement),
whereupon the Lease Term and all rights of Lessee under this
Agreement shall cease; and/or
(b) proceed by appropriate court action or actions to enforce
performance of this Agreement including the payment of all
Rent and all other amounts payable to Lessor or any Indemnitee
pursuant to the terms of this Agreement; and/or
(c) proceed by appropriate court action or actions to recover
damages for the breach of this Agreement which shall include:
(i) all Rent and other amounts which are or become due and
payable under this Agreement prior to (A) in the case of
clause (ii)(a) below, the date Lessor re-leases the
Aircraft, (B) in the case of clause (ii)(b) below
(unless the proviso thereto is applicable), the date
Lessor is tendered or obtains possession of the
Aircraft, and (C) otherwise, the date Lessor specifies
for payment of the amounts determined pursuant to this
clause (c); or, in any case, if earlier, (x) the date on
which Lessee tenders full payment of the amounts
determined as provided in this clause (c), or (y) the
date on which Lessor obtains or is tendered possession
of the Aircraft (such applicable date, the "Reference
Date");
(ii) an amount (the "Mitigated Rent Amount") equal to the
aggregate Rent for the remainder of the Term (determined
without reference to any right of Lessor to cancel the
leasing of the Aircraft, whether or not such right is
exercised), discounted periodically (equal to
installment frequency) to present worth at the Discount
Rate to the Reference Date, less the applicable amount,
if any, set forth below:
(a) in the event that Lessor has re-let the Aircraft
on terms (other than rental payment terms) which,
taken as a whole, Lessor reasonably regards as
being substantially similar to
100
the terms of this Agreement, an amount equal to
the aggregate basic rental payments to become due
under such re-lease for the period coinciding with
the remainder of the Term (determined without
reference to any right of Lessor to cancel the
leasing of the Aircraft, whether or not such right
is exercised), discounted periodically (equal to
installment frequency) to present worth at the
Discount Rate to the Reference Date; or
(b) in the event that Lessor elects to retain the
Aircraft or has sold the Aircraft or has re-let
the Aircraft on terms (other than rental payment
terms) which, taken as a whole, Lessor does not
reasonably regard as being substantially similar
to the terms of this Agreement, an amount equal to
the fair market rental value (determined pursuant
to the Appraisal Procedure) of the Aircraft for
the period commencing with the date that Lessor
reasonably anticipates that the Aircraft could be
re-let at such rental rate and ending with the
date that the Term was scheduled to expire
(determined without reference to any right of
Lessor to cancel the leasing of the Aircraft,
whether or not such right is exercised),
discounted periodically (equal to installment
frequency) to present worth at the Discount Rate
to the Reference Date; provided that, if Lessor is
unable after reasonable effort to dispose of the
Aircraft or if circumstances reasonably indicate
that such effort will not be availing, the
Mitigated Rent Amount shall be determined pursuant
to clause (ii) above without subtracting any
amounts pursuant to this clause (b);
(iii) all costs, expenses and other incidental damages
incurred by Lessor in exercising its remedies hereunder
or otherwise incurred by Lessor as a result of an Event
of Default, including repossession costs, legal fees,
Aircraft storage, preservation, shipment, repair,
refurbishment, modification, maintenance and insurance
costs, Aircraft re-lease or sale costs (including any
costs incurred prepare the Aircraft for sale or lease,
advertising costs, sale or lease costs (including
commissions), in any way relating to the Aircraft or any
Part, including to put the Aircraft in the condition
required in Clause 12 and Schedule 3, or in the
Redelivery Location, all such costs and incidental
damages being referred to herein collectively as
"Enforcement and Remarketing Costs";
(iv) without duplication, any loss, cost, expense or damage
to Lessor's residual interest in the Aircraft, incurred
by Lessor due to Lessee's failure to maintain the
Aircraft in accordance with the terms of this Agreement
or Lessee's failure to redeliver the Aircraft in the
101
condition required by this Agreement, if any, including
any consequential loss of revenue or profits, all such
amounts being referred to herein collectively as
"Aircraft Condition Damages"; and
(v) without duplication, any premium, penalty or incremental
expense which may be incurred as a result of such Event
of Default in repaying funds received by Lessor to
finance the Aircraft or in unwinding any financial
instrument relating in whole or in part to Lessor's
financing of the Aircraft, all such amounts being herein
referred to collectively as "Unwind Expenses";
provided, however, that if the measure of damages provided in
clauses (i)-(v) above is inadequate to place Lessor in the
same economic position, on an After-Tax Basis, as Lessor would
have been in if Lessee had timely performed each of its
obligations under this Agreement, then Lessor shall be
entitled to recover as damages such additional amount, giving
due credit for payments or proceeds of dispositions of the
Aircraft, as is necessary to place Lessor in such economic
position; and/or
(d) either:
(i) enter upon the premises where all or any part of the
Aircraft and/or any Engine is located and take immediate
possession of and, at Lessor's sole option, remove the
same, all without liability accruing to Lessor for or by
reason of such entry or taking of possession whether for
the restoration of damage to property, conversion or
otherwise, caused by such entry or taking, except
damages caused by Lessor's gross negligence or willful
misconduct; or
(ii) by delivering notice to Lessee, require Lessee to
redeliver the Aircraft and/or any Engine to Lessor at
the Redelivery Location on the date specified in such
notice and in all respects in the condition required by
this Agreement upon the return pursuant to Clause 12 (it
being understood that Lessee shall not delay any such
return for the purpose of placing the Aircraft and/or
any Engine in such condition, but shall nevertheless be
liable to Lessor for the failure of the Aircraft and/or
any Engine to be in such condition); and/or
(e) sell at private or public sale, as Lessor may determine, or
hold, use, operate or lease to others the Aircraft and/or any
Engine as Lessor in its sole discretion may determine, all
free and clear of any rights of Lessee as if this Agreement
had not been entered into, it being agreed that Lessor shall
have no obligation or duty to sell the Aircraft and/or any
Engine and Lessor shall be obligated to attempt to re-lease
the Aircraft only to the
102
extent, if any, that it is required to do so under Article 2A
of the UCC; and/or
(f) by written notice to Lessee specifying a payment date (which
shall be a date not earlier than five (5) Business Days
following the date of such notice), Lessor may demand that
Lessee pay to Lessor, and Lessee shall pay to Lessor on the
payment date specified in such notice (in lieu of the Rent due
for the period commencing after the date specified for payment
in such notice) the sum of the following amounts:
(i) all Rent and other amounts which are, or will become,
due and payable under this Agreement prior to the
Reference Date (references therein to clause (c) being
deemed references to this clause (f));
(ii) an amount equal to the Mitigated Rent Amount; and
(iii) an amount equal to Lessor's reasonably anticipated
Enforcement and Remarketing Costs, Unwind Expenses and
Aircraft Condition Damages;
provided, however, that if the measure of damages provided in
clauses (i)-(ii) above is inadequate to place Lessor in the
same economic position, on an After-Tax Basis, as Lessor would
have been in if Lessee had timely performed each of its
obligations under this Agreement, then Lessor shall be
entitled to recover as damages such additional amount, giving
due credit for payments or proceeds of dispositions of the
Aircraft, as is necessary to place Lessor in such economic
position; it being understood that (subject to any final
non-appealable judgment of a court of competent jurisdiction),
to the extent that any of the foregoing amounts in clause
(iii) above represents an estimate by Lessor of losses,
damages, costs or expenses which Lessor reasonably anticipates
to incur, (x) Lessor shall adjust (upward or downward, as the
case may be) the amount thereof as needed to reflect the
actual amount of such losses, damages, costs or expenses
incurred by Lessor when substantially all of such amounts
become known to Lessor, but Lessee shall remain obligated to
pay the amount demanded by Lessor in accordance with clause
(iii) above (subject to such subsequent adjustment) and (y)
notwithstanding the amount specified in such demand, Lessor
shall be entitled to claim such other (and greater) amount as
described in subclause (x) in any action against Lessee
hereunder; and/or
(g) draw upon the Security Deposit and apply such amounts to any
amounts owing to Lessor hereunder,
103
In addition to the foregoing, Lessor shall be entitled to exercise
such other rights and remedies as may be available under applicable
law and Lessee shall be liable on an After-Tax Basis for, and shall
pay Lessor on demand interest on all unpaid amounts at the Interest
Rate, from the due date until the date of payment in full.
Lessee hereby agrees that, in the event of the return to or
repossession by Lessor of the Aircraft and/or any Engine or any
Part, any rights in any warranty (express or implied) previously
assigned to Lessee or otherwise held by Lessee shall without further
act, notice or writing be assigned or reassigned to Lessor, if
assignable, subject to the terms hereof.
No remedy referred to in this Clause 13 is intended to be exclusive,
but, to the extent permissible under this Agreement or under
applicable 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 the exercise 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; provided, however, that nothing in this Clause 13 shall be
construed to permit Lessor to obtain a duplicate recovery of any
element of damages to which Lessor is entitled or to obtain damages
in excess of those permitted by law. No express or implied waiver by
Lessor of any Default or Event of Default shall in any way be, or be
construed to be, a waiver of any future or subsequent Default or
Event of Default.
13.3 POWER OF ATTORNEY:
Lessee hereby appoints Lessor as the attorney-in-fact of Lessee,
with full authority in the place and stead of Lessee and in the name
of Lessee or otherwise, for the purpose of carrying out the
provisions of this Agreement in accordance with the terms and
conditions hereof and taking any action and executing any instrument
that Lessor may, acting reasonably, deem necessary or advisable to
accomplish the purposes hereof (including, but not limited to, the
return of the Aircraft and, upon termination or cancellation of this
Agreement, the removal of this Agreement from public records);
provided, however, that Lessor may only take action or execute
instruments under this Clause 13 after an Event of Default has
occurred and while it is continuing. Lessee hereby declares that the
foregoing powers are granted for valuable consideration, constitute
powers granted as security for the performance of the obligations of
Lessee hereunder and are coupled with an interest and shall be
irrevocable. Without limiting the generality of the foregoing or any
other rights of Lessor under this Agreement, upon the occurrence and
during the continuation of an Event of Default, Lessor shall have
the sole and exclusive right and power to (i) settle, compromise,
adjust or defend any actions, suits or proceedings relating to or
pertaining to the Engine, any Part or this Agreement (other than
suits between the parties hereto) and (ii) make proof of loss,
appear in and prosecute any action arising from any policy or
policies of insurance maintained pursuant to this Agreement, and
settle, adjust or
104
compromise any claims for loss, damage or destruction under, or take
any other action in respect of, any such policy or policies, but, in
no event, may settle any matter by means of an admission of
liability on the part of Lessee unless required by law to do so.
14. ASSIGNMENT
14.1 ASSIGNMENT BY LESSEE:
LESSEE WILL NOT ASSIGN, DELEGATE OR OTHERWISE TRANSFER (VOLUNTARILY,
INVOLUNTARILY, BY OPERATION OF LAW OR OTHERWISE) ANY OF ITS RIGHTS
OR OBLIGATIONS UNDER THIS AGREEMENT EXCEPT IN CONNECTION WITH A
TRANSACTION PERMITTED BY CLAUSE 8.8(C), OR CREATE OR PERMIT TO EXIST
ANY SECURITY INTEREST (OTHER THAN PERMITTED LIENS) OVER ANY OF ITS
RIGHTS UNDER THIS AGREEMENT, AND ANY ATTEMPT TO DO SO SHALL BE NULL
AND VOID.
14.2 ASSIGNMENT BY LESSOR:
(a) Lessor or Owner may sell, assign or transfer all or any of
their respective rights under this Agreement and in the
Aircraft (a "Transfer") subject to compliance with the
following conditions:
(i) the proposed purchaser, assignee or transferee (the
"Transferee") shall confirm, in favor of Lessee and
Guarantor, in writing its undertaking to perform the
obligations of Lessor under this Agreement and other
Transaction Documents (including without limitation, all
obligations in respect of any Security Deposit, proceeds
of insurance and/or Supplemental Rent), to the extent
the same arise on or after the effective date of
Transfer and confirm Lessor's covenant of quiet
enjoyment which confirmations shall be reasonably
satisfactory to Lessee, whereupon Lessor or Owner, as
the case may be, will be released from its obligations
under this Agreement and the Participation Agreement;
(ii) the Transfer will not increase Lessee's and Guarantor's
indemnity or other obligations (including with respect
to withholding taxes) under this Agreement or the
Guaranty, as applicable or diminish Lessee's rights
under this Agreement (to be determined in each case at
the time of such Transfer by applying all applicable
laws as are in effect on the effective date of the
Transfer or which have been enacted on or prior to such
effective date but scheduled to come into effect
thereafter); and
(iii) unless an Event of Default has occurred and is
continuing, Lessor shall be responsible for and pay (on
or promptly after the time of
105
such Transfer) Lessee's and Guarantor's legal and other
costs incurred in respect of such Transfer;
(iv) the Transferee shall not be in bankruptcy or similar
proceedings at the time of the transfer;
(v) no Transferee shall be an air carrier or Affiliate
(other than a financial institution or credit company)
of an air carrier in competition with Lessee and
operating similar aircraft; and
(vi) the Transferee shall confirm in writing its agreement to
keep the trust structure, or another tax structure not
materially adversely affecting the tax position of this
Lessee, in place.
(b) Notwithstanding any such Transfer, Lessor, Owner and
Beneficiary will remain entitled to the benefit of each
indemnity under this Agreement to the extent that any claim
thereunder relates to any period prior to the effective date
of such Transfer, and shall remain entitled to the benefit of
the liability insurances effected pursuant to this Agreement
for a period of two years following the effective date of such
Transfer.
(c) Upon and subject to compliance by Lessor and any Transferee
with the terms and conditions of Clause 14.2(a), Lessee shall
execute and deliver in connection with such Transfer such
documents and assurances (including a consent to the Transfer)
and take such further action at Lessor's cost (unless an Event
of Default has occurred and is continuing) as Lessor may
reasonably request to establish or protect the rights and
remedies created or intended to be created in favor of
Transferee in connection with such Transfer.
14.3 GRANTS OF SECURITY INTERESTS:
Lessor or Owner shall be entitled at any time after the Delivery
Date to grant a Security Interest in the Aircraft or its right,
title and interest in this Agreement (each, an "Additional
Mortgage") in favor of any Financing Party (each, an "Additional
Mortgagee") provided the same shall not result in an increase of
Lessee's obligations or liabilities hereunder on the date of such
transaction nor restrict Lessee's rights in respect of this
Agreement or the Aircraft. In the case of any such grant by Lessor
or Owner of an Additional Mortgage to an Additional Mortgagee in all
or any portion of Lessor's or Owner's rights, title and interest in
and to the Aircraft and this Agreement, subject to this Clause 14.3
and to Lessee receiving a letter of quiet enjoyment substantially
similar to Part 4 of Schedule 5 (and including the additional
paragraphs set forth in Part 5 of Schedule 5 if the Additional
Mortgage includes an Assignment (or such substantially similar
wording as Lessor and Lessee may agree)) from such Additional
Mortgage and notice of assignment in a form reasonably acceptable to
Lessee, Lessee shall
106
promptly, at the specific written request of Lessor, as the case may
be, and with Lessor or Owner, as the case may be, paying all of
Lessee's out-of-pocket costs and expenses execute an acknowledgement
of assignment in such form as Lessor or Owner, as the case may be,
may reasonably request.
15. MISCELLANEOUS
15.1 SURVIVAL:
All provisions of this Agreement constituting an obligation on the
part of either party to indemnify the other party or any other
Indemnitee shall survive the expiration or any termination or
cancellation of this Agreement and shall continue in full force and
effect.
15.2 WAIVERS, REMEDIES CUMULATIVE:
The rights under this Agreement:
(i) may be exercised as often as necessary;
(ii) are cumulative and not exclusive of its rights under any
law; and
(iii) may be waived only in writing and specifically.
Delay in exercising or nonexercise of any such right will not
constitute a waiver of that right.
15.3 DELEGATION:
Lessor may delegate to any Person or Persons all or any of the
trusts, powers or discretions vested in it by these presents and any
such delegation may be made upon such terms and conditions and
subject to such regulations (including power to subdelegate) as
Lessor in its absolute discretion thinks fit, provided no such
delegation shall affect the rights, obligations or liabilities of
Lessee or Guarantor.
15.4 CERTIFICATES:
Save where expressly provided in this Agreement, any determination
by Lessor (in accordance with the terms of this Agreement) as to any
rate of interest payable under this Agreement will, in the absence
of manifest error, be conclusive and binding on Lessee.
15.5 APPROPRIATION:
If any sum paid or recovered in respect of the liabilities of Lessee
under this Agreement is less than the amount then due, Lessor may
apply that sum to amounts due under this Agreement in such
proportions and order and generally in
107
such manner as Lessor, acting reasonably, may determine and, upon
written request, notify Lessee of such application.
15.6 SEVERABILITY:
If a provision of this Agreement is or becomes illegal, invalid or
unenforceable in any jurisdiction, that will not affect:
(a) the legality, validity or enforceability in that jurisdiction
of any other provision of this Agreement; or
(b) the legality, validity or enforceability in any other
jurisdiction of that or any other provision of this Agreement.
15.7 REMEDY:
If Lessee fails to comply with any provision of this Agreement,
Lessor may, without being in any way obliged to do so or responsible
for so doing and without prejudice to the ability of Lessor to treat
the noncompliance as a Default or an Event of Default, effect
compliance on behalf of Lessee, whereupon Lessee shall become liable
to pay immediately any sums expended by Lessor together with all
costs and expenses (including legal costs) in connection therewith.
15.8 EXPENSES:
(a) Each of Lessor and Lessee will pay its own expenses (including
legal, professional, and out-of-pocket expenses) incurred or
payable in connection with the negotiation, preparation, and
execution of this Agreement;
(b) Without duplication of any other amounts payable by Lessee
hereunder, Lessee will pay to Lessor promptly following demand
all reasonable expenses (including legal, professional, and
out-of-pocket expenses) related to any amendment to or
extension of any other documentation in connection with, or
the granting of any waiver or consent under, this Agreement
which has been requested by Lessee;
(c) Lessor will pay to Lessee promptly following demand all
reasonable expenses (including legal, professional, and
out-of-pocket expenses) related to any amendment to or
extension of any other documentation in connection with, or
the granting of any waiver or consent under, this Agreement
which has been requested by Lessor unless the same arises out
of, or is connected with, the occurrence of an Event of
Default;
(d) Without duplication of any other amounts payable by Lessee
hereunder, Lessee will pay to Lessor promptly following demand
all reasonable expenses (including legal and other costs)
payable or incurred by Lessor in
108
connection with the enforcement of or preservation of any of
Lessor's rights under, this Agreement, or in respect of the
repossession of the Aircraft; and
(e) Except as provided in clause 14.2(a)(ii), Lessee will pay to
Lessor promptly following demand all reasonable expenses
(including legal, survey and other costs) payable or incurred
by Lessor in connection with (i) up to $2,000 with respect to
the Trust Agreement and the tax structure of this transaction,
and (ii) the filing or recording of this Agreement in the
Country of Registration, the Habitual Base and other states
(as appropriate given the operation of the Aircraft),
including, in each case, the provision of legal opinions, tax
advice (to the extent related to the Trust Agreement and the
tax structure of this transaction), stamp duties, notarial
fees, translations and registrations, if required by either
Lessor or Lessee.
All expenses payable pursuant to this Clause 15.8 will be paid in
the currency in which they are incurred by Lessor or Lessee, as the
case may be.
15.9 TIME OF ESSENCE:
The time stipulated in this Agreement for all payments and for the
performance of all other obligations under this Agreement will be of
the essence of this Agreement.
15.10 NOTICES:
All notices under, or in connection with, this Agreement will,
unless otherwise stated, be given in writing by letter or facsimile.
Any such notice is deemed effectively to be given as follows:
(i) if by letter, when delivered;
(i) if by facsimile, when transmitted and full transmission
has been separately notified by telephone by the
transmitting party.
The address, facsimile and telephone numbers of Lessee and Lessor
are as follows:
Lessee: Address: Compania Panamena de Aviacion, S.A.
Avenida Xxxxx Xxxxxxxxx y Xxxxx 00
Xxxxxxxx 0000
Xxxxxx 0, Xxxxxxxx of Panama
Attn: Vice President - Finance
Facsimile: 000.000.000.0000
Telephone: 000.000.000.0000
109
Lessor: Address: XXXXX FARGO BANK NORTHWEST, N.A.
000 Xxxxx Xxxx Xxxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
Attn: Corporate Trust Department
Facsimile: x0 (000) 000-0000
Telephone: x0 (000) 000-0000
15.11 LAW AND JURISDICTION:
(a) This Agreement is governed by the Governing Law including all
matters of construction, validity and performance. This
Agreement is delivered in the State of New York;
(b) Both parties agree that the Supreme Court of the County of New
York, State of New York and the federal courts of the United
States of America sitting in the Southern District of New York
are to have jurisdiction to settle any disputes that may arise
in connection with or arising out of the legal relationships
established by this Agreement (including, without limitation,
claims for set-off or counterclaim) and the other Transaction
Documents or otherwise arising in connection with this
Agreement and the other Transaction Documents. Both parties
hereby irrevocably and unconditionally submit to the
jurisdiction of the Supreme Court of the City of New York,
State of New York and the federal courts of the United States
of America sitting in the Southern District of New York. The
submission to such jurisdiction shall not (and shall not be
construed so as to) limit the rights of any party to take
proceedings against any other party in any other court of
competent jurisdiction, nor shall the taking of proceedings in
any one or more jurisdictions preclude the taking of
proceedings in any other jurisdiction, whether concurrently or
not;
(c) Nothing in this Clause limits the right of either party to
bring proceedings against the other in connection with this
Agreement:
(i) in any other court of competent jurisdiction; or
(ii) concurrently in more than one jurisdiction.
(d) Each party irrevocably and unconditionally:
(i) agrees that if the other party brings legal proceedings
against it or its assets in relation to this Agreement
no immunity from such legal proceedings (which will be
deemed to include, to the extent available, suit,
attachment prior to judgment, other attachment, the
110
obtaining of judgment, execution or other enforcement)
will be claimed by or on behalf of itself or with
respect to its assets;
(ii) waives, and agrees not to assert, by way of motion, as a
defense, or otherwise, in any such suit, action or
proceeding, the defense of sovereign immunity, any claim
that it is not personally subject to the jurisdiction of
the above-named courts by reason of sovereign immunity
or otherwise or that it is immune from any legal process
(whether thorough service of notice, attachment prior to
judgment, attachment in aid of execution, execution or
otherwise) with respect to itself of its property, or
any objection on the grounds of venue or forum non
conveniens or any similar grounds; and
(iii) consents generally in respect of any such proceedings to
the giving of any relief or the issue of any process in
connection with such proceedings including, without
limitation, the making, enforcement or execution against
any property whatsoever (irrespective of its use or
intended use) of any order or judgment which may be made
or given in such proceedings.
(e) Each party:
(i) irrevocably waives objection to the Supreme Court of the
County of New York, State of New York and the federal
courts of the United States of America sitting in the
Southern District of New York on grounds of venue or
inconvenient forum or otherwise as regards proceedings
in connection with this Agreement; and
(ii) agrees that a final (no longer appealable) judgment or
order of a court of the State of New York or a federal
court of the United States of America sitting in the
Southern District of New York in connection with this
Agreement is conclusive and binding on it and may be
enforced against it in the courts of any other
jurisdiction.
(f) EACH OF LESSEE AND LESSOR HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY ALL RIGHTS TO A JURY TRIAL IN
RESPECT OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING
OUT OF THIS AGREEMENT OR THE OTHER TRANSACTION DOCUMENTS OR
ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF
THE TRANSACTIONS CONTEMPLATED HEREBY OR 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. EACH OF
LESSOR AND LESSEE REPRESENTS AND WARRANTS THAT IT VOLUNTARILY
111
WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH ITS
LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE AND THIS WAIVER
SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR THE OTHER
TRANSACTION DOCUMENTS. IN THE EVENT OF LITIGATION, THIS CLAUSE
MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT;
(g) The parties hereto agree that, in the event of non-compliance
with any of its obligations under this Agreement by Lessee,
Lessor may bring an action against Lessee in respect of such
non-compliance under the laws of the state of New York or
under the laws governing civil aviation of the Republic of
Panama, or in any jurisdiction where Lessee or any of its
assets may be found. Lessee acknowledges that the laws
governing civil aviation of the Republic of Panama, in
Articles 20 and 24 of Law 21 of January 29, 2003, authorize
Lessor, in the event of non-compliance with any of its
obligations under this Agreement by Lessee, to terminate this
Agreement and take possession and material control of the
Aircraft in accordance with the terms of this Agreement,
without notice or judicial procedure; and
(h) Lessee shall at all times maintain an agent for service of
process in New York. Such agent shall be Corporate Service
Company (CSC), 1133 Avenue of the Americas, Xxxxx 0000, Xxx
Xxxx, Xxx Xxxx 00000, and any claim form, judgment or other
notice of legal process shall be sufficiently served on Lessee
if delivered to such agent at its address for the time being.
If for any reason, such agent no longer serves as agent of
Lessee to receive service of process in New York, Lessee shall
promptly appoint another agent and advise Lessor thereof.
15.12 SOLE AND ENTIRE AGREEMENT:
(a) ENTIRE AGREEMENT; AMENDMENTS: This Agreement and the other
Transaction Documents are the sole and entire agreement
between Lessor and Lessee in relation to the leasing of the
Aircraft, and supersede all previous agreements in relation to
that leasing. Any amendments hereto shall be made in writing
and signed on behalf of Lessor and Lessee; and
(b) TRUE LEASE: The parties intend and agree that this Agreement:
(i) constitutes a "true lease" and not a "security interest"
as defined in Section 1-201(37) of the UCC; and
(ii) confers only a leasehold interest on Lessee in and to
the Aircraft on and subject to the terms of this
Agreement, and no ownership or
112
other interest with respect to the Aircraft is provided
to Lessee under this Agreement.
Lessee shall not file any tax return that is inconsistent with
the provisions of this Clause 15.12(b).
15.13 INDEMNITIES:
All rights expressed to be granted to each Indemnitee under this
Agreement (other than Lessor and Beneficiary) are given to Lessor on
behalf of that Indemnitee.
15.14 COUNTERPARTS:
This Agreement may be executed in counterparts each fully-executed
set of which will constitute one and the same document.
15.15 LANGUAGE:
All notices to be given under this Agreement will be in English. All
documents delivered to Lessor pursuant to this Agreement will be in
English, or if not in English, will be accompanied by a certified
English translation. If there is any inconsistency between the
English version of this Agreement and any version in any other
language, the English version will prevail.
15.16 NO BROKERS:
Each party agrees to indemnify and hold the other harmless from and
against any and all claims, suits, damages, costs and expenses
(including, but not limited to, reasonable attorneys' fees) asserted
by any agent, broker or other third party for any commission or
compensation of any nature whatsoever based upon the lease of the
Aircraft, if such claim, suit, damage, cost or expense arises out of
any action or alleged action by the indemnifying party, its
employees or agents.
15.17 CONFIDENTIALITY:
(a) Each of Lessor and Lessee agrees that it will endeavor to keep
all terms and provisions of this Agreement and the agreements
and documents related hereto, and all other information,
material, documents and data furnished by the other party
hereunder as confidential (except Aircraft Documents), and
that all such other information, material, documents and data
will not be furnished or disclosed by it to any other Person,
firm or corporation except (to the extent that such Person
agrees to be bound by the confidentiality standards of this
Clause) Beneficiary, any Financing Party, the Manufacturer,
the manufacturer of the Engines, the Air Authority or such
other governmental agency that may require submission of other
information, material, documents or data), without the other
party's prior written consent; provided, however, that both
parties hereby
113
consent to the disclosure of any and all such confidential
information to their respective boards of directors and the
boards of directors of their respective affiliates; creditors,
Beneficiary, the Financing Parties and lawyers, accountants
and others providing professional services to Lessee, Lessor,
Beneficiary or any Financing Party; provided further that
neither party or other Person shall be deemed to be in breach
of this provision by virtue of it making any filing for public
record which is required under the laws of the Country of
Incorporation, the State of New York or the federal laws of
the United States of America; and
(b) The restrictions in Clause 15.17(a) with respect to disclosure
of confidential information shall not apply to any information
which any party demonstrates (i) becomes available to the
public other than as a result of a disclosure by such party or
its representatives; (ii) was available to such party on a
nonconfidential basis prior to its disclosure pursuant to this
Agreement; (iii) becomes available to such party on a
nonconfidential basis from a source other than the other party
hereto or its representatives, (iv) it is compelled to or
required to disclose by legal action; (v) is required in
connection with any litigation hereunder; (vi) is required in
connection with a disposition or other transfer of rights
permitted or consented to in writing by both parties
hereunder; or (vii) is required or advised based on legal
advice of counsel in order to protect and perfect the
interests and rights of Lessor hereunder; provided the
proposed transferee agrees in writing to be bound by the
provisions of this Clause 15.17, each party shall only be
required to use the same degree of care to prevent
unauthorized disclosure of the information described above as
it would use to prevent the disclosure of its own commercial
and financial information of the same or similar nature and
which it considers proprietary or confidential.
15.18 LIABILITY OF LESSOR LIMITED:
It is expressly agreed and understood that all representations,
warranties and undertakings of Lessor hereunder shall be binding
upon Lessor only in its capacity as trustee under the Trust
Agreement, and neither the institution acting as Lessor nor the
Beneficiary shall be liable in its individual capacity for any
breach of Lessor's representations, warranties and undertakings
except in the case of the institution acting as Lessor for breach of
its own covenants, representations and warranties contained herein,
to the extent covenanted or made in its individual capacity.
16. DISCLAIMERS AND WAIVERS
LESSOR AND LESSEE AGREE THAT THE DISCLAIMERS, WAIVERS AND
CONFIRMATIONS SET FORTH IN CLAUSES 16.1 TO 16.3 BELOW SHALL APPLY AT
ALL TIMES DURING THE TERM WITH EFFECT FROM
114
LESSEE'S ACCEPTANCE OF THE AIRCRAFT BY EXECUTION OF THE LEASE
SUPPLEMENT NO.1, WHICH SHALL BE CONCLUSIVE EVIDENCE THAT LESSEE HAS
FULLY INSPECTED THE AIRCRAFT AND EVERY PART THEREOF AND THAT THE
AIRCRAFT, THE ENGINES, THE PARTS AND THE AIRCRAFT DOCUMENTS ARE, AS
BETWEEN LESSOR AND LESSEE, TECHNICALLY ACCEPTABLE AND ARE IN
SUITABLE CONDITION FOR DELIVERY TO AND ACCEPTANCE BY LESSEE.
16.1 EXCLUSION:
THE AIRCRAFT IS DELIVERED "AS IS, WHERE IS" AND LESSEE AGREES AND
ACKNOWLEDGES THAT AS BETWEEN LESSOR AND LESSEE:
(A) EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, NONE OF
LESSOR, OWNER OR BENEFICIARY WILL BE DEEMED TO HAVE MADE OR
GIVEN, (WHETHER BY VIRTUE OF HAVING DONE OR FAILED TO DO ANY
ACT, OR HAVING ACQUIRED OR FAILED TO ACQUIRE ANY STATUS UNDER
OR IN RELATION TO THIS AGREEMENT OR OTHERWISE), AND WILL NOT
HAVE ANY LIABILITY IN RELATION TO, ANY WARRANTIES OR
REPRESENTATIONS, EXPRESS OR IMPLIED, WITH RESPECT TO, THE
AIRCRAFT, ANY ENGINE OR ANY PART, INCLUDING BUT NOT LIMITED
TO: THE DESCRIPTION, AIRWORTHINESS, MERCHANTABILITY,
COMPLIANCE WITH SPECIFICATIONS, OPERATION, FREEDOM FROM
INFRINGEMENT OF PATENT OR OTHER PROPRIETARY RIGHTS, FITNESS
FOR ANY PARTICULAR USE OR PURPOSE, VALUE, DURABILITY,
CONDITION, OR DESIGN, OF THE AIRCRAFT OR ANY PART, OR AS TO
THE QUALITY OF THE MATERIAL OR WORKMANSHIP, THE ABSENCE OF
LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, OR AS TO
ANY OTHER MATTER WHATSOEVER, EXPRESS OR IMPLIED (INCLUDING ANY
IMPLIED WARRANTY ARISING FROM A COURSE OF PERFORMANCE OR
DEALING OR USAGE OF TRADE) WITH RESPECT TO THE AIRCRAFT, ANY
ENGINE OR ANY PART; OR
(B) EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, NONE OF
LESSOR, OWNER OR BENEFICIARY SHALL HAVE ANY OBLIGATION OR
LIABILITY WHATSOEVER TO LESSEE (WHETHER ARISING IN CONTRACT OR
IN TORT, AND WHETHER ARISING BY REFERENCE TO NEGLIGENCE OR
STRICT LIABILITY OF LESSOR OR OTHERWISE) FOR:
(i) ANY LIABILITY, LOSS OR DAMAGE CAUSED OR ALLEGED TO BE
CAUSED DIRECTLY OR INDIRECTLY BY
115
THE AIRCRAFT OR ANY ENGINE 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 ANY INDIRECT OR CONSEQUENTIAL
LOSS OR DAMAGE; OR
(iv) THE DELIVERY, OPERATION, SERVICING, MAINTENANCE, REPAIR,
IMPROVEMENT OR REPLACEMENT OF THE AIRCRAFT, ANY ENGINE
OR ANY PART;
16.2 WAIVER:
LESSEE HEREBY WAIVES, AS BETWEEN ITSELF AND LESSOR, ALL ITS RIGHTS
IN RESPECT OF ANY WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, ON
THE PART OF LESSOR THAT IS DISCLAIMED HEREIN AND ALL CLAIMS AGAINST
LESSOR HOWSOEVER AND WHENEVER ARISING AT ANY TIME IN RESPECT OF OR
OUT OF ANY OF THE MATTERS WAIVED OR DISCLAIMED IN CLAUSE 16.1.
16.3 DISCLAIMER OF CONSEQUENTIAL DAMAGES:
LESSEE AGREES THAT IT SHALL NOT BE ENTITLED TO RECOVER, AND HEREBY
DISCLAIMS AND WAIVES ANY RIGHT THAT IT MAY OTHERWISE HAVE TO
RECOVER, LOST PROFITS OR REVENUES OR CONSEQUENTIAL DAMAGES (AS
DEFINED IN SECTION 2A-520 OF THE UNIFORM COMMERCIAL CODE OR
OTHERWISE) AS A RESULT OF ANY BREACH OR ALLEGED BREACH BY LESSOR OF
ANY OF THE AGREEMENTS, REPRESENTATIONS OR WARRANTIES OF LESSOR
CONTAINED HEREIN.
16.4 CONFIRMATION:
LESSEE CONFIRMS THAT IT IS FULLY AWARE OF THE PROVISIONS OF THIS
CLAUSE 16 AND ACKNOWLEDGES THAT RENT AND OTHER AMOUNTS HAVE BEEN
CALCULATED NOTWITHSTANDING ITS PROVISIONS.
116
SCHEDULE 1
PART 1
DESCRIPTION OF AIRCRAFT
AIRCRAFT
Manufacturer: The Boeing Company
Model: B737-800
Serial Number: 29670
Maximum Take Off Weight (MTOW): 174,200 lbs.
Maximum Landing Weight (MLW): 146,300 lbs.
Maximum Zero Fuel Weight (MZFW): 138,300 lbs.
Specification: Manufacturer's detailed specification number
D6-38808-43-1 Revision A, dated October 31,
2003 for B737-800NG model designation
B737-8V3, including all Boeing Options and
related Seller Furnished Equipment, Buyer
Furnished Equipment and Seller Furnished
Equipment.
ENGINES
Manufacturer: Two (2) CFM International, Inc.
Model: CFM56-7B26, rated at 26,300 lbs static take
off thrust
Serial Numbers: [TBA] and [TBA]
APU
Manufacturer: Honeywell
Model: [TBA]
Serial Number: [TBA]
117
Delivery Condition Requirements
1. The Aircraft shall conform to the Description set out herein, as modified
in accordance with Manufacturer approved service bulletins issued with
respect to the aircraft on or prior to the Sale Date.
2. With a Certificate of Airworthiness for Export issued by the FAA valid on
the date of original new delivery from the Manufacturer in compliance with
all FAA AD's and FAR's to FAR 121 Standard
3. With a LOPA (Lay Out Passenger Arrangement) in accordance with Boeing
database LOPA-378-1244 with 155 (14 business and 141 economy) class
seating
And in addition;
4. With MAS IFE Installed post Delivery
5. With blended winglets installed post Delivery
Note: The above post delivery modifications, items 5 & 6 above, will be
the responsibility of Lessee and to Lessee's account. However, Lessor will
reimburse Lessee the full amount of incorporating such modifications
including installation at cost, up to $950,000 (October 2003 dollars) upon
presentation with an invoice for the same.
With customary Lessor assignment to Lessee of all airframe, engine and equipment
warranties applicable to the Aircraft.
PART 2
AIRCRAFT DOCUMENTS
I. AIRCRAFT DOCUMENTS AT DELIVERY
At Delivery, the following manuals and technical records will be
delivered to Lessee:
FLIGHT OPERATIONS
1 Airplane Flight Manual
2 Operations Manual
3 Quick Reference Handbook
4 Weight and Balance Manual
5 Dispatch Deviation Procedures Guide
6 Flight Crew Training Manual
7 Performance Engineer's Manual
118
8 Jet Transport Performance Methods
9 FMC Supplemental Data Document
10 Operational Performance Software
11 Fault Reporting Manual
12 ETOPS Guide Vol. III
13 Flight Planning and Performance Manual
MAINTENANCE
14 Aircraft Maintenance Manual
15 Wiring Diagram Manual
16 Systems Schematics Manual
17 Structural Repair Manual
18 Overhaul/Component Practices Manual
19 Standard Overhaul Practices Manual
20 Standard Wiring Practices Manual
21 Non-Destructive Test Manual
22 Services Bulletins and Index
23 Corrosion Prevention Manual
24 Fault Isolation Manual
25 Fuel Measuring Stick Manual
26 Power Plan Buildup Manual
27 In Service Activity Report (online only and not listed on worksheet)
28 All Operator Letters
29 Service Letters
30 Structural Item Interim Advisory
31 Maintenance Tips
32 Combined Index
MAINTENANCE PLANNING
119
33 Maintenance Planning Data Document
34 Maintenance Planning Data Tasks Masterfile (including in the digital
version only to the Maintenance Task Cards)
35 Maintenance Task Cards and Index
36 Airline Maintenance Inspection Intervals Report
37 ETOPS Guide Vol. II
38 Configuration Maintenance and Procedures for Extended Range Operations
SPARES
39 Illustrated Parts Catalog
40 Standards Books
FACILITIES AND EQUIPMENT PLANNING
41 Facilities and Equipment Planning Document
42 Special Tool and Ground Handling Equipment Drawings (online only) and
Index
43 Supplementary Tooling Documentation
44 Illustrated Tool and Equipment List/Manual
45 Aircraft Recovery Document
46 Airplane Characteristics for Airport Planning Document
47 Airplane Rescue and Fire Fighting Document
48 Engine Ground Handling Document
49 ETOPS Guide Vol. I
SUPPLIER TECHNICAL DATA
50 Service Bulletins
51 Ground Support Equipment Data
52 Provisioning Information
53 Component Maintenance/Overhaul Manuals and Index
54 Publications Index
55 Product Support Supplier Directory
120
II. AIRCRAFT DOCUMENTS DURING TERM AND AT RETURN
Lessee shall maintain all documents, manuals, data, overhaul records, records
evidencing life limited part traceability to "zero time since new," log books
original new delivery documents, component records, applicable and required FAA
forms, modifications records and inspection records relating to the Aircraft,
each Engine and each Part in accordance with the requirements of Clause 8.10 of
this Agreement and in compliance with FAR 91.417 and FAR 121.380 during the
Term, and on the Final Expiry Date, Lessee shall return the Aircraft to Lessor
together with all such records, documents and manuals. Without limiting the
generality of the foregoing, the records required to be maintained by Lessee
during the Term include all of the following, and all of the documents and
manuals listed under Clause I of this Part 2 of this Schedule 1:
A. CERTIFICATES
1 Certificate of Airworthiness (current)
2 Current Aircraft Registration Certificate
3 Export Certificate of Airworthiness (Air Authority)
4 Copy of Radio Station License (current)
5 Noise certificate (current)
6 Export Certificate of Airworthiness (original new delivery for Aircraft
and each Engine)
7 Registration cancellation notice (Air Authority)
8 Copy of Air Operator Certificate
9 Certificate of Most Recent Release to Service
10 All Supplemental Type Certificates (STC) applied to the Aircraft
B. AIRCRAFT STATUS SUMMARIES
Each status summary shall be in the English language and be certified by
operator's Quality Control or Quality Assurance as being an accurate
representation of aircraft status at transfer. All status summary
documents to be signed and dated on first page by the Lessee's Manager of
Aircraft Records or other appropriate individual.
1 Aircraft record of flight time and cycles (listing accumulated hours and
cycles on specific dates).
2 Airworthiness Directive Applicability and Compliance Status Reports
(Airframe, Engines and Appliances) Format/content as follows:
121
(a) Airworthiness Directives listed in a chronological order; and
(b) All Airworthiness Directives applicable to the Aircraft,
Engine, APU or Aircraft Appliance type listed as follows:
- AD number;
- AD effective date;
- title;
- applicability status;
- accomplishment status;
- date or hours/cycles at last accomplishment action; and
- date or hours/cycles of next action due (if applicable).
3 Manufacturer's Airworthiness Directive compliance status at time of
manufacture as provided by Manufacturer at Aircraft Delivery.
4 Complete listing of all Engineering Orders accomplished against the
Aircraft. For those Engineering Orders that are driven by a Service
Bulletin, Airline will use best efforts to provide the applicable Service
Bulletin number. The listing will otherwise include:
- title;
- date of accomplishment;
5 If applicable, Corrosion Prevention and Control Programme Task Status
(showing last accomplishment and next due for each task) listing the
Corrosion Prevention and Control Programme Tasks.
6 If applicable, Ageing Aircraft Inspection and Modification Programme)
tasks status (showing task number, termination status as applicable, last
accomplishment and next due for each item if open) if applicable.
7 List of Operator implemented Modifications Incorporated (Engineering
Orders applied to Airframe, Engines and Appliances). Format/content as
follows:
(a) Operator Modifications listed in numerical order; and
(b) Aviation Authority/FAA type certificate data approval for
modification provided.
122
8 Structural Repair File with a detailed Scratch and Dent computer report as
prepared by Lessee detailing the location of all external repairs and
damages indicating their status in accordance with the Manufacturers
structural repair manual showing general size and location of each
external repair and basis for approval. Format/content as follows:
(a) records of accomplishment or compliance of each Major Repair
provided as follows:
- Original signed/certified "dirty finger print" records;
- Numbered and sorted by index number; and
(b) records for Major Repairs or repairs that do not conform to
the Manufacturer's Structural Repair Manual accompanied by the
appropriate Engineering Approval document issued by the State
of Washington FAA Form 8110-3 Statement or FAA Form 8100-9 (or
any successor of either), as applicable.
9 List of Major Alterations and Supplemental Type Certificate's Incorporated
(STC's) (with reference to approved documentation used to accomplish).
10 List and Status of Airframe Life Limited Parts (if any) with full back to
birth traceability support documents. Format/content as follows:
(a) each Life Limited Part fitted to the Airframe listed by part
number and unique serial number;
(b) detailed full back to birth traceability file supplied for
each individual Life Limited Part detailing on/off transaction
history for Engine LLPs, and FAA Form 8130-3's or equivalent
showing status of LLP at installation for other LLPs;
(c) original Airworthiness document issued when the Life Limited
Parts was new (such as the manufacturer's certificate of
conformity or readiness log document as appropriate); and
(d) if available, supplied tags and any other appropriate
certified document or job-card indicating hours/cycles or
calendar time at each on/off demonstrating unbroken trace of
the Hours/cycles or calendar time from birth up to current
time.
11 List and Status of Landing Gear Life Limited Parts for each Landing Gear
with full back to birth traceability support documents Format/content as
follows:
(a) each Life Limited Part fitted to Landing Gear listed by part
number and unique serial number;
123
(b) detailed full back to birth traceability file supplied for
each individual Life Limited Part detailing on/off transaction
history, if available, otherwise FAA form 8130-3 or
equivalent; showing status of LLPs at installation.
(c) original Airworthiness tag document issued when the Life
Limited Parts was new (such as the manufacturer's tag,
certificate of conformity or readiness log document as
appropriate); and
(d) if available, supplied tags and any other appropriate
certified document or job-card indicating hours/cycles or
calendar time at each on/off demonstrating unbroken trace of
the Hours/cycles or calendar time from birth up to current
time.
12 List and Status of Engine Life Limited Parts with full back to birth
traceability support documents. Format/content as follows:
(a) each Life Limited Part fitted to the engine identified by part
number and unique serial number;
(b) detailed full back to birth traceability file supplied for
each individual Life Limited Part detailing on/off transaction
history;
(c) original Airworthiness tag document issued when the Life
Limited Parts was new (such as the manufacturer's tag,
certificate of conformity or readiness log document as
appropriate) provided;
(d) full back to birth traceability file for each Life Limited
Part provided, to include the Airworthiness approval tag (JAA
form 1 or FAA form 8130-3 or equivalent) pertaining to each
subsequent (if any) on/off transaction up to and including
installation on the subject airframe; and
(e) supplied tags and any other appropriate certified document or
job-card indicating hours/cycles or calendar time at each
on/off demonstrating unbroken trace of the Hours/cycles or
calendar time from birth up to current time.
13 List and Status of Auxiliary Power Unit (APU) Life Limited Parts (if any)
with full back to birth traceability support documents Format/content as
follows:
(a) each Life Limited Part fitted to the APU identified by part
number and unique serial number;
(b) detailed full back to birth traceability file supplied for
each individual Life Limited Part detailing on/off transaction
history;
124
(c) original Airworthiness tag document issued when the Life
Limited Parts was new (such as the manufacturer's tag,
certificate of conformity or readiness log document as
appropriate) provided;
(d) full back to birth traceability file for each Life Limited
Part provided, to include the Airworthiness approval tag (JAA
form 1 or FAA form 8130-3 or equivalent) pertaining to each
subsequent (if any) on/off transaction up to and including
installation on the subject airframe; and
(e) supplied tags and any other appropriate certified document or
job-card indicating hours/cycles or calendar time at each
on/off demonstrating unbroken trace of the Hours/cycles or
calendar time from birth up to current time.
14 Check/Inspection History and Current Status
15 List and Current Status of Time-Controlled Components Format/content as
follows:
(a) Time-Controlled Components fitted to the Aircraft listed by
part number and unique serial number; and
(b) Airworthiness approval tag (JAA form 1 or FAA form 8130-3 or
equivalent) provided for Time-Controlled Components.
16 Inventory of Installed Serialized On-Condition/Condition Monitored
Components . Format/content as follows:
(a) Serialised Components fitted to the Aircraft listed by part
number and unique serial number; and
(b) Airworthiness approval tag (JAA form 1 or FAA form 8130-3 or
equivalent) provided for Serialised Components.
17 List of Deferred Maintenance Items (if no Deferred Maintenance Items are
"open" at transfer, a signed statement to that effect is required).
List and Status of any Out-of-Phase Checks, Special Inspection
Requirements, Time Limited Repairs, etc. (If none exist or if
requirements are incorporated into aircraft status reports, then a
signed statement to that effect is required.)
18 If applicable, Supplemental Structural Inspection (SSID) Status (showing
last accomplishment and next due for each task). Format/content as
follows:
listing the Supplemental Structural Inspections in a numerical or
chronological order as applicable.
125
C. AIRCRAFT MAINTENANCE RECORDS
Airframe inspection, maintenance, modification, and repair documents
with maintenance and/or inspection signatures (as required) and
description of work done.
1 Aircraft Flight and Maintenance Log Sheets for one year.
2 Most recent Airframe inspection, maintenance, modification and repair
documents with maintenance and/or inspection signatures (as required) and
description of work done.
3 Last "A", and all systems "C" and Structural Checks (or equivalents). (In
the event that a check is performed in phases, all phases necessary to
constitute a complete block check are required. In the event that check
content varies by multiples of the check, all multiples necessary to
constitute a complete cycle are required.)
4 Airworthiness Directive, Service Bulletin and Modification compliance
documents including engineering orders, drawings, shop cards, etc., as
necessary to establish method of compliance, quality control acceptance,
and approval authority.
5 Corrosion Prevention and Control Programme compliance documents and
inspection findings as applicable including records of accomplishment or
compliance provided (the original signed/certified "dirty finger print"
workcards).
6 Documentation for Operator Modifications such as engineering orders,
drawings, FAA Form 8110-3 or FAA Form 8100-9 (as appropriate),
Supplemental Type Certificates, Master Change Notice, FAA type certificate
conformity approval from manufacturer or approved design organisation
etc., as necessary to define work done, certification basis, and approval
authority.
7 Without duplication, supporting documentation for Operator Modifications
such as engineering orders, drawings, FAA Form 8110-3 or FAA Form 8100-9
(as appropriate), Supplemental Type Certificates, Master Change Notice,
FAA type certificate conformity approval from manufacturer or approved
design organisation etc., as necessary to define work done, certification
basis, and approval authority.
8 Aircraft weight and balance records (including weight change ledger, most
recent weighing report and individual flight control weight and balance
data).
9 Test Flight Reports, to the extent available.
10 X-Ray Inspection findings (pictures/film) as applicable, to the extent
available.
126
D. AIRCRAFT HISTORY RECORDS
1 Copies of maintenance logs for one year, and last available Lessee
Reliability reports and equivalent, or those retained as required by the
Federal Aviation Regulations (FARs).
2 Accident and Incident Reports (if none, then a signed "no
Incident/Accident" statement from operator's Quality Control Manager).
3 Aircraft Log Book(s) or equivalent data and Aviation Authority Operation
and Modification Log Book(s) (as applicable), for the last year or those
retained as required by the FARs.
E. ENGINE RECORDS (FOR EACH ENGINE)
Each status summary shall be in the English language and be certified by
operator's Quality Control or Quality Assurance as being an accurate
representation of engine status at transfer.
1 Certified statement as to following:
- Time and Cycles since new
- Time and Cycles since performance restoration on each engine
module
- Flying hours and cycles in Lessee's operation
2 Airworthiness Directive Applicability and Compliance Report
3 Current Manufacturer Modification and Service Bulletin Status
4 List of Operator Modifications Incorporated, if any including supporting
documentation with Manufacturer approval and JAA/FAA Type Certificate
conformity, as applicable
5 List of all Major Repairs and Alterations, if any
6 List and Current Status of Life Limited Components
7 Check/Inspection Status
8 Accessory Status sheet with certified TSO for each rotable item installed
9 Last shop visit JAA Form I/FAA form 8130-3 or equivalent serviceable tag
(or copies) for each of the accessory rotables and last JAA Form I/FAA
form 8130-3 or equivalent overhaul tags (or copies) for each of the
accessory rotables with a hard-time overhaul requirement
127
10 Repair, overhaul and inspection documents including JAA Form I/FAA form
8130-3 for each shop visit (minimum acceptable is shop visit history
through last performance restoration shop visit and if different, last
overhaul of each module)
11 Documents demonstrating installation and full traceability back to birth
(to new) for each Life Limited Part
12 Engine Condition Monitoring Report for last six months
13 Last three (3) months of pilot reports from the aircraft records system
for the aircraft to which engine was fitted, as required by FAA's
14 Reason for last engine removal, engine change paperwork and date of engine
removal
15 Most recent certified engine borescope (videotaped)
16 Most recent fuel, oil sampling, magnetic chip detector and vibration
survey results
17 Most recent on-wing ground performance run specifying engine OATL (outside
air temperature limit) at rated thrust
18 Last certified Test Cell Run specifying engine OATL
19 Manufacturer delivery documents i.e. Data Submittal
20 Engine Oil used
21 Any incidents during operation since last performance restoration shop
visit with action taken i.e. IFSD/FOD/oil loss etc.
F. APU RECORDS
Each status summary shall be in the English language and be certified by
operator's Quality Control or Quality Assurance as being an accurate
representation of APU status at transfer.
1 Certified statement as to following:
- Hours and Cycles since new
- Hours and Cycles since shop visit
- Lessee's Method for APU Time Accrual
2 Airworthiness Directive Applicability and Compliance Report
3 Current Manufacturer Service Bulletin Status
128
4 List of Operator Modifications Incorporated, if any including supporting
documentation with Manufacturer approval and FAA Type Certificate
conformity
5 List and Current Status of Life Limited Components
6 Accessory Status Sheet with certified time since overhaul for each rotable
item installed
7 Last overhaul tags (or copies) for each of the accessory rotables
8 Certified and Updated APU Log Book from new (with manufacturer delivery
documents and including record of installation and removal and accumulated
time and cycles)
9 Repair, overhaul and inspection documents including, as applicable, JAA
Form I/FAA forms 8130-3 and 337
10 Documents demonstrating installation and full traceability back to birth
(to new) for each Life Limited Part
11 List of Line Replaceable Units (LRU)/QEC Rotable items missing from APU
(if any for any spare APU redelivery)
12 Last three (3) months of pilot reports from the aircraft records system
for the aircraft to which APU was fitted
13 Reason for last APU removal, removal paperwork and date of APU removal
14 Last certified test cell run
G. COMPONENT RECORDS
1 Time Controlled Component Installation records and certified records of
last overhaul, if applicable
2 Documents demonstrating installation and full traceability back to birth
(to new) for each Type Certificate Life Limited Part
3 Serviceable tags for Serialised On-Condition/Condition Monitored
Components, as required by FAA
4 Landing gear records to include Life Limited Parts status and back to
birth traceability, modification status, inventory of all sub-assemblies
with part numbers and serial numbers specified, Airworthiness Directive
status including detailed workshop workscope provided by the Agreed
Maintenance Performer, last overhaul documentation including JAA form
I/FAA form 8130-3 serviceable tag
129
H. MISCELLANEOUS TECHNICAL DOCUMENTS
1 Maintenance Program Specifications including a cross-reference to
Manufacturer's maintenance planning document to be made available
2 Reference material necessary for interpretation of status summaries, i.e.
Operator part numbers Cross Reference to Manufacturer's part numbers
3 Interior configuration drawings (L.O.P.A. and Emergency Equipment
Locations; Galley Drawings)
4 Aircraft Detail Specification
5 Loose Equipment Inventory such as galley trolleys / containers / oven
trays / oven inserts
6 Seat, cushion and fabric cover Material Burn Test documents for applicable
FAA if provided by Aircraft Manufacturer during Delivery (Lessee shall be
responsible only for providing burn test documents for any replacement
materials installed after Delivery)
7 Flight Data Recorder - Print / Copy of Last Read-Out as applicable under
Lessee's Approved Maintenance Program
130
SCHEDULE 2
FORM OF ACCEPTANCE CERTIFICATE
FORM OF AIRCRAFT TECHNICAL ACCEPTANCE CERTIFICATE
This Aircraft Technical Acceptance Certificate is given, on and as of the
date set forth below, by Xxxxx Fargo Bank Northwest, N.A., not in its individual
capacity, but solely as trustee ("TRUSTEE") for the benefit of RBS Aerospace
Limited ("RBS") under the Trust Agreement dated as of December 23, 2004 between
Trustee and RBS, to Delta Air Lines, Inc. ("SELLER") pursuant to the Aircraft
Sale and Purchase Agreement dated as of October 1, 2003 between RBS and Seller
(the "AGREEMENT", terms used herein being used as defined in the Agreement):
Trustee hereby indicates and confirms to Seller, its successors and
assigns, that the Trustee has, at ____ o'clock _. m. on this ____ day of
_____________, 2005 at Boeing Field, Seattle, Washington, completed its
technical inspection and flight test of the following Aircraft and inspection of
its related Technical Documents in accordance with the provisions of the
Agreement, and that Trustee is ready to accept Delivery of such Aircraft and
Technical Documents from Seller under the Agreement (it being understood that
Trustee may be entering into a delivery concessions letter with Boeing to
resolve any technical issues at a later date):
(a) one Boeing model 737-800 jet airframe, manufacturer's serial number
_________
Registration number __________
Total Time: __________
Total Cycles: __________
(b) Two CFM International CFM56-7B ______ Engines
Serial Numbers Total Time Total Cycles
1.
2.
(each of the Engines having _________ pounds thrust rating or its
equivalent)
(c) [APU manufacturer and model #]
Serial Number Total Time Total Cycles
(d) Landing Gear
Serial Number Total Time Total Cycles
Nose
Main right
Main left
(e) Fuel status: _________ kilos
(f) Loose Equipment Check List: Signed by Seller and Trustee and
attached hereto.
131
(g) Statement of Non-Conformance: Signed by Seller and Trustee and
attached hereto.
132
IN WITNESS WHEREOF, Trustee has caused this Aircraft Technical Acceptance
Certificate to be executed in its name, by its duly authorized officer(s) or
representative(s), pursuant to due corporate authority, all as of the date
written in paragraph 1 above.
XXXXX FARGO BANK NORTHWEST, N.A., not in its individual capacity, but solely as
trustee for the benefit of RBS Aerospace Limited under the Trust Agreement dated
as of December 23, 2004 between itself and RBS Aerospace Limited
By: COMPANIA PANAMENA DE AVIACION, S.A.,
its agent
By: ____________________________
Name: ______________________
Title: _____________________
133
FORM OF AIRCRAFT DELIVERY CERTIFICATE
This Aircraft Delivery Certificate is given, on and as of the date set
forth below, by Xxxxx Fargo Bank Northwest, N.A., not in its individual
capacity, but solely as trustee ("TRUSTEE") for the benefit of RBS Aerospace
Limited ("RBS") under the Trust Agreement dated as of December 23, 2004 between
Trustee and RBS, to Delta Air Lines, Inc. ("SELLER") pursuant to the Aircraft
Sale and Purchase Agreement dated as of October 1, 2003 between Buyer and Seller
(the "AGREEMENT", terms used herein being used as defined in the Agreement):
1. DETAILS OF DELIVERY
Trustee hereby indicates and confirms to Seller, its successors and
assigns, that the Trustee has, at ___ o'clock _. m. on this ___ day of
___________, 2005 at Boeing Field, Seattle, Washington, received and accepted
the following Aircraft in accordance with the provisions of the Agreement:
(a) one Boeing model 737-800 jet airframe, manufacturer's serial number
_________
Registration number ________
Total Time: ________
Total Cycles: ________
(b) Two CFM International CFM56-7B Engines
Serial Numbers Total Time Total Cycles
1.
2.
(each of the Engines having _________ pounds thrust rating or its
equivalent)
(c) [make and model] APU
Serial Number Total Time Total Cycles
(d) Landing Gear
Serial Number Total Time Total Cycles
Nose
Main right
Main left
(e) Fuel status: _________ kilos
(f) Loose Equipment Check List: Signed by Seller and Trustee and
attached hereto.
(g) Statement of Non-Conformance: Signed by Seller and Trustee and
attached hereto.
2. CONFIRMATION OF UNDERTAKINGS
The Trustee confirms that as of the Delivery at the time specified
above:
134
(i) The Aircraft was duly accepted by Trustee in accordance with and
subject to the provisions of the Agreement and the execution and delivery of
this Aircraft Delivery Certificate further confirms the acceptance of the
Aircraft by Trustee for all purposes of the Agreement, subject only to the items
noted on the Statement of Non-Conformance; and
(ii) the Aircraft is insured in accordance with the Agreement.
IN WITNESS WHEREOF, Trustee has caused this Aircraft Delivery Certificate to be
executed in its name, by its duly authorized officer(s) or representative(s),
pursuant to due corporate authority, all as of the date written in paragraph 1
above.
XXXXX FARGO BANK NORTHWEST, N.A., not in its individual capacity,
but solely as trustee for the benefit of RBS Aerospace Limited
under the Trust Agreement dated as of December 23, 2004
between itself and RBS Aerospace Limited
By: COMPANIA PANAMENA DE AVIACION, S.A.,
its attorney-in-fact
By: ____________________________
Name: ______________________
Title: _____________________
135
FORM OF RECEIPT FOR TECHNICAL DOCUMENTS
One Boeing 737-800 Aircraft
Manufacturer's Serial No. ____________
The undersigned hereby acknowledges receipt of all of the Technical
Documents listed on Exhibit D to the Aircraft Sale and Purchase Agreement dated
as of October 1, 2003 (the Agreement) between Delta Air Lines, Inc. ("SELLER")
and RBS Aerospace Limited.
By this acceptance, Trustee assumes any and all risks of the use and
ownership of all the Technical Documents or any part thereof, and for itself and
its respective officers, directors, agents, employees, representatives,
successors and assigns, does hereby release any claim it may have against Seller
arising out of the use or possession of such Documents.
XXXXX FARGO BANK NORTHWEST,
N.A., not in its individual capacity,
but solely as trustee for the benefit of RBS
Aerospace Limited under the Trust Agreement
dated as of December 23, 2004 between itself
and RBS Aerospace Limited
By: COMPANIA PANAMENA DE AVIACION, S.A., for
and on behalf of the Trustee
By: ____________________________________
Name: ___________________________
Title: __________________________
136
SCHEDULE 3
REDELIVERY CONDITIONS AND REDELIVERY MAINTENANCE ADJUSTMENT
PART 1 RETURN CONDITIONS:
**Material Redacted**
**7 pages**
137
PART 2
[Intentionally left blank]
138
PART 3
MAINTENANCE REDELIVERY ADJUSTMENTS
**Material Redacted**
**2 pages**
139
SCHEDULE 4
INSURANCE REQUIREMENTS
1. Types of Insurance
The Insurances required to be maintained are as follows:
(a) Hull insurance covering loss of or damage while flying and on the ground
with respect to the Aircraft on an agreed value basis for the Agreed Value
and with a deductible not exceeding the Maximum Deductible Amount, or such
other greater amount as is consistent with market practice in the airline
insurance industry from time to time and similar carriers operating
similar aircraft in similar circumstances;
(b) Hull War and Allied Perils insurance, being such risks excluded from the
Hull All insurance to the extent reasonably commercially available from
the leading international insurance markets (except for confiscation by
the Country of Registration), for an amount no less than the Minimum War
Risk Coverage;
(c) Hull All Risks (including War and Allied Perils except when on the ground
or in transit other than by air) property insurance on all Engines and
Parts when not installed on the Aircraft on an "agreed value" basis for
their full replacement value and including engine test and running risks;
(d) Aircraft Third Party, Property Damage, Passenger, Baggage, Cargo and Mail
and Airline General Third Party (including Products) Legal Liability for a
combined single limit (bodily injury/property damage) of an amount not
less than the Minimum Liability Coverage for the time being for any one
occurrence (but in respect of products and personal injury liability, this
limit may be an aggregate limit for any and all losses occurring during
the currency of the policy). War and Allied Perils are also to be covered
under the policy to the extent reasonably commercially available from the
leading international airline insurance markets (which coverage shall
include but not be limited to an extended war risk coverage endorsement
equivalent to the terms of AVN52D).
2. Terms of Hull and Spares Insurance
All required hull and spares insurance, so far as it relates to the Aircraft,
will:
(a) ADDITIONAL INSUREDS: name Lessor, Beneficiary, Owner, if different from
Lessor, and each Financing Party and their respective successors and
permitted assigns as additional assureds for their respective rights and
interests;
(b) SETTLEMENT OF LOSSES: provide that any loss will be adjusted between
Lessee and Insurers subject to prior approval before settlement with
Lessor, and will be payable in Dollars to Lessor up to the Agreed Value,
for the account of all interests, except where the loss does
140
not exceed the Damage Notification Threshold, and Lessor has not notified
the insurers to the contrary, in which case the loss will be settled with
and paid to Lessee;
(c) 50/50 PROVISION: if separate "Hull" and "war risks and allied perils"
insurances are arranged, include a 50/50 provision in accordance with
market practice (AVS. 103 or its equivalent);
3. Terms of Liability Insurance
All required liability insurances will:
(a) ADDITIONAL INSUREDS: include Lessor, Owner, if different from Lessor,
Initial Purchaser (but only for claims arising against Initial Purchaser
solely as a result of Initial Purchaser being a party in the chain of
title and where no act or omission of Initial Purchaser, its successors,
assigns, officers, or employees, allegedly contributed to the event
leading to indemnification requirement), and each of the other
Indemnitees, as additional insureds (each an "Additional Insured") for
their respective rights and interests, warranted, each as to itself only,
no operational interest; however, no party shall be included as an
Additional Insured in respect of its liability, if any, as Manufacturer,
repairer, supplier or servicing agent of the Aircraft or any part thereof;
(b) SEVERABILITY: include a severability of interests clause which provides
that the insurance, except for the limit of liability, will operate to
give each insured the same protection as if there was a separate policy
issued to each insured;
(c) PRIMARY POLICY: contain a provision confirming that the policy is primary
without right of contribution, and the liability of the insurers will not
be affected by any other insurance of which any Additional Insured may
have the benefit so as to reduce the amount payable to the additional
insureds under such policies;
4. Terms of All Insurances
All Insurances will:
(a) BEST INDUSTRY PRACTICE: be in accordance with normal industry practice of
similar airlines operating similar aircraft in similar circumstances;
(b) DOLLARS: provide cover denominated in dollars and any other currencies
which Lessor may reasonably require in relation to liability insurance;
(c) WORLDWIDE: operate on a worldwide basis subject to such limitations and
exclusions as are standard at the date hereof in the London or New York
aviation market or as Lessor may agree;
(d) BREACH OF WARRANTY: provide that, in relation to the interests of each of
the Additional Insureds, the Insurances will not be invalidated by any act
or omission by Lessee, or any other insured other than the respective
Additional Insureds seeking protection and shall
141
insure the interests of each of the additional assureds regardless of any
breach or violation by Lessee, or any other Person other than the
respective additional assured seeking protection of any warranty,
declaration or condition, contained in such Insurances;
(e) SUBROGATION: provide that the insurers will hold harmless and waive any
rights of recourse against the Additional Insureds or to be subrogated to
any rights of Lessor or Lessee;
(f) PREMIUMS: provide that the Additional Insureds will have no obligation or
responsibility for the payment of any premiums due (but reserve the right
to pay the same should any of them elect to do so) and that the insurers
will not exercise any right of set-off or counter-claim in respect of any
premium due against the respective interests of the Additional Insureds
other than outstanding premiums relating to the Aircraft, any Engine or
Part the subject of the relevant claim;
(g) CANCELLATION/CHANGE: provide that the Insurances will continue unaltered
for the benefit of the Additional Insureds for at least 30 days (ten days
in the event of cancellation due to non-payment of premium) after written
notice by registered mail or fax of any cancellation, change, event of
non-payment of premium or installment thereof has been sent to Lessee's
broker of record, except in the case of war risks for which 7 days (or
such lesser period as is or may be customarily available in respect of war
risks or allied perils) will be given, or in the case of war between the
five great powers or nuclear peril for which termination is automatic;
(h) REINSURANCE: any reinsurance will:
(i) be on the same terms as the original insurances and will include the
provisions of this Schedule,
(ii) provide that notwithstanding any bankruptcy, insolvency,
liquidation, dissolution or similar proceedings of or affecting the
reinsured that the reinsurers' liability will be to make such
payments as would have fallen due under the relevant policy of
reinsurance if the reinsured 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) contain a "cut-through" clause in the following form (or otherwise
satisfactory to Lessor):
"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, as provided by the Aircraft Lease
Agreement dated as of December 23, 2004 and made between Lessor and
Lessee, 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 Reinsured, its successors in interest and assigns pay
to the Person named as sole loss payee under the primary insurances
effected by the Reinsured
142
that portion of any loss due for which the Reinsurers would
otherwise be liable to pay the Reinsured (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; subject to such provisions not contravening
any Law of the State of Incorporation;" and
5. Deductibles
Lessee shall be responsible for any and all deductibles under the Insurances.
6. Application of Insurance Proceeds
The Insurances will be endorsed to provide for payment of proceeds as follows:
(a) TOTAL LOSS: all insurance payments up to the Agreed Value (and all other
amounts which are then payable by Lessee to Lessor) received as the result
of a Total Loss occurring during the Lease Period will be paid to Lessor
up to the Agreed Value;
(b) EXCEEDING DAMAGE NOTIFICATION THRESHOLD: all insurance proceeds of any
property, damage or loss to the Aircraft, any Engine or any Part occurring
during the Lease Period not constituting a Total Loss and in excess of the
Damage Notification Threshold for repairs or replacement property upon
Lessor being satisfied that the repairs or replacements have been effected
in accordance with this Agreement. Any balance remaining shall be paid to
Lessee;
(c) BELOW DAMAGE NOTIFICATION THRESHOLD: insurance proceeds in amounts below
the Damage Notification Threshold may be paid by the insurer directly to
Lessee;
(d) DEFAULT: notwithstanding the foregoing paragraphs, if at the time of the
payment of any such insurance proceeds a Default has occurred and is
continuing, all such proceeds will be paid to or retained by Lessor to be
applied toward payment of any amounts which may be or become payable by
Lessee in such order as Lessor may elect, and any remainder after cure of
such Default shall be paid to Lessee.
In the event of a conflict between the provisions hereof and the provisions of
AVN 67B or its equivalent, the latter shall control and the provisions hereof
shall be deemed modified accordingly; provided that the provisions of AVN 67B
shall continue to reflect industry practice. To the extent that insurance
proceeds are paid to Lessee, Lessee agrees to comply with the foregoing
provisions and apply or pay over such proceeds as so required.
143
SCHEDULE 5
ACKNOWLEDGEMENTS IN CONNECTION WITH FINANCING
PART 1
NOTICE OF ASSIGNMENT
From: Xxxxx Fargo Bank Northwest, N.A., not in its individual capacity, but
solely as trustee under the Trust Agreement
To: Compania Panamena de Aviacion, S.A.
[Date]
Dear Sirs,
We hereby give you notice that by an Assignment dated [ ], 200_ (the
"Assignment") between us and [ ] of [ ] ("Assignee") we have assigned as
security to Assignee all our right, title and interest in and to the Aircraft
Lease Agreement dated as of December 23, 2004 (the "Lease") between ourselves
and yourselves relating to one Boeing B[ ] aircraft with manufacturer's serial
number [ ] together with the two [ ] engines (the "Aircraft").
Henceforth all monies that may be payable by you under the Lease shall continue
to be paid to the bank account specified in the Lease unless and until the
Assignee otherwise directs, whereupon you are authorized and required to comply
with the Assignee's directions.
This notice and the instructions herein contained are irrevocable. Please
acknowledge receipt of this notice to the Assignee on the enclosed
Acknowledgement. You are hereby authorized to assume the obligations expressed
to be assumed by you thereunder to the effect that, so far as the same would
otherwise be incompatible therewith, your obligations to us under the Lease will
be modified accordingly.
Yours faithfully,
Xxxxx Fargo Bank Northwest, N.A.,
not in its individual capacity,
but solely as trustee under
the Trust Agreement
By: ____________________________
Name:
Title:
144
PART 2
ACKNOWLEDGEMENT
From: Compania Panamena de Aviacion, S.A.
To: [ ] [Date]
Dear Sirs,
We acknowledge receipt of a Notice of Assignment dated [ ] (the "Assignment
Notice") relating to an assignment (the "Assignment") between Xxxxx Fargo Bank
Northwest, N.A., not in its individual capacity, but solely as trustee under the
Trust Agreement (the "Assignor"), and you. [Subject to the fulfillment or
satisfaction of the requirements of Clause 14.2 of the Lease and your agreement
in our favor to be bound by the obligations of Lessor as set forth in and in
accordance with the Lease and further subject to the receipt of a Quiet
Enjoyment Letter in the form attached hereto and to your counter-signature and
that of Assignor hereof,] we acknowledge that we will not challenge the
effectiveness of the Assignment to confer on you all rights, title and interest
of the Assignor under the Aircraft Lease Agreement dated as of December 23, 2004
between Assignor and ourselves (the "Lease") in respect of one Boeing B[ ]
aircraft with manufacturer's serial number [ ] together with the two [ ]
engines.
In consideration of the foregoing and of payment to us of $1 and for other
valuable consideration, receipt of which we hereby acknowledge, we hereby agree
as follows:
If you issue to us a notice (a "Lessor Default Notice") that your rights as
assignee under the Assignment have become exercisable we agree that we will
thereafter (a) pay to you at such account as you may nominate all rentals and
other amounts from time to time payable by us under the Lease; (b) perform,
observe and comply with all our other undertakings and obligations under the
Lease in your favor and for your benefit as if you were named as "Lessor"
therein instead of the Assignor; and (c) if you so request, enter into a lease
with you or your nominee, on the same terms (mutatis mutandis) as the Lease.
If the Assignor is in breach of any of its obligations, express or implied,
under the Lease, or if any event occurs which would permit us to terminate,
cancel or surrender the Lease we will (a) immediately upon becoming aware of it,
give you notice of such breach or event, (b) accept as adequate remedy for any
such breach performance by you of such obligations within 7 days of our written
notice to you; and (c) if you so request, enter into a lease with you or your
nominee on terms identical to the Lease, mutatis mutandis.
We agree that after issue by you of any Lessor Default Notice, we will not
recognize the exercise by the Assignor of any of its rights and powers under the
Lease unless and until requested to do so by you.
145
We agree that you will have the benefit of Clause 10 of the Lease (Indemnity),
subject, however, to all of the limitations set forth in the Lease, and agree
that we are bound by the terms of such clause, as though the same were set out
herein in full, mutatis mutandis.
Yours faithfully,
For and on behalf of Compania Panamena de Aviacion, S.A.
By: ____________________________
Name:
Title:
ACKNOWLEDGEMENT AND AGREEMENT OF
ASSIGNOR AND ASSIGNEE:
The agreements of Compania Panamena de Aviacion, S.A. ("COPA") set forth in the
foregoing Acknowledgment are hereby acknowledged and agreed to by each of
Assignor and ____________ ("Assignee") in all respects, and so far as the
obligations of COPA set forth above would otherwise be incompatible with the
obligations of COPA to the Assignor under the Lease, the obligations of COPA
under the Lease shall be modified accordingly.
ASSIGNOR:
Xxxxx Fargo Bank Northwest, N.A.,
not in its individual capacity,
but solely as trustee under
the Trust Agreement
By: ____________________________
Name:
Title:
ASSIGNEE:
_________________________________
146
PART 3
FORM OF LETTER OF QUIET ENJOYMENT FROM OWNER
[Date]
COMPANIA PANAMENA DE AVIACION, S.A.
___________, 200_
Dear Sirs,
Boeing B[ ] Aircraft with Manufacturer's Serial Number _____ (the "Aircraft")
We refer to the Lease Agreement dated as of ___________ __, 200_ (the
"Head Lease") between [Owner] (the "Owner"), as lessor, and Xxxxx Fargo Bank
Northwest, N.A., not in its individual capacity, but solely as trustee under the
Trust Agreement (the "Lessor"), as lessee, and the Aircraft Lease Agreement
dated as of December 23, 2004 between Lessor, as lessor and Compania Panamena de
Aviacion, S.A. ("COPA"), as lessee, relating to the Aircraft (the "Lease
Agreement").
For good and valuable consideration receipt of which is hereby
acknowledged, Owner confirms to you that it will not disturb the quiet use,
possession and enjoyment of the Aircraft by COPA throughout the term of the
Lease Agreement in accordance with the terms of the Lease Agreement so long as
no Event of Default then exists under the Lease Agreement.
Yours sincerely,
__________________________
[Owner].
147
PART 4
[FORM OF LETTER OF QUIET ENJOYMENT FROM FINANCING PARTIES]
[NAME AND ADDRESS OF FINANCING PARTY]
[Date]
Compania Panamena de Aviacion, S.A.
Dear Sirs,
Boeing B[ ] Aircraft with Manufacturer's Serial Number ______ (the "Aircraft")
We refer to the Aircraft Lease Agreement dated as of ______________, 2004
between Xxxxx Fargo Bank Northwest, N.A., not in its individual capacity, but
solely as trustee under the Trust Agreement ("Lessor") and Compania Panamena de
Aviacion, S.A. ("COPA") relating to the Aircraft (the "Lease Agreement").
For good and valuable consideration receipt of which is hereby
acknowledged, we confirm to you that we will not disturb the quiet use,
possession and enjoyment of the Aircraft by COPA throughout the term of the
Lease Agreement in accordance with the terms of the Lease Agreement, so long as
no Event of Default then exists under the Lease Agreement.
Yours sincerely,
____________________________
[Financing Parties]
148
PART 5
ADDITIONAL PARAGRAPHS FOR FORM OF LETTER OF QUIET ENJOYMENT
1. Until such time as COPA has received a notice (herein, a "Lessor Rights
Notice") from Assignee stating that Assignee has succeeded to the rights
of Lessor under the Lease Agreement to exercise and receive any of the
claims, rights, powers, privileges, remedies and other benefits of Lessor
as "Lessor" under the Lease Agreement (collectively referred to herein as
"Lessor's Rights and Powers"), COPA shall be entitled to acknowledge and
rely upon the exercise by Lessor of all of Lessor's Rights and Powers, and
any consent, notice, approval, amendment, waiver or release or other
exercise of Lessor's Rights and Powers by Lessor shall be binding upon
Lessor and Assignee for all purposes.
2. Assignee's exercise or receipt of Lessor's Rights and Powers shall be
subject to all of the terms and conditions of the Lease Agreement, to the
same extent as if exercised by Lessor.
3. Any security deposit, letter of credit and/or insurance payments under any
policy maintained by Lessee pursuant to the Lease Agreement received or
held by Assignee at any time shall be held subject to the terms of the
Lease Agreement and shall be applied only in the manner permitted under
the terms of the Lease Agreement.
149
SCHEDULE 6
FORM OF MONTHLY STATUS REPORT
FORM OF MONTHLY REPORT
REPORT FOR MONTH _____________
Aircraft Type: Boeing B737-800
Manufacturer's Serial Number: [ ][ ]
Engine Type: CFM56-7B26
AIRFRAME DURING PERIOD SINCE NEW
Airframe Flight Hours
Airframe Block Hours
Aircraft Cycles
Time remaining to Airframe 6C/24,000 Flight Hour Block Structural Check
ENGINES ENGINE POS #1 ENGINE POS #2
Serial Number of Engine
Present Location of Engine
Engine Flight Hours since new
Cycles since new
Engine Flight Hours performed during period
Engine Cycles flown during period
Date of last shop visit/type of shop visit
Engine Cycles flown since last shop visit
Serial number of engine installed on the Airframe
APU
Serial Number of Original
Present location of original APU
APU Hours (original APU)
Date of last shop visit/type of shop visit
APU Hours since last shop visit
APU Cycles since last shop visit
150
Serial number of APU installed on the Airframe
MAINTENANCE CHECKS COMPLETED
NUMBER DATE HOURS CYCLES
"A" check
"C" check
Structural inspection
NEXT CHECKS DUE
NUMBER DATE HOURS CYCLES
"C" Check
Structural inspection
HOURS/CYCLES FLOWN DURING MONTH X US$ PER FLIGHT HOUR/CYCLE =
OVERHAUL RESERVES
Engine Performance Restoration
S/N ____________ X / Flight Hour =
Engine Performance Restoration
S/N ____________ X / Flight Hour =
Engine LLP
S/N ____________ X / Cycle =
Engine LLP
S/N ____________ X / Cycle =
APU Performance Restoration X / APU operating Cycle =
RELEVANT MAINTENANCE TASK US$ PER MONTH
Airframe 6C/24,000 Flight
Hour Block Structural Check
Landing Gear overhaul
TOTAL AMOUNT OF MAINTENANCE RESERVES
151
SCHEDULE 7
ECONOMIC VARIABLES
AGREED VALUE **Material Redacted**
AIRFRAME 6C/24,000 US**Material Redacted** per Flight Hour
FLIGHT HOUR BLOCK
STRUCTURAL CHECK
SUPPLEMENTAL RENT
RATE
ANNUAL SUPPLEMENTAL 3%
RENT ADJUSTMENT
APU SUPPLEMENTAL US**Material Redacted** per Airframe Flight Hour
RENT RATE
ASSUMED LIBOR RATE 1.25%
ASSUMED RATIO Flight Hour to Cycle ratio: 2.3 to 1
ASSUMED ANNUAL 3,000 Flight Hours
UTILIZATION
ASSUMED RENT **Material Redacted**
CROSS-DEFAULT AMOUNT US$3,000,000
DAMAGE NOTIFICATION US$500,000
THRESHOLD
DISCOUNT RATE 4.5%
ENGINE LLP US**Material Redacted** per Cycle per Engine
SUPPLEMENTAL RENT
RATE
ENGINE SUPPLEMENTAL US**Material Redacted** per Flight Hour per Engine
RENT RATE
LANDING GEAR US**Material Redacted** per Month
SUPPLEMENTAL RENT
RATE
152
MAXIMUM DEDUCTIBLE US**Material Redacted**
AMOUNT
MINIMUM LIABILITY US**Material Redacted**
COVERAGE
MINIMUM WAR RISK US**Material Redacted**
COVERAGE
SECURITY DEPOSIT **Material Redacted**
AMOUNT
TAX CONTEST THRESHOLD US$50,000
WARRANTY CLAIM US$100,000
NOTIFICATION THRESHOLD
153
ASSUMED RATIO ADJUSTMENT TABLE*
Engine Supplemental
Flight Hour / Cycle Rent Adjusted Value
------------------- -------------------
.75:1 **Material Redacted**
1:01 **Material Redacted**
1.25:1 **Material Redacted**
1.5:1 **Material Redacted**
1.75:1 **Material Redacted**
2:01 **Material Redacted**
2.25:1 **Material Redacted**
2.5:1 **Material Redacted**
2.75:1 **Material Redacted**
3:01 **Material Redacted**
4:01 **Material Redacted**
all higher **Material Redacted**
ASSUMED ANNUAL UTILIZATION ADJUSTMENT TABLE
Airframe Structural Check
Annual Utilisation Reserve Amount $
(Airframe Flight Hours) (2004)**
2,800 66.5
3,000 62
3,200 58.5
3,400 55
3,600 52
3,800 50
4,000 47
4,200 45
----------
* Operation 3000 Hrs / 1300 cycles per year (Ratio 23:1).
** The above USD rates to be escalated by 3%, compounded annually, commencing
January 1, 2005.
154
RENT ADJUSTMENT FACTOR
The rental shall be adjusted, upwards or downwards, by the following adjustment
factors for every one hundredth of one per cent (0.01%) change, upwards or
downwards, in the Assumed LIBOR Rate of 1.25% for the applicable 6-month period.
(Values in US$):
N FACTOR*
SIX MONTH PERIODS ---------
(COMMENCING ON DELIVERY DATE) (US$)
----------------------------
Period 1 **Material Redacted**
Period 2 **Material Redacted**
Period 3 **Material Redacted**
Period 4 **Material Redacted**
Period 5 **Material Redacted**
Period 6 **Material Redacted**
Period 7 **Material Redacted**
Period 8 **Material Redacted**
Period 9 **Material Redacted**
Period 10 **Material Redacted**
Period 11 **Material Redacted**
Period 12 **Material Redacted**
Period 13 **Material Redacted**
Period 14 **Material Redacted**
Period 15 **Material Redacted**
* Adjustment Factors to be adjusted in accordance with the Price Escalation
Adjustment from July 2004 until the Delivery Date. The formula for the
calculation of the Price Escalation Adjustment is set out in Schedule 7.
155
PRICE ESCALATION ADJUSTMENTS
The Escalation Adjustment for the Aircraft will be determined by the following
formula:
P(a) = P x ((L + M)/1.3665* - 1)
where:
P(a) = Purchase Price Adjustment (includes the Engine price)
L = 0.65 x ECI/130.1
M = 0.35 x ICI/123.6
P = Aircraft Base Purchase Price in July, 2004 Dollars
ECI is a value determined using the U.S. Department of Labor, Bureau of
Labor Statistics "Employment Cost Index for workers in aerospace
manufacturing" (ECI code 3721), calculated by establishing a three-month
arithmetic average value (expressed as a decimal and rounded to the
nearest tenth) using the values for the fifth, sixth and seventh months
prior to the month of the Scheduled Delivery Date of the applicable
Aircraft. As the Employment Cost Index values are only released on a
quarterly basis, the value released for the month of March will be used
for the months of January and February; the value for June used for April
and May; the value for September used for July and August; and the value
for December used for October and November.
ICI is a value determined using the U.S. Department of Labor, Bureau of
Labor Statistics "Producer Prices and Price Index - Industrial Commodities
Index", calculated as a 3-month arithmetic average of the released monthly
values (expressed as a decimal and rounded to the nearest tenth) using the
values for the 5th, 6th and 7th months prior to the month of the Scheduled
Delivery Date of the applicable Aircraft.
In determining the values of L and M, all calculations and resulting values will
be expressed as a decimal rounded to the nearest ten-thousand, where rounding of
the fourth digit will be increased to the next higher digit when the 5th digit
is equal to 5 or more. The values released by the Bureau of Labor Statistics and
available 30 days prior to the month of the Scheduled Delivery Date for each
Aircraft will be used to determine the ECI and ICI values for the applicable
months (including those noted as preliminary by the Bureau of Labor Statistics)
to calculate the Escalation Adjustment at the time of Delivery. The values will
be considered final and no further adjustments will be made after Aircraft
Delivery for any subsequent changes, revisions or corrections to published Index
values.
----------
*This is the July 2004 Adjustment Factor assuming escalation from a July 1995
base.
156
SCHEDULE 8
FORM OF LEASE SUPPLEMENT NO. 1
THIS LEASE AGREEMENT SUPPLEMENT NO. 1 (this "Lease Supplement No. 1") is
entered into on the ____ day of ____________, 2005 between Xxxxx Fargo Bank
Northwest, N.A., not in its individual capacity, but solely as trustee under the
Trust Agreement ("Lessor"); and Compania Panamena de Aviacion, S.A., a
corporation organized under the laws of The Republic of Panama, with its
principal place of business at Avenida Xxxxx Xxxxxxxxx y Xxxxx 00, Xxxxxxxx
0000, Xxxxxx 0, Xxxxxxxx of Panama ("Lessee").
RECITALS:
A. Lessor and Lessee have previously entered into that certain Aircraft
Lease Agreement dated as of December 23, 2004 (the "Agreement"). The 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 under the Agreement as and when delivered by Lessor to Lessee in
accordance with the terms thereof.
B. The Agreement and this Lease Supplement No. 1 relate to the Aircraft,
Engines and Parts as more precisely described below. A counterpart of the
Agreement is attached hereto and this Lease Supplement and the Agreement shall
form one document.
In consideration of the premises and other good and valuable
consideration, receipt of which is hereby acknowledged, Lessor and Lessee hereby
agree as follows:
1. Lessor hereby delivers and leases to Lessee under the Agreement, and
Lessee hereby accepts, acknowledges receipt of possession and leases from Lessor
under the Agreement, that certain A[ ] aircraft bearing manufacturer's serial
number [ ] and U.S. Registration No. [ ] and the two [ ] engines bearing
manufacturer's serial numbers [ ] and [ ] (each of which engines has 750 or more
rated takeoff horsepower or the equivalent of such horsepower) described below,
together with the Aircraft Documents described in the Agreement (collectively,
the "Delivered Aircraft").
2. The Delivery Date of the Delivered Aircraft is the date of this Lease
Supplement No. 1 set forth in the opening paragraph hereof.
3. The Term of the Delivered Aircraft shall commence on the Delivery Date
and shall end on but exclude each Annual Expiry Date, subject to automatic
renewal at the end of the current Lease Term for consecutive periods of one (1)
year's duration, each commencing on the Annual Expiry Date and ending on but
excluding the next succeeding Annual Expiry Date, until the Final Expiry Date,
which shall be [insert date], subject to the provisions of Clauses 11 and 13.2
of the Lease Agreement.
4. The amount of Rent for the Delivered Aircraft is set forth in Schedule
7 to the Agreement.
157
5. Lessee hereby confirms to Lessor that (i) the Delivered Aircraft and
each delivered Engine have been duly marked in accordance with the terms of
Clause 8.7(d) of the Agreement, (ii) the Aircraft is insured as required by the
Agreement, (iii) the representations and warranties of Lessee referred to in
Clause 2.1 of the Agreement are hereby repeated with effect as of the date first
above written, (iv) having inspected the Delivered Aircraft, Lessee acknowledges
that the Delivered Aircraft satisfies all conditions required for Lessee's
acceptance of Delivery as set forth in the Agreement, and (v) the execution and
delivery of this Lease Supplement No. 1 signifies absolute, unconditional and
irrevocable acceptance by Lessee of the Delivered Aircraft for all purposes of
the Agreement.
6. All of the terms and provisions of the Agreement are hereby
incorporated by reference in this Lease Supplement No. 1 to the same extent as
if fully set forth herein.
7. This Lease Supplement may be executed in any number of counterparts;
each of such counterparts, shall for all purposes be deemed to be an original;
and all such counterparts shall together constitute but one and the same
instrument.
158
IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease Supplement
No. 1 to be duly executed as of the day and year first above written.
LESSOR: LESSEE:
Xxxxx Fargo Bank Northwest, N.A., COMPANIA PANAMENA DE AVIACION,
not in its individual capacity, S.A.
but solely as trustee under
the Trust Agreement
By: _____________________________ By: ____________________________
Name: ___________________________ Name: _________________________
Title: _________________________ Title: ________________________
159
SCHEDULE 9
FORM OF IRREVOCABLE POWER OF ATTORNEY
The undersigned acting on behalf of Compania Panamena de Aviacion, S.A. (the
"Lessee") hereby grants a power in favor of Xxxxx Fargo Bank Northwest, N.A.,
not in its individual capacity, but solely as trustee under the Trust Agreement
(the "Lessor"), in order that through their attorneys and legal representatives
they may, in relation to the Boeing model B[ ] aircraft MSN [ ] leased by Lessor
to Lessee, carry out the following powers:
(A) To carry out, after the occurrence and during the continuance of an Event
of Default as defined in the Lease, such acts as Lessor may be obliged to
carry out as a result of termination of the above-mentioned contract for
any of the reasons set out therein in order for Lessor to recover
possession, control and use of the aircraft in question, carrying out and
continuing such procedures as may be necessary before the authorities and
courts of the Republic of Panama in order to export such aircraft.
(B) To carry out, after the occurrence and during the continuance of an Event
of Default as defined in the Lease, such acts as may be necessary in
relation to the use, operation and possession (including but without
limitation the possession and Export) in relation to the return of one
Boeing model B[ ] aircraft with manufacturer's serial number [ ], together
with engines, equipment, records and other documents relating to such
aircraft and to it leaving the jurisdiction and territory in which the
aircraft is then situated, upon termination of the Aircraft Lease
Agreement (herein the "Lease") of the Aircraft between Lessor and Lessee,
whether (a) by reason of any breach which may be been declared by Lessor
in accordance with the terms of the contract in the manner required
thereby or (b) termination of the Lease in accordance with the terms and
conditions of the Lease.
(C) To grant power to such Lessor and to such Persons in order to carry out
such acts and take such measures as may be necessary or appropriate in
order to properly exercise the powers conferred above including power to
represent Lessee before the Autoridad Aeronautica Civil in The Republic of
Panama or any entity or agency thereof or any department of the government
of The Republic of Panama and in the extent to which it is necessary to
obtain control of the Aircraft, after the occurrence and during the
continuance of an Event of Default as defined in the Lease, in any
department or government agency in The Republic of Panama or any other
country which may have jurisdiction over the Aircraft.
(E) After the occurrence and during the continuance of an Event of Default as
defined in the Lease, to carry out such declarations and matters and grant
such public or private documents as may be necessary in the proper
exercise of the powers conferred in the above paragraphs.
(F) To delegate or substitute in favor of one or several people in whole or in
part the powers conferred in this power.
This power is granted to Lessor and its attorneys and legal representatives and
shall not be revoked, modified or limited in any manner without its consent.
COMPANIA PANAMENA DE AVIACION, S.A.
By:________________________________
Name:
Title:
161
SCHEDULE 10
FORM OF COPA HOLDINGS, S.A. GUARANTEE
THIS GUARANTY is given as of the ___ day of December, 2004 by COPA
HOLDINGS, S.A., a company formed under the laws of the Republic of Panama and
having its principal place of business at Avenida Xxxxx Xxxxxxxxx y Xxxxx 00,
Xxxxxxxx 0000, Xxxxxx 0, Xxxxxxxx of Panama (the "Guarantor") in favor of XXXXX
FARGO BANK NORTHWEST, N.A., not in its individual capacity, but solely as
trustee under the Trust Agreement dated as of December ___, 2004, as Lessor (the
"Lessor") for the benefit of Lessor and Beneficiary, (collectively, the
"Guaranty Beneficiaries" and individually, a "Guaranty Beneficiary").
WHEREAS
(A) Compania Panamena de Aviacion, S.A. (the "Lessee") has leased from Lessor
and Lessor has leased to Lessee a Boeing B737-800 aircraft bearing
manufacturer's serial number 29670 (collectively together with all Parts, the
"Aircraft") pursuant to that certain Aircraft Lease Agreement dated as of
December ___, 2004 between the Lessee and Lessor (the "Lease").
(B) The Guaranty Beneficiaries desire support for the due and punctual payment,
observance and performance of all of the obligations and liabilities of Lessee
under or in respect of the Lease and the other Transaction Documents (together
with the Lease, as amended, supplemented or modified from time to time, the
"Operative Documents") to which Lessee is a party (the "Obligations"); and
(C) It is a condition precedent to the Lessor's obligation to lease the Aircraft
to Lessee and the right of the Lessee to lease the Aircraft from the Lessor that
Lessee cause the Guarantor to execute and deliver this Guaranty.
IT IS AGREED
1. INTERPRETATION
1.1 Definitions: Capitalized terms (including those within the recitals), not
defined herein shall have the meaning ascribed to them in the Lease.
2. GUARANTY
For value received and to induce the Guaranty Beneficiaries to enter into
the Operative Documents, Guarantor, as a primary obligor and not as a surety,
does hereby absolutely, unconditionally and irrevocably guarantee to the
Guaranty Beneficiaries the due and punctual payment, observance and performance
by Lessee of all of the Obligations.
Accordingly, upon the occurrence and during the continuance of an Event of
Default under the Lease, Guarantor shall forthwith without demand of any kind
pay, and perform all of such Obligations, to and for the benefit of the Guaranty
Beneficiaries, strictly in accordance with
the terms of the Operative Documents. Guarantor further agrees to pay any and
all reasonable out-of-pocket costs and expenses (including reasonable fees and
disbursements of legal counsel) that may be paid or incurred by any Guaranty
Beneficiary in collecting any Obligations or in preserving or enforcing any
rights under this Guaranty or under the Obligations.
3. ABSOLUTE AND CONTINUING GUARANTY
The obligations of Guarantor under this Guaranty shall be absolute,
continuing, unconditional and irrevocable and this Guaranty shall remain in full
force and effect until such time as all of the Obligations are finally paid and
performed in full. The obligations of Guarantor set forth herein constitute the
full recourse obligations of Guarantor enforceable against it to the full extent
of all its assets and properties, notwithstanding any provision in the Lease or
any other Operative Documents limiting the liability of any Guaranty Beneficiary
or any other Person.
4. STRICT OBSERVANCE
To the maximum extent permitted by applicable law, the obligations of
Guarantor under this Guaranty shall not in any manner be affected by: (a) any
termination, amendment or modification of, or deletion from, or addition or
supplement to, or other change in the Lease or any other any of the Operative
Documents, or any other instrument or agreement applicable to any of the parties
to such agreements, or to the Aircraft or any part thereof, or any assignment,
mortgage or permitted transfer of any thereof, or of any interest therein, or
any leasing of the Aircraft, or any furnishing or acceptance of any security, or
any release of any security, for the Obligations, or the failure of any security
or the failure of any Person to perfect any interest in any collateral security;
(b) any failure, omission or delay on the part of Lessee or any other Person to
conform or comply with any term of any Operative Document; (c) any exercise or
nonexercise of any right, remedy, power or privilege under or in respect of any
Operative Document; (d) any extension of time or payment of or settlement,
compromise or subordination of, Rent or any other Obligation; (e) the exchange,
surrender, substitution or modification of any collateral security or guarantee
for any of the Obligations; (f) any failure, omission or delay on the part of
any of the Guaranty Beneficiaries to enforce, assert or exercise any right,
power or remedy conferred on it in this Guaranty, or any such failure, omission
or delay on the part of any of the Guaranty Beneficiaries in connection with any
Operative Document, or any other action on the part of the Guaranty
Beneficiaries; (g) any voluntary or involuntary bankruptcy, insolvency,
reorganization, arrangement, readjustment, assignment for the benefit of
creditors, composition, receivership, conservatorship, custodianship,
liquidation, marshalling of assets and liabilities or similar proceedings with
respect to Lessee, Guarantor, any other Person, or any of their respective
properties or creditors, or any action taken by any trustee or receiver or by
any court in any such proceeding; (h) any invalidity, illegality or
unenforceability, in whole or in part, of any of the Operative Documents; (i)
any defect in the title, compliance with specifications, condition, design,
operation or fitness for use of or any damage to or loss or destruction of, the
Aircraft, or any interruption or cessation in the use of the Aircraft or any
portion thereof by Lessee or any other Person for any reason whatsoever
(including any governmental prohibition or restriction, condemnation,
requisition, seizure or any other act on the part of any governmental or
military authority, or any act of God or of the public enemy) regardless of the
duration thereof (even though such duration would otherwise constitute a
frustration of contract or an Event of Loss), whether or not resulting from
accident and whether or not without fault on the part of Lessee or any other
Person; (j) any permitted or non-permitted assignment of the Lease by Lessee or
any merger or consolidation of Lessee or Guarantor or any Affiliate into or with
any other corporation, or any sale, lease or transfer of any of the assets of
Lessee or Guarantor or any Affiliate to any other Person; (k) any change in the
ownership of any shares of capital stock of Lessee or any Affiliate, or any
change in the corporate relationship between Lessee or any Affiliate and
Guarantor, or any termination of such relationship; (l) any release or
discharge, by operation of law, of Guarantor from the performance or observance
of any obligation, covenant or agreement contained in this Guaranty, or any
release, discharge or cancellation of the Obligations, other than payment or
performance in full of the Obligations; (m) the imposition or operation of any
currency exchange controls in any country; (n) the effect of any foreign or
domestic laws, rules, regulations or actions of a court or governmental body or
entity; or (o) any other condition, event or circumstance which might otherwise
constitute a legal or equitable discharge, release or defense of a surety or
guarantor or otherwise, or which might otherwise limit recourse against
Guarantor, it being agreed that the obligations of Guarantor hereunder shall not
be discharged except by payment and performance in of the Obligations. No
failure to make demand or delay in making demand on Guarantor for satisfaction
of the obligations of Guarantor hereunder shall prejudice the right of the
Guaranty Beneficiaries to enforce the obligations of Guarantor hereunder.
5. WAIVERS OF NOTICE, ETC.
To the maximum extent permitted by applicable law, Guarantor hereby waives
diligence, presentment, demand, protest or notice of any kind whatsoever with
respect to this Guaranty or the Obligations, including: (a) notice of acceptance
of this Guaranty, notice of nonpayment or nonperformance of any of the
Obligations and (b) all notices required by statute, rule of law or otherwise
now or hereafter in effect to preserve any rights against Guarantor; and (w) any
right to the enforcement, assertion or exercise against Lessee or any other
Person or the Aircraft or any other collateral security for the Obligations of
any right, power, privilege or remedy conferred in any Agreement or otherwise,
(x) any requirement to exhaust any remedies, (y) any requirement of promptness
in commencing suit against any Person who may be or become liable thereon, and
(z) any other circumstance whatsoever which might otherwise constitute a legal
or equitable discharge, release or defense of Guarantor or any surety or which
might otherwise limit recourse against Guarantor other than payment and
performance in full of the Obligations.
6. EXTENSIONS, ETC.
Guarantor consents and agrees that the Guaranty Beneficiaries, or any of
them, may in their sole discretion, to the extent otherwise permitted by the
Operative Documents and to the maximum extent permitted by applicable Law, at
any time or from time to time, (i) extend or shorten the Term of the Lease
and/or renew, extend, or increase or decrease or otherwise change or modify the
amount, time, manner, place or terms of payment, performance or observance of
any or all of the Obligations, (ii) apply payments by Lessee or Guarantor to any
Obligations, (iii) exchange, release or surrender any security or property which
may at any time be held by it, (iv) release any surety or guarantor for or of
any of the Obligations, (v) settle or compromise any or all of the Obligations
with Lessee or any other Person liable thereon or (vi) subordinate the payment,
performance or observance of all or any part thereof to the payment, performance
or
observance of any other debts or obligations which may be due or owing to them
or any other Person, all in such manner and upon such terms as the Guaranty
Beneficiaries, or any of them, may deem proper (but in any case, in conformity
with the provisions of the Operative Documents), without further assent from
Guarantor, who agrees to remain bound under this Guaranty notwithstanding any
such extension, change, modification, amendment, release, surrender, settlement,
compromise or subordination.
7. NO WAIVER
No failure on the part of any of the Guaranty Beneficiaries to exercise,
and no delay in exercising, any right or power under this Guaranty shall operate
as a waiver thereof, nor shall any single or partial exercise of any such right
or power preclude any other or further exercise thereof or the exercise of any
other right or power, or of any remedy, of any Guaranty Beneficiary under this
Guaranty, the Operative Documents or applicable law.
8. GUARANTY OF PERFORMANCE
This Guaranty is a guaranty of payment and performance and not of
collection and Guarantor waives any right to require that any action against
Lessee or any Affiliate be taken or exhausted prior to action being taken
against Guarantor. Guarantor shall pay to each Guaranty Beneficiary on demand
all reasonable attorneys' fees and other reasonable expenses incurred by such
Guaranty Beneficiary in exercising its rights and remedies provided hereunder,
together with interest on such sums as the Interest Rate, from the date of
demand by Lessor.
9. REPRESENTATIONS AND WARRANTIES
The Guarantor acknowledges that the Guaranty Beneficiaries have entered
into the Lease and the other Operative Documents to which they are,
respectively, parties on the basis of, and in reliance on, representations in
the following terms and the Guarantor represents and warrants as follows:
(a) STATUS: the Guarantor is duly incorporated with limited liability
and validly existing under the laws of the Republic of Panama;
(b) POWERS AND AUTHORIZATIONS: the documents which contain or establish
the Guarantor's constitution and the laws of the Republic of Panama
include provisions which give power, and all necessary corporate
authority has been obtained and action taken, for the Guarantor to
own its assets, carry on its business and operations as they are now
being conducted, and sign and deliver, and perform the transactions
contemplated in this Guaranty, and this Guaranty constitutes the
valid and binding obligation of the Guarantor enforceable in
accordance with its terms;
(c) NON-VIOLATION: neither the signing and delivery of this Guaranty nor
the performance of any of the transactions contemplated herein or
therein does or will contravene or constitute a default under, or
cause to be exceeded any limitation on it or the powers of its
directors imposed by or contained in: (i) any law by which it or any
of its assets is bound or affected; (ii) any document which contains
or
establishes its constitution; or (iii) any agreement to which it is
a party or by which any of its assets is bound;
(d) CONSENTS: no authorization, approval, consent, license, exemption,
registration, recording, filing or notarization and no payment of
any duty or tax and no other action whatsoever which has not been
duly and unconditionally obtained, made or taken is necessary or
desirable to ensure the validity, enforceability or priority of the
liabilities and obligations of the Guarantor or the rights of the
Lessor under this Guaranty;
(e) NO DEFAULT: no event has occurred which constitutes, or which with
the giving of notice and/or the lapse of time and/or a relevant
determination would constitute, a contravention of, or default
under, any agreement or instrument by which the Guarantor or any of
its assets is bound or affected being a contravention or default
which might either have a material adverse effect on the business,
assets or condition of the Guarantor or materially and adversely
affect its ability to observe or perform its obligations under this
Guaranty;
(f) LITIGATION: no litigation, arbitration or administrative proceeding
or claim which might by itself or together with any other such
proceedings or claims either have a material adverse effect on its
business, assets or condition or materially and adversely affect its
ability to observe or perform its obligations under this Guaranty,
is presently in progress or pending or, to the knowledge of the
Guarantor, threatened against the Guarantor or any of its assets;
(g) INFORMATION: the information furnished by the Guarantor in
connection with this Guaranty does not contain any untrue statement
or omit to state any fact the omission of which makes the statements
therein, in the light of the circumstances under which they were
made, misleading, and all expressions of expectation, intention,
belief and opinion contained therein were made on reasonable grounds
after due inquiry by the Guarantor;
(h) RANKING: the obligations of the Guarantor under this Guaranty rank,
or will upon execution thereof by the Guarantor rank, at least pari
passu in point of priority and security with all other present and
future unsecured and unsubordinated obligations (including
contingent obligations) of the Guarantor other than such obligations
which may be mandatorily preferred by law;
(i) NO EVENT OF DEFAULT: to Guarantor's knowledge, no Event of Default
has occurred and is continuing;
(j) NO SECURITY: the Guarantor has not taken or accepted any Security
Interest from the Lessee or, in relation to the Obligations, from
any third party.
(k) INVESTMENT COMPANY: Guarantors is not an "investment company" as
defined in the investment Company Act of 1940, as amended.
(l) SUBMISSION TO JURISDICTION: Guarantor has validly submitted to the
jurisdiction of the Supreme Court of the State of New York in the
County of New York, State of New York and the United States District
Court for the Southern District of New York.
10. UNDERTAKINGS
The Guarantor undertakes with the Lessor, from the date of this Guaranty
until the Obligations have been unconditionally and irrevocably paid and
discharged in full, the satisfaction of which shall be confirmed in writing by
the Lessor, as follows:
(a) INFORMATION: it will deliver to the Lessor such additional financial
information as the Lessor may from time to time (but, absent an
Event of Default, not more frequently than once per calendar year)
reasonably request;
(b) CONSENTS: the Guarantor will obtain and promptly renew from time to
time, and will promptly deliver to the Lessor certified copies of,
any authorization, approval, consent, license, exemption,
registration, recording, filing or notarization as may be necessary
or desirable to ensure the validity, enforceability or priority of
the liabilities and obligations of the Guarantor or the rights of
the Lessor under this Guaranty and the Guarantor shall comply with
the terms of the same;
(c) NO SECURITY: the Guarantor shall not take or accept any security
interest from the Lessee or from any third party with respect to the
Obligations, without first obtaining the Lessor's written consent
which consent shall not be unreasonably withheld;
(d) NATURE OF OBLIGATION: Guarantor's obligation to make all payments
due hereunder and to perform its other obligations hereunder shall
be absolute and unconditional and shall in no event be subject to
any right of setoff, recoupment, deduction or counterclaim or any
other defense which Guarantor or any other Person may now or
hereafter have against any Guaranty Beneficiary or any other Person,
which Guarantor hereby waives to the full extent permitted by law,
save for payment and performance in full of the Obligations.
(e) LESSOR: Lessor (or any of its Affiliates) may set off any Obligation
of Guarantor hereunder against any obligation owed by Lessor or any
of its Affiliates to Lessee or Guarantor or any of their Affiliates,
and, in the case of Lessor, to the extent permitted by Law, shall
notify Guarantor promptly after any such set-off provided that the
failure to give such notice shall not impair any rights or remedies
of the Guaranty Beneficiaries hereunder.
(f) SUBROGATION: Guarantor shall become entitled to subrogation rights
by reason of performance of any of its obligations hereunder,
provided, that such rights are and shall be subject and subordinate
to the rights of the Guaranty Beneficiaries against Lessee under the
Lease in the event of any insolvency, bankruptcy, liquidation,
reorganization or other similar proceedings related to Lessee, or in
the event of
any proceedings for voluntary liquidation, dissolution or other
winding up of Lessee, whether or not involving insolvency or
bankruptcy proceedings, such that the Obligations shall be finally
paid and performed in full before any payment in respect of a
subrogation claim by Guarantor shall be made by or on behalf of
Lessee and (b) notwithstanding the foregoing provisions or any other
provision of this Guaranty or the Lease, if an Event of Default is
in existence, Guarantor hereby irrevocably waives and relinquishes
any and all rights of subrogation, contribution, reimbursement or
other payment from Lessee or Lessee's estate, whether arising by
contract or operation of law (including any such right arising under
the United States Bankruptcy Code) or otherwise arising out of, or
on account of, any sums which have been claimed or are thereafter
claimable against Guarantor under this Guaranty, which waiver shall
be in effect unless and until all of the Obligations shall have been
finally paid and performed in full. The waiver and relinquishment of
rights provided for in the immediately preceding sentence shall be
irrevocable and unconditional regardless of whether any such right
is reduced to judgment, liquidated, unliquidated, fixed, contingent,
matured, unmatured, disputed, undisputed, secured, or unsecured.
(g) BANKRUPTCY, ETC.: Guarantor agrees that if at any time all or any
part of any payment or performance theretofore applied by any
Guaranty Beneficiary to any of the Obligations is or must be
rescinded or returned by any Guaranty Beneficiary for any reason
whatsoever (including the insolvency, bankruptcy or reorganization
of Lessee), such Obligations shall, for the purposes of this
Guaranty, to the extent that such payment or performance is or must
be rescinded or returned, be deemed to have continued in existence,
notwithstanding such application by the Guaranty Beneficiaries, and
this Guaranty shall continue to be effective or be reinstated, as
the case may be, as to such Obligations, all as though such
application by a Guaranty Beneficiary had not been made. If an Event
of Default shall at any time have occurred and be continuing, or the
exercise of any remedy pursuant to the Lease, shall at such time be
prevented by reason of the pendency against Lessee or any other
Person of a case or proceeding under a bankruptcy, insolvency or
similar law, or if the Lease or any other Operative Document shall
be terminated as a result of a rejection or disaffirmance in a
bankruptcy, insolvency or similar proceeding involving Lessee,
Guarantor or any affiliate of Lessee or Guarantor, Guarantor agrees
that, for purposes of this Guaranty and its obligations hereunder,
the Lease or such other operative Documents shall be deemed to be in
default with the same effect as if the Lease or such other Operative
Documents had been enforceable in accordance with the terms thereof,
and Guarantor shall forthwith pay all amounts, or any of them, to be
paid thereunder, any interest thereon and any other amounts
guaranteed hereunder or provided herein. In the circumstance
described in the preceding sentence, any election of remedies and
any determination of any such amount may be made solely for purposes
of this Guaranty and any required notice or demand upon the Lessee
is hereby waived by the Guarantor and may, at the option of a
Guaranty Beneficiary, be given or made upon the Guarantor. Guarantor
agrees that it shall be liable for the full amount of the
Obligations guaranteed hereby, irrespective of and without regard
to, any modification,
limitation or discharge of liability, rejection or disaffirmance
that may result from or in connection with any bankruptcy,
insolvency or similar proceeding involving Lessee or any other
Person.
11. CERTIFICATES
A certificate of the Lessor issued at any time setting forth the amount of
any Obligations not then paid by the Lessee shall be conclusive evidence of such
amount against the Guarantor in the absence of any manifest error.
12. MISCELLANEOUS PROVISIONS
12.1 Any communication or document to be made by one person to another pursuant
to this Guaranty shall be made in writing and shall be delivered personally, or
by courier (where the courier company is a reputable international or local
company) or by facsimile communication (unless that other person has, by fifteen
(15) days' written notice to the Lessor, specified another office address and/or
facsimile number) to that other person at the office address or facsimile number
set out below, and shall be deemed to have been made or delivered:
(a) in the case of any communication made by facsimile, when
transmission of such facsimile communication has been completed and
such transmission has been separately acknowledged by such other
person in a manner provided for herein; or
(b) in the case of any communication made by courier, on the date of
delivery as evidenced by the records of the courier company,
Provided that (i) any communication or document to be made or delivered to the
Lessor or any Guaranty Beneficiary shall be effective only when received by the
Lessor, and then only if the same is expressly marked for the attention of the
department or officer identified below (or such other department or officer as
the Lessor shall from time to time specify for this purpose) and (ii) any notice
received after close of business on any day shall not be deemed to have been
received until commencement of business on the immediately succeeding Business
Day.
To the Guarantor:
Address: COMPANIA PANAMENA DE AVIACION, S.A.
Avenida Xxxxx Xxxxxxxxx y Xxxxx 00
Xxxxxxxx 0000
Xxxxxx 0, Xxxxxxxx of Panama
Facsimile: 000.000.000.0000
Attention: Vice President - Finance
With a copy to:
Address: Xxxxxxxxx Traurig, P.A.
0000 Xxxxxxxx Xxx
Xxxxx, Xxxxxxx 00000
Facsimile: (000) 000 0000
Attention: Xxxxxxx Xxxxx
To the Lessor or any Guaranty Beneficiary:
Address: XXXXX FARGO BANK NORTHWEST, N.A.,
as trustee and Lessor
000 Xxxxx Xxxx Xxxxxx
Xxxx Xxxx Xxxx, XX 00000
Facsimile: 000-000-0000
Attention: Corporate Trust Department
With a copy to:
Address: RBS AEROSPACE LIMITED
0 Xxxxxx'x Xxxx Xxxxx
Xxxxxx'x Xxxx
Xxxxxx 0
Ireland
Facsimile: 353-1-448-3390
Attention: Head of Transaction Execution and Management
12.2 Any payment to the Lessor to be made hereunder shall be made:
(a) to the Lessor for the account of the Lessor or to such other bank or
account as the Lessor may notify the Guarantor at the time of making
a demand under this Guaranty; and
(b) in full without set off or counterclaim and free and clear of and
without any deduction for, on or on account of any present or future
taxes, levies, imposts, duties or other charges whatsoever unless
the Guarantor is compelled by law to make any such deduction. If the
Guarantor is compelled by law to make any such deduction from any
payment to the Lessor, then the Guarantor will pay to the Lessor
such additional amount as will result in the receipt by the Lessor
of the full amount stated in any demand made by the Lessor under
this Guaranty.
12.3 If the Guarantor fails to pay any amount to the Lessor upon receipt of
written demand in accordance with this Guaranty, the Guarantor shall pay
interest in U.S. dollars on that amount from the time of default up to the time
of actual payment (as well after as before judgment) at the Interest Rate.
12.4 If, under any law, whether as a result of a judgment against the Guarantor
or the liquidation of the Guarantor or for any other reason, any payment under
or in connection with this Guaranty is made or is recovered in a currency (the
"Other Currency") other than that in which it is required to be paid hereunder
(the "Original Currency") then, to the extent that the payment to the Lessor
(when converted at the rate of exchange on the date of payment or, in the case
of a liquidation, the latest date for the determination of liabilities permitted
by the applicable law) falls short of the amount unpaid under this Guaranty, the
Guarantor shall, as a separate and independent obligation, fully indemnify the
Lessor against the amount of the shortfall; and for the purposes of this
sub-clause, "rate of exchange" means the rate at which the Lessor is able on the
relevant date to purchase the original currency in New York with the other
currency.
12.5 Any determination and demand in respect of any amount at any time due and
owing by the Guarantor to the Lessor pursuant to this Guaranty shall be made on
the same basis as is applicable to a demand or determination made by the Lessor
under the Lease.
12.6 If, in respect of any particular amount due and owing to the Lessor under
the Lease, a payment is made by the Guarantor under this Guaranty and that
amount is also paid under the Lease, the Lessor agrees, subject to applicable
law and provided that no Default or Event of Default has occurred and is
continuing (and to the extent it determines it can do so without prejudice to
the retention of the payment made under the Lease under applicable bankruptcy or
any other laws affecting creditors rights in general), to reimburse the
Guarantor for the amount paid hereunder which corresponds to that particular
amount.
12.7 If any provision of this Guaranty becomes invalid, illegal or unenforceable
in any respect under any law, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired.
13. CHOICE OF LAW
This Guaranty is governed by, and shall be construed in accordance with,
the laws of the State of New York including Title 14 Sections 5-1401 and 5-1402
of the General Obligations Law of the State of New York.
14. JURISDICTION AND WAIVER
14.1 (a) The parties agree that the Supreme Court of the State of New York
sitting in New York County and the United States District Court for the Southern
District of New York shall have non-exclusive jurisdiction to hear and determine
any suit, action or proceeding, and to settle any disputes, which may arise out
of or in connection with this Guaranty (including, without limitation, claims
for set-off or counterclaim) or otherwise arising in connection with this
Guaranty;
(b) the Lessor or any Guaranty Beneficiary may in its absolute
discretion take proceedings in the courts of any other country which
may have jurisdiction, to whose jurisdiction the Guarantor
irrevocably submits;
(c) the Guarantor irrevocably waives any objections on the ground of
venue or forum non conveniens or any similar grounds;
(d) the Guarantor irrevocably consents to service of process by mail or
in any other manner permitted by the relevant law.
14.2 The Guarantor irrevocably waives and agrees not to claim any immunity from
suits and proceedings (including actions in rem) and from all forms of execution
or attachment (including attachment prior to judgment and attachment in aid of
execution) to which it or its property is now or may hereafter become entitled
under the laws of any jurisdiction and declares that such waiver shall be
effective to the fullest extent permitted by such laws.
14.3 The Guarantor shall at all times maintain an agent for service of process
in New York. Such agent shall be Corporation Service Company (CSC) with its
offices at 0000 Xxxxxx xx xxx Xxxxxxxx, Xxxxx 0000, Xxx Xxxx, XX 00000, and any
writ, judgment or other notice of legal process shall be sufficiently served on
the Guarantor if delivered to such agent at its address for the time being. The
Guarantor undertakes not to revoke the authority of the above agent and if, for
any reason, any such agent no longer serves as agent of the Guarantor to receive
service of process, the Guarantor shall promptly appoint another such agent and
advise the Lessor thereof.
14.4 This Guaranty shall be binding upon the successors and assigns of Guarantor
and shall inure to the benefit of the Guaranty Beneficiary, and its permitted
successors and assigns.
[Continued on next page]
This Guaranty has been duly executed on the date first above written.
COPA HOLDINGS, S.A.
By:_______________________________________
Name:
Title:
AGREED AND ACCEPTED:
XXXXX FARGO BANK NORTHWEST, N.A.,
not in its individual capacity but solely as trustee, Lessor
By: ______________________________________________
Name:_________________________________________
Title:________________________________________
Date:_________________________________________
RBS AEROSPACE LIMITED
By: ______________________________________________
Name:_________________________________________
Title:________________________________________
Date:_________________________________________
SCHEDULE 11
AIRWORTHINESS DIRECTIVE COST SHARING FORMULA
If the cost to the Lessee of effecting any Airworthiness Directive (not to
include a Mandatory Order) issued by the FAA (whether or not also issued by the
JAA) after the Delivery Date exceeds US$200,000 (2003), Lessor shall, upon
presentation to Lessor by Lessee of substantiating documentation and so long as
no Default or Event of Default has occurred and is continuing, reimburse Lessee
within 30 days for such Aircraft for a portion of such cost, such reimbursement
to be calculated as follows:
R= (60 - M) x (C - US$200,000 (2003)*)
--------
60
where
"R" means the portion of the cost of compliance to be reimbursed to
Lessee.
"M" means the number of months (including parts thereof) between (1) the
earlier of (a) the date of completion of such modification and (b) the
originally required date thereof and (2) the end of the Lease Term. Where
the original required date thereof is after the end of the Lease Term for
such Aircraft, M shall equal 0.
"C" means the cost of completing such modification at an Approved
Maintenance Provider's normal commercial labour charge rates plus
reasonable cost of materials, subtracting any subsidy, warranty payment or
other benefit provided to Lessee and excluding any loss or expenses
incurred because of inability to operate such Aircraft.
Should an Event of Default have occurred and be at any relevant time continuing,
Lessor shall retain such amount until such Event of Default or Default shall
have been cured whereupon it shall pay to Lessee any such amount less any
portion thereof as was applied by Lessor to cure such Default or Event of
Default.
----------
* escalated at 3% commencing on January 1, 2005 and each annual anniversary date
thereafter.
SCHEDULE 12
FORM OF WARRANTY ASSIGNMENT
_________, 200_
The Boeing Company
X.X. Xxx 0000
Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Vice President - Contracts
Mail Code 21-34
Ladies and Gentlemen:
In connection with: (i) the sale by Delta Air Lines Inc. ("SELLER") to Xxxxx
Fargo Bank Northwest, N.A., not in its individual capacity but solely as trustee
("OWNER TRUSTEE") under the Trust Agreement dated as of December 23, 2004
between RBS Aerospace Limited ("RBS") and Xxxxx Fargo Bank Northwest N.A., as
trustee ("BUYER") of the aircraft identified below, and (ii) the lease by Buyer
of such aircraft to Compania Panamena de Aviacion, S.A. ("LESSEE"); reference is
made to:
A. Purchase Agreement No. 2022 (the "PURCHASE AGREEMENT") and the Aircraft
General Terms Agreement AGTA-DAL (the "AGTA"), each dated as of October 21,
1997, between The Boeing Company ("BOEING") and Seller, excluding, as it relates
to the Purchase Agreement, all Articles, Tables, Exhibit A and Supplemental
Xxxxxxxx XXX/XXXXX/XXX/XXX, XX0, XX0, XXXXX0 and all Letter Agreements and, as
it relates to the AGTA, Articles 2 through 10, 13, 16.7, Exhibits A through E
and Appendices 8 and 9, but including Attachments 1, 2, 3 and 7 to Letter
Agreement No. 6-1162-RLL-3692 to the Purchase Agreement (titled "Lombard
Aviation Capital Matters") (the "AGREEMENT") under which Seller purchased
certain Boeing Model 737 aircraft, including the aircraft bearing Manufacturer's
Serial No. ________ (the "AIRCRAFT").
B. Aircraft Sale and Purchase Agreement dated as of October 1, 2003 between
Seller and RBS (the "ASPA"); and
C. Aircraft Lease Agreement (the "Lease") dated as of ____________, as
supplemented, between Buyer and Lessee.
Capitalized terms used herein without definition will have the same meaning as
in the Agreement.
Seller has sold the Aircraft to Buyer under the ASPA. To accomplish: (i) a
transfer of certain rights from Seller to Buyer in respect of the Aircraft under
the Agreement, all as authorized by the provisions thereof, the parties hereto
agree as follows:
1. Seller hereby assigns to Buyer all of the rights of "Customer" in respect of
the Aircraft under the provisions of the Agreement set forth in the attached
Schedule I (collectively, the "SUBJECT RIGHTS").
2. Buyer acknowledges that it has reviewed and, in connection with any exercise
of the Subject Rights, agrees to be bound by and comply with, all of the
provisions of the Agreement set forth in Schedule I as well as the provisions of
the Agreement set forth in Schedule II, including, without limitation, the
DISCLAIMER AND RELEASE and EXCLUSION OF CONSEQUENTIAL AND OTHER DAMAGES in
Article 12 of Part 2 of Exhibit C to the AGTA and the insurance provisions in
Article 11 of the AGTA (collectively, the "DISCLOSED PROVISIONS").
3. Pursuant to the provisions of the Lease Buyer authorizes Lessee to exercise,
to the exclusion of Buyer, all rights and powers of Buyer with respect to the
Subject Rights in respect of the Aircraft. This authorization will continue
until Boeing receives written notice from Buyer to the contrary, addressed to
Vice President - Contracts, Mail Code 21-34, Boeing Commercial Airplanes, P. O.
Xxx 0000, Xxxxxxx, Xxxxxxxxxx, 00000-0000. Until Boeing receives such notice,
Boeing is entitled to deal exclusively with Lessee as "Customer" with respect to
the Aircraft under the Agreement. With respect to the rights, powers, duties and
obligations of "Customer" under the Agreement, all actions taken by Lessee or
agreements entered into by Lessee during the period prior to Boeing's receipt of
such notice is final and binding on Buyer. Further, any payments made by Boeing
as a result of claims made by Lessee prior to receipt of such notice are to be
made to the credit of Lessee.
4. Lessee accepts the authorization set forth in paragraph 3 above, acknowledges
that it has reviewed, and agrees to be bound by and to comply with, all of the
Disclosed Provisions, including those relating to any exclusion or limitation of
liabilities or warranties.
5. RBS and Seller will remain responsible for any payments due Boeing as a
result of obligations relating to the Aircraft incurred by Seller or Buyer, as
the case may be, to Boeing prior to the effective date hereof.
6. Each of Seller, Buyer and Lessee further agrees, upon the written request of
Boeing, promptly to execute and deliver such further assurances and documents
and take such further action as Boeing reasonably requests in order to obtain
the full benefits of such party's agreements herein.
7. It is expressly agreed and understood that all representations, warranties
and undertakings of Buyer hereunder shall be binding upon Buyer only in its
capacity as trustee under the Trust Agreement, and neither the institution
acting as Buyer nor RBS shall be liable in its individual capacity for any
breach thereof except in the case of the institution acting as Buyer for breach
of its own covenants, representations and warranties contained herein, to the
extent covenanted or made in its individual capacity.
We request that Boeing acknowledge receipt hereof and confirm the transfer of
rights set forth above by signing the acknowledgment and forwarding one copy
hereof containing its acknowledgment to each of the undersigned.
Very truly yours,
DELTA AIR LINES, INC. (Seller) RBS AEROSPACE LIMITED (Buyer)
By ___________________________ By ______________________________
Its __________________________ Its _____________________________
Dated ________________________ Dated ___________________________
XXXXX FARGO BANK NORTHWEST, COMPANIA PANAMENA DE AVIACION,
N.A., not in its individual capacity, S.A. (LESSEE)
but solely as trustee (Trustee) for the
benefit of RBS Aerospace Limited under
the Trust Agreement dated as of December
23, 2004 between itself and RBS
Aerospace Limited
By ___________________________ By ______________________________
Its __________________________ Its _____________________________
Dated ________________________ Dated ___________________________
Receipt of the above letter is acknowledged and transfer of rights under the
Purchase Agreement with respect to the Aircraft is confirmed, effective as of
this date.
THE BOEING COMPANY
By ______________________________
Its _______________________________
Dated ____________________________
Aircraft Manufacturer's Serial Number ________________
