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LEASE AGREEMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N670FE)
Dated as of May 1, 1997
between
STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION,
Not in its Individual Capacity,
but Solely as Owner Trustee,
Lessor
and
FEDERAL EXPRESS CORPORATION,
Lessee
COVERING ONE AIRBUS A300F4-605R AIRCRAFT
SERIAL NO. 777, REGISTRATION NO. N670FE
CERTAIN OF THE RIGHT, TITLE AND INTEREST IN AND TO THIS LEASE
AGREEMENT OF STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL
ASSOCIATION, AS OWNER TRUSTEE, HAS BEEN ASSIGNED TO AND IS SUBJECT TO A LIEN
AND SECURITY INTEREST IN FAVOR OF FIRST SECURITY BANK, NATIONAL ASSOCIATION,
AS INDENTURE TRUSTEE UNDER THE TRUST INDENTURE AND SECURITY AGREEMENT (FEDERAL
EXPRESS CORPORATION TRUST NO. N670FE) DATED AS OF MAY 1, 1997 FOR THE BENEFIT
OF THE HOLDERS OF THE CERTIFICATES REFERRED TO IN SUCH TRUST INDENTURE AND
SECURITY AGREEMENT. THIS LEASE AGREEMENT HAS BEEN EXECUTED IN SEVERAL
COUNTERPARTS. ONLY THE CHATTEL-PAPER "ORIGINAL" COUNTERPART CONTAINS THE
RECEIPT THEREFOR EXECUTED BY FIRST SECURITY BANK, NATIONAL ASSOCIATION, AS
INDENTURE TRUSTEE, ON THE SIGNATURE PAGES THEREOF.
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TABLE OF CONTENTS
Page
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Initial Recitals.............................................................1
ARTICLE 1
DEFINITIONS
ARTICLE 2
ACCEPTANCE UNDER THE LEASE
Section 2.01. Sale and Lease of Aircraft; Term......................... 1
ARTICLE 3
RENT AND RENT ADJUSTMENT
Section 3.01. [Reserved]............................................... 2
Section 3.02. Basic Rent............................................... 2
Section 3.03. Supplemental Rent........................................ 2
Section 3.04. Adjustments to Basic Rent, Stipulated Loss Value and
Termination Value After the Delivery Date................ 3
Section 3.05. Minimum Basic Rent....................................... 4
Section 3.06. Payment to Indenture Trustee............................. 5
Section 3.07. Costs and Expenses....................................... 5
ARTICLE 4
RENEWAL OPTIONS AND PURCHASE OPTIONS
Section 4.01. Renewal Options.......................................... 5
Section 4.02. Purchase Options......................................... 6
Section 4.03. Appraisal Procedures..................................... 8
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
Section 5.01. Disclaimer of Representations and Warranties............. 10
Section 5.02. No Modification of Other Warranties...................... 10
Section 5.03. Certain Agreements of the Lessee......................... 11
ARTICLE 6
LIENS
Section 6.01. Liens.................................................... 11
ARTICLE 7
AIRCRAFT REGISTRATION, MAINTENANCE AND OPERATION
Section 7.01. Registration, Maintenance and Operation.................. 12
Section 7.02. Possession and Permitted Transfer and Sublease........... 14
Section 7.03. Insignia................................................. 19
ARTICLE 8
REPLACEMENT AND POOLING OF PARTS
Section 8.01. Replacement of Parts..................................... 19
Section 8.02. Pooling of Parts......................................... 20
ARTICLE 9
ALTERATIONS, MODIFICATIONS AND ADDITIONS
Section 9.01. Required Alterations and Modifications................... 21
Section 9.02. Other Alterations and Modifications...................... 21
ARTICLE 10
VOLUNTARY TERMINATION
Section 10.01. Right of Termination Upon Obsolescence or Surplus....... 23
Section 10.02. Retention of Aircraft by the Lessor..................... 25
Section 10.03. Voluntary Termination as to Engines..................... 26
ARTICLE 11
LOSS, DESTRUCTION, REQUISITION
Section 11.01. Lessee's Election Rights................................ 27
Section 11.02. Payment of Stipulated Loss Value........................ 27
Section 11.03. Replacement of Airframe and Engines..................... 28
Section 11.04. Event of Loss with Respect to an Engine................. 31
Section 11.05. Application of Payments from the Government or Others... 33
Section 11.06. Requisition of an Airframe and the Installed Engines
for Use by Government................................... 34
Section 11.07. Requisition for Use by Government of an Engine Not
Installed on the Airframe............................... 35
Section 11.08. Application of Payments During Existence of Certain
Defaults................................................ 35
ARTICLE 12
RETURN OF AIRCRAFT
Section 12.01. Return of Aircraft...................................... 35
Section 12.02. Return of Engines....................................... 36
Section 12.03. Return of Manuals....................................... 36
Section 12.04. Condition of Aircraft................................... 37
Section 12.05. [Reserved].............................................. 38
Section 12.06. Storage................................................. 38
Section 12.07. Special Markings........................................ 38
Section 12.08. Lessor's Option to Purchase Parts....................... 39
ARTICLE 13
INSURANCE
Section 13.01. Comprehensive Airline Liability and Property Damage
Liability Insurance..................................... 39
Section 13.02. Insurance Against Loss or Damage to Aircraft and Engines 41
Section 13.03. Application of Insurance Proceeds....................... 43
Section 13.04. Reports................................................. 44
Section 13.05. Lessor's Insurance...................................... 45
Section 13.06. Self-Insurance.......................................... 45
ARTICLE 14
INSPECTION
Section 14.01. Right of Inspection..................................... 46
Section 14.02. No Obligation to Inspect................................ 46
ARTICLE 15
ASSIGNMENT
Section 15.01. Lessee's Right to Assign................................ 46
Section 15.02. Citizenship............................................. 47
ARTICLE 16
EVENTS OF DEFAULT
Section 16.01. Events of Default....................................... 47
ARTICLE 17
REMEDIES
Section 17.01. Remedies Upon Lessee's Default.......................... 49
Section 17.02. Cumulative Remedies..................................... 52
Section 17.03. Waiver.................................................. 52
Section 17.04. Lessor's Right to Perform for Lessee.................... 53
ARTICLE 18
COVENANT OF QUIET ENJOYMENT
Section 18.01. Quiet Enjoyment......................................... 53
ARTICLE 19
FURTHER ASSURANCES
Section 19.01. Further Assurances...................................... 53
ARTICLE 20
NET LEASE
Section 20.01. Nature of Lease......................................... 54
ARTICLE 21
SUCCESSOR LESSOR
Section 21.01. Successor Lessor........................................ 55
ARTICLE 22
SECURITY FOR LESSOR'S OBLIGATIONS
Section 22.01. Security for Lessor's Obligations to Holders............ 56
Section 22.02. [Reserved].............................................. 56
Section 22.03. Consent of Lessee to Assignment of Lease as Security.... 56
ARTICLE 23
SECURITY FUNDS
Section 23.01. Investment of Security Funds............................ 57
ARTICLE 24
CONCERNING THE LESSOR
Section 24.01. Lessor's Entry Into Lease............................... 58
ARTICLE 25
NOTICES
Section 25.01. Notices................................................. 59
ARTICLE 26
MISCELLANEOUS
Section 26.01. Section Heading and Captions............................ 60
Section 26.02. References.............................................. 60
Section 26.03. APPLICABLE LAW.......................................... 60
Section 26.04. Severability............................................ 60
Section 26.05. No Oral Modification.................................... 60
Section 26.06. Agreement as Chattel Paper.............................. 60
Section 26.07. Counterparts............................................ 60
Section 26.08. Public Release of Information........................... 61
ARTICLE 27
TRUE LEASE
Section 27.01. Intent of the Parties................................... 61
Section 27.02. Section 1110 Compliance................................. 61
Section 27.03. Finance Lease........................................... 61
Schedule I Definitions
Schedule II Basic Rent
Schedule III Stipulated Loss Values
Schedule IV Termination Values
Schedule V Purchase Option Schedule
Exhibit A Form of Lease Supplement
Exhibit B Form of Purchase Agreement Assignment, Consent and
Agreement and AVSA Consent and Agreement
Exhibit C Form of Engine Warranty Assignment and Engine Consent
LEASE AGREEMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N670FE)
LEASE AGREEMENT (FEDERAL EXPRESS CORPORATION TRUST NO. N670FE) dated
as of May 1, 1997 (this "Lease") between STATE STREET BANK AND TRUST COMPANY
OF CONNECTICUT, NATIONAL ASSOCIATION, a national banking association, not in
its individual capacity but solely as Owner Trustee under the Trust Agreement
(as defined in Article 1 below) (the "Lessor"), and FEDERAL EXPRESS
CORPORATION, a Delaware corporation (the "Lessee").
W I T N E S S E T H :
WHEREAS, all capitalized terms used herein shall have the meanings
assigned thereto as provided in Article 1 below;
WHEREAS, subject to the terms and conditions set forth in the
Participation Agreement (as hereinafter defined), the Lessee desires on the
Delivery Date (as hereinafter defined) to lease from the Lessor and the Lessor
is willing to lease to the Lessee the Aircraft (as hereinafter defined) in
accordance with the terms and conditions set forth in this Lease.
NOW, THEREFORE, in consideration of the mutual promises herein, and
other good and valuable consideration, the receipt and adequacy of which is
hereby acknowledged by the parties, the Lessor and the Lessee agree as follows:
ARTICLE 1
DEFINITIONS
Unless the context otherwise requires, the capitalized terms herein
shall have the meanings given in Schedule I hereto, for all purposes of this
Lease and shall be equally applicable to both the singular and the plural
forms of the terms defined.
ARTICLE 2
ACCEPTANCE UNDER THE LEASE
Section 2.01. Sale and Lease of Aircraft; Term. The Lessor, subject
to satisfaction or waiver of the conditions set forth in this Lease and in the
Participation Agreement, hereby agrees to purchase the Aircraft from AVSA on
the Delivery Date and agrees immediately thereafter to lease the Aircraft to
the Lessee pursuant to this Lease, and the Lessee hereby agrees to lease the
Aircraft from the Lessor, such lease to be evidenced by the execution by the
Lessor and the Lessee of a Lease Supplement leasing the Aircraft hereunder.
Such lease shall last for the Term, at all times during which full legal title
to the Aircraft shall remain vested with the Lessor to the exclusion of the
Lessee, notwithstanding the possession and use thereof by the Lessee or any
other Person. The Lessee agrees that the Lessor will authorize one or more
employees of the Lessee, designated by the Lessee in writing, as the
authorized representative or representatives of the Lessor to accept delivery
of the Aircraft pursuant to the sale of the Aircraft described in the
Participation Agreement. The Lessee hereby agrees that in the event delivery
of the Aircraft shall be accepted by an employee or employees of the Lessee
pursuant to such authorization by the Lessor, such acceptance of delivery by
such employee or employees on behalf of the Lessor shall, without further act,
irrevocably constitute acceptance by the Lessee of the Aircraft for all
purposes of this Lease.
ARTICLE 3
RENT AND RENT ADJUSTMENT
Section 3.01. [Reserved].
Section 3.02. Basic Rent. The Lessee agrees to pay to the Lessor in
immediately available funds, on each Rent Payment Date, Basic Rent for the
Aircraft during the Basic Term, each payment being set forth on Schedule II
hereto opposite the applicable Rent Payment Date, subject to increase or
decrease as provided in Section 3.04 of this Lease. Each payment of Basic
Rent shall be made in arrears or in advance, all as stated in Schedule II
hereto. Each payment of Basic Rent designated as advance rent shall be
allocated over the six-month period beginning on the Rent Payment Date on
which such advance rent payment is scheduled to be made, and each installment
of Basic Rent that is designated as payable in arrears shall be accrued over
the six-month period ending on and including the day immediately preceding the
Rent Payment Date on which such arrears payment is scheduled to be made.
Section 3.03. Supplemental Rent. The Lessee agrees to pay or cause
to be paid to the Lessor, or to whomever shall be entitled to it, any and all
Supplemental Rent promptly as the same shall become due. If the Lessee fails
to pay any Supplemental Rent when due, the Lessor shall have all rights,
powers and remedies provided for in this Lease, or by law or equity or
otherwise in the case of nonpayment of Basic Rent. The Lessee will also pay
to the Person entitled thereto, on demand, as Supplemental Rent, to the extent
permitted by applicable law, an amount equal to interest at the Past Due Rate
on any part of any installment of Basic Rent not paid when due, for any period
until the same shall be paid and on any payment of Supplemental Rent not paid
when due, for the period until the same shall be paid. In addition, the
Lessee will pay to the Lessor, as Supplemental Rent, (i) an amount equal to
the aggregate amount of any Make-Whole Premium payable under the Indenture
(other than any Make-Whole Premium payable in connection with an Indenture
Event of Default that is not and does not arise out of a Lease Event of
Default) and (ii) an amount equal to the excess of interest at the Past Due
Rate on the principal of the Certificates in connection with an acceleration
of the Certificates pursuant to Section 7.02 of the Indenture following an
Indenture Event of Default attributable to an Event of Default over interest
payable by the Lessee at the Past Due Rate on Basic Rent. The expiration or
other termination of the Lessee's obligation to pay Basic Rent shall not limit
or otherwise modify the obligations of the Lessee with respect to the payment
of Supplemental Rent.
Section 3.04. Adjustments to Basic Rent, Stipulated Loss Value and
Termination Value After the Delivery Date. The percentages for Basic Rent
referred to in Schedule II hereto and the percentages for Stipulated Loss
Value and Termination Value referred to in Schedule III and Schedule IV
hereto, respectively, shall be adjusted (upward or downward) subject to the
minimum value established by Section 3.05 hereof and the definitions of
Stipulated Loss Value and Termination Value to reflect (i) any costs and
expenses paid by the Lessor or the Owner Participant pursuant to Section 10.01
of the Participation Agreement being greater or less than the Estimated
Expense Amount, (ii) any Refinancing pursuant to Section 15.01 of the
Participation Agreement, (iii) any reoptimization pursuant to Section 15.02(a)
of the Participation Agreement, (iv) payments pursuant to Section 5 of the Tax
Indemnity Agreement by an adjustment of Basic Rent or (v) the Delivery Date
being other than June 2, 1997. Each such adjustment pursuant to clause (i),
(ii), (iv) or (v) of the first sentence of this Section 3.04 shall maintain
the Owner's Economic Return (and, while maintaining such Owner's Economic
Return, minimize the aggregate Net Present Value of Rents to the Lessee). In
the event of an adjustment pursuant to clause (iii) of the first sentence of
this Section 3.04, the Owner Participant may recalculate Basic Rent as set
forth in Schedule II hereto in order to maintain to the extent feasible the
Owner's Economic Return and, subject to the provisions of Section 15.02 of the
Participation Agreement, recalculate the schedule of principal repayments, the
Stipulated Loss Value percentages set forth in Schedule III hereto and the
Termination Value percentages set forth in Schedule IV hereto in a manner
consistent with such recalculation of Basic Rent; provided that any such
recalculations as a result of an adjustment pursuant to such clause (iii) of
the first sentence of this Section 3.04 may not (A) increase the Net Present
Value of Rents to the Lessee, (B) increase as of any date the sum of (1) the
Net Present Value of Rents to the Lessee payable through such date plus (2) the
present value of the Stipulated Loss Value or the Termination Value as of such
date, in each case discounted to the Delivery Date at the Debt Rate, beyond
such net present values prior to such adjustment, or (C) otherwise result in
any adverse impact (including tax consequences) to the Lessee for which the
Owner Participant has not agreed to indemnify the Lessee on terms reasonably
acceptable to the Lessee.
The Owner Participant shall promptly notify the Lessee and the Lessor
and the Lessee shall promptly notify the Owner Participant and the Lessor of
the need for any such adjustment pursuant to this Section 3.04. As promptly
as feasible after any such notification, the Lessor shall furnish the Lessee
with a notice setting forth the amount of any such adjustments together with
the calculations upon which the adjustments are based; provided, however, that
the Lessor and the Owner Participant shall not be required to disclose to the
Lessee in such notice any confidential or proprietary information (including
methodology or assumptions) relating to such calculations. At the request
and, subject to the next succeeding sentence, expense of the Lessee, the
accuracy of the calculation of such adjustments and the consistency of the
calculation with the calculation used to determine Basic Rent, Stipulated Loss
Values and Termination Values shall be verified first, by First Chicago Leasing
Corporation or such other financial advisor chosen by the Lessee and second,
if such adjustments are still believed to be in error and are not reconciled
with the Owner Participant within fifteen (15) Business Days, by a firm of
nationally recognized independent public accountants selected by the Lessee
and reasonably acceptable to the Owner Participant and, in order to enable
them to verify such adjustments, the Owner Participant shall make available to
such accountants (for their own confidential use and not to be disclosed to
the Lessee or any other Person and subject to the execution of a
confidentiality agreement reasonably satisfactory to the Owner Participant)
all information reasonably necessary for such verification, including the name
of the lease analysis program used by the Owner Participant to calculate such
adjustments. The Lessee will pay the reasonable costs and expenses of the
verification process under this Section 3.04 unless as a result of such
verification process by the independent public accountants Basic Rent is
adjusted and such adjustment causes the Net Present Value of Rents, to decline
by 10 or more basis points (in which event the Owner Participant shall pay the
reasonable costs and expenses of such verification process). The Lessor and
the Lessee shall execute and deliver an amendment to this Lease to reflect
each adjustment under this Section 3.04.
All adjustments under this Section 3.04 shall be in compliance with
the requirements of Revenue Procedure 75-21, 1975-1 C.B. 715 and Sections
4.02(5), 4.07(1), 4.07(2) and 4.08(1) of Revenue Procedure 75-28, 1975-1 C.B.
752 and shall be structured so as to not cause the Lease to be a "disqualified
leaseback or long-term agreement" within the meaning of Section 467 of the
Code.
Section 3.05. Minimum Basic Rent. Notwithstanding any other
provisions of the Operative Agreements to the contrary, each installment of
Basic Rent due on each Rent Payment Date and not constituting an Excepted
Payment shall be, under any and all circumstances, an amount at least
sufficient to pay in full any installment of principal of and interest on the
Certificates required to be paid pursuant to the Certificates (other than
amounts becoming due on account of the exercise of remedies pursuant to
Article 17 hereof) on such Rent Payment Date.
Section 3.06. Payment to Indenture Trustee. All Rent payable by the
Lessee to the Lessor shall be paid to the Lessor c/o State Street Bank and
Trust Company, Xxx Xxxxxxxxxxxxx Xxxxx, 0xx Xxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000,
Attention: Corporate Trust Department, or as the Lessor may otherwise direct,
by wire transfer of immediately available funds in U.S. Dollars with
sufficient information to identify sources and applications of such funds no
later than 10:30 a.m., New York time on the due date of such payment;
provided, however, that so long as the Lien of the Indenture shall not have
been discharged the Lessor hereby directs, and the Lessee agrees, that all
Rent (other than Excepted Payments, which shall be paid by the Lessee directly
to the Person entitled thereto) (all without set-off or counterclaim as and to
the extent provided in Article 20 hereof) shall be paid directly to the
Indenture Trustee at its principal office at 00 Xxxxx Xxxx Xxxxxx, Xxxx Xxxx
Xxxx, Xxxx 00000, Attention: Corporate Trust Department, or as the Indenture
Trustee may otherwise direct within the United States by wire transfer of
immediately available funds in U.S. Dollars no later than 10:30 a.m., New York
time, on the due date of such payment. In any case where a scheduled Rent
Payment Date shall not be a Business Day such Rent Payment Date shall be
adjourned to the next succeeding Business Day without interest thereon for the
period of such extension (provided that payment is made on such next
succeeding Business Day).
Section 3.07. Costs and Expenses. As between the Lessor and the
Lessee, all obligations under this Lease shall be done, performed and complied
with at the Lessee's cost and expense, whether or not so expressed, unless
otherwise expressly stated to the contrary.
ARTICLE 4
RENEWAL OPTIONS AND PURCHASE OPTIONS
Section 4.01. Renewal Options. (a) Election to Renew. The Lessee
shall provide the Lessor with irrevocable written notice (the "Preliminary
Notice") not more than 360 days nor less than 180 days prior to the end of the
Basic Term or any Renewal Term, as the case may be, whether it will exercise
its options either to renew this Lease pursuant to this Section 4.01 or to
purchase the Aircraft pursuant to Section 4.02(a)(B), (C) or (F) hereof, as
applicable.
Provided that (i) no Event of Default shall have occurred and be
continuing at the time of renewal, (ii) this Lease has not otherwise expired
or terminated, and (iii) the Lessee shall have timely delivered the respective
Preliminary Notice, the Lessee may, by irrevocable written notice delivered to
the Lessor not less than 90 days prior to the end of the Basic Term or any
Fixed Renewal Term, extend the Term for one Fixed Renewal Term of three years
commencing on the expiration of the Basic Term and one additional Fixed
Renewal Term of one year commencing on the expiration of the preceding Fixed
Renewal Term. The Lessee shall pay the Fixed Renewal Rent during the Fixed
Renewal Term.
In addition, provided that (i) no Event of Default shall have
occurred and be continuing at the time of renewal, (ii) this Lease has not
otherwise expired or terminated, and (iii) the Lessee shall have timely
delivered the respective Preliminary Notice, the Lessee may, on no more than
two occasions, by irrevocable written notice delivered to the Lessor not less
than 90 days prior to the end of the Basic Term or the preceding Renewal Term,
as the case may be, elect to extend the Term for a Renewal Term or further
Renewal Term commencing on the expiration of the Basic Term or the preceding
Renewal Term and ending two years thereafter for a rent equal to the
then-current Fair Market Rental of the Aircraft. The Term may be extended
pursuant to this paragraph for an aggregate of no more than four years
following the Basic Term or the Fixed Renewal Term.
(b) Terms and Conditions. Any such renewal shall be on the same
terms and conditions as provided herein, except that (i) rent for the Aircraft
due during any Renewal Term shall be payable semi-annually in arrears on the
dates corresponding to the Rent Payment Dates during such Renewal Term, and
(ii) during any Renewal Term, the Stipulated Loss Value for the Aircraft shall
as of any Stipulated Loss Value Determination Date during the Renewal Term be
equal to the greater of the Stipulated Loss Value on the last day of the Basic
Term and the Fair Market Value of the Aircraft as of the commencement of such
Renewal Term.
Section 4.02. Purchase Options. (a) Election to Purchase.
Provided that (i) this Lease has not otherwise expired or terminated, (ii) the
Lessee shall have previously given the Preliminary Notice under Section
4.01(a) hereof (in the case of paragraph (B) or (F) below or, if a Renewal
Term is available, paragraph (C) below) or the applicable notice for each
other paragraph below, as the case may be, and (iii) no Event of Default shall
have occurred and be continuing on the applicable Termination Date, the Lessee
may:
(A) by written notice delivered to the Lessor, the Indenture Trustee
and the Owner Participant, not more than 180 nor less than 90 days prior to
the applicable Rent Payment Date, elect to terminate the Lease and purchase
the Aircraft on (and only on) January 15, 2016, for, at the Lessee's
option, either (1) an amount in immediately available funds equal to the
greater of the Fair Market Value or the Termination Value on such date or
(2)(i) the assumption by the Lessee, pursuant to Section 7.11 of the
Participation Agreement, of all of the obligations of the Lessor under the
Indenture, the Certificates and Section 7.04 of the Participation Agreement
and (ii) the payment to the Lessor of an amount in immediately available
funds equal to the excess of (A) the greater of the Fair Market Value or the
Termination Value on such date over (B) the unpaid principal of the
Certificates plus accrued interest as of such date. Such notice (which
shall be revocable by the Lessee upon at least 15 days' written notice
prior to the applicable Rent Payment Date) shall either direct the Lessor
to prepay the Certificates in full on such Termination Date pursuant to
Section 6.02 of the Indenture or state that the Lessee shall exercise its
option to assume the Certificates pursuant to Section 7.11 of the
Participation Agreement and Section 2.12 of the Indenture; or
(B) by irrevocable written notice delivered to the Lessor and the
Owner Participant not less than 90 days prior to the end of the Basic Term,
elect to purchase the Aircraft on the last day of the Basic Term for an
amount in immediately available funds equal to the Fair Market Value
thereof on such date; provided, however, that the Lessee shall have paid
all Rent due and payable under this Lease on or prior to the last day of
the Basic Term; or
(C) by irrevocable written notice delivered to the Lessor and the
Owner Participant not less than 90 days prior to the end of any Renewal
Term, elect to terminate the Lease and purchase the Aircraft on the last
day of such Renewal Term at a price in immediately available funds equal to
the Fair Market Value of the Aircraft on such day; provided, however, that
the Lessee shall have paid all Rent due and payable under this Lease on or
prior to the expiration of any such Renewal Term; or
(D) exercise the purchase option in this Section 4.02(a)(D) which is
more particularly described in Schedule V hereto by reference to this
Section 4.02(a)(D) and which shall be in an amount in immediately available
funds not less than the greater of the amount specified in Schedule V
hereto and the Fair Market Value of the Aircraft; or
(E) exercise the purchase option in this Section 4.02(a)(E) which is
more particularly described in Schedule V hereto by reference to this
Section 4.02(a)(E) and which shall be in an amount in immediately available
funds not less than the greater of the amount specified in Schedule V
hereto and the Fair Market Value of the Aircraft; or
(F) by irrevocable written notice delivered to the Lessor and the
Owner Participant not less than 90 days prior to the end of the Basic Term,
elect to purchase the Aircraft on the last day of the Basic Term for the
amount in immediately available funds specified in the Ancillary Agreement
II (the "FPO Price") which is not less than the estimate set forth in the
Appraisal of the Fair Market Value of the Aircraft at the time of exercise
of the purchase option under this Section 4.02(a)(F).
The Lessee shall give the Lessor, the Owner Participant and the
Indenture Trustee not more than 180 and not less than 90 days' prior written
notice of its election to purchase pursuant to Section 4.02(a)(D) or
4.02(a)(E) hereof. Such notice shall either direct the Lessor to prepay the
Certificates in full on such Termination Date pursuant to Section 6.02 of the
Indenture or state that the Lessee shall exercise its option to assume the
Certificates pursuant to Section 7.11 of the Participation Agreement and
Section 2.12 of the Indenture. In the event that the Lessee shall have given
notice to purchase the Aircraft under Section 4.02(a)(A), 4.02(a)(D) or
4.02(a)(E) hereof and shall fail to make payment (and, if applicable, assume
the Certificates) on the applicable Termination Date, the Lease shall continue
and the Lessee shall pay to the Owner Trustee any losses, costs and expenses
of the Owner Participant incurred in connection with such failure.
(b) Terms and Conditions. If the Lessee elects to purchase the
Aircraft pursuant to Section 4.02(a) hereof, the Lessee shall pay to the
Lessor on the applicable Termination Date by wire transfer of immediately
available funds any Basic Rent payable on such Termination Date (to the extent
payable in arrears but not to the extent payable in advance), the applicable
purchase price together with any other amounts past due hereunder or due on
the applicable Termination Date and all other Supplemental Rent then due under
this Lease including, without limitation, the aggregate amount of any
Make-Whole Premium applicable to any Certificate and amounts due under the
Participation Agreement and the Tax Indemnity Agreement, whereupon (and upon
discharge of the Lien of the Indenture in accordance with Section 14.01
thereof) the Lessor will transfer to the Lessee, without recourse or warranty
(except as to the absence of Lessor's Liens), all of the Lessor's right, title
and interest in and to the Aircraft on an "as-is, where is" basis. In
connection with such transfer, the Lessee shall prepare and the Lessor shall
execute or arrange for the execution of a xxxx of sale evidencing such
transfer and such other documents as the Lessee may reasonably require. In
connection with any termination or proposed termination of this Lease, the
Lessee shall pay, at the time of the applicable Termination Date, all related
reasonable costs and expenses of the Owner Participant, the Lessor and the
Indenture Trustee.
Section 4.03. Appraisal Procedures. (a) Generally. Whenever Fair
Market Rental or Fair Market Value is required to be determined under this
Lease (unless otherwise provided herein), it shall be determined by the mutual
agreement of the Lessor and the Lessee in accordance with the definitions of
such terms in Schedule I hereto. If the Lessee and the Lessor cannot agree by
the date 60 days prior to the date for exercise of the applicable option, such
amount shall be determined by independent appraisal conducted by appraisers
selected pursuant to Section 4.03(b) hereof. At any time prior to final
determination of such amount pursuant to Section 4.03(b) hereof, the Lessee
and the Lessor shall be entitled to submit to the appraisers (and shall submit
to each other any bids submitted to the appraisers) any bids from unrelated
third parties, and such bids shall be accorded the weight such appraisers deem
appropriate. The Lessor and the Lessee shall each have an opportunity to
comment on any such bids after receiving a copy thereof.
(b) Selection. If an independent appraisal is required pursuant to
this Lease, the Lessor and the Lessee shall consult for the purpose of
appointing a mutually acceptable, qualified aircraft appraiser. If they are
unable to agree on a single appraiser within ten (10) Business Days, then the
independent appraisal shall be arrived at by mutual agreement of two
nationally recognized, independent aircraft appraisers, one chosen by the
Lessor and one chosen by the Lessee, or, if such appraisers cannot agree on
the amount of such appraisal, their appraisals shall be treated in the manner
described in Section 4.03(c) hereof with an appraisal arrived at by a third
nationally recognized, independent aircraft appraiser chosen by the mutual
consent of such two appraisers; provided, however, that if either party shall
fail to appoint an appraiser within fifteen (15) Business Days after a written
request to do so by the other party, or if such two appraisers cannot agree on
the amount of such appraisal and fail to appoint a third appraiser within
twenty (20) Business Days after the date of the appointment of the second of
such appraisers, then either party may initiate an arbitration proceeding with
the American Arbitration Association for purposes of appointing a nationally
recognized, independent aircraft appraiser.
(c) Valuation. If one appraiser is chosen, the value determined by
such appraiser shall be final and binding upon the Lessor and the Lessee. If
two appraisers are chosen, one appraiser by the Lessor and one by the Lessee,
and such appraisers agree on the value, such value shall be final and binding
upon the Lessor and the Lessee. If three appraisers shall be appointed and
the difference between the determination which is farther from the middle
determination is more than 125% of the difference between the middle
determination and the third determination, then such further determination
shall be excluded, the remaining two determinations shall be averaged, and
such average shall be final and binding upon the Lessor and the Lessee.
Otherwise, the average of all three determinations shall be final and binding
upon the Lessor and the Lessee.
(d) Rules of Appraisal. Any appraisal pursuant to this Section 4.03
shall be conducted in accordance with the commercial rules of the American
Arbitration Association as then in effect, as modified by this Section 4.03
and the definitions of Fair Market Value and Fair Market Rental. All expenses
of any independent appraisal shall be borne by the Lessee, except that each of
the Lessee and the Owner Participant (in the case of the Lessor) shall bear
any fees, costs and expenses of its respective attorneys in connection with
such appraisal except in the case of an Event of Default or in the case of a
revocation by the Lessee of its election to terminate the Lease under Section
4.02 hereof, in which case such expenses shall be borne by the Lessee.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
Section 5.01. Disclaimer of Representations and Warranties. THE
LESSEE ACKNOWLEDGES AND AGREES THAT (i) THE AIRFRAME AND EACH ENGINE IS OF A
SIZE, DESIGN, AND CAPACITY AND MANUFACTURE SELECTED BY AND ACCEPTABLE TO THE
LESSEE, (ii) THE LESSEE IS SATISFIED THAT THE AIRFRAME AND EACH ENGINE IS
SUITABLE FOR ITS PURPOSES, (iii) NEITHER THE OWNER PARTICIPANT NOR THE LESSOR
IS A MANUFACTURER OR A DEALER IN PROPERTY OF SUCH KIND AND (iv) THE AIRFRAME
AND EACH ENGINE IS LEASED HEREUNDER SUBJECT TO ALL APPLICABLE LAWS AND
GOVERNMENTAL REGULATIONS, NOW IN EFFECT OR HEREAFTER ADOPTED, WITHOUT
REPRESENTATION OR WARRANTY OF ANY KIND BY THE LESSOR (IN ITS INDIVIDUAL
CAPACITY OR AS OWNER TRUSTEE), THE INDENTURE TRUSTEE, THE OWNER PARTICIPANT OR
ANY HOLDER. THE LESSOR LEASES THE AIRFRAME AND EACH ENGINE, AS-IS, WHERE-IS,
AND NEITHER THE LESSOR (IN ITS INDIVIDUAL CAPACITY OR AS OWNER TRUSTEE), THE
INDENTURE TRUSTEE, THE OWNER PARTICIPANT NOR ANY HOLDER MAKES, HAS MADE OR
SHALL BE DEEMED TO HAVE MADE, AND EACH HAS AND WILL HAVE BEEN DEEMED TO HAVE
EXPRESSLY DISCLAIMED, ANY WARRANTY OR REPRESENTATION EITHER EXPRESS OR
IMPLIED, AS TO (A) THE TITLE, AIRWORTHINESS, WORKMANSHIP, CONDITION, VALUE,
FITNESS FOR ANY PARTICULAR USE OR PURPOSE, DESIGN, OPERATION OR
MERCHANTABILITY OF THE AIRFRAME, EACH ENGINE OR ANY PART THEREOF, (B) THE
ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, (C) THE
ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR COPYRIGHT, (D) THE
ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN TORT, (E) THE LESSOR'S
TITLE THERETO, (F) THE LESSEE'S OR ANY SUBLESSEE'S RIGHT TO THE QUIET
ENJOYMENT THEREOF (EXCEPT AS PROVIDED IN ARTICLE 18 HEREOF) OR (G) ANY OTHER
MATTER WHATSOEVER. IT IS AGREED THAT ALL RISKS INCIDENT TO THE MATTERS
DISCUSSED IN THE PRECEDING SENTENCE, AS AMONG THE LESSOR, THE INDENTURE
TRUSTEE, THE OWNER PARTICIPANT AND THE LESSEE, ARE TO BE BORNE BY THE LESSEE.
The provisions of this Section 5.01 have been negotiated by the Lessor and the
Lessee and, except as provided in Article 7 of the Participation Agreement,
are intended to be a complete exclusion and negation of any representations or
warranties of the Lessor, the Indenture Trustee and the Owner Participant,
express or implied, with respect to the Airframe and each Engine that may
arise pursuant to any law now or hereafter in effect, or otherwise.
Section 5.02. No Modification of Other Warranties. None of the
provisions of this Article 5 or any other provision of this Lease shall be
deemed to amend, modify or otherwise affect the representations, warranties or
other obligations (express or implied) of the Lessee, AVSA, the Manufacturer
or the Engine Manufacturer or any of their respective subcontractors or
suppliers, with respect to the Airframe, the Engines or any Parts incorporated
or installed in or attached to the Airframe or Engines, or to release the
Lessee, AVSA, the Manufacturer or the Engine Manufacturer or any of their
respective subcontractors or suppliers from any such representation, warranty
or obligation. So long as an Event of Default shall not have occurred and be
continuing under this Lease and to the extent permitted under the applicable
warranty, patent indemnity, or service-life policy, (i) the Lessor shall
assign or otherwise make available to the Lessee such rights as the Lessor may
have under any warranty, patent indemnity, or service-life policy made or
given by the Manufacturer, AVSA or the Engine Manufacturer or any of their
respective subcontractors or suppliers, and any other claims against the
Manufacturer, AVSA and the Engine Manufacturer or any such subcontractor or
supplier with respect to the Aircraft, including all rights to demand, accept
and retain all rights in and to property (other than the Aircraft), data and
services of any kind which the Manufacturer, AVSA and the Engine Manufacturer
are obligated to provide and do provide pursuant to the Purchase Agreement or
the GTA with respect to the Aircraft; and (ii) all payments pursuant to any
manufacturer's or subcontractor's warranty, patent indemnity, or service-life
policy obligation shall be paid to the Lessee; provided that the Lessee shall
apply such payments to the cost of repair or correction of any condition of
the Aircraft which gave rise to such payments.
Section 5.03. Certain Agreements of the Lessee. The Lessee agrees
with the Lessor for the benefit of the Owner Participant that the Lessee shall
perform the agreements, covenants and indemnities of the Lessee set forth in
the Participation Agreement to the extent the same are applicable to the Owner
Participant, as fully and to the same extent and with the same force and
effect as if set forth in full in this Article 5.
ARTICLE 6
LIENS
Section 6.01. Liens. The Lessee will not directly or indirectly
create, incur, assume or suffer to exist, and will promptly, at its own cost
and expense, take such action as may be necessary to discharge, any Lien on or
with respect to the Lessor's Estate or this Lease or the Aircraft, the
Airframe or any Engine or any Part or title thereto or any interest therein
except:
(a) the respective rights of the Lessor and the Lessee as provided
in this Lease, the security interest and Lien of the Indenture and the
rights of the Owner Participant, the Lessor and the Indenture Trustee under
the Trust Agreement, the Indenture and the Participation Agreement;
(b) the rights of any sublessee or transferee or other Person under a
sublease, transfer, assignment or other such arrangement expressly
permitted by the terms of this Lease;
(c) Lessor's Liens and Indenture Trustee's Liens to the extent
required to be discharged by the Owner Participant, the Lessor or the
Indenture Trustee, as the case may be, in accordance with Section 7.03(b),
7.04(b) or 7.05(b) of the Participation Agreement;
(d) Liens for Taxes imposed against the Lessee either not yet due or
being contested in good faith by appropriate proceedings so long as such
Liens or proceedings do not involve (i) any material danger of the sale,
forfeiture or loss of the Lessor's Estate, the Aircraft, the Airframe or
any Engine or any interest therein, (ii) any material risk of civil
liabilities or (iii) any risk of the assertion of criminal charges against
the Lessor, the Owner Participant, the Indenture Trustee or any Holder;
(e) materialmen's, mechanics', workmen's, repairmen's, employees' or
other like Liens arising against the Lessee in the ordinary course of the
Lessee's business for amounts the payment of which is either not yet due or
is being contested in good faith by appropriate proceedings so long as such
Liens or proceedings do not involve any material danger of the sale,
forfeiture or loss of the Lessor's Estate, the Aircraft, the Airframe or
any Engine or any interest therein; and
(f) Liens arising from judgments or awards against the Lessee with
respect to which (i) at the time an appeal or proceeding for review is
being prosecuted in good faith and with respect to which there shall have
been secured a stay of execution pending such appeal or proceeding for
review and then only for the period of such stay and (ii) there is not, and
such proceedings do not involve, any material danger of the sale,
forfeiture or loss of the Lessor's Estate, the Aircraft, Airframe or any
Engine or any interest therein.
ARTICLE 7
AIRCRAFT REGISTRATION, MAINTENANCE AND OPERATION
Section 7.01. Registration, Maintenance and Operation. The Lessee,
at its own cost and expense, shall:
(a) upon payment by the Lessor of the Purchase Price on the Delivery
Date, cause the Aircraft to be duly registered in the name of the Lessor as
owner, pursuant to the Transportation Code and, subject to the proviso to
Section 6.03(b) of the Participation Agreement, to remain at all times duly
registered pursuant to the Transportation Code and at all times act in
accordance with the rules and regulations of the Aeronautics Authority or
the applicable laws, rules and regulations of any other jurisdiction in
which the Aircraft may then be registered in accordance with Section
6.03(b) of the Participation Agreement;
(b) maintain, inspect, service, repair, test and overhaul the
Aircraft (or cause the same to be done) so as to keep the Aircraft (and any
engine which is not an Engine but is installed on the Aircraft) in as good
operating condition as when delivered to the Lessor on the Delivery Date,
ordinary wear and tear excepted, and in any event (i) in accordance with
the applicable regulations of the Aeronautics Authority or of the
regulatory agency or body of any other jurisdiction in which the Aircraft
may then be registered pursuant to Section 6.03(b) of the Participation
Agreement and the Lessee's maintenance program approved by the Aeronautics
Authority or such agency or body, (ii) in the same manner and with the same
care used by the Lessee with respect to other A300-600 series aircraft and
CF6-80C2-A5F series engines (or other engines permitted by the terms of
this Lease to be used on the Aircraft) owned, operated or leased by the
Lessee, to the extent that the same regulations, and the Lessee's
FAA-approved maintenance program shall apply to any such aircraft and
related engines, owned or leased by the Lessee, and utilized in similar
circumstances, and without discriminating against the Aircraft, with
respect to its use, operation or maintenance in contemplation of the
expiration or termination of this Lease other than withdrawal of the
Aircraft from use and operation as is necessary to prepare the Aircraft for
return to the Lessor upon such expiration or termination, and (iii) so as
to keep the Aircraft in such condition as may be necessary to enable its
airworthiness certification to be maintained in good standing at all times
under the Transportation Code or any applicable rule or regulation of the
applicable regulatory agency or body of any other jurisdiction in which the
Aircraft may then be registered;
(c) maintain, or cause to be maintained, all records, logs and other
materials in respect of the Aircraft required by the Aeronautics Authority,
or the applicable regulatory agency or body of any other jurisdiction in
which the Aircraft may then be registered, all such records and logs to be
maintained in the English language (which records, logs and other materials
shall, as between the Lessor and the Lessee and all parties claiming
through the Lessee, be the property of the Lessor but shall become the
property of the Lessee upon purchase by the Lessee of the Aircraft pursuant
to the terms of this Lease or upon the occurrence of an Event of Loss and
the Lessee's compliance with Section 11.03 hereof);
(d) promptly furnish to the Lessor such information within the
Lessee's possession as may be required to enable the Lessor to file any
reports to be filed by the Lessor with any governmental authority because
of the Lessor's ownership of or the Owner Participant's interest in the
Aircraft;
(e) not maintain, service, repair, overhaul, use or operate the
Aircraft or any Engine in violation of any airworthiness certificate or
registration relating thereto, or in violation of any law or any license,
rule, regulation or order of or by any government or governmental authority
having jurisdiction over the Lessee or the Aircraft or any Engine or for
any purpose for which the Aircraft or any Engine is not designed; provided,
however, that the Lessee (or if a sublease shall then be in effect, the
sublessee thereunder) may in good faith contest the validity or application
of any such law, license, rule, regulation or order in any manner that does
not adversely affect the Lessor, its right, title or interest in the
Aircraft or any Engine or the interests of the Indenture Trustee or the
Owner Participant therein, or in any Operative Agreement (excluding any
interests the Lessee agrees are indemnified for under the Tax Indemnity
Agreement) and such contest or non-compliance will not result in any
material risk of loss, forfeiture or damage to the Aircraft or in any risk
of criminal liability to the Lessor, the Indenture Trustee or the Owner
Participant; and if any such law, license, rule, regulation or order
requires alteration of the Aircraft or any Engine, the Lessee will conform
the same therewith at its own cost and expense and will maintain the
Aircraft or any Engine in compliance with such law, license, rule,
regulation or order; and
(f) not operate or locate the Airframe or any Engine, or suffer the
Airframe or any Engine to be operated or located in any area excluded from
coverage by any insurance policy required by the terms of Article 13
hereof, unless the Lessee has obtained, prior to the operation or location
of the Airframe or any Engine in such area, indemnification from the
Government, or other insurance, against the risks and in the amounts
required by, and in compliance with, Article 13 hereof covering such area
(and naming the Lessor, or so long as this Lease is assigned to the
Indenture Trustee, the Indenture Trustee, as sole loss payee in respect of
indemnification or insurance payable in respect of casualties to the
Aircraft) or unless the Aircraft is only temporarily located in such area
as a result of an isolated occurrence attributable to a hijacking, medical
emergency, equipment malfunction, weather conditions, navigational error or
other similar unforeseen circumstances and the Lessee is using its good
faith efforts to remove the Aircraft from such area.
The Lessee may, at any time during the Term, install an engine or
engines on the Airframe and operate the Aircraft with such engine or engines
installed thereon and the Lessor shall have no right, title or interest in and
to any such engine until such time, if any, that such engine is returned to
the Lessor under Section 12.02 hereof.
Section 7.02. Possession and Permitted Transfer and Sublease. (a)
Conditions. The Lessee will not, without the prior written consent of the
Lessor, sublease or otherwise in any manner deliver, transfer or relinquish
possession of the Aircraft, the Airframe or any Engine or install any Engine,
or permit any Engine to be installed, on any airframe other than the Airframe;
provided, that, so long as (i) in the case of clause (i) below, no Payment
Default, Bankruptcy Default or Event of Default shall have occurred and be
continuing at the commencement of such sublease, (ii) the Lien of the
Indenture is not impaired thereby, (iii) all applicable governmental approvals
in connection therewith have been obtained and (iv) the Lessee shall comply
with the provisions of Article 13 hereof, the Lessee may without the prior
written consent of the Lessor:
(i) so long as the sublessee is generally meeting its material
obligations as they come due and is not subject to a proceeding or final
order under applicable bankruptcy, insolvency or reorganization laws on the
date the sublease is entered into and with 30 days' prior written notice to
the Lessor and the Owner Participant, (A) sublease the Aircraft or any
Engine to a U.S. Air Carrier, (B) after December 31, 2004 sublease the
Aircraft or any Engine to an Air Carrier which is principally based in and
domiciled in one of the countries listed on Schedule III of the
Participation Agreement, or (C) after December 31, 2004 sublease the
Aircraft or any Engine to any other Air Carrier not described in this
Section which shall be reasonably acceptable to the Lessor as evidenced by
its prior written consent; provided, that, with respect to clauses (B) and
(C) above, at the time of any such sublease the United States of America
maintains normal diplomatic relations with the country in which such Air
Carrier is principally based and domiciled and provided further that such
country shall not then be experiencing war. In the case of any sublease (x)
such sublease shall include the provisions required by Section 7.02(b)
hereof and expressly require the sublessee to operate and maintain the
Aircraft in compliance with the applicable provisions of this Lease, (y)
such sublease shall provide that such sublessee will not transfer
possession of, or any other rights to, the subleased Airframe or any Engine
to any other Person without the prior written consent of the Lessor (except
as permitted by subparagraphs (ii) through (viii) below and except that, in
the case of subparagraph (iv), possession of the Aircraft may only be
transferred at the direction of the Lessee) and (z) such sublease shall
expire not later than the expiration of the Basic Term or any Renewal Term
then in effect hereunder. Prior to any sublease to an Air Carrier
permitted under Section 7.02(a)(i)(C) above: (I) the maintenance standards
of the aeronautical authority of the country of domicile or principal
operation of the sublessee taken as a whole shall not be materially less
stringent than those of the FAA or at least comparable to those, taken as a
whole, required by the central civil aviation authority of any of the
United Kingdom, France, Canada, Japan or Germany; (II) the Lessee will
provide opinions of counsel (such counsel and the form and substance of
such opinions to be reasonably satisfactory to the Lessor) with respect to
(A) the legality, validity and enforceability of the Operative Agreements
and the sublease in such country, (B) that the laws of such country require
fair compensation by the government of such country payable in a currency
freely convertible into U.S. dollars for the loss of the use of or title to
the Aircraft in the event of a requisition of use or title by such
government, (C) the Lessor's title to the subleased equipment will be
recognized, (D) the required agreement of such foreign air carrier that its
rights under the sublease are subject and subordinate to all the terms of
this Lease is enforceable against such foreign air carrier under applicable
law (subject only to customary exceptions to enforceability), (E) that it
is not necessary for the Owner Participant, the Lessor or the Indenture
Trustee to register or qualify to do business in such country as a result
of the proposed sublease or in order for the Owner Participant, the Lessor
or the Indenture Trustee to enforce the terms and conditions of the
Operative Agreements, (F) there is no tort liability of the owner of an
aircraft not in possession thereof or of Persons lending money to such an
owner for the purchase of an aircraft, under the laws of such jurisdiction
other than tort liability which might reasonably have been imposed on such
owner or Persons under the laws of the United States or any state thereof
(it being understood that, in the event that such latter opinion cannot be
given in a form satisfactory to the Lessor, such opinion shall be waived if
insurance reasonably satisfactory to the Lessor is available to cover such
risk to the Owner Participant and is provided at or before the execution of
such a sublease, at the Lessee's cost and expense), (G) that there exist no
possessory rights in favor of such sublessee under the laws of such country
which would, upon bankruptcy or insolvency of the Lessee (and assuming that
at such time such sublessee is not bankrupt or insolvent) or of the
sublessee, prevent the return of the Aircraft in accordance with the terms
of this Lease and (H) all necessary governmental approvals required for the
subleased equipment, the Airframe or any Engine, as the case may be, to be
imported and, to the extent reasonably obtainable, exported from the
applicable country of domicile upon repossession of such subleased
equipment by the Lessor (and the Lessee as sublessor), shall have been
procured at the Lessee's own cost and expense by the Lessee prior to
commencement of any such sublease; (III) duties and tariffs, if applicable,
shall be paid for by the Lessee; and (IV) the Lessee shall effect or cause
to be effected at the Lessee's own cost and expense all recordings and
filings that are required, or reasonably requested by the Lessor, to
continue the Lessor's right, title and interest to the Aircraft and rights
under the Lease (and sublease) and to perfect and maintain the priority of
the Lien of the Indenture;
(ii) subject the Engines or permit any Engine to be subjected to
normal interchange or pooling agreements or arrangements, in each case
customary in the airline industry, entered into by the Lessee in the
ordinary course of its business with a vendor domiciled in the United
States or in a country with which the United States maintains normal
diplomatic relations (and which is not experiencing war) or (x) any U.S.
Air Carrier or (y) any foreign Air Carrier which is (I) organized in a
country listed on Schedule III to the Participation Agreement, (II)
organized in a country with which the United States then maintains normal
diplomatic relations, (III) is a party to the Convention on the
International Recognition of Rights in Aircraft or (IV) otherwise provides
equivalent protection to owners, lessors and mortgagees of aircraft;
provided that no transfer of the registration of or any Engine shall be
effected and that throughout the period that any Engine is subjected to
such interchange or pooling agreement or arrangement the terms of this
Lease shall be observed; and provided, further, that no such agreement or
arrangement contemplates or requires the transfer of title to or
registration of any Engine, and if the Lessor's title to any Engine shall
nonetheless be divested under any such agreement or arrangement, such
divestiture shall be deemed to be an Event of Loss with respect to such
Engine and the Lessee shall comply with Section 11.04 of this Lease in
respect of such Engine;
(iii) deliver or permit the delivery of possession of the Airframe or
any Engine to their respective manufacturers or certified maintenance
providers for testing, service, repair, maintenance or overhaul work or for
alterations or modifications in or additions to the Airframe or any Engine
to the extent required or permitted by the terms of Article 9 hereof;
(iv) transfer or permit the transfer of possession of the Airframe
or any Engine pursuant to a contract or agreement with the Government or
pursuant to the Civil Reserve Air Fleet Program administrated pursuant to
Executive Order No. 12056, as amended (the "CRAF Program"), or any similar
or substitute programs of the Government, so long as the Lessee (or any
permitted sublessee or transferee pursuant to this Section) shall promptly
notify the Lessor upon such transfer of possession and provide the Lessor
and the Indenture Trustee with the name and address of the Contracting
Officer or representative of the Military Aircraft Command of the United
States Air Force to whom notices must be given in respect of the Aircraft;
(v) install or permit the installation of an Engine on an airframe
which is owned by the Lessee or any permitted sublessee free and clear of
all Liens, except (A) Liens of the type permitted under Section 6.01
hereof, (B) Liens which apply only to the engines (other than an Engine),
appliances, parts, instruments, appurtenances, accessories, furnishings and
other equipment (other than Parts) installed on such airframe and which do
not apply to substantially all of such airframe and (C) the rights of an
Air Carrier under normal interchange or pooling agreements which are
customary in the airline industry and do not contemplate or require the
transfer of title to such airframe or the engines installed on it;
(vi) install or permit the installation of an Engine on an airframe
leased to the Lessee or any permitted sublessee or transferee or purchased
by the Lessee subject to a conditional sale or other security agreement,
provided that (A) such lease, conditional sale or other security agreement
does not cover the Engine so installed and the Lessor shall have received
from the lessor, conditional vendor or secured party of such airframe an
agreement (which may be the lease or conditional sale or other security
agreement covering such airframe), whereby such lessor, conditional vendor
or secured party expressly agrees that neither it nor its successors or
assigns will acquire or claim any right, title or interest in any Engine
by reason of such Engine being installed on such airframe at any time, and
(B) such airframe is and remains free and clear of all Liens except the
rights of the parties to the lease or conditional sale or other security
agreement covering such airframe and Liens of the type permitted by
subparagraph (v) of this Section 7.02(a);
(vii) install or permit the installation of an Engine on an airframe
owned by the Lessee, leased to the Lessee or purchased by the Lessee
subject to a conditional sale or other security agreement under
circumstances where neither subparagraph (v) nor subparagraph (vi) of this
Section 7.02(a) is applicable, provided that such installation shall be
deemed an Event of Loss with respect to such Engine and the Lessee shall
comply with Section 11.04 hereof in respect of such Engine, the Lessor not
intending to waive any right, title or interest it may have to or in such
Engine under applicable law until compliance by the Lessee with such
Section 11.04; and
(viii) enter into a wet lease under which the Lessee has effective
control of the Aircraft in the ordinary course of the Lessee's business
which shall not be considered a transfer of possession hereunder, provided
that the Lessee's obligations under this Lease shall continue in full force
and effect notwithstanding any such wet lease.
(b) Rights of Transferee. Notwithstanding the provisions of Section
7.02(a) hereof, the rights of any transferee who takes possession of the
Aircraft, the Airframe or any Engine by reason of a transfer permitted by
Section 7.02(a) hereof shall be subject and subordinate to, and any sublease
or wet lease permitted by Section 7.02(a) hereof shall be made expressly
subject and subordinate to, all the terms of this Lease, including, without
limitation, the Lessor's right to repossession pursuant to Article 17 hereof
and to avoid such sublease upon such repossession, and the Lessee shall remain
primarily liable for the performance of all the terms of this Lease and the
other Operative Agreements to the same extent as if such sublease or transfer
had not occurred. Any such sublease shall include appropriate provisions for
the maintenance, inspection (as required by Section 14.01 hereof), operation,
use and insurance of the Aircraft, the Airframe and each Engine in accordance
with the provisions of this Lease and shall provide assurances reasonably
satisfactory to the Lessor that the sublessee may not further sublease any of
such equipment. The Lessee shall promptly provide the Lessor, the Owner
Participant and the Indenture Trustee a copy of any sublease and, prior to
execution and delivery of any sublease deliver to the Lessor all other
documents (including all insurance certificates evidencing compliance with
this Lease) required hereunder relating to such sublease or transfer of
possession.
(c) No Release of Lessee/Costs of Subleasing. No sublease,
interchange or pooling agreement or other relinquishment of possession
permitted under this Article 7 of any of the Aircraft, the Airframe or any
Engine shall in any way discharge or diminish any of the Lessee's obligations
to the Lessor, the Indenture Trustee or the Owner Participant under this
Lease, the Participation Agreement or the Tax Indemnity Agreement or
constitute a waiver of any of the Lessor's rights and remedies hereunder or
thereunder or extend beyond the end of the Term. Subject to the terms and
conditions of this Lease, the Lessee will retain the right to cure any default
by any sublessee permitted pursuant to this Section 7.02 and to terminate such
sublease upon such default. The Lessee shall pay all costs of the Owner
Participant, the Indenture Trustee and the Lessor incurred in connection with
any subleasing or proposed subleasing.
Section 7.03. Insignia. (a) Nameplate. On or prior to the
Delivery Date or as soon thereafter as possible, the Lessee agrees to affix to
and maintain in the cockpit of the Airframe, in a clearly visible location,
and on each Engine, a clearly visible metal nameplate bearing the inscription
"STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, AS
OWNER TRUSTEE, OWNER AND LESSOR," and, so long as such Airframe or Engines
shall be subject to the Lien of the Indenture, the additional inscription
"FIRST SECURITY BANK, NATIONAL ASSOCIATION, AS INDENTURE TRUSTEE, MORTGAGEE"
(such nameplate to be replaced, if necessary, from time to time, with a
nameplate reflecting the name of any successor Lessor or successor Indenture
Trustee, in each case as permitted by the Operative Agreements).
(b) Lessee's Marks. Except as provided in Section 7.03(a) hereof,
the Lessee will not allow the name of any Person to be placed on the Airframe
or on any Engine as a designation that might be interpreted as a claim of
ownership; provided, that during the Term, the Lessee may cause the Aircraft
to be lettered "Federal Express Corporation" or may letter, paint or xxxx it
in some other appropriate manner for convenience of identification of the
Lessee's interest or the interest of any permitted sublessee (including but
not limited to the Lessee's or any permitted sublessee's customary colors and
insignia) and to bear insignia plates or other markings identifying the
supplier or manufacturer of the Airframe or the Engines or any Parts of either.
ARTICLE 8
REPLACEMENT AND POOLING OF PARTS
Section 8.01. Replacement of Parts. (a) Generally. The Lessee, at
its own cost and expense, will replace or cause to be replaced as promptly as
practicable all Parts which may from time to time be incorporated or installed
in or attached to the Airframe or any Engine and which may from time to time
become worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond
repair or permanently rendered unfit for use for any reason, except as
otherwise provided in Section 9.01 or 9.02 hereof. In addition, the Lessee
may, at its own cost and expense, remove or cause to be removed in the
ordinary course of maintenance, service, repair, overhaul or testing, any
Parts, whether or not worn out, lost, stolen, destroyed, seized, confiscated,
damaged beyond repair or permanently rendered unfit for use, provided that the
Lessee, except as otherwise provided in Sections 9.01 or 9.02 hereof, will, at
its own cost and expense, replace such Parts as promptly as practicable. All
replacement parts shall be free and clear of Liens (except for pooling
arrangements to the extent permitted by Section 8.02 hereof and Liens
permitted under Section 6.01 hereof, other than clauses (d) and (f) thereof)
and shall be in at least as good operating condition as, and shall have a
value and utility at least equal to, the Parts replaced, and in any event not
less than the condition and repair required to be maintained by the provisions
of this Lease.
(b) Title. All Parts at any time removed from the Airframe or any
Engine shall remain the property of the Lessor until such Parts shall be
replaced by parts which have been incorporated or installed in or attached to
the Airframe or such Engine and which meet the requirements for replacement
parts specified in Section 8.01(a) hereof. Immediately upon any replacement
part (other than, to the extent permitted by Section 8.02 hereof, a
replacement part subject to a pooling arrangement) becoming incorporated or
installed in or attached to the Airframe or any Engine, and without further
act:
(i) title to the replaced Part shall vest in the Lessee, free and
clear of all rights of the Lessor, and such replaced Part shall no longer
be deemed a Part under this Lease;
(ii) title to such replacement part shall vest in the Lessor free
and clear of all Liens except for Liens permitted by Section 6.01 hereof
(other than clauses (d) and (f) thereof) and shall thereupon be and become
a Part; and
(iii) such replacement part shall become subject to this Lease and to
the Lien of the Indenture, and shall be deemed part of the Airframe or such
Engine for all purposes to the same extent as the Parts originally
incorporated or installed in or attached to the Airframe or such Engine.
Section 8.02. Pooling of Parts. Any Part removed from the Airframe
or any Engine as permitted in Section 8.01(a) hereof may be subjected by the
Lessee to any normal pooling arrangement customary in the U.S. airline
industry and entered into with vendors and other Air Carriers in the ordinary
course of the Lessee's business, provided that the part replacing such removed
Part shall be incorporated or installed in or attached to the Airframe or such
Engine in accordance with Section 8 hereof, as promptly as practicable after
the removal of such removed Part. In addition, any replacement part when
incorporated or installed in or attached to the Airframe or any Engine in
accordance with Section 8.01(a) hereof may be owned by another Air Carrier
subject to such normal pooling arrangement, provided that the Lessee, at its
own cost and expense and as promptly as possible, either:
(a) causes title to such replacement part to vest in the Lessor in
accordance with Section 8.01(b) hereof by the Lessee acquiring title to
such replacement part for the benefit of, and transferring such title to,
the Lessor free and clear of all Liens (other than Liens permitted under
Section 6.01 hereof (other than clauses (d) and (f) thereof)); or
(b) replaces such replacement part by incorporating or installing in
or attaching to the Airframe or such Engine a further replacement part
owned by the Lessee free and clear of all Liens (other than Liens permitted
under Section 6.01 hereof (other than clauses (d) and (f) thereof)) and by
causing title to such further replacement part to vest in the Lessor in
accordance with Section 8.01(b) hereof.
All such replacement parts and further replacement parts shall meet
the standards set forth in the last sentence of Section 8.01(a) hereof.
ARTICLE 9
ALTERATIONS, MODIFICATIONS AND ADDITIONS
Section 9.01. Required Alterations and Modifications. The Lessee,
at its own cost and expense, shall make or cause to be made such alterations
and modifications in and additions to the Airframe and each Engine as may be
required from time to time to meet the applicable requirements of the
Aeronautics Authority or any other governmental authority with jurisdiction
over the Lessee's operations and aircraft; provided, however, that the Lessee
or sublessee, as the case may be, may in good faith contest the validity or
application of any such requirements in any reasonable manner that does not
involve any material risk of civil liabilities (unless indemnified by the
Lessee) or any risk of criminal penalties being imposed on or against the
Indenture Trustee, the Owner Participant or the Lessor, that does not involve
any material risk or danger of loss, forfeiture or sale of the Aircraft or any
Engine and that does not adversely affect the Lessor, its title or interest in
the Aircraft or any Engine, the first and prior perfected Lien and security
interest of the Indenture, or the interests of the Indenture Trustee or the
Owner Participant in the Airframe or any Engine, or in any Operative Agreement
(excluding any interests the Lessee agrees are indemnified for under the Tax
Indemnity Agreement). All such alterations, modifications or additions shall
be made on or before the date mandated therefor, taking into account
authorized postponements resulting from a contest or otherwise and shall be
made at such time and in such a manner so as not to discriminate against the
Aircraft whether by reason of its leased status or otherwise.
Section 9.02. Other Alterations and Modifications. (a) Generally.
The Lessee, at its own cost and expense, may from time to time make such
alterations and modifications in and additions to the Airframe or any Engine
as the Lessee may deem desirable in the proper conduct of its business,
including, without limitation, removal of Obsolete Parts in its usual course
of maintenance, provided that no such alteration, modification, addition or
removal, individually or in the aggregate, shall create any adverse tax
consequences for the Owner Participant not otherwise indemnified for, diminish
the value, remaining useful life, or utility of the Airframe or the value or
utility of any Engine or impair its condition or state of airworthiness below
its value, remaining useful life (in the case of the Airframe only), utility,
condition and state of airworthiness immediately prior to such alteration,
modification, addition or removal, assuming that the Airframe or such Engine
was then in the condition and state of airworthiness required to be maintained
by the terms of this Lease, or cause the Airframe or any Engine to become
"limited use property" within the meaning of Revenue Procedure 76-30, 1976-2
C.B. 647, except that the value (but not the remaining useful life, utility,
condition or airworthiness) of the Aircraft may be reduced by the value, if
any, of any such Obsolete Parts which shall have been removed; provided that
in no event shall the aggregate value of all such Obsolete Parts which shall
have been so removed and not replaced exceed $500,000.
(b) Title to Installed Parts. Title to each part incorporated or
installed in or attached or added to the Airframe or any Engine as the result
of any alteration, modification, removal or addition made pursuant to Section
9.01 or 9.02(a) hereof shall without further act vest in the Lessor and become
subject to this Lease; provided, however, that the Lessee may remove any such
Part at any time during the Term if:
(i) such Part is in addition to, and not in replacement of or
substitution for, any Part originally incorporated or installed in or
attached or added to the Airframe or such Engine on the Delivery Date or
any Part in replacement of, or substitution for, any such Part;
(ii) such Part is not required to be incorporated or installed in or
attached or added to the Airframe or such Engine pursuant to the terms of
Article 7 hereof or the first sentence of Section 9.01 hereof; and
(iii) such Part can be removed from the Airframe or such Engine
without (A) causing material damage to the Airframe or such Engine (it
being understood that the Lessee shall repair any damage caused by a
permitted removal) or diminishing or impairing the value, utility,
condition or state of airworthiness or remaining useful life of the
Airframe required to be maintained by the terms of this Lease or (B)
diminishing the value, utility or remaining useful life (in the case of the
Airframe) or the value and utility (in the case of such Engine) which the
Airframe or such Engine would have had at such time had such alteration,
modification, removal or addition not occurred, assuming the Airframe or
such Engine was then in the condition required to be maintained by the
terms of this Lease.
(c) Title to Removed Parts. Upon the removal by the Lessee of any
such Part as provided in subsection (b) above, title thereto shall, without
further act, vest in the Lessee and such Part shall no longer be deemed a
Part. Any Part not removed by the Lessee as above provided prior to the
return of the Aircraft to the Lessor hereunder shall remain the property of
the Lessor and subject to this Lease.
ARTICLE 10
VOLUNTARY TERMINATION
Section 10.01. Right of Termination Upon Obsolescence or Surplus.
(a) Option to Terminate. So long as no Event of Default shall have occurred
and be continuing, the Lessee shall have the right, at its option, on any
Termination Date, on no more than 180 days' and at least 90 days' irrevocable
(except as provided herein) prior written notice (which notice shall state the
Proposed Termination Date) to the Lessor and the Owner Participant to
terminate this Lease as of a Termination Date if the Aircraft shall have
become obsolete or surplus to the operations of the Lessee; provided that the
Lessee shall have furnished to the Lessor, the Indenture Trustee and the Owner
Participant a certificate of the Lessee's President, Chief Executive Officer,
Chief Financial Officer, Chief Operating Officer, Treasurer or Assistant
Treasurer stating the determination of the Lessee that the Aircraft is
obsolete or surplus to its needs. Unless the Lessor has elected to retain the
Aircraft as herein provided, the Lessee shall have the right on one occasion
to revoke its notice of termination no later than the Business Day prior to
the date 15 days prior to the Proposed Termination Date whereupon this Lease
shall continue in full force and effect.
(b) Sale Procedure. During the period from the giving of notice
pursuant to Section 10.01(a) hereof until the Proposed Termination Date, the
Lessee, as non-exclusive agent for the Lessor, shall use its reasonable
efforts to obtain bids for the cash purchase on the Proposed Termination Date
(or such earlier date as shall be consented to in writing by the Lessor) of
the Aircraft. On the Proposed Termination Date, the Engines shall be
installed on the Airframe (provided that the Airframe may be sold with engines
meeting the requirements set forth herein for Replacement Engines in lieu of
the Engines so long as the aggregate number of Engines and Replacement Engines
being sold with the Airframe equals two). The Lessor may, if it desires to do
so, seek to obtain such bids. The Owner Participant shall not inspect any bids
received by the Lessee with respect to the Aircraft, unless the Owner
Participant has given to the Lessee binding and irrevocable notice that
neither the Owner Participant nor any of its Affiliates nor any Person acting
for the Owner Participant or such Affiliate will submit a bid for the purchase
of the Aircraft and if such notice has been given, the Lessee will provide the
Lessor with copies of bids received by the Lessee. No bid may be submitted by
the Lessee or any Person affiliated with the Lessee (or with whom or which
there is any arrangement or understanding as to the subsequent use of the
Aircraft by the Lessee or any of its Affiliates) or any agent or Person acting
on behalf of the Lessee. The Lessee may reject any bid which is less than the
sum of the applicable Termination Value, the aggregate amount of any
Make-Whole Premium and all other expenses incurred by the Lessor, the Owner
Participant and the Indenture Trustee in connection with the sale. Subject to
the provisions of Section 10.02 hereof, on the Proposed Termination Date or
such earlier date of sale as shall be consented to in writing by the Lessor,
the Lessee shall deliver the Airframe which shall have the Engines installed
on it (provided that the Airframe may be delivered with installed engines
meeting the requirements set forth herein for Replacement Engines in lieu of
the Engines so long as the aggregate number of Engines and Replacement Engines
being delivered with the Airframe equals two and the Lessee shall comply with
the provisions of Section 11.04 hereof as if an Event of Loss occurred with
regard to the Engines) to the bidder which shall have submitted the highest
cash bid (whether certified to the Lessor by the Lessee or directly received
by the Lessor and certified to the Lessee) in the same manner as if delivery
were made to the Lessor pursuant to Article 12 hereof, at a location specified
by such bidder, and shall duly transfer to the Lessor title to any such
engines not owned by the Lessor, and the Lessor shall, upon payment in full to
the Lessor of the bid price and all amounts due and owing pursuant to Section
10.01(c) hereof by wire transfer of immediately available funds and upon
discharge of the Lien of the Indenture in accordance with Article XIV thereof,
sell the Airframe and Engines or engines to such bidder without recourse or
warranty (except as to the absence of Lessor's Liens).
(c) Payments to the Lessor. The total selling price realized at a
sale pursuant to Section 10.01(b) hereof net of all expenses of the sale
(including commissions and any sales or transfer taxes) (the "Net Sales
Price") shall be retained by the Lessor (or the Indenture Trustee as long as
the Indenture is in force) and, in addition, on or before the Proposed
Termination Date, the Lessee shall pay to the Lessor (or the Indenture Trustee
as long as the Indenture is in force), by wire transfer of immediately
available funds, the sum of:
(i) the excess, if any, of the Termination Value for the Aircraft
computed as of the Proposed Termination Date over the Net Sales Price; plus
(ii) the installment of Basic Rent due with respect to the Aircraft
on the Proposed Termination Date to the extent payable in arrears but not
to the extent payable in advance; plus
(iii) all other amounts then due and payable by the Lessee (including,
without limitation, the aggregate amount of any Make-Whole Premium) under
this Lease and any other Operative Agreement.
(d) Transfer of Uninstalled Engines. Upon payment of the amounts
described in Section 10.01(c) hereof and upon transfer to the Lessor of title
to engines which have been returned in lieu of Engines as provided in Section
10.01(b) hereof, and upon payment of all other amounts then due under this
Lease, the Lessor will transfer to the Lessee, without recourse or warranty
(except as to the absence of Lessor's Liens), all of the Lessor's right, title
and interest in and to any Engines which were replaced with engines pursuant
to Section 10.01(b) hereof, and shall deliver to the Lessee such instrument as
the Lessor shall have received from the Indenture Trustee releasing such
Engines from the Lien of the Indenture.
(e) Limitation on the Lessor's Duties. The Lessor shall be under no
duty to solicit bids, to inquire into the efforts of the Lessee to obtain bids
or otherwise to take any action in connection with any such sale other than to
transfer to the purchaser named in the highest cash bid (determined as
described in Section 10.01(b) above) as referred to above (or to such
purchaser and to the Lessee, as the case may be), without recourse or warranty
(except as to the absence of Lessor's Liens), all of the Lessor's right, title
and interest in and to the Aircraft, against receipt by the Lessor of the
payments provided for in Section 10.01(c) hereof.
(f) Termination of the Lessee's Obligations. Upon the sale of the
Aircraft pursuant to this Section 10.01 and upon compliance by the Lessee with
the further provisions of this Article 10, the obligation of the Lessee to pay
Basic Rent with respect to the Aircraft shall cease for any Rent Payment Date
occurring after the Proposed Termination Date and the Term shall end effective
as of the Proposed Termination Date. If no sale shall have occurred on or
before the Proposed Termination Date, this Lease shall continue in full force
and effect and, for purposes of Section 10.01(a) hereof, it shall be deemed
that the Lessee has rescinded its notice of termination, and the Lessee shall
pay the expenses incurred by the Lessor, the Indenture Trustee and the Owner
Participant in connection with the proposed sale.
Section 10.02. Retention of Aircraft by the Lessor. (a) Generally.
Notwithstanding Section 10.01 hereof, the Lessor may, subject to Section
10.02(b) hereof, elect to retain the Aircraft after receipt of the Lessee's
notice of termination given in accordance with Section 10.01(a) hereof, by
giving the Lessee and the Indenture Trustee written irrevocable notice of such
election not less than sixty (60) days prior to the Proposed Termination Date.
If the Lessor so elects, the Lessee shall pay to the Lessor on the Proposed
Termination Date, by wire transfer of immediately available funds the sum of:
(i) the installment of Basic Rent due with respect to the Aircraft on
the Proposed Termination Date to the extent payable in arrears but not to
the extent payable in advance; plus
(ii) all other amounts then due and payable by the Lessee under this
Lease and any other Operative Agreement, including the aggregate amount of
any Make- Whole Premium, on or prior to the Proposed Termination Date.
(b) Payment of the Certificates. It shall be an absolute condition
precedent to the Lessor's right to retain the Aircraft and to the termination
of the Term pursuant to this Section 10.02 that the Lessor (or the Lessee to
the extent set forth in Section 10.02(a) hereof) shall have paid to the
Holders and such Holders shall have received the entire outstanding principal
amount of, the aggregate amount of any Make-Whole Premium and accrued interest
on the Certificates on the Proposed Termination Date and all other sums due
and owing to the Indenture Trustee and the Holders on or prior to the Proposed
Termination Date under this Lease, the Indenture or any other Operative
Agreement.
(c) Delivery of Aircraft to Lessor; Title to Engines. If the Lessor
elects to retain the Aircraft pursuant to this Section 10.02, the Lessee shall
deliver the Airframe and the Engines (provided that the Airframe may be
delivered with engines meeting the requirements set forth herein for
Replacement Engines in lieu of the Engines so long as the aggregate number of
Engines and engines being delivered with the Airframe equals two and provided
that the other requirements of Section 11.04 hereof are met as if an Event of
Loss has occurred with regard to the Engines) to the Lessor in the same manner
as if delivery were made to the Lessor pursuant to Article 12 hereof, and shall
duly transfer to the Lessor right, title and interest to any such engines not
owned by the Lessor, all in accordance with Article 12 hereof. Upon such
delivery of the Airframe and Engines or engines to the Lessor and payment by
the Lessee of any amounts required to be paid by the Lessee pursuant to
Section 10.02(a) hereof, the Lessor will transfer to the Lessee, without
recourse or warranty (except as to the absence of Lessor's Liens), all of the
Lessor's right, title and interest in and to any Engines which were replaced
by engines pursuant to this Section 10.02(c), and shall deliver to the Lessee
such instrument as the Lessor shall have received from the Indenture Trustee
releasing such Engines from the Lien of the Indenture.
(d) Termination of the Lessee's Obligations. Upon compliance by the
Lessor and the Lessee with the provisions of this Section 10.02 and upon
compliance by the Lessee with the further provisions of this Article 10, the
obligation of the Lessee to pay Basic Rent with respect to the Aircraft shall
cease for any Rent Payment Date occurring after the Proposed Termination Date
and the Term shall end effective as of the Termination Date.
Section 10.03. Voluntary Termination as to Engines. The Lessee
shall have the right at its option and at any time, on at least thirty (30)
days' prior written notice to the Lessor, to terminate this Lease with respect
to any Engine not then installed or held for use on the Airframe, provided
that prior to the date of such termination, the Lessee shall comply with the
terms of Section 11.04 hereof to the same extent as if an Event of Loss had
occurred with respect to such Engine.
ARTICLE 11
LOSS, DESTRUCTION, REQUISITION
Section 11.01. Lessee's Election Rights. The Lessee shall notify
the Lessor, the Indenture Trustee and the Owner Participant as soon as
practicable but in no event more than 10 Business Days following the
occurrence of an event which constitutes, or would with the passage of time
constitute, an Event of Loss with respect to the Airframe or with respect to
the Airframe and the Engines or engines then installed on the Airframe. By
written notice to the Lessor, the Indenture Trustee and the Owner Participant
delivered within 60 days of the occurrence of any Event of Loss, the Lessee
shall have the right to elect the alternative set forth in Section 11.02
hereof or the alternative set forth in Section 11.03 hereof. The Lessee's
failure to make such election within said 60-day period shall be deemed to be
an election of the alternative set forth in Section 11.02 hereof.
Section 11.02. Payment of Stipulated Loss Value. (a) The Lessee
shall, if it has so elected or is deemed to have so elected under Section
11.01 hereof, pay to the Lessor, by wire transfer of immediately available
funds on the earlier of (i) the fifteenth day following receipt in full of
insurance proceeds or requisition proceeds, described in Section 11.05 hereof,
in connection with such Event of Loss or if later, the 15th day following the
end of the 60-day election period referred to in Section 11.01 hereof and (ii)
the 120th day after the occurrence of such Event of Loss (the earlier of such
dates being referred to herein as the "Loss Payment Date"), the sum of (A) the
Stipulated Loss Value for the Aircraft, determined as of the Stipulated Loss
Value Determination Date next succeeding the Loss Payment Date (or, if the
Loss Payment Date occurs on a Stipulated Loss Value Determination Date,
determined as of such Stipulated Loss Value Determination Date), plus (B) any
and all Basic Rent due and payable on the relevant Stipulated Loss Value
Determination Date to the extent payable in arrears but not to the extent
payable in advance, plus (C) any and all Supplemental Rent due and payable on
or prior to such Loss Payment Date, plus (D) all other amounts (including
Basic Rent due and payable with respect to Rent Payment Dates occurring prior
to such Stipulated Loss Value Determination Date and unpaid) due and payable
by the Lessee hereunder or owing by the Lessee or the Owner Trustee to the
Indenture Trustee or the Holders under the Indenture and the other Operative
Agreements, plus (E) any reasonable out-of-pocket expenses incurred in
connection with such Event of Loss and the related prepayment of the
Certificates by the Lessor, the Owner Participant and the Indenture Trustee;
provided that in no event shall the Holders not be paid in full.
(b) Termination of Lease; Title Transfer. Upon payment in full of
the amounts due pursuant to Section 11.02(a) hereof, the obligation of the
Lessee to pay Basic Rent on any Rent Payment Date occurring subsequent to the
payment of such amounts shall terminate and the Term shall end. Further, upon
such payment, the Lessor will transfer to the Lessee, without recourse or
warranty (except as to the absence of Lessor's Liens), all of the Lessor's
right, title and interest, if any, in and to the Airframe, Engines and engines
with respect to which such Event of Loss occurred, as well as all of the
Lessor's right, title and interest in and to any Engines constituting part of
the Aircraft but not installed on the Airframe when such Event of Loss
occurred, and will deliver to the Lessee such instrument as the Lessor shall
have received from the Indenture Trustee, releasing the Aircraft from the Lien
of the Indenture.
Section 11.03. Replacement of Airframe and Engines. (a) Generally.
So long as no Payment Default, Bankruptcy Default or Event of Default shall
have occurred and be continuing, and subject to Section 11.01 hereof and
provided that the Lessee shall have reimbursed the reasonable out-of-pocket
costs and expenses (including, without limitation, reasonable counsel fees and
disbursements) of the Lessor, the Owner Participant, the Indenture Trustee and
the Holders (to the extent of the reasonable fees and expenses of one legal
counsel in each relevant jurisdiction representing all of the Holders) in
connection with the matters contemplated by this Section 11.03, if the Lessee
has elected to replace the Airframe and Engines suffering an Event of Loss
pursuant to this Section 11.03, the Lessee shall cause to be duly conveyed to
the Lessor within one hundred twenty (120) days after the occurrence of such
Event of Loss, as replacement for the Airframe and Engines with respect to
which such Event of Loss has occurred, good and marketable title to an Airbus
A300-600 series airframe manufactured no earlier than January 1, 1997 (the
"Replacement Airframe") and good and marketable title to a number of
Replacement Engines equal to the number of Engines with respect to which an
Event of Loss has occurred, provided that following compliance with all other
terms of this Section 11.03 each Engine shall be of identical make and model
and, in the case of such Replacement Airframe and each such Replacement
Engine, owned by the Lessee free and clear of all Liens not excepted in
Sections 6.01(a), (b), (c) and (e) hereof, duly certified as an airworthy
aircraft by the Aeronautics Authority, and having in the case of the
Replacement Airframe a value, remaining useful life and utility, and in the
case of the Replacement Engines a value and utility, at least equal to, and
being in as good operating condition as, the Airframe and Engines with respect
to which such Event of Loss occurred, assuming that the Airframe and Engines
were then in the condition and state of airworthiness required to be
maintained by the terms of this Lease immediately prior to the occurrence of
such Event of Loss. In such case and as a condition to such substitution the
Lessee, at its own cost and expense, will also promptly:
(i) furnish the Indenture Trustee with originals of, and the Lessor
with copies of, full warranty bills of sale, in form and substance
satisfactory to the Lessor and the Indenture Trustee, with respect to such
Replacement Airframe and Replacement Engines together with an assignment in
form and substance satisfactory to the Lessor and the Indenture Trustee of
any and all manufacturer's warranties applicable thereto and a consent
reasonably satisfactory to the Lessor and the Indenture Trustee from such
manufacturer or manufacturers to such assignment;
(ii) cause such Replacement Airframe and Replacement Engines to be
duly registered in the name of the Lessor pursuant to the Transportation
Code or the applicable laws of any other jurisdiction in which the Aircraft
may then be registered in accordance with Section 6.03(b) of the
Participation Agreement;
(iii) cause a Lease Supplement with respect to such Replacement
Airframe and Replacement Engines to be duly executed by the Lessee and
recorded pursuant to the Transportation Code, or the applicable laws, rules
and regulations of any other jurisdiction in which the Aircraft may then be
registered as permitted by Section 6.03(b) of the Participation Agreement;
(iv) furnish the Lessor, the Indenture Trustee and the Owner
Participant with an appraisal or other report of a nationally recognized
aircraft appraiser based on an inspection of such Replacement Airframe and
Replacement Engines reasonably satisfactory to the Indenture Trustee and
the Owner Participant certifying that such Replacement Airframe has a
value, remaining useful life and utility, and such Replacement Engines have
a utility and value, at least equal to, and are in as good operating
condition as, the Airframe and Engines replaced, assuming such Airframe and
Engines were in the condition and repair required by the terms of this Lease
immediately prior to the occurrence of such Event of Loss;
(v) furnish the Lessor, the Indenture Trustee and the Owner
Participant with such evidence as the Lessor or the Indenture Trustee may
reasonably request of compliance with the insurance provisions of Article
13 hereof with respect to such Replacement Airframe and Replacement Engines;
(vi) provide the Owner Participant and the Lessor with (A) an opinion
of counsel selected by the Owner Participant and reasonably acceptable to
the Lessee (which opinion shall be reasonably satisfactory in form and
substance to the Owner Participant and the Lessor) that it will suffer no
adverse tax consequence not otherwise indemnified for to its reasonable
satisfaction as of the Delivery Date as a result of such substitution or
(B) an indemnity reasonably acceptable to the Lessor and the Owner
Participant against such consequences;
(vii) comply with the provisions of Section 9.08 of the Indenture;
(viii) cause an Indenture and Security Agreement Supplement with
respect to such Replacement Airframe and Replacement Engines to be duly
executed by the Lessor and the Indenture Trustee and recorded pursuant to
the Transportation Code, or the applicable laws, rules and regulations of
any other jurisdiction in which the Aircraft may then be registered as
permitted by Section 6.03(b) of the Participation Agreement in order that
the Lien of the Indenture shall constitute a first priority, duly perfected
Lien and security interest on and in respect of such Replacement Airframe
and Replacement Engines;
(ix) take such other action, including the filing of UCC financing
statements naming the Indenture Trustee as a secured party with the
Secretary of State of Connecticut and the filing of a notice with the
Secretary of State of Tennessee, as the Lessor or the Indenture Trustee may
reasonably request in order that such Replacement Airframe and Replacement
Engines shall be duly and properly titled in the Lessor, leased under this
Lease and subjected to the Lien of the Indenture to the same extent as the
replaced Airframe and Engines;
(x) furnish the Indenture Trustee with an opinion (reasonably
satisfactory in form and substance to the Lessor, the Owner Participant and
the Indenture Trustee) of counsel to the Lessee (which may be the Lessee's
General Counsel) addressed to the Indenture Trustee and the Owner
Participant to the effect that (A) the Lessor has good title to such
Replacement Airframe and Replacement Engines, and (B) such Replacement
Airframe and Replacement Engines have been validly subjected to the Lien of
the Indenture (with the effect and result that the Indenture constitutes a
first priority duly perfected security interest and Lien on such
Replacement Airframe and Replacement Engines); and
(xi) cause to be delivered to the Lessor, the Owner Participant and
the Indenture Trustee an opinion of counsel to the Lessee addressed to the
Lessor, the Owner Participant and the Indenture Trustee as to the due
registration of the Aircraft and the due recordation of the requisite
documents or instruments and the validity and perfection of the Lien in
such Replacement Airframe and Replacement Engines.
(b) Title to Replaced Equipment. Upon compliance by the Lessee with
the terms of Section 11.03(a) hereof, the Lessor will transfer to the Lessee
(subject to any insurer's salvage rights), without recourse or warranty
(except as to the absence of Lessor's Liens), all of the Lessor's right, title
and interest, if any, in and to the Airframe and Engines with respect to which
such Event of Loss occurred. In connection with such transfer, the Lessee
shall prepare and the Lessor shall execute or forward to the Indenture Trustee
for execution, as the case may be, all in recordable form, a xxxx of sale
evidencing such transfer, a release of the Airframe and Engines with respect to
which such Event of Loss occurred from the Indenture and such other documents
as the Lessee reasonably requests, all at the Lessee's sole cost and expense.
Any Engine constituting part of the Aircraft, but not installed on the
Airframe when such Event of Loss occurred, shall continue to be property of
the Lessor and leased under this Lease as part of the same equipment as the
Replacement Airframe and Replacement Engines.
(c) Definitions. Each Replacement Airframe and Replacement Engine
shall be deemed part of the property leased under this Lease, each such
Replacement Airframe shall be deemed an "Airframe," each such Replacement
Engine shall be deemed an "Engine" and each such Replacement Airframe and
Replacement Engine shall be deemed part of the same Aircraft as was the
Airframe or Engine replaced.
(d) Rent Adjustments. An Event of Loss covered by this Section
11.03 shall not result in any change in Basic Rent, Stipulated Loss Values or
Termination Values except as may be provided pursuant to the Tax Indemnity
Agreement and the Participation Agreement.
(e) Time Limitations. If the Lessee has elected to proceed under
this Section 11.03 but has not fully performed its obligations under this
Section 11.03 within 120 days of the occurrence of the applicable Event of
Loss, in the event that any amounts held by the Lessor (or, so long as the
Indenture shall be in effect, the Indenture Trustee) in respect of such Event
of Loss are less than the Stipulated Loss Value thereof, the Lessee will
deposit with the Lessor or the Indenture Trustee, as the case may be, the
amount of any deficiency as security on such 120th day. If the Lessee has
elected to proceed under this Section 11.03 but has not fully performed its
obligations under this Section 11.03 within 180 days of the occurrence of such
Event of Loss, the Lessee shall be deemed to have elected to proceed under
Section 11.02 hereof and shall immediately perform its obligations thereunder,
and the Indenture Trustee, or the Lessor if the Indenture shall have been
discharged, shall apply the amounts held by it pursuant to the preceding
sentence as a credit against such obligations.
Section 11.04. Event of Loss with Respect to an Engine. (a)
Generally. Upon the occurrence of an Event of Loss with respect to an Engine
under circumstances in which there has not occurred an Event of Loss with
respect to the Airframe, the Lessee shall give the Lessor and the Indenture
Trustee prompt written notice thereof and shall, as soon as practicable but in
any event within sixty (60) days after the occurrence of such Event of Loss,
duly convey or cause to be conveyed to the Lessor, a Replacement Engine for
the Engine with respect to which such Event of Loss occurred, good and
marketable title to a Replacement Engine, free and clear of all Liens not
excepted in Sections 6.01(a), (b) (provided that if there are any Liens of the
type described in Section 6.01(b) hereof, such Liens are subordinate to the
Lien of the Indenture), (c) and (e) hereof and having a value and utility at
least equal to, and being in as good operating condition as, the Engine with
respect to which such Event of Loss occurred, assuming such Engine was of the
value and utility and in the condition and repair required by the terms of
this Lease immediately prior to the occurrence of such Event of Loss, provided
that after any replacement, each Engine shall be of identical make and model.
The standards set forth in this Section with respect to Replacement Engines
shall apply upon any replacement or substitution of an Engine with a
Replacement Engine pursuant to any other provision of this Lease.
(b) Conditions Precedent. Prior to or at the time of any conveyance
of an Engine pursuant to Section 11.04(a) hereof, the Lessee, at its own cost
and expense will:
(i) furnish the Indenture Trustee with an original of, and the Lessor
with a copy of, a full warranty xxxx of sale, in form and substance
satisfactory to the Lessor, with respect to such Replacement Engine
together with an assignment in form and substance satisfactory to the
Lessor of any and all manufacturer's warranties applicable thereto and a
consent reasonably satisfactory to the Lessor and the Indenture Trustee
from such manufacturer to such assignment;
(ii) cause a Lease Supplement covering such Replacement Engine to be
duly executed by the Lessee and filed for recordation pursuant to the
Transportation Code, or the applicable laws, rules and regulations of any
other jurisdiction in which the Aircraft may then be registered as
permitted by Section 6.03(b) of the Participation Agreement and, if the
Engine being replaced was registered under the applicable laws of the
jurisdiction in which the Aircraft is then registered, the Replacement
Engine shall be registered in the same fashion;
(iii) furnish the Lessor and the Indenture Trustee with a certificate
of a nationally recognized aircraft appraiser reasonably satisfactory to
the Lessor certifying that such Replacement Engine has a value and utility
at least equal to, and is in as good operating condition as, the Engine
replaced, assuming such Engine was in at least the condition and repair
required by the terms of this Lease immediately prior to the occurrence of
such Event of Loss;
(iv) furnish the Lessor with such evidence of compliance with the
insurance provisions of Article 13 hereof with respect to such Replacement
Engine as the Lessor or the Indenture Trustee may reasonably request;
(v) comply with the provisions of Section 9.08 of the Indenture;
(vi) cause an Indenture and Security Agreement Supplement with
respect to such Replacement Engine to be duly executed by the Lessor and
the Indenture Trustee and recorded pursuant to the Transportation Code, or
the applicable laws, rules and regulations of any other jurisdiction in
which the Aircraft may be registered as permitted by Section 6.03(b) of the
Participation Agreement in order that the Indenture shall constitute a
first priority duly perfected Lien and security interest on and in respect
of such Replacement Engine;
(vii) take such other action, including the filing of UCC financing
statements naming the Indenture Trustee as Secured Party with the Secretary
of State of Connecticut and a notice filing with the Secretary of State of
Tennessee, as the Lessor or the Indenture Trustee may reasonably request in
order that such Replacement Engine be duly and properly titled in the
Lessor, leased under this Lease and subjected to the Lien of the Indenture
to the same extent as the replaced Engine;
(viii) furnish the Lessor, the Owner Participant and the Indenture
Trustee with an opinion (reasonably satisfactory in form and substance to
the Lessor, the Owner Participant and the Indenture Trustee) of counsel to
the Lessee (which may be the Lessee's General Counsel) addressed to the
Indenture Trustee and the Owner Participant to the effect that (A) the
Lessor has good title to such Replacement Engine, and (B) such Replacement
Engine has been validly subjected to the Lien of the Indenture (with the
effect and result that the Indenture constitutes a first priority duly
perfected security interest and Lien on such Replacement Engine); and
(ix) take such other action as the Indenture Trustee may reasonably
request in order that such Replacement Engine be duly and properly
subjected to the Lien of the Indenture to the same extent as the replaced
Engine.
(c) Title Transfer. Upon compliance by the Lessee with the terms of
Sections 11.04(a) and (b) hereof, the Lessor will transfer to the Lessee
(subject to any insurer's salvage rights), without recourse or warranty
(except as to the absence of Lessor's Liens), all of the Lessor's right, title
and interest, if any, in and to the Engine with respect to which such Event of
Loss occurred. In connection with such transfer, the Lessee shall prepare and
the Lessor shall execute or forward to the Indenture Trustee for execution, as
the case may be, all in recordable form, a xxxx of sale evidencing such
transfer, a release of the Engine with respect to which such Event of Loss
occurred from the Indenture and such other documents as the Lessee reasonably
requests, all at the Lessee's sole cost and expense. Each Replacement Engine
shall, after such conveyance, be deemed part of the property leased under this
Lease. An Event of Loss covered by this Section 11.04 shall not result in any
change in Basic Rent, Stipulated Loss Values or Termination Values, but may
result in payments to be made pursuant to the Tax Indemnity Agreement and the
Participation Agreement.
Section 11.05. Application of Payments from the Government or
Others. (a) Generally. Any payments (other than insurance proceeds the
application of which is provided for in Section 13.03 hereof) received at any
time by the Lessor or by the Lessee from any governmental authority or any
other party, foreign or domestic, with respect to an Event of Loss resulting
from the condemnation, confiscation, theft or seizure of, or requisition of
title to or use of, the Airframe or any Engine will be applied, as
appropriate, in accordance with Section 11.05(b) or Section 11.05(c) hereof.
(b) Payments of Stipulated Loss Value. If the payments described in
Section 11.05(a) hereof are received with respect to the Airframe or with
respect to the Airframe and Engines or engines then installed on the Airframe
and the Lessee has elected the alternative set forth in Section 11.02 hereof,
so much of such payments as shall not exceed the amount required to be paid by
the Lessee pursuant to Section 11.02 hereof shall be paid to the Lessor (or,
if the Lien of the Indenture has not been discharged, the Indenture Trustee)
in reduction of the Lessee's obligations under Section 11.02 hereof if not
already paid by the Lessee, or, if such obligations have already been
discharged in full by the Lessee, such payments shall be applied to reimburse
the Lessee for its payment of such Stipulated Loss Value and, if and to the
extent specifically included in such payment, to pay to the Lessee interest on
such amount of Stipulated Loss Value at the rate included in such payment if
any, or otherwise at the applicable Debt Rate, for the period from the date of
payment by the Lessee of the Stipulated Loss Value to the date of
reimbursement of the Lessee under this Section 11.05(b). The excess, if any,
remaining after such application shall be divided between the Lessor and the
Lessee as their respective interests may appear.
(c) Payment if the Lessee Elects Replacement. If the payments
described in Section 11.05(a) hereof are received with respect to the Airframe
or with respect to the Airframe and the Engines or engines then installed on
the Airframe and the Lessee has elected the alternative set forth in Section
11.03 hereof, or if such payments are received with respect to an Engine not
then installed on the Airframe under the circumstances contemplated by Section
11.04 hereof, all such payments shall, subject to Section 11.08 hereof, be
paid over to or retained by the Lessee, provided that the Lessee shall have
fully performed its obligations pursuant to Section 11.03 or Section 11.04
hereof, as the case may be, with respect to the Event of Loss for which such
payments are made.
Section 11.06. Requisition of an Airframe and the Installed Engines
for Use by Government. In the event of the requisition for use by the
Government or any other government of registry of the Aircraft, or any agency
or instrumentality of either (a "Requisitioning Government") of the Airframe
and the Engines or engines then installed on the Airframe during the Term,
which requisition does not constitute an Event of Loss, the Lessee shall
promptly notify the Lessor, the Indenture Trustee and the Owner Participant of
such requisition and all of the Lessee's obligations under this Lease with
respect to such Airframe and Engines or engines shall continue to the same
extent as if such requisition had not occurred except to the extent that any
failure or delay in repairing or maintaining the Aircraft by the Lessee shall
have been caused by such requisition. All payments received by the Lessor,
the Lessee or any permitted sublessee or transferee from the Requisitioning
Government for such use of the Airframe and Engines or engines during the Term
(other than any such requisition which constitutes an Event of Loss, as to
which the provisions of Section 11.05 hereof shall govern) shall, subject to
Section 11.08 hereof, be paid over to, or retained by the Lessee or such
permitted sublessee or transferee. All payments received by the Lessor, the
Lessee or any such permitted sublessee or transferee from the Requisitioning
Government for the use of the Airframe and Engines or engines after the Term
shall be paid over to, or retained by, the Lessor (or the Lessee if it shall
have purchased the Lessor's interest therein in accordance with the provisions
hereof).
Section 11.07. Requisition for Use by Government of an Engine Not
Installed on the Airframe. In the event of the requisition for use by a
Requisitioning Government of registry of the Aircraft or any agency or
instrumentality thereof of any Engine not then installed on the Airframe, the
Lessee shall replace such Engine by complying with the terms of Section 11.04
hereof to the same extent as if an Event of Loss had occurred with respect to
such Engine as of the date of such requisition, and any payments received by
the Lessor or the Lessee from the Requisitioning Government with respect to
such requisition shall, subject to Section 11.08 hereof, be paid over to or
retained by the Lessee, provided that the Lessee shall have fully performed
its obligations under Section 11.04 hereof.
Section 11.08. Application of Payments During Existence of Certain
Defaults. Any amount referred to in Section 11.05, 11.06 or 11.07 hereof
which is payable to the Lessee shall not be paid to the Lessee, or, if it has
been previously paid directly to the Lessee, shall not be retained by the
Lessee, if at the time of such payment a Payment Default, Bankruptcy Default
or Event of Default shall have occurred and be continuing, but shall be paid
to and held by the Lessor (or the Indenture Trustee so long as the Lien of the
Indenture is in effect) as provided in Article 23 hereof as security for the
obligations of the Lessee under this Agreement, and at such time as there
shall not be continuing any such Payment Default, Bankruptcy Default or Event
of Default, such amount to the extent not theretofore applied as provided
herein, shall be paid to the Lessee.
ARTICLE 12
RETURN OF AIRCRAFT
Section 12.01. Return of Aircraft. Unless the Aircraft is purchased
by the Lessee as provided in Section 4.02 hereof, at the end of the Term, or
upon the termination of this Lease pursuant to Article 10 or Article 17 hereof
or otherwise, the Lessee, at its own cost and expense, will return the
Aircraft by delivering it to the Lessor on the last day of the Term or on the
Termination Date, as the case may be, at the Lessee's principal maintenance
facility in Memphis, Tennessee or such other location specified by the Lessee
(and reasonably acceptable to the Owner Participant), or if such termination
is pursuant to Article 17 hereof, selected by the Lessor in its reasonable
discretion, within or, if the Aircraft is then registered outside the United
States, outside of the continental United States (on the Lessee's route
structure as in effect on the return date and provided that the Lessee shall
pay any incremental expenses incurred in connection with a redelivery outside
the United States) and the Airframe shall be fully equipped with two Engines
of the same or an improved make and model as were delivered on the Delivery
Date (or Replacement Engines), free and clear of all Liens (other than
Lessor's Liens), including any rights of third parties under pooling,
interchange, overhaul, repair or similar agreements or arrangements, it being
understood that all such Engines and Replacement Engines so returned shall be
of identical make and model and that any Replacement Engine shall be in at
least as good operating condition and have at least the same value and utility
as the Engines being replaced, assuming such Engines were in the condition
required hereunder. The Lessee will give the Lessor at least 30 days' prior
written notice of the place of such return; provided, however, that if the
Lessor shall have made the request for storage pursuant to Section 12.06
hereof, the Lessee shall return the Aircraft to the Lessor at the site of the
storage.
Section 12.02. Return of Engines. If any engine not owned by the
Lessor shall be delivered with the Airframe as set forth in Section 12.01
hereof, the Lessee, concurrently with such delivery, will, at its own cost and
expense furnish the Lessor with (i) a full warranty xxxx of sale, in form and
substance reasonably satisfactory to the Lessor, with respect to such engine,
(ii) an opinion of the Lessee's counsel to the effect that, upon such return,
the Lessor will acquire full right, title and interest to such engine free and
clear of all Liens (other than Lessor's Liens) and (iii) a certificate as
described in Section 11.04(b)(iii) hereof. The Lessee shall take such other
action as the Lessor may reasonably request in order that such Replacement
Engine shall be duly and properly titled in the Lessor free and clear of all
Liens (other than Lessor's Liens), and the Lessor will then (i) transfer to
the Lessee, without recourse or warranty (except as to the absence of Lessor's
Liens), and subject to the disclaimers provided in Section 5.01 hereof, all
the Lessor's right, title and interest in and to any Engine in lieu of which a
Replacement Engine has been delivered pursuant to Section 12.01 hereof, "as
is, where is" and (ii) deliver to the Lessee such instrument as the Lessor
shall have received from the Indenture Trustee, releasing such Engine from the
Lien of the Indenture.
Section 12.03. Return of Manuals. Upon the return of the Aircraft,
the Lessee shall deliver to the Lessor all original (or photocopied or
microfilmed copies thereof, if then permitted to be maintained in such form
under applicable law) logs, manuals, certificates and technical data, and
inspection, modification and overhaul records pertaining to the Airframe,
Engines or engines, which are required to be maintained under applicable rules
and regulations of the Aeronautics Authority or pursuant to the Lessee's or
any permitted sublessee's Aeronautics Authority-approved maintenance program
and all original (or photocopied or microfilmed copies thereof, if then
permitted to be maintained in such form under applicable law) records required
to be maintained with respect to the Aircraft under the maintenance program
approved by the aeronautical authority of any other country of registry of the
Aircraft. All records shall be returned in the format necessary to allow the
Lessee or any sublessee to comply with Section 12.04(a)(i) hereof.
Section 12.04. Condition of Aircraft. (a) Required Condition. The
Aircraft when returned to the Lessor shall, at the Lessee's own cost and
expense, meet the following requirements:
(i) it shall, unless otherwise requested by the Lessor not less than
90 days prior to the end of the Term to retain the then-existing
registration of the Aircraft, be duly registered in the name of the Lessor
or its designee pursuant to the Transportation Code;
(ii) it shall be clean by airline and cargo handling operating
standards;
(iii) the Airframe shall be returned with the Engines, or any
replacements thereto as herein authorized, provided that the Airframe shall
have an aggregate of two Engines or engines (as herein authorized under
Section 12.02 hereof), both of the same make and model, installed thereon,
together with the equipment, accessories or parts installed thereon on the
Delivery Date or replacements therefor (as herein authorized) and
alterations, modifications and additions thereto made in accordance with
the provisions of this Lease;
(iv) it shall be in the condition required by Section 12.04(b) hereof
and in as good operating condition as when delivered to the Lessor on the
Delivery Date, ordinary wear and tear excepted;
(v) it shall have a currently effective airworthiness certificate
issued by the Aeronautics Authority;
(vi) it shall comply with any then applicable rules and regulations
imposed by the Aeronautics Authority and, without limitation of the
foregoing, terminate all airworthiness directives of, and mandatory
modifications required by, the Aeronautics Authority (or any government or
governmental authority, domestic or foreign, having jurisdiction over the
Aircraft) to be terminated during the Term of the Lease and the Airframe
and each Engine (including any Replacement Engine) shall be serviceable in
accordance with the Lessee's FAA-approved maintenance program;
(vii) it shall be free and clear of all Liens and rights of others
(other than Lessor's Liens) including, without limitation, rights of third
parties under pooling, interchange, overhaul, repair and other similar
agreements or arrangements referred to in Section 7.02(a) hereof; and
(viii) it shall be in a standard cargo configuration.
(b) Remaining Time. If, at the time of return of the Aircraft, the
Airframe is not being maintained under a continuous maintenance program, then
the Airframe shall have remaining until the next scheduled "C" check at least
25% of the allowable hours between "C" checks permitted under the Lessee's
FAA-approved maintenance program (or other permitted maintenance program).
If, at the time of return of the Aircraft, the Engines or engines are not
being maintained under an on-condition maintenance program, then the average
number of hours of operation on such Engines or engines remaining until the
next scheduled engine heavy maintenance visit under the Lessee's FAA-approved
maintenance program (or other permitted maintenance program) shall be at least
25% of the allowable hours between engine heavy maintenance visits. With
respect to maintenance under the Lessee's FAA-approved maintenance program,
the Lessee shall have treated the Aircraft in a nondiscriminatory manner with
other Airbus A300-600 series aircraft in the Lessee's fleet, and the Aircraft
shall be free and clear of all Liens and rights of others other than Lessor's
Liens and shall be in compliance in every material respect with the Lessee's
FAA-approved maintenance program as if the Term were not ending.
Section 12.05. [Reserved].
Section 12.06. Storage. Upon any expiration or termination of this
Lease, at the written request of the Lessor given at least 45 days prior to
such expiration or termination, the Lessee will arrange, or will cause to be
arranged, at no charge to the Lessor (subject, however, to the last sentence
of this Section 12.06), storage at a ramp storage facility for the Aircraft at
the Lessee's principal maintenance facilities in Memphis, Tennessee or one of
the Lessee's other maintenance facilities or at a location selected by the
Lessee used as a location for the parking or storage of aircraft for a period
of up to 30 days; provided that if storage is available at no additional cost
or expense to the Lessee at the location at which the Lessor has specified
pursuant to Section 12.01 hereof that return of the Aircraft shall take place,
the Lessee shall provide storage at such location. At the end of such 30 day
period, if the Lessor so requests within 10 days of before the end of such
period, the Lessee will continue to provide such ramp storage facility at such
facility or location for an additional 30 days at the Lessor's expense. If
the Lessee is required to move the Aircraft from one storage facility to
another, such move shall be at the risk and expense of the Lessor. The
maintenance and risk of loss of, and responsibility for obtaining insurance
on, the Aircraft shall be the responsibility of the Lessor during any period
of storage; provided, however, the Lessee will, upon written request of the
Lessor and at the Lessor's expense, not to exceed the Lessee's incremental
cost of such service, obtain insurance for such property (including, if
possible, coverage through its fleet policy).
Section 12.07. Special Markings. If requested by the Lessor, the
Lessee shall, at the Lessee's cost, remove or paint over all insignias and
other distinctive markings of the Lessee or any sublessee on the Aircraft and
repaint the stripped down areas in a workmanlike manner to match exterior
colors.
Section 12.08. Lessor's Option to Purchase Parts. At any time after
the Lessee has advised the Lessor that it has determined not to renew this
Lease or purchase the Aircraft, or the Aircraft is otherwise to be returned to
the Lessor, the Lessee shall advise the Lessor of any Part which the Lessee
intends, and is permitted, to remove as provided in Section 9.02(b) above, and
the Lessor may, at its option, upon 30 days' notice to the Lessee, purchase
any or all of such Parts from the Lessee upon the expiration of the Term at
their then Fair Market Value (taking into account the provisions of this
Lease) determined in accordance with the provisions of Section 4.03 hereof.
Upon any return of the Aircraft pursuant to this Article 12, if the Lessor does
not elect to exercise its option under this Section 12.08, the Lessee will, at
its own cost and expense, remove such Parts described in subparagraph (i),
(ii) or (iii) of Section 9.02(b) hereof as the Lessor may request.
ARTICLE 13
INSURANCE
Section 13.01. Comprehensive Airline Liability and Property Damage
Liability Insurance. (a) Comprehensive Airline Liability and Property Damage
Liability Insurance. The Lessee, at its own cost and expense, will maintain
or cause to be maintained with respect to the Aircraft, (i) comprehensive
airline liability insurance including, without limitation, passenger legal and
bodily injury liability and property damage liability insurance and cargo
legal liability in such amounts, against such risks (including, without
limitation, contractual liability and allied perils liability but excluding
war risk insurance (except as required under the second sentence of this
Section 13.01(a)), with such retentions (subject to the limitations set forth
in Section 13.06 hereof) and on such terms and conditions (including coverage
for cost of claims) as the Lessee customarily maintains with respect to
aircraft and engines of the same type and model which comprise the fleet of
the Lessee, and (ii) such insurance against such other risks as is usually
carried by similar corporations engaged in the same or similar business and
similarly situated as the Lessee and owning or operating aircraft and engines
similar to the Aircraft and Engines; provided that in no event shall the
limits of liability for all such insurance be less than the amount, per
occurrence, as set forth on the insurance certificate delivered on the
Delivery Date unless and only so long as the Aircraft is not operated and all
risk-ground insurance for the Aircraft on the ground is maintained in the same
manner and covering the same risks as is from time to time applicable to other
aircraft owned or operated by the Lessee of the same type and model on the
ground and not in operation. The Lessee will be required to maintain war risk
insurance only if the Aircraft is operated in a war zone or a recognized area
of armed hostilities. All insurance required by this Section 13.01(a) shall
be maintained with insurers of recognized reputation and responsibility.
(b) Government Indemnification. Notwithstanding Section 13.01(a)
hereof, in the event of the requisition for use by the Government of the
Airframe or the Airframe and the Engines or engines then installed on the
Airframe, the Lessee shall maintain throughout the period of such requisition
such insurance as would otherwise be required under this Section 13.01;
provided that the Lessor shall accept, in lieu of such insurance coverage,
written indemnification or insurance from the Government which is
substantially the same as otherwise required under this Article 13.
(c) Policy Terms. Any policy of insurance carried and maintained in
accordance with this Section 13.01, and any policy taken out in substitution or
replacement for any such policy subject to the terms, conditions and
limitations thereof, shall:
(i) name or be amended to name the Lessor in its individual capacity
and as owner of the Aircraft, the Indenture Trustee in its individual
capacity and as trustee/mortgagee of the Aircraft and the Owner
Participant, each Liquidity Provider and each of their respective officers
and directors in their respective capacities as such as additional insureds
(hereinafter in this paragraph (c) sometimes referred to as "Additional
Insured");
(ii) provide that, in respect of the interest of any Additional
Insured in such policies, the insurance shall not be invalidated by any
action or inaction of the Lessee or any Additional Insured as defined under
the policy of insurance required under this Section 13.01 (other than any
action or inaction of such Additional Insured) and shall insure each
Additional Insured regardless of any breach or violation of any warranty,
declaration or condition contained in such policies by the Lessee or any
other Additional Insured (other than any breach or violation of any
warranty, declaration or condition by such Additional Insured) as defined
under the policy of insurance required under this Section 13.01;
(iii) provide that if such insurance is cancelled for any reason, or
any substantial change is made in the policies which adversely affect the
scope of the coverage required herein, or if such insurance is allowed to
lapse for nonpayment of premium, such cancellation, change or lapse shall
not be effective as to any Additional Insured for thirty (30) days (except
in the case of war risk coverage in which event the applicable period shall
be seven (7) days or such other period as may be customary) after receipt
by each such Additional Insured of written notice from such insurers or
such insurers' broker of such cancellation, change or lapse;
(iv) provide that the insurers shall waive any rights of subrogation
against each Additional Insured, to the extent that the Lessee has waived
its rights under this Lease and the Participation Agreement; provided that
the exercise by insurers of rights of subrogation derived from rights
retained by the Lessee shall not, in any way, delay payment of any claim
that would otherwise be payable by such insurers but for the existence of
rights of subrogation derived from rights retained by the Lessee;
(v) provide that all of the provisions of such policy shall operate
in the same manner as if there were a separate policy covering each
Additional Insured; provided, that such policies shall not operate to
increase any insurer's limit of liability;
(vi) be primary, without right of contribution from any other
insurance which is carried by the Lessee or any sublessee or any Additional
Insured with respect to its interest in the Aircraft;
(vii) provide that no Additional Insured shall have any obligation or
liability for premiums or other payments, if any, in connection with such
insurance; and
(viii) provide that such insurer shall waive the right of such
insurer to any set-off or counterclaim or any other deduction, whether by
attachment or otherwise, in respect of any liability of any Additional
Insured.
Section 13.02. Insurance Against Loss or Damage to Aircraft and
Engines. (a) Hull Insurance. The Lessee, at its own cost and expense, shall
maintain or cause to be maintained in effect, with insurers of recognized
reputation and responsibility, all-risk ground and flight aircraft hull
insurance covering the Aircraft and all-risk coverage with respect to any
Engines and Parts while removed from the Aircraft and not replaced by similar
Engines or Parts, including in each case war-risk and allied perils, hijacking
(air piracy) and governmental confiscation and expropriation insurance (except
with respect to the country of registry) with such retentions (subject to the
limitations set forth in Section 13.06 hereof) and in such form, and upon such
terms and conditions (including coverage for cost of claims), and in amounts
as the Lessee customarily maintains with respect to the aircraft in the
Lessee's fleet of the same type and model and operated on the same routes as
the Aircraft (except that the Lessee shall be required to maintain (i) allied
perils, hijacking (air piracy) and governmental confiscation and expropriation
insurance (except with respect to the country of registry) if the Aircraft is
operated on routes where the custom is for major international Air Carriers
flying comparable routes to carry such insurance and (ii) war risk insurance
only if the Aircraft is operated in a war zone or a recognized area of armed
hostilities), provided that such insurance shall at all times while the
Aircraft is subject to this Lease and the Lien of the Indenture be on an
agreed-value basis for an amount not less than an amount equal to the
Stipulated Loss Value for the Aircraft from time to time.
(b) Policy Terms. Any policies carried and maintained in accordance
with this Section 13.02 and any policies taken out in substitution or
replacement for any such policies subject to the terms, conditions and
limitations thereof shall:
(i) name or be amended to name the Lessor in its individual capacity
and as owner of the Aircraft (or, so long as the Indenture shall not have
been discharged, the Indenture Trustee) as an additional insured and as the
sole loss payee (hereinafter in this paragraph (b) sometimes referred to as
"Loss Payee");
(ii) provide with respect to coverage provided under this Section
13.02, (except as otherwise provided under Section 13.03 hereof when an
Event of Loss or a Payment Default, Bankruptcy Default or Event of Default
has occurred and is continuing), that (i) in the event of a loss involving
proceeds in the aggregate in excess of $6,000,000, the proceeds in respect
of such loss up to an amount equal to the Stipulated Loss Value for the
Aircraft shall be payable to the Lessor (or, so long as the Indenture shall
not have been discharged, the Indenture Trustee), it being understood and
agreed that in the case of any payment to the Lessor (or the Indenture
Trustee) otherwise than in respect of an Event of Loss, the Lessor (or the
Indenture Trustee) shall in the aggregate upon receipt of evidence
satisfactory to it that the damage giving rise to such payment shall have
been repaired or that such payment shall then be required to pay for
repairs then being made, pay the amount of such payment to the Lessee or
its order, and (ii) the entire amount of any loss involving proceeds in the
aggregate of $6,000,000 or less or the amount of any proceeds of any loss
in excess of the Stipulated Loss Value for the Aircraft shall be paid to
the Lessee or its order to pay for repairs or replacement property;
(iii) provide that if such insurance is cancelled for any reason or
any substantial change is made in the policies which adversely affect the
scope of the coverage required herein, or if such insurance is allowed to
lapse for nonpayment of premium, such cancellation, change or lapse shall
not be effective as to the Loss Payee for thirty days (except in the case
of war-risk coverage in which event the applicable period shall be seven
(7) days or such other period as may be customary) after receipt by the
Loss Payee of written notice from such insurer of such cancellation, change
or lapse;
(iv) provide that, in respect of the interest of the Lessor (in its
individual capacity and as the Owner Trustee), the Owner Participant or the
Indenture Trustee (in their respective capacities as such) in such
policies, the insurance shall not be invalidated by any action or inaction
of the Lessee or the Loss Payee (other than any action or inaction of such
Loss Payee) and shall insure the Lessor (in its individual capacity and as
Owner Trustee), the Owner Participant and the Indenture Trustee regardless
of any breach or violation of any warranty, declaration or condition
contained in such policies by the Lessee or the Loss Payee (other than any
breach or violation of any warranty, declaration or condition by the Loss
Payee) as defined under the policy of insurance required under this Section
13.02;
(v) provide that the insurers shall waive any rights of subrogation
against the Lessor (in its individual capacity and as Owner Trustee), the
Owner Participant and the Indenture Trustee to the extent that the Lessee
has waived its rights under this Lease or the Participation Agreement;
provided that the exercise by insurers of rights of subrogation derived
from rights retained by the Lessee shall not, in any way, delay payment of
any claim that would otherwise be payable by such insurers but for the
existence of rights of subrogation derived from rights retained by the
Lessee;
(vi) be primary and without rights of contribution from any other
insurance which is carried by the Loss Payee with respect to its interest
in the Aircraft;
(vii) provide that (except in the case of insurance with respect to
Engines and spare parts that have been removed from the Aircraft and
replaced with other Engines or engines, or spare parts, as the case may be)
such insurer shall waive any right of such insurer to any set-off or
counterclaim or any other deduction, whether by attachment or otherwise, in
respect of any liability of the Loss Payee;
(viii) provide that (except in the case of insurance with respect to
Engines and spare parts that have been removed from the Aircraft and
replaced with other Engines or engines or spare parts, as the case may be)
no Loss Payee shall have any obligation or liability for premiums or other
payments, if any, in connection with such insurance; and
(ix) in the event that separate policies are maintained to cover
all-risk ground and flight aircraft, hull and war risks and allied perils
insurance, include a 50/50 provisional claims settlement clause as
contained in the policies of insurance maintained by the Lessee with
respect to all other aircraft in the Lessee's fleet, and a copy of the
50/50 provisional claims settlement clause in effect on the Delivery Date
shall be attached to the insurance certificate issued on the Delivery Date.
Section 13.03. Application of Insurance Proceeds. (a) Generally.
All insurance proceeds (other than proceeds from policies carried by the
Lessor, the Indenture Trustee or the Owner Participant) received under
policies described in Section 13.02 hereof as the result of the occurrence of
an Event of Loss with respect to the Airframe or an Engine will be applied as
follows:
(i) if such proceeds are received with respect to the Airframe or with
respect to the Airframe and the Engines or engines then installed on the
Airframe and the Lessee has elected or is deemed to have elected the
alternative set forth in Section 11.02 hereof, so much of such proceeds as
shall not exceed the amounts required to be paid by the Lessee pursuant to
said Section 11.02 hereof shall be applied in reduction of the Lessee's
obligation to pay such amounts if not already paid by the Lessee, or if
already paid by the Lessee, shall be applied to reimburse the Lessee for
its payment of such amounts; or
(ii) if such proceeds are received with respect to the Airframe or the
Airframe and the Engines or engines then installed on the Airframe and the
Lessee has elected the alternative set forth in Section 11.03 hereof, or if
such proceeds are received with respect to an Engine not then installed on
the Airframe and not replaced by an Engine or engine under the
circumstances contemplated by Section 11.04 hereof, all such proceeds shall
be paid to the Indenture Trustee (unless the Indenture has been discharged
in which case paid to the Lessor) for disbursement to the order of the
Lessee, after the Lessee shall have fully performed the terms of Section
11.03 or 11.04 hereof, as applicable, with respect to the Event of Loss for
which such proceeds are paid.
(b) Payment if no Event of Loss. The insurance proceeds of any
property damage loss not constituting an Event of Loss with respect to the
Airframe or an Engine will be applied in payment (or to reimburse the Lessee)
for repairs or for replacement property in accordance with Articles 7 and 8
hereof, if not already paid for by the Lessee, and any balance remaining after
compliance with said Articles 7 and 8 hereof with respect to such loss shall
be paid to the order of the Lessee.
(c) Application of Payments During Existence of Certain Defaults. Any
amount referred to in this Article 13 which is payable to or retainable by the
Lessee shall not be paid to or retained by the Lessee if at the time of such
payment or retention a Payment Default, Bankruptcy Default or Event of Default
shall have occurred and be continuing, but shall be held by or paid over to
the Indenture Trustee (unless the Indenture has been discharged in which case
such amount shall be paid to the Lessor) to be held in accordance with Article
23 hereof, as security for the obligations of the Lessee under this Lease and,
if an Event of Default shall have occurred and be continuing, applied against
the Lessee's obligations hereunder as and when due. At such time as there
shall not be continuing any such Payment Default, Bankruptcy Default or Event
of Default, such amount shall be paid to the Lessee to the extent not
previously applied in accordance with the preceding sentence.
(d) Information. If any Additional Insured becomes subject to any
claim covered by any insurance policy maintained pursuant to this Article 13,
the Lessee shall make available any information required by such Additional
Insured in connection with such claim.
Section 13.04. Reports. On or before the Delivery Date and
thereafter annually on or before the scheduled expiration date for such policy
during the Term, the Lessee will cause its aviation insurance broker to
furnish to the Lessor and the Indenture Trustee a signed report, stating the
types of coverage and limits carried and maintained on the Aircraft and
certifying that such insurance complies with the terms and conditions of this
Lease. The Lessee will cause such aviation insurance broker to advise the
Lessor, the Owner Participant and the Indenture Trustee in writing promptly
of any default in the payment of any premium and of any other act or omission
on the part of the Lessee of which it has knowledge and which might
invalidate, cause cancellation of or render unenforceable all or any part of
any insurance carried by the Lessee with respect to the Aircraft. The Lessee
will cause such insurance broker to agree to advise the Lessor, the Indenture
Trustee and the Owner Participant in writing if and when it becomes evident to
such broker that any insurance policy carried and maintained on the Aircraft
pursuant to this Article 13 will not be renewed at the scheduled expiration
date for such policy. If the Lessee shall fail to maintain insurance as
required, the Lessor may, at its option, provide such insurance, and in such
event, the Lessee shall, upon demand, reimburse the Lessor, as Supplemental
Rent, for the cost of such insurance; provided, however, that no exercise of
said option shall affect the provisions of this Lease, including the
provisions that failure by the Lessee to maintain the prescribed insurance
shall constitute an Event of Default or otherwise constitute a waiver of any
other rights the Lessor may have against the Lessee.
Section 13.05. Lessor's Insurance. The Lessor, the Indenture
Trustee or the Owner Participant may insure the Airframe or any Engine at its
own cost and expense, including insuring the Aircraft for amounts in excess of
the Stipulated Loss Value of the Aircraft, provided that any insurance so
maintained by the Lessor, the Indenture Trustee or the Owner Participant shall
not result in a reduction of coverage or amounts payable under insurance
required or permitted to be maintained by the Lessee under this Article 13 or
increase the cost to the Lessee of maintaining such insurance; provided
further, that any insurance policies of the Lessor, the Indenture Trustee or
the Owner Participant insuring the Airframe or any Engine shall provide for a
release to the Lessee of any and all salvage rights in and to the Airframe or
any Engine.
Section 13.06. Self-Insurance. The Lessee may self-insure the risks
required to be insured against by Sections 13.01 and 13.02 hereof in such
manner and in such reasonable amounts as are then generally applicable to
other aircraft or engines of the Lessee of the same type and model as the
Aircraft, but in no case shall such self-insurance with respect to all
aircraft (whether owned or leased) in the Lessee's fleet in aggregate exceed
for any 12-month policy year an amount equal to the lesser of (i) 50% of the
highest insured value of any single aircraft in the Lessee's fleet and (ii)
1.5% of the average aggregate insured value from time to time of the Lessee's
entire aircraft fleet provided that a standard deductible per occurrence per
aircraft (and/or retentions) not in excess of the amount imposed by the
aircraft hull or liability insurer shall be permitted in addition to the
above-mentioned self-insurance. The foregoing shall not permit the Lessee to
discriminate as between insurance coverage on the Aircraft and insurance which
the Lessee maintains with respect to similar aircraft owned or operated by the
Lessee operating on similar routes in similar locations.
ARTICLE 14
INSPECTION
Section 14.01. Right of Inspection. At reasonable times, and upon
at least ten (10) Business Days' prior written notice to the Lessee, the
Lessor, the Indenture Trustee or the Owner Participant, or their respective
authorized representatives, may inspect the Aircraft and upon at least ten
(10) Business Days' prior written notice, all Aeronautics Authority required
books and records of the Lessee or any sublessee relating to the maintenance
of the Aircraft and such Persons shall keep any information obtained thereby
confidential and shall not disclose the same to any Person, except to a Person
described in Section 18.01 of the Participation Agreement. Any such
inspection of the Aircraft shall be a visual, walk-around inspection of the
interior and exterior of the Aircraft and shall not include opening any panel,
bays or the like without the express consent of the Lessee (except to the
extent any such inspection takes place when any such panel, bays or the like
are open). Notwithstanding the first sentence of this Section 14.01, unless a
material Default relating to maintenance or an Event of Default shall have
occurred and be continuing, the Lessor, the Indenture Trustee, the Owner
Participant or their respective authorized representatives shall each be
entitled to inspect the Aircraft only one time during any consecutive
twelve-month period. The Lessee shall make any permitted sublease or transfer
permitted under Section 7.02 hereof expressly subject to inspection rights
consistent with this Article 14.
Section 14.02. No Obligation to Inspect. None of the Lessor, the
Indenture Trustee or the Owner Participant shall have any duty to make any
inspection pursuant to Section 14.01 hereof and no such party shall incur any
liability or obligation by reason of making or not making any such inspection.
ARTICLE 15
ASSIGNMENT
Section 15.01. Lessee's Right to Assign. The Lessee shall not, and
shall have no authority or power to assign, convey or sublease any of its
rights under this Lease without the prior written consent of the Lessor except
(i) as expressly provided in Section 7.02 hereof, or (ii) to a wholly-owned
domestic subsidiary of the Lessee which shall be a certificated U.S. Air
Carrier. Any such assignment, conveyance or sublease shall in no way relieve
the Lessee from any obligation hereunder or under any other Operative
Agreement or any written agreement of the Lessee entered into in connection
with the transactions contemplated by the Operative Agreements, which shall be
and remain primary obligations of the Lessee. The Lessor agrees that it will
not assign or convey its right, title and interest in and to this Lease or the
Aircraft except as contemplated by or provided in this Lease, the Trust
Agreement, the Indenture or the Participation Agreement. The terms and
provisions of this Lease shall be binding upon and inure to the benefit of the
Lessor and the Lessee and their respective successors and permitted assigns,
and shall inure, to the extent expressly provided herein and therein, to the
direct benefit of, and in accordance with the provisions of the Indenture and
the Participation Agreement shall be enforceable by, the Indenture Trustee,
the Lessor and their respective successors and permitted assigns.
Section 15.02. Citizenship. The Lessee will at all times be a duly
certificated U.S. Air Carrier under the Transportation Code.
ARTICLE 16
EVENTS OF DEFAULT
Section 16.01. Events of Default. After the Delivery Date, each of
the following events shall constitute an Event of Default, whether any such
event shall be voluntary or involuntary or come about or be effected by
operation of law or pursuant to or in compliance with any judgment, decree or
order of any court or any order, rule or regulation of any administrative or
governmental body:
(a) the Lessee shall fail to make any payment of Basic Rent, Renewal
Rent, Stipulated Loss Value or Termination Value, as the case may be, or
any payment pursuant to Section 17.02 of the Participation Agreement,
within ten Business Days after the date when due (except that with respect
to any failure to pay Excepted Payments, such failure shall constitute an
Event of Default at the discretion of the Owner Participant); or
(b) the Lessee shall fail to make any payment of Supplemental Rent
(other than amounts described in clause (a) above) within 30 days after the
Lessee has received written notice from the Person entitled to receive such
payment stating that such payment is due (except that with respect to any
failure to pay Excepted Payments for such period, such failure shall
constitute an Event of Default at the discretion of the Owner Participant);
or
(c) (i) the Lessee shall fail to procure, carry and maintain
insurance on or in respect of the Aircraft at any time in accordance with
the provisions of Article 13 or such insurance lapses or is cancelled,
provided that, in the case of insurance with respect to which cancellation
or lapse for nonpayment is not effective as to the Lessor, the Indenture
Trustee, the Holders or the Owner Participant for 30 days (seven days, in
the case of any aircraft war risk coverage) no such lapse or cancellation
shall constitute an Event of Default until the earlier of (A) 30 days (or
seven days or such shorter time as may be standard in the industry with
respect to war risk coverage) after receipt by any Additional Insured of
written notice of such lapse or cancellation and (B) the date that such
lapse or cancellation is effective as to any Additional Insured and
provided further that such failure shall not constitute an Event of Default
as long as the Aircraft is insured as required while on the ground and not
operated, or (ii) the Aircraft shall be operated at any time when
comprehensive airline liability insurance required under Section 13.01
hereof shall not be in effect (it being understood that the Lessee is not
required to maintain such insurance under Section 13.01 hereof while the
indemnification or insurance referred to in the proviso to Section 13.01(b)
hereof is in effect); or
(d) the Lessee shall fail to perform or observe any other covenant,
condition or agreement to be performed or observed by it under any
Operative Agreement (excluding the Tax Indemnity Agreement) or any other
written agreement of the Lessee entered into in connection with the
transactions contemplated by the Operative Agreements and such failure
shall continue unremedied for a period of thirty (30) days after the Lessee
shall have received written notice from the Lessor or the Owner Participant
of such failure, provided, that in the event such failure is curable and so
long as (but for no longer than 150 days after such 30-day period) the
Lessee shall have promptly undertaken such cure after the Lessee receives
notice thereof which undertaking shall be diligently and continuously
pursued using the Lessee's reasonable best efforts, such failure shall not
constitute an Event of Default; provided, further, that failure of the
Lessee to maintain the registration of the Aircraft under the
Transportation Code pursuant to the Lessee's covenants and agreement in
Section 6.03(b) of the Participation Agreement and in Section 7.01(a) of
this Lease, when the lapse of such registration is solely because the Owner
Participant or the Lessor has ceased to be a Citizen of the United States,
shall not constitute a Default or an Event of Default; or
(e) an order for relief shall be entered in respect of the Lessee by
a court having jurisdiction in the premises in an involuntary case under
the federal bankruptcy laws as now or hereafter in effect; or the Lessee
shall consent to the appointment of a custodian, receiver, trustee or
liquidator of itself or of a substantial part of its property; or the
Lessee is not paying, or shall admit in writing its inability to pay, its
debts generally as they come due or shall make a general assignment for the
benefit of creditors; or the Lessee shall file, or the Board of Directors
of the Lessee shall authorize the filing of, or grant one or more persons
authority (at their discretion) to make a filing for, a voluntary petition
in bankruptcy or a voluntary petition or an answer seeking reorganization
in a proceeding under any bankruptcy laws (as now or hereafter in effect)
or an answer admitting the material allegations of a petition filed against
the Lessee in any such proceeding; or the Lessee shall file, or the Board
of Directors of the Lessee shall authorize the Lessee to, or grant one or
more persons authority (at their discretion) to, seek relief by voluntary
petition, answer or consent, under the provisions of any other or future
bankruptcy or other similar law providing for the reorganization or
winding-up of corporations, or providing for an agreement, composition,
extension or adjustment with its creditors; or
(f) an order, judgment or decree shall be entered by any court of
competent jurisdiction appointing, without the consent of the Lessee, a
custodian, receiver, trustee, or liquidator of the Lessee or of any
substantial part of its property, or sequestering any substantial part of
the property of the Lessee, or granting any other relief in respect of the
Lessee under the federal bankruptcy laws or other insolvency laws, and any
such order, judgment or decree of appointment or sequestration shall remain
in force undismissed or unvacated for a period of 60 days after the date of
its entry; or
(g) a petition against the Lessee in a proceeding under the federal
bankruptcy law or other insolvency laws (as now or hereafter in effect)
shall be filed and shall not be withdrawn or dismissed within 60 days, or
under the provisions of any law providing for reorganization or winding-up
of corporations which may apply to the Lessee, any court of competent
jurisdiction shall assume jurisdiction, custody or control of the Lessee or
of any substantial part of its property and such jurisdiction, custody or
control shall remain in force unrelinquished or unterminated for 60 days; or
(h) any representation or warranty made by the Lessee in this Lease
or in the Participation Agreement or in any document or certificate
furnished by the Lessee in connection with or pursuant to this Lease or the
Participation Agreement (except for the Tax Indemnity Agreement) shall at
any time prove to have been incorrect at the time made in any respect
material to the transactions contemplated by this Lease and, if originally
made by the Lessee in good faith, shall remain material and unremedied for
a period of 120 days after the Lessee shall have received written notice of
such misstatement.
ARTICLE 17
REMEDIES
Section 17.01. Remedies Upon Lessee's Default. (a) Remedies
Generally. Upon the occurrence of any Event of Default and at any time after
such occurrence so long as the same shall be continuing, the Lessor may, at
its option, declare this Lease to be in default (except that no such
declaration shall be required in the case of an Event of Default pursuant to
paragraph (e), (f) or (g) of Section 16.01 hereof and this Lease shall be
deemed declared in default without any further act or notice), and at any time
thereafter the Lessor may do, and the Lessee shall comply with, one or more
of the following with respect to all or any part of the Airframe and the
Engines, as the Lessor in its sole discretion shall elect, to the extent
permitted by, and subject to compliance with, any mandatory requirements of
applicable law then in effect:
(i) Demand in writing that the Lessee shall, and upon such written
demand the Lessee shall, at the Lessee's own cost and expense, return
promptly to the Lessor all or such part of the Airframe and the Engines as
the Lessor may demand in the manner and condition required by, and
otherwise in accordance with all of the provisions of this Lease (provided
that, unless the Lessor shall require otherwise, the Aircraft shall be
returned within the continental United States), or the Lessor, at its
option, may enter upon the premises where such Airframe or Engines are
located or believed to be located and take immediate possession of and
remove such Airframe and Engines (together with any engine which is not an
Engine but is installed on the Airframe, subject to all of the rights of
the owner, lessor, Lien holder or secured party of such engine) without the
necessity for first instituting proceedings, or by summary proceedings or
otherwise, all without liability of the Lessor to the Lessee for or by
reason of such entry or taking of possession, whether for the restoration
of damage to property caused by such action or otherwise;
(ii) With or without taking possession thereof, sell or otherwise
dispose of the Airframe or any Engine, at public or private sale and with
or without advertisement or notice to the Lessee, as the Lessor may
determine, and the Lessor may hold the Lessee liable for any installment of
Basic Rent and Renewal Rent due on or before the date of such sale (and, if
Basic Rent or Renewal Rent is payable in arrears, the pro rata portion of
the installment of Basic Rent or Renewal Rent due on the next succeeding
Rent Payment Date in respect of any period commencing on the immediately
preceding Rent Payment Date to the date of such sale), or hold, use,
operate, lease to others or keep idle all or any part of the Airframe or any
Engine as the Lessor, in its sole discretion, may determine, in any such
case free and clear of any rights of the Lessee except as otherwise set
forth in this Article 17, and without any duty to account to the Lessee
with respect to such action or inaction or for any proceeds except to the
extent required by Section 17.01(a)(iv) hereof; in the event the Lessor
elects to exercise its rights under said Section, and in connection with
any sale of the Aircraft or any part thereof pursuant to this Article 17,
the Lessor, the Indenture Trustee, the Owner Participant or any Holder may
bid for and purchase such property;
(iii) Whether or not the Lessor shall have exercised or shall later
at any time exercise any of its rights under Section 17.01(a)(i) or
17.01(a)(ii) hereof, the Lessor, by written notice to the Lessee specifying
a payment date not earlier than 10 days from the date of such notice, may
demand that the Lessee pay to the Lessor, and the Lessee shall pay to the
Lessor on the payment date specified in such notice, as liquidated damages
for loss of a bargain and not as a penalty (in lieu of the Basic Rent or
Renewal Rent due on Rent Payment Dates occurring after the payment date
specified in such notice), any installment of Basic Rent, Renewal Rent and
any Supplemental Rent due on or before such payment date (and, to the
extent Basic Rent or Renewal Rent is payable in arrears, the pro rata
portion of the installment of Basic Rent or Renewal Rent due on the next
succeeding Rent Payment Date in respect of the period commencing on the
Stipulated Loss Value Determination Date referred to below and ending on
the date of such payment), plus an amount equal to the excess, if any, of
the Stipulated Loss Value for the Aircraft, computed as of the Stipulated
Loss Value Determination Date on or next preceding the payment date
specified in such notice over the Fair Market Value of the Aircraft,
computed as of such Stipulated Loss Value Determination Date, together with
(A), if Basic Rent is payable in advance, interest, to the extent permitted
by applicable law, at the Debt Rate on the amount of such Stipulated Loss
Value from such Stipulated Loss Value Determination Date to the date for
payment set forth in such notice from the Lessor and (B) in all cases,
interest, to the extent permitted by applicable law at the Past Due Rate on
the excess of such Stipulated Loss Value over such Fair Market Value, from
the date as of which such Stipulated Loss Value is payable to the date of
actual payment of such amount; provided, however, that if (and in any event
prior to the time for payment hereunder) the Lessor is unable within a
reasonable period of time to recover possession of the Aircraft, or any
portion thereof, pursuant to clause (i) above unencumbered by this Lease
and free and clear of all Liens (other than Lessor's Liens), the Fair
Market Value of the Aircraft or such portion shall, at the option of the
Lessor to the extent legally enforceable, be zero and, if the Fair Market
Value of the Aircraft is deemed to be zero, after payment in full by the
Lessee of the amount specified above and all other amounts due from the
Lessee under this Lease and the other Operative Agreements, the Lessor
shall promptly transfer (without recourse or warranty other than as to the
absence of the Lessor's Liens) all of its right, title and interest in the
Aircraft or such portion, to the Lessee;
(iv) In the event the Lessor, pursuant to Section 17.01(a)(ii)
hereof, shall have sold the Airframe and/or any Engine, the Lessor, in lieu
of exercising its rights under Section 17.01(a)(iii) hereof, may, if it
shall so elect, demand that the Lessee pay the Lessor, and the Lessee shall
pay to the Lessor, on the date of such sale, as liquidated damages for loss
of a bargain and not as a penalty (in lieu of the Basic Rent or Renewal
Rent due after the date on which such sale occurs) any unpaid Basic Rent or
Renewal Rent due on or before the date on which such sale occurs (and, to
the extent Basic Rent or Renewal Rent is payable in arrears, the pro rata
portion of the installment of Basic Rent or Renewal Rent due on the next
succeeding Rent Payment Date in respect of any period commencing on the
Stipulated Loss Value Determination Date referred to below and ending on
the date of such sale), and any Supplemental Rent due on or before the date
on which such sale occurs, plus an amount equal to the excess, if any, of
(A) the Stipulated Loss Value for the Aircraft, computed as of the
Stipulated Loss Value Determination Date next preceding the sale date, over
(B) the net proceeds of such sale (after deduction of all of the Lessor's
costs and expenses of such sale, including, without limitation, sales or
transfer taxes, costs of storage, overhaul, maintenance, preparation and
transportation of the Aircraft and brokers' and attorneys' fees) together
with (x), if Basic Rent is payable in advance, interest, to the extent
permitted by applicable law, at the Debt Rate on such Stipulated Loss Value
from such Stipulated Loss Value Determination Date to the date of such sale
and (y) in all cases, interest to the extent permitted by applicable law at
the Past Due Rate, on the amount of such excess from the date of such sale
to the date of actual payment by the Lessee;
(v) Proceed by appropriate court action to enforce the terms of this
Lease or to recover damages for its breach;
(vi) Terminate or rescind this Lease as to the Airframe or any or all
of the Engines; or
(vii) Exercise any other right or remedy which may be available to
the Lessor under applicable law.
(b) Cost of Exercise of Remedies. In addition, the Lessee shall be
liable, except as otherwise provided above, for any and all unpaid Rent due
before, after or during the exercise of any of the Lessor's remedies, for all
amounts payable by the Lessee under the Participation Agreement before or
after any termination hereof, and for all reasonable legal fees and other
costs and expenses incurred by the Lessor, the Indenture Trustee or the Owner
Participant by reason of the occurrence of any Event of Default or the
exercise of the Lessor's remedies, including, without limitation, all costs
and expenses incurred in connection with the return of the Airframe or any
Engine in accordance with the terms of Article 12 hereof or in placing the
Airframe or Engines in the condition and state of airworthiness required by
such Article or in connection with any inspection, use, operation,
maintenance, insurance, storage, or leasing carried out as part of such
exercise.
Section 17.02. Cumulative Remedies. Except as otherwise provided, no
remedy referred to in this Article 17 is intended to be exclusive, but each
shall be cumulative and in addition to any other remedy referred to above or
otherwise available to the Lessor at law or in equity; and the exercise or
beginning of exercise by the Lessor of any one or more of such remedies shall
not preclude the simultaneous or later exercise by the Lessor of any or all of
such other remedies.
Section 17.03. Waiver. No express or implied waiver by the Lessor
of any Event of Default shall in any way be, or be construed to be, a waiver
of any future or subsequent Event of Default. To the extent permitted by
applicable law, the Lessee waives any rights now or in the future conferred by
statute or otherwise which may require the Lessor to sell, lease or otherwise
use the Airframe or any Engine in mitigation of the Lessor's damages or which
may otherwise limit or modify any of the Lessor's rights or remedies under
this Article 17. The Lessor's access to the Aircraft is of the essence and
shall not be impaired.
Section 17.04. Lessor's Right to Perform for Lessee. If the Lessee
fails to make any required payment of Rent or fails to perform or comply with
any of its agreements contained in this Lease, whether or not such failure
shall constitute an Event of Default hereunder, the Lessor may (but shall not
be obligated to) make such payments or perform or comply with such agreement,
and the amount of such payment and the amount of the reasonable costs and
expenses of the Lessor incurred in connection with such payment or the
performance of or compliance with such agreement, together with interest (to
the extent permitted by applicable law) at the Past Due Rate from the date of
the making of such payment or the incurring of such costs and expenses by the
Lessor to the date of payment of such Rent or other amount by the Lessee,
shall be deemed Supplemental Rent payable by the Lessee upon demand. No such
payment or performance by the Lessor shall be deemed to waive any Default or
Event of Default or relieve the Lessee of its obligations hereunder.
ARTICLE 18
COVENANT OF QUIET ENJOYMENT
Section 18.01. Quiet Enjoyment. So long as no Event of Default
shall have occurred and be continuing, the Lessor covenants that neither it
nor any other Person lawfully claiming through it (other than the holder of a
Lien which the Lessee is obligated to discharge pursuant to Article 6 hereof,
and it being understood that the Lessor shall not be liable for any act or
omission of the Indenture Trustee or any other Person claiming through the
Indenture Trustee) shall interfere with the Lessee's right to quietly enjoy
the Aircraft without hindrance or disturbance by it or any such other Person.
ARTICLE 19
FURTHER ASSURANCES
Section 19.01. Further Assurances. Promptly upon the execution and
delivery of the Lease Supplement and the Indenture and Security Agreement
Supplement, the Lessee will cause each of them and this Lease, the Trust
Agreement and the Indenture, to be duly filed for recordation in accordance
with the Transportation Code and will maintain the recordation of the
Indenture until the Lien of the Indenture shall have been discharged pursuant
to the terms of the Indenture. In addition, the Lessee will, at the Lessee's
own cost and expense, promptly and duly execute and deliver to the Lessor, the
Owner Participant and the Indenture Trustee such further documents and
assurances to carry out the intent and purpose of this Lease and the Indenture
and to establish and protect the rights and remedies created or intended to be
created in favor of the Lessor under this Lease, and of the Owner Participant
under the Trust Agreement, and of the Indenture Trustee under the Indenture,
including, without limitation, the execution and filing of Uniform Commercial
Code financing and continuation statements, the execution and delivery of
supplements and amendments to this Lease and the Indenture, in recordable form,
subjecting to this Lease and the Indenture any Replacement Airframe and/or
Replacement Engines delivered by the Lessee pursuant to Section 11.03 hereof
and any Replacement Engine delivered by the Lessee pursuant to Section 11.04
hereof and the recording and filing of counterparts of this Lease and the
Indenture in accordance with the laws of such jurisdictions as the Lessor or
the Indenture Trustee may from time to time deem advisable. The foregoing
does not impose upon the Lessor any additional liabilities not otherwise
contemplated by this Lease.
ARTICLE 20
NET LEASE
Section 20.01. Nature of Lease. (a) This Lease is a net lease, it
being the intention of the parties hereto that the obligations of the Lessee
to pay all costs and expenses of every character, whether seen or unforeseen,
ordinary or extraordinary, or structural or nonstructural, in connection with
the use, operation, maintenance, repair and reconstruction of the Airframe and
each Engine by the Lessee, including, without limitation, the costs and
expenses particularly set forth in this Lease (unless expressly excluded from
the terms hereof, the costs and expenses of the Lessor and the Owner
Participant shall include the reasonable fees and expenses of their respective
outside counsel), shall be absolute and unconditional, shall be separate and
independent covenants and agreements, and shall continue unaffected unless and
until the covenants have been terminated pursuant to an express provision of
this Lease. The obligation to pay Rent and all amounts payable by the Lessee
under this Lease or the Participation Agreement shall be absolute and
unconditional and (except as otherwise expressly provided with respect to
Supplemental Rent) shall be paid without notice or demand and such obligation
shall not be affected by any circumstance, including, without limitation:
(i) any set-off, counterclaim, recoupment, defense or other right
which the Lessee may have against the Lessor, the Owner Participant, any
Holder, the Indenture Trustee or anyone else for any reason (including,
without limitation, any breach by the Lessor or the Owner Participant or
the Indenture Trustee or any Holder of their respective representations,
warranties, agreements or covenants contained in any of the Operative
Agreements);
(ii) any defect in the title, airworthiness, registration,
eligibility for registration under the Transportation Code (and the
regulations thereunder) or under any of the laws or regulations of any
other country of registry of the Aircraft, condition, design, operation,
merchantability or fitness for use of, suitability for a particular purpose
of, or any damage to or loss or destruction of, the Aircraft or any portion
thereof, or any interruption or cessation in the use or possession of the
Aircraft by the Lessee or any sublessee for any reason including, without
limitation, by reason of governmental action or any doctrine of force
majeure or impossibility of performance;
(iii) any insolvency, bankruptcy, reorganization or similar case or
proceedings by or against the Lessor, the Lessee, the Indenture Trustee or
the Owner Participant or any other Person;
(iv) any Liens, encumbrances or rights of any other Person with
respect to the Aircraft, the invalidity or unenforceability or lack of due
authorization or other infirmity of this Lease or any other Operative
Agreement or document or instrument executed pursuant hereto or thereto, or
any lack of right, power or authority of the Lessor or the Lessee or any
sublessee or any other party to any other Operative Agreement to enter into
this Lease or any other Operative Agreement or any such document or
instrument; or
(v) any other circumstance, happening or event whatsoever, whether or
not unforeseen, or similar to any of the foregoing.
(b) To the extent permitted by applicable law, the Lessee waives any
and all rights which it may now have or which at any time it may have
conferred upon it, by statute or otherwise, to suspend performance under,
terminate, cancel, quit, rescind or surrender this Lease, the Airframe, or any
Engine or part thereof, other than in accordance with the terms hereof.
(c) Each payment of Rent made by the Lessee shall be final as to the
Lessor and the Lessee, and the Lessee will not seek to return nor to recover,
xxxxx, suspend, defer or reduce all or any part of any such payment of Rent
from the Lessor or from the Indenture Trustee for any reason.
ARTICLE 21
SUCCESSOR LESSOR
Section 21.01. Successor Lessor. The Lessee agrees that in the case
of the appointment of any successor trustee for the Lessor pursuant to the
terms of the Participation Agreement, such successor trustee shall, upon
written notice by such successor to the Lessee, succeed to all the rights,
powers and title of the Lessor under this Lease and shall be deemed to be the
Lessor and the owner of the Aircraft for all purposes of this Lease without
the necessity of any consent or approval by the Lessee and without in any way
altering the terms of this Lease or the Lessee's obligations. One such
appointment and designation of a successor trustee shall not exhaust the right
to appoint and designate a further successor trustee pursuant to the
Participation Agreement, but such right may be exercised repeatedly so long as
this Lease shall be in effect.
ARTICLE 22
SECURITY FOR LESSOR'S OBLIGATIONS
Section 22.01. Security for Lessor's Obligations to Holders. In
order to secure the indebtedness evidenced by the Certificates, the Indenture
provides among other things, for the assignment by the Lessor to the Indenture
Trustee of this Lease and the Lease Supplement and for the creation of a first
mortgage and security interest in favor of the Indenture Trustee on the
Aircraft. The Lessee consents to and acknowledges such assignment (subject to
the reservations and conditions therein set forth) and the receipt of a copy
of the Indenture.
Section 22.02. [Reserved].
Section 22.03. Consent of Lessee to Assignment of Lease as Security.
The Lessee hereby acknowledges and consents to the Indenture Trustee's rights
pursuant to the terms of the Indenture to receive payments (other than
Excepted Payments not constituting Basic Rent) due under this Lease, to
transfer or assign title to the Aircraft subject to this Lease, to make
(jointly with the Lessor where provided in the Indenture) all waivers and
agreements except as otherwise provided in the Indenture (including Section
8.01 thereof), to give all notices, consents and releases and to take all
action upon the happening of a Default or Event of Default under this Lease
(except as otherwise specifically provided in the Indenture, including Section
8.01 thereof), or to do any and all other things whatsoever which the Lessor
is or may become entitled to do under this Lease (except as otherwise provided
in the Indenture, including Section 8.01 thereof); all or any of which rights,
obligations, benefits and interests may, pursuant to the terms of the
Indenture, be reassigned or retransferred by the Indenture Trustee at any time
and from time to time (except as otherwise provided in the Indenture);
provided, however, that the Lessor, except to the extent, and for such time
as, it is unable to do so by virtue of the Indenture, shall remain liable for
the performance of all the terms, conditions, covenants and provisions for
which it is obligated under this Lease notwithstanding such assignment.
ARTICLE 23
SECURITY FUNDS
Section 23.01. Investment of Security Funds. (a) Any amounts
otherwise payable to the Lessee in accordance with the terms hereof shall
instead be held by the Lessor as security for, and may be applied by the
Lessor against, the obligations of the Lessee under this Lease during such
time as there shall have occurred and be continuing a Payment Default,
Bankruptcy Default or Event of Default, and, at such times as there shall not
be continuing a Payment Default, Bankruptcy Default or Event of Default, such
amounts, net of any amounts which have been applied by the Lessor against the
Lessee's obligations hereunder, shall be paid to the Lessee as provided in
this Lease. Any amounts which are held by the Lessor pending payment to the
Lessee shall, until paid to the Lessee or applied against the Lessee's
obligations hereunder, be invested by the Lessor, as directed from time to
time, in writing (and in the absence of a written direction by the Lessee, the
Lessor shall invest such monies in direct obligations of the United States of
America), by the Lessee and at the expense and risk of the Lessee, in the
following securities (which in the case of securities referred to in
subparagraphs (i) through (iv) of this Section 23.01(a) hereof shall mature
within ninety (90) days of the date of purchase):
(i) direct obligations of the United States of America; or
(ii) obligations fully guaranteed by the United States of America; or
(iii) certificates of deposit issued by, or bankers' acceptances of,
or time deposits or a deposit account with, any bank, trust company or
national banking association incorporated or doing business under the laws
of the United States of America or one of its States (which may include the
Owner Trustee or the Indenture Trustee in their respective individual
capacities or any Affiliate thereof), having a combined capital and surplus
of at least $500,000,000 and having a rating of "A" or better from Xxxxx'x
or S&P; or
(iv) commercial paper rated A-1/P-1 by S&P or Xxxxx'x, respectively
(or if neither such organization shall rate such commercial paper at any
time, a rating by any nationally recognized statistical rating organization
in the United States of America equal to the highest rating assigned by
such rating organization) (which may include commercial paper issued by the
Owner Trustee or the Indenture Trustee in their respective individual
capacities or any Affiliate thereof).
(b) At any time any invested funds are distributed to the Lessee,
there shall be promptly remitted to the Lessee any gain (including interest
received) realized as the result of any investment pursuant to Section
23.01(a) hereof (net of any fees, commissions and other costs, Taxes and
expenses, if any, incurred by the Lessor or the Owner Participant in
connection with such investment), unless a Payment Default, Bankruptcy Default
or Event of Default shall have occurred and be continuing in which case such
funds shall be applied in the same manner as the principal so invested. The
Lessee shall be responsible for and will promptly pay to the Indenture Trustee
or the Lessor, as the case may be, on demand, the amount of any loss realized
as the result of any such investment (together with any fees, commissions and
other costs, Taxes and expenses, if any, incurred by the Indenture Trustee or
the Lessor or the Owner Participant in connection with such investment), such
amount to be disposed of in accordance with the terms of the Indenture or the
Lease, as the case may be.
ARTICLE 24
CONCERNING THE LESSOR
Section 24.01. Lessor's Entry Into Lease. Except as expressly
provided herein, the Lessor and the Lessee agree that this Lease is executed
by SSB not individually but solely as Owner Trustee under the Trust Agreement
in the exercise of the power and authority conferred and vested in it as such
Owner Trustee, that each and all of the representations, undertakings and
agreements by the Lessor herein are for the purpose and with the intention of
binding only the Lessor's Estate, and that in no case whatsoever shall SSB be
personally liable for any loss in respect of such representations,
undertakings and agreements, that actions to be taken by the Lessor pursuant
to its obligations hereunder may, in certain instances, be taken by the Lessor
only upon specific authority of the Owner Participant and the Indenture
Trustee, that nothing herein contained shall be construed as creating any
liability on SSB, individually or personally, to perform any covenant, either
express or implied, herein, all such liability, if any, being expressly waived
by the Lessee and by each and every Person now or hereafter claiming by,
through or under the Lessee except with respect to the gross negligence or
willful misconduct of SSB, and that so far as SSB, individually or personally
is concerned, the Lessee and any Person claiming by, through or under the
Lessee shall look solely to the Lessor's Estate for the performance by the
Lessor of any of its obligations under this Lease; provided, that nothing in
this Section 24.01 shall be construed to limit in scope or substance those
representations and warranties of SSB in its individual capacity set forth in
the Participation Agreement and the Trust Agreement. The term "Lessor" as
used in this Lease shall include any trustee succeeding SSB as Owner Trustee
under the Trust Agreement. Any obligation of the Lessor hereunder may be
performed by the Owner Participant, and any such performance shall not be
construed as revocation of the trust created by the Trust Agreement. Nothing
contained in this Lease shall restrict the operation of the provisions of the
Trust Agreement with respect to its revocation of the resignation or removal
of the Owner Trustee hereunder.
ARTICLE 25
NOTICES
Section 25.01. Notices. All notices, demands, declarations and other
communications required by this Lease shall be in writing and shall be deemed
received (a) if given by telecopier, when transmitted and the appropriate
telephonic confirmation received if transmitted on a Business Day and during
normal business hours of the recipient, and otherwise on the next Business Day
following transmission, (b) if given by certified mail, return receipt
requested, postage prepaid, five Business Days after being deposited in the
United States mail and (c) if given by FedEx service (or, if a Default or
Event of Default shall have occurred and be continuing, by other comparable
courier service), when received or personally delivered, addressed:
(a) If to the Lessee, to its office at 0000 Xxxxxxxxx Xxxxxx,
Xxxxxxx, Xxxxxxxxx 00000, Attention: Senior Vice President and Chief
Financial Officer with a copy to Senior Vice President and General Counsel;
telephone (000) 000-0000, facsimile (000) 000-0000; or at such other
address as the Lessee shall from time to time designate in writing to the
Lessor, the Indenture Trustee and the Owner Participant;
(b) If to the Lessor or Owner Trustee, to it x/x Xxxxx Xxxxxx Xxxx
and Trust Company, Xxx Xxxxxxxxxxxxx Xxxxx, 0xx Xxxxx, Xxxxxx,
Xxxxxxxxxxxxx 00000, Attention: Corporate Trust Department; telephone
(000) 000-0000, facsimile (000) 000-0000; or to such other address as the
Lessor shall from time to time designate in writing to the Lessee and the
Indenture Trustee, with a copy to Owner Participant at the Owner
Participant's address as provided in subsection (c) below;
(c) If to the Owner Participant, in accordance with the Participation
Agreement; and
(d) If to the Indenture Trustee, to its office at 00 Xxxxx Xxxx
Xxxxxx, Xxxx Xxxx Xxxx, Xxxx 00000, Attention: Corporate Trust Department,
telephone (000) 000-0000, facsimile (000) 000-0000; or to such other
address as the Indenture Trustee shall from time to time designate in
writing to the Lessor, the Lessee and the Owner Participant.
ARTICLE 26
MISCELLANEOUS
Section 26.01. Section Heading and Captions. All article and section
headings and captions used in this Lease are purely for convenience and shall
not affect the interpretation of this Lease.
Section 26.02. References. Any reference to a specific article or
section number shall be interpreted as a reference to that article or section
of this Lease unless otherwise expressly provided.
Section 26.03. APPLICABLE LAW. THIS LEASE SHALL IN ALL RESPECTS BE
GOVERNED BY, AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW
YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE BUT
WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS, AND IS BEING
DELIVERED IN NEW YORK.
Section 26.04. Severability. Any provision of this Lease which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
Section 26.05. No Oral Modification. The terms and provisions of
this Lease may not be changed, waived, discharged or terminated orally, but
only by an instrument in writing signed by the party against which enforcement
of the change, waiver, discharge or termination is sought. Any such change,
waiver, discharge or termination is also subject to the provisions of Section
8.01 and Article XIII of the Indenture.
Section 26.06. Agreement as Chattel Paper. To the extent that this
Lease constitutes chattel paper (as such term is defined in the Uniform
Commercial Code as in effect in any applicable jurisdiction), no security
interest in this Lease may be created through the transfer or possession of
any counterpart other than the original chattel-paper counterpart, which shall
be the counterpart containing the receipt executed by the Indenture Trustee on
its signature page.
Section 26.07. Counterparts. This Lease may be executed in any
number of counterparts, each of which shall be an original (except that only
the counterpart bearing the receipt executed by the Indenture Trustee shall be
the original for purposes of perfecting a security interest therein as chattel
paper under the Uniform Commercial Code), but all of which taken together
shall constitute one and the same instrument and any of the parties hereto may
execute this Lease by signing any such counterpart.
Section 26.08. Public Release of Information. Provided no Event of
Default shall have occurred and be continuing, each party shall in each
instance obtain the prior written approval of each party concerning the exact
text and timing of news releases, articles and other informational releases to
the public media concerning this Lease.
ARTICLE 27
TRUE LEASE
Section 27.01. Intent of the Parties. It is the intent of the
parties to this Lease that for all purposes (including, without limitation,
U.S. Federal income tax purposes) this Lease will be a true lease, and that
this Lease conveys to the Lessee no right, title or interest in the Aircraft
except as a lessee.
Section 27.02. Section 1110 Compliance. Notwithstanding any
provision herein or elsewhere contained to the contrary, it is understood and
agreed among the parties hereto that the transactions contemplated by this
Lease and the other Operative Agreements are expressly intended to be, shall
be and should be construed so as to be, entitled to the full benefits of
Section 1110 of the Bankruptcy Code and any successor provision thereof.
Section 27.03. Finance Lease. This Lease is a "finance lease"
within the meaning of Section 2-A--103(g) of the Uniform Commercial Code.
IN WITNESS WHEREOF, the Lessor and the Lessee have each caused this
Lease to be duly executed as of the date first above written.
LESSOR: STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION,
not in its individual capacity,
but solely as Owner Trustee
By: ______________________________________________
Name: Xxxx X. Xxxxx
Title: Vice President
LESSEE: FEDERAL EXPRESS CORPORATION
By: _______________________________________________
Name: Xxxxxx X. Xxxxxxx
Title: Assistant Treasurer and
Managing Director - Structured Finance
Receipt of this original counterpart of the Lease is hereby
acknowledged on this __ day of May 1997.
Indenture Trustee: FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not in its individual capacity,
but solely as Indenture Trustee
By: _____________________________________________
Name: Xxxx X. Xxxxxx
Title: Vice President
SCHEDULE I
DEFINITIONS
(FEDERAL EXPRESS CORPORATION TRUST NO. N670FE)
GENERAL PROVISIONS
The following terms shall have the following meanings for all
purposes of the Operative Agreements (other than the Pass Through Agreement,
the Series Supplements, the Intercreditor Agreement and the Liquidity
Facilities) referred to below, unless otherwise defined in an Operative
Agreement or the context thereof shall otherwise require. In the case of any
conflict between the provisions of this Schedule and the provisions of any
Operative Agreement, the provisions of such Operative Agreement shall control
the construction of such Operative Agreement.
Unless the context otherwise requires, (i) references to agreements
shall be deemed to mean and include such agreements as amended and
supplemented from time to time, and (ii) references to parties to agreements
shall be deemed to include the successors and permitted assigns of such
parties.
DEFINED TERMS:
Additional Insured. As defined in Article 13 of the Lease.
Aeronautics Authority. As appropriate, the Federal Aviation
Administration and/or the Administrator of the Federal Aviation
Administration, any successor to the former United States Civil Aeronautics
Board, or any Person, governmental department, bureau, commission or agency
located in the United States succeeding to the functions of any of the
foregoing.
Affidavits. The affidavits of citizenship of the Owner Trustee and
the Owner Participant.
Affiliate. With respect to any Person, any other Person directly or
indirectly controlling, controlled by or under common control with such
Person. For the purposes of this definition, "control" (including "controlled
by" and "under common control with") shall mean the power, directly or
indirectly, to direct or cause the direction of the management and policies of
such Person whether through the ownership of voting securities or by contract
or otherwise. In no event shall the Owner Trustee or the Lessor be deemed an
Affiliate of the Owner Participant.
After-Tax Basis. A basis such that any payment to be received by a
Person shall be supplemented by a further payment to such Person so that the
sum of the two payments, after deduction of all Taxes resulting from the
receipt or accrual of such payments, shall be equal to the payment to be
received. In the case of amounts payable to the Lessor, the Owner Participant,
or any corporate Affiliate of the Owner Participant, it shall be presumed that
such Person is at all times subject to Federal income tax at the maximum
marginal rate generally applicable to corporations from time to time and
actual state, local and foreign income taxes.
Air Carrier. Any U.S. Air Carrier and any "foreign air carrier" (as
defined in the Transportation Code) as to which there is in force a permit
granted under Section 41302 of the Transportation Code.
Airbus Guaranty. The Guaranty to be dated the Delivery Date executed
by the Manufacturer and guaranteeing AVSA's Warranty Xxxx of Sale.
Aircraft. The Airframe to be sold by AVSA to the Owner Trustee as
provided in the Participation Agreement and to be leased under the Lease (or
any permitted substitute airframe thereunder) together with two Engines
(whether either is an initial Engine or a Replacement Engine) whether or not
any of such initial or Replacement Engines may from time to time be installed
on such Airframe or may be installed on any other airframe or on any other
aircraft, including any aircraft substituted pursuant to Section 11.03 of the
Lease. Prior to delivery of the initial Lease Supplement, references in the
Operative Agreements (including Section 3.05 of the Participation Agreement)
to Aircraft shall mean the Airbus A300F4-605R airframe bearing FAA
Registration Number N670FE and Manufacturer's serial number 777, together with
two General Electric CF6-80C2-A5F engines.
Airframe. The Airbus A300F4-605R aircraft (excluding the Engines or
engines from time to time installed thereon) to be leased by the Lessor to the
Lessee pursuant to the Lease and the initial Lease Supplement and having the
United States FAA Registration Number initially and manufacturer's serial
number specified in the initial Lease Supplement, including (i) all Parts in
respect thereof and (ii) any Replacement Airframe which may be substituted
pursuant to Section 11.03 of the Lease.
Ancillary Agreement. Any written agreement of the Lessee to which the
Lessor is a party or to which the Lessor has consented in writing entered into
on or prior to the Delivery Date or any date thereafter in connection with the
transactions contemplated by the Operative Agreements, as such agreement may
be amended and supplemented from time to time with the consent of the Lessor
and delivered to the Owner Trustee, the Indenture Trustee, the Pass Through
Trustee, the Subordination Agent, each Liquidity Provider and the Owner
Participant.
Ancillary Agreement I. The Ancillary Agreement I (Federal Express
Corporation Trust No. N670FE), dated the Certificate Closing Date, among the
Lessee, the Owner Trustee, not in its individual capacity, but solely as Owner
Trustee, the Owner Participant and the Indenture Trustee not in its individual
capacity, but solely as Indenture Trustee, as originally executed or as
amended, modified or supplemented with the consent of all the parties thereto.
Ancillary Agreement II. The Ancillary Agreement II (Federal Express
Corporation Trust No. N670FE), dated the Certificate Closing Date, among the
Lessee, the Owner Trustee, not in its individual capacity, but solely as Owner
Trustee, the Owner Participant and the Indenture Trustee not in its individual
capacity, but solely as Indenture Trustee, as originally executed or as
amended, modified or supplemented with the consent of all the parties thereto.
Application. The application for registration of the Aircraft with
the FAA in the name of the Owner Trustee.
Appraisal. The report prepared by BK Associates, Inc. and to be
delivered to the Owner Participant (with an abbreviated report to the Lessee)
on the Delivery Date pursuant to Section 4.02(h) of the Participation
Agreement.
Assignment and Assumption Agreement. Any agreement delivered in
compliance with Section 7.03(d) of the Participation Agreement.
Average Life Date. For any Certificate, the date which follows the
prepayment date by a period equal to the Remaining Weighted Average Life of
such Certificate.
AVSA. AVSA S.A.R.L., a societe a responsabilite limitee, organized
and existing under the laws of France.
AVSA Consent and Agreement. The Consent and Agreement dated as of
May 1, 1997, executed by AVSA.
AVSA's FAA Xxxx of Sale. The xxxx of sale for the Airframe on AC
Form 8050-2, or such other form as may be approved by the Aeronautics
Authority, executed by AVSA in favor of the Owner Trustee and to be dated the
Delivery Date.
AVSA's Warranty Xxxx of Sale. The full warranty xxxx of sale
covering the Aircraft (and specifically referring to each Engine) executed by
AVSA as owner of the Aircraft in favor of the Owner Trustee and to be dated
the Delivery Date.
Bankruptcy Code. The Federal Bankruptcy Code of 1978, as amended, and
any successor thereto.
Bankruptcy Default. An event specified in Section 16.01(e), (f) or
(g) of the Lease which either does or, with the giving of notice or lapse of
time or both, would constitute an Event of Default.
Basic Rent. The aggregate periodic rent payable for the Aircraft
throughout the Basic Term pursuant to Section 3.02 of the Lease, adjusted
pursuant to Article 3 of the Lease.
Basic Term. The period commencing at the beginning of the day on the
Delivery Date and ending at the end of the day on September 2, 2020, or such
earlier date on which the Lease shall be terminated as provided therein.
Beneficial Interest. The interest of the Owner Participant under the
Trust Agreement.
Business Day. Any day on which commercial banks are not authorized or
required to close in New York, New York, Memphis, Tennessee and the city in the
United States in which the office or agency is maintained by the Pass Through
Trustee for the payment of the Pass Through Certificates, and after the Lien
of the Indenture is discharged, Boston, Massachusetts.
Certificate Closing Date. The date of the closing with respect to the
purchase of Certificates by the Pass Through Trustee contemplated by Section
2.01(b) of the Participation Agreement.
Certificates. The Equipment Trust Certificates (Federal Express
Corporation Trust No. N670FE), issued by the Owner Trustee pursuant to the
Indenture and any certificate issued in exchange therefor or replacement
thereof pursuant to the Indenture.
Change in Tax Law. Any change to the Code or the Treasury regulations
promulgated thereunder or the publication of any revenue ruling, revenue
procedure or any informational release by the Internal Revenue Service or the
Department of Treasury either of which would change or would allow a change in
the tax assumptions or structure upon which the lease economics were based,
provided that the Owner Participant or the Lessee has notified the other party
of such change in writing prior to the Delivery Date.
Change in Tax Rate. Any amendment, modification, deletion, addition,
or change to the Code which is enacted into law after the Delivery Date which
changes the highest marginal statutory rate of Federal income tax applicable
to the Owner Participant (other than a change which is in the nature of a
minimum tax).
Citizen of the United States. A citizen of the United States as
defined in Section 40102(a)(15) of the Transportation Code, or any analogous
part of any successor or substituted legislation or regulation at the time in
effect.
Class A Liquidity Provider. Has the meaning specified in Section
1.01 of the Intercreditor Agreement.
Class B Liquidity Provider. Has the meaning specified in Section
1.01 of the Intercreditor Agreement.
Closings. The closing with respect to the acquisition of the Pass
Through Certificates by the Underwriters and the closing with respect to the
acquisition of Certificates by the Pass Through Trustee.
Code. Except as otherwise provided, the Internal Revenue Code of
1986, as amended from time to time.
Collateral Account. The deposit account established and maintained
pursuant to Section 2.13 of the Indenture.
Collateral Account Control Agreement. The Collateral Account Control
Agreement dated as of May 1, 1997 among State Street Bank and Trust Company,
the Indenture Trustee and the Owner Trustee.
Commitment. The amount of the Owner Participant's participation in
the Purchase Price required to be made available or paid as provided in
Section 3.02 of the Participation Agreement.
Consent and Agreement. The Consent and Agreement dated as of May 1,
1997 executed by the Manufacturer.
Consent and Guaranty. The Consent and Guaranty of the Manufacturer
attached to the Purchase Agreement.
Corporate Trust Administration. The Corporate Trust Administration
office of the Owner Trustee located at 000 Xxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxxx
00000, Attention: Corporation Trust Administration, or such other office at
which the Owner Trustee's corporate trust business shall be administered which
the Owner Trustee shall have specified by notice in writing to the Lessee, the
Owner Participant and the Indenture Trustee.
Corporate Trust Department. The Corporate Trust Department office of
the Indenture Trustee located at 00 Xxxxx Xxxx Xxxxxx, Xxxx Xxxx Xxxx, Xxxx
00000, Attention: Corporate Trust Department, or such other office at which
the Indenture Trustee's corporate trust business shall be administered which
the Indenture Trustee shall have specified by notice in writing to the Lessee,
the Owner Participant and the Owner Trustee.
CRAF Program. Has the meaning specified in Section 7.01(f) of the
Lease.
Cut-Off Date. September 1, 1997.
Debt Portion. The amount specified as such on Schedule IV to the
Participation Agreement.
Debt Rate. The weighted average (based on Outstanding principal
amount) rate of interest on the Certificates issued pursuant to the Indenture.
Default. Any event or condition which, with the lapse of time or the
giving of notice, or both, would constitute an Event of Default.
Delivery Date. The date on which the Aircraft is delivered and sold
by AVSA to the Lessor and leased by the Lessor to the Lessee under the Lease,
which date shall also be the date of the initial Lease Supplement.
Delivery Notice. Notice of the Aircraft's Delivery Date, given by
the Lessee as provided in Section 3.01 of the Participation Agreement and
including any notice with respect to a postponed Delivery Date given by the
Lessee pursuant to Section 3.05(c) of the Participation Agreement.
Eligible Deposit Account. Either (a) a segregated account with an
Eligible Institution or (b) a segregated trust account with the corporate
trust department of a depository institution with corporate trust powers
organized under the laws of the United States or any state thereof, or the
District of Columbia, and whose deposits are insured by the Federal Deposit
Insurance Corporation, provided that such institution also has a combined
capital and surplus of at least $100,000,000 and a rating of A or better from
the Thomson Bank Watch.
Eligible Institution. A depository institution organized under the
laws of the United States or any one of the states thereof, or the District of
Columbia, or any domestic branch of a foreign bank, which in any such case at
all times (a) has either (x) a long-term unsecured debt rating of at least Aa2
by Xxxxx'x or (y) a short-term certificate of deposit rating of P-1 by
Xxxxx'x, (b) has either (x) a long-term unsecured debt rating of a least AA by
S&P or (y) a short-term certificate of deposit rating of A-1+ by S&P and (c)
is a member of the Federal Deposit Insurance Corporation.
Engine. Each of the two General Electric CF6-80C2-A5F engines listed
by its manufacturer's serial number in the initial Lease Supplement and leased
pursuant to the Lease, whether or not from time to time installed on the
Airframe or installed on any other airframe or on any other aircraft, and any
Replacement Engine which may from time to time be substituted for an Engine
pursuant to Section 7.02(a)(vii), 10.02(c), 10.03, 11.03, 11.04 or 12.02 of
the Lease, together with all Parts related thereto. Except as otherwise
provided, at such time as a Replacement Engine shall be so substituted and the
Engine for which the substitution is made shall be released from the Lien of
the Indenture, such replaced Engine shall cease to be an "Engine" under the
Lease. The term "Engines" means, as of any date of determination, both Engines
then leased to the Lessee pursuant to the Lease.
Engine Consent. The Engine Consent dated as of May 1, 1997, executed
by the Engine Manufacturer.
Engine Manufacturer. General Electric Company, a New York
corporation.
Engine Warranty Assignment. The Engine Warranty Assignment (Federal
Express Corporation Trust No. N670FE), dated as of May 1, 1997 between the
Lessor and the Lessee.
ERISA. The Employee Retirement Income Security Act of 1974, as
amended.
ERISA Plan. As defined in Section 8.01(b)(xii) of the Participation
Agreement.
Estimated Expense Amount. Has the meaning specified in Section
10.01(a) of the Participation Agreement.
Event of Default. Each of the events specified in Article 16 of the
Lease.
Event of Loss. Any of the following events with respect to the
Aircraft, the Airframe or any Engine: (i) loss of such property or its use (A)
for a period in excess of 60 days due to theft or disappearance or such longer
period, not to exceed 180 days from the end of such initial 60-day period, if
and so long as the location of such property is known to the Lessee and the
Lessee is diligently pursuing recovery of such property, or to the end of the
Term, if less (unless such theft or disappearance constitutes an Event of Loss
pursuant to (i)(B) or (ii) hereof) or (B) for a period in excess of 60 days
due to the destruction, damage beyond economic repair or rendition of such
property permanently unfit for normal use by Lessee for any reason whatsoever;
(ii) any damage to such property which results in an insurance settlement with
respect to such property on the basis of a total loss, or constructive or
compromised total loss; (iii) (1) condemnation, confiscation or seizure of, or
requisition of title to such property by the Government, any foreign
government or purported government or any agency or instrumentality thereof,
or (2) condemnation, confiscation, or seizure of, or requisition or taking of,
use of such property (A) by a foreign government or instrumentality or agency
of any such foreign government, for a period in excess of 180 days (or such
shorter period ending on the earlier of the expiration of the Term or on the
date on which an insurance settlement with respect to such property on the
basis of a total loss or constructive or compromised total loss shall occur)
or (B) by the Government for a period extending beyond the Term; and (iv) as a
result of any law, rule, regulation, order or other action by the Aeronautics
Authority or other governmental body having jurisdiction, the use of the
Aircraft or Airframe in the normal course of air transportation of cargo shall
have been prohibited by virtue of a condition affecting all Airbus A300-600
series aircraft equipped with engines of the same make and model as the
Engines for a period of twelve (12) consecutive months, unless the Lessee,
prior to the expiration of such twelve (12) month period, shall be diligently
carrying forward all steps which are necessary or desirable to permit the
normal use of the Aircraft or Airframe or, in any event, if such use of the
Aircraft or the Airframe shall have been prohibited for a period of
twenty-four (24) consecutive months or until the end of the Term, if earlier.
The date of such Event of Loss shall be (s) the 61st day or the 241st day, as
the case may be, following loss of such property or its use due to theft or
disappearance (or the end of the Term or the Lessee's abandonment of diligent
efforts to recover such property, if earlier); (t) the 61st day following the
date of any destruction, damage beyond economic repair or rendition of such
property permanently unfit for normal use; (u) the date of any insurance
settlement on the basis of a total loss or constructive or compromised total
loss; (v) the date of any condemnation, confiscation, seizure or requisition
of title of such property; (w) the 181st day following condemnation,
confiscation, seizure or requisition for use of such property by a foreign
government referred to in clause (iii)(2)(A) above (or the end of the Term or
the date of any insurance settlement described therein, if earlier than such
181st day); (x) the last day of the Term in the case of requisition for use of
such property by the Government; (y) the last day of the 12 month or 24 month
period, referred to in clause (iv) above (or if earlier, the end of the Term
or abandonment of the Lessee's efforts to restore the normal use of the
Aircraft). An Event of Loss with respect to the Aircraft shall be deemed to
have occurred if any Event of Loss occurs with respect to the Airframe.
Excepted Payments. Collectively, (i) indemnity, expense,
reimbursement or other payments paid or payable by the Lessee in respect of
the Owner Participant, the Owner Trustee in its individual capacity or any of
their respective successors, permitted assigns, directors, officers,
employees, servants and agents or Affiliates, pursuant to the Participation
Agreement or any other Operative Agreement or any indemnity hereafter granted
to the Owner Participant or the Owner Trustee in its individual capacity
pursuant to the Lease or the Participation Agreement, (ii) proceeds of public
liability insurance (or government indemnities in lieu thereof) in respect of
the Aircraft payable as a result of insurance claims paid for the benefit of,
or losses suffered by, the Owner Trustee or the Indenture Trustee in their
respective individual capacities or by the Owner Participant, or their
respective successors, permitted assigns or Affiliates, (iii) proceeds of
insurance maintained with respect to the Aircraft by the Owner Participant
(whether directly or through the Owner Trustee) maintained in accordance with
Section 13.05 of the Lease but not required under Article 13 of the Lease,
(iv) payments of Supplemental Rent by the Lessee in respect of any amounts
payable under the Tax Indemnity Agreement, (v) any purchase price paid to the
Owner Participant for its interest in the Trust Estate pursuant to Section
7.03(d) of the Participation Agreement, (vi) subject to Section 3.05 of the
Lease, payments constituting increases in Basic Rent attributable to payments
arising pursuant to Section 5 of the Tax Indemnity Agreement, (vii) any
payments in respect of interest to the extent attributable to payments
referred to in clauses (i) through (vi) above and (viii) any right to demand,
collect or otherwise receive and enforce the payment of any amount described
in clauses (i) through (v) and (vii) above (except with respect to interest
attributable to payments referred to in clause (vi) above).
Expense; Expenses. Have the meaning specified in Section 9.01(a) of
the Participation Agreement.
Fair Market Renewal Term. A term with respect to which the Lessee has
exercised its option to renew the Lease pursuant to the second paragraph of
Section 4.01(a) thereof and with respect to which the conditions set forth in
such Section 4.01(a) are met.
Fair Market Rental. An amount determined on the basis of, and equal
in amount to, the rental which would be obtained in an arm's-length
transaction between an informed and willing lessee and an informed and willing
lessor unaffiliated with such lessee, neither being under any compulsion to
lease. In such determination, it shall be assumed that the Aircraft is in the
condition required under the Lease in the case of return of the Aircraft
pursuant to Article 12 of the Lease and Fair Market Rental shall be determined
in accordance with the provisions of Section 4.03 of the Lease.
Fair Market Value. An amount determined on the basis of, and equal in
amount to, the value which would be obtained in an arm's-length transaction
between an informed and willing purchaser under no compulsion to buy and an
informed and willing seller unaffiliated with such purchaser and under no
compulsion to sell, assuming the Aircraft (or other property) is unencumbered
by the Lease. In such determination, except for purposes of Section 17.01 of
the Lease (when it shall be determined based upon the actual condition and
location of the Aircraft), it shall be assumed that the Aircraft is in the
condition required under the Lease in the case of return of the Aircraft
pursuant to Article 12 of the Lease and Fair Market Value shall be determined
in accordance with the provisions of Section 4.03 of the Lease.
Federal Aviation Administration; FAA. The United States Federal
Aviation Administration and any successor agency or agencies thereto.
Final Drawing. Has the meaning specified in Section 1.01 of the
Intercreditor Agreement.
Fixed Renewal Rent. Semi-annual payments of rent during the Fixed
Renewal Term equal to the lesser of (i) Fair Market Rental as determined as of
the commencement of such Fixed Renewal Term and (ii) 50% of the average actual
semi-annual Basic Rent payable during the Basic Term.
Fixed Renewal Term. The term with respect to which the Lessee has
exercised its option to renew the Lease pursuant to the first paragraph of
Section 4.01(a) thereof and with respect to which the conditions set forth in
such Section 4.01(a) are met.
FPO Price. Has the meaning set forth in Section 4.02(a)(F) of the
Lease.
French Pledge Agreement. The French Pledge Agreement dated as of May
1, 1997 between the Owner Trustee and the Indenture Trustee.
FSB. First Security Bank, National Association, a national banking
association.
Government. The United States of America or an agency or
instrumentality thereof the obligations of which bear the full faith and
credit of the United States of America.
GTA. The General Terms Agreement dated as of July 3, 1991 between the
Engine Manufacturer and the Lessee related to the purchase by the Lessee of the
Engines as originally executed or as modified, amended or supplemented in
accordance with the terms thereof, but only insofar as the General Terms
Agreement relates to the Engines, to the extent assigned to the Owner Trustee
pursuant to the Engine Warranty Assignment.
Holder of a Certificate; Certificate Holder; Holder. As of any
particular time, the Person in whose name a Certificate shall be registered
(but not including the holder of any Pass Through Certificate).
Indemnitee. Each of SSB, in its individual capacity and as Owner
Trustee and Lessor, the Subordination Agent, in its individual capacity and in
its capacity as Subordination Agent, each Liquidity Provider, the Owner
Participant, the Indenture Trustee, in its individual capacity and as trustee,
the Owner Participant Guarantor and any successor (including any trustee which
may succeed to the Lessor's interest under the Lease), Affiliate, assign,
officer, director, employee, agent and servant of any of the foregoing, the
Lessor's Estate and the Trust Indenture Estate. Neither the Pass Through
Trustee nor any holder of a Pass Through Certificate shall be deemed to be an
Indemnitee.
Indenture. The Trust Indenture and Security Agreement (Federal
Express Corporation Trust No. N670FE), dated as of May 1, 1997, between the
Lessor and the Indenture Trustee, as supplemented by the Indenture and
Security Agreement Supplement.
Indenture and Security Agreement Supplement. The Indenture and
Security Agreement Supplement No. 1 (Federal Express Corporation Trust No.
N670FE) to be dated the Delivery Date, substantially in the form of Exhibit A
to the Indenture.
Indenture Default. Any event or condition which, with the lapse of
time or the giving of notice, or both, would constitute an Indenture Event of
Default.
Indenture Documents. Has the meaning specified in the Granting
Clause of the Indenture.
Indenture Event of Default. Each of the events specified in Section
7.01 of the Indenture.
Indenture Trustee. First Security Bank, National Association, a
national banking association, not in its individual capacity but solely as
Indenture Trustee under the Indenture.
Indenture Trustee's Liens. Any Lien against, on or with respect to
the Aircraft, the Lessor's Estate or the Trust Indenture Estate or any part
thereof resulting from (i) claims against the Indenture Trustee not related to
the administration of the Trust Indenture Estate or any transactions pursuant
to the Indenture or any document included in the Trust Indenture Estate, (ii)
any act or omission of the Indenture Trustee which is not related to the
transactions contemplated by the Operative Agreements or is in violation of
any of the terms of the Operative Agreements or (iii) Taxes imposed against
the Indenture Trustee in its individual capacity in respect of which the Lessee
has not indemnified (and is not obligated to indemnify) the Indenture Trustee
in such capacity.
Independent Appraisal. An appraisal conducted pursuant to Section
4.03 of the Lease.
Independent Investment Banker. An independent investment banking
institution of national standing appointed by the Lessee that is independent
in fact, does not have any direct financial interests, or any material
indirect financial interest, in the Lessee or any Affiliate of the Lessee, and
is not connected with the Lessee or any Affiliate of the Lessee, as an
officer, employee, promoter, underwriter, trustee, partner, director or Person
performing similar functions; provided, that if the Indenture Trustee shall
not have received written notice of such an appointment at least 10 days prior
to the Prepayment Date, "Independent Investment Banker" shall mean such an
institution appointed by the Indenture Trustee.
Intercreditor Agreement. The Intercreditor Agreement dated as of May
1, 1997, among the Pass Through Trustee, the Class A Liquidity Provider, the
Class B Liquidity Provider and the Subordination Agent.
Interest Drawing. Has the meaning specified in Section 1.01 of the
Intercreditor Agreement.
Invoice. The invoice for the Aircraft given by AVSA to the Lessor.
Lease. The Lease Agreement (Federal Express Corporation Trust No.
N670FE) dated as of May 1, 1997, entered into by the Lessor and the Lessee
concurrently with the execution and delivery of the Indenture, including,
without limitation, supplementation by one or more Lease Supplements entered
into pursuant to the applicable provisions of the Lease.
Lease Supplement. The Lease Supplement No. 1 (Federal Express
Corporation Trust No. N670FE) to be dated the Delivery Date, substantially in
the form of Exhibit A to the Lease.
Lease Term. The period commencing on the Delivery Date and ending at
the end of the Basic Term.
Lessee. Federal Express Corporation, a Delaware corporation.
Lessee Documents. Has the meaning set forth in Section 6.01(b) of the
Participation Agreement.
Lessor. State Street Bank and Trust Company of Connecticut, National
Association, a national banking association, not in its individual capacity
but solely as Owner Trustee under the Trust Agreement.
Lessor's Estate. All estate, right, title and interest of the Owner
Trustee in and to the Collateral Account, the Liquid Collateral, the Aircraft,
the Lease, any Lease Supplement, the Participation Agreement, AVSA's FAA Xxxx
of Sale, AVSA's Warranty Xxxx of Sale, the Airbus Guaranty, the Purchase
Agreement, the Purchase Agreement Assignment, the Consent and Agreement, the
AVSA Consent and Agreement, the Consent and Guaranty (to the extent assigned
by the Purchase Agreement Assignment), any Ancillary Agreement, the GTA, the
Engine Warranty Assignment, the Engine Consent, any warranty with respect to
the Airframe and the Engines, all amounts of Basic Rent and Supplemental Rent,
including without limitation, insurance proceeds (other than insurance
proceeds payable to or for the benefit of the Owner Trustee in its individual
capacity or the Owner Participant) and requisition, indemnity or other
payments of any kind for or with respect to the Aircraft (except amounts owing
to the Owner Participant, to the Indenture Trustee, to the Owner Trustee in its
individual capacity, or to any of their respective directors, officers,
employees and agents pursuant to Articles 8 and 9 of the Participation
Agreement), and all other property of the Owner Trustee purportedly subjected
to the Lien of the Indenture by the Granting Clause thereof; provided that in
no event shall "Lessor's Estate" include any Excepted Payment.
Lessor's Liens. Liens against, on or with respect to the Aircraft,
the Lessor's Estate or the Trust Indenture Estate or any part thereof, title
thereto or any interest therein arising as a result of (i) claims against the
Lessor, in its individual capacity or as Owner Trustee, or the Owner
Participant, in each case not related to the transactions contemplated by the
Operative Agreements, (ii) acts or omissions of the Lessor in its individual
capacity or as Owner Trustee, and, in the case of the Lessor in its individual
capacity, arising from its gross negligence or willful misconduct or expressly
prohibited under the Operative Agreements and any act or omission of the Owner
Participant which is in violation of any of the terms of the Operative
Agreements, (iii) Taxes or Expenses imposed against the Lessor, in its
individual capacity or as Owner Trustee, Owner Participant, Lessor's Estate or
the trust created by the Trust Agreement which are not required to be
indemnified against by the Lessee pursuant to the Participation Agreement by
reason of Section 8.01(b) or 9.01(b) thereof and which are not required to be
indemnified against by the Lessee pursuant to the Tax Indemnity Agreement, or
(iv) claims against the Lessor or the Owner Participant arising from the
voluntary transfer by the Lessor or the Owner Participant of its interests in
the Aircraft other than a transfer of the Aircraft pursuant to Section 4.02(a)
or Article 10 or 11 of the Lease and other than a transfer pursuant to the
exercise of the remedies set forth in Article 17 of the Lease.
Lien. Any mortgage, pledge, lien, charge, encumbrance, lease or
security interest or other similar interest.
Liquid Collateral. All amounts and securities deposited from time to
time in the Collateral Account and all the products, investments, earnings and
proceeds of the foregoing, including, but not limited to, all proceeds of the
investment or conversion thereof, voluntary or involuntary, into cash,
Specified Investments or other property, all rights to payment of any and
every kind, and other forms of obligations, and instruments and other property
which at any time constitute all or part or are included in the proceeds of
any of the foregoing.
Liquidity Facility. Has the meaning specified in Section 1.01 of the
Intercreditor Agreement.
Liquidity Provider. Has the meaning specified in Section 1.01 of the
Intercreditor Agreement.
Losses. Has the meaning specified in Section 17.02(a) of the
Participation Agreement.
Loss Payee. Has the meaning specified in Section 13.02(b)(i) of the
Lease.
Majority in Interest of Certificate Holders. As of a particular date
of determination, the Holders of more than 50% of the aggregate unpaid
principal amount of all Certificates outstanding as of such date excluding for
purposes of this definition any Certificates held by (i) the Owner Trustee or
the Owner Participant or any interests of the Owner Participant unless all
Certificates then outstanding shall be held by the Owner Participant, (ii) the
Lessee or (iii) any Affiliate of any thereof.
Make-Whole Premium. An amount determined as of the day before the
applicable Prepayment Date (or date of purchase, as the case may be) which an
Independent Investment Banker determines to be equal to the excess, if any, of
(i) the present value of the remaining scheduled payments of such principal
amount or portion thereof and interest thereon (excluding interest accrued
from the immediately preceding Payment Date to such Prepayment Date or date of
purchase, as the case may be) to the Maturity of such Certificate in
accordance with generally accepted financial practices assuming a 360-day year
consisting of twelve 30-day months at a discount rate equal to the Treasury
Yield, all as determined by the Independent Investment Banker over (ii) the
outstanding principal amount of such Certificate plus accrued interest.
Manufacturer. Airbus Industrie G.I.E., a groupement d'interet
economique formed under the laws of France.
Maturity. With respect to any Certificate, the date on which the
final principal amount of such Certificate is scheduled to be due and payable.
Moody's. Xxxxx'x Investors Service, Inc.
Net Present Value of Rents. The net present value, as of the
Delivery Date, of Basic Rent set forth in Schedule II of the Lease, discounted
at a rate equal to the Debt Rate per annum compounded semi-annually.
Non-U.S. Person. Any Person other than a U.S. Person.
Obsolete Parts. Parts which are severable from the Aircraft in
accordance with clauses (ii) and (iii) of the proviso to Section 9.02(b) of
the Lease and the Lessee in good faith determines to be obsolete or no longer
suitable or appropriate for use on the Airframe or any Engine.
Officer's Certificate. When delivered pursuant to the Indenture, a
certificate signed by a Responsible Officer of the Lessee or the Owner
Trustee, as the case may be, and delivered to the Indenture Trustee. Each
such certificate shall include the statements provided for in Section 15.07 of
the Indenture.
Operative Agreements. The Participation Agreement, the Trust
Agreement, AVSA's FAA Xxxx of Sale, AVSA's Warranty Xxxx of Sale, the Airbus
Guaranty, the Purchase Agreement, the Purchase Agreement Assignment, the GTA,
the Engine Warranty Assignment, the French Pledge Agreement, the Lease, the
Lease Supplement, the Owner Participant Guaranty, the Owner Trustee Guaranty,
if any, any Ancillary Agreement entered into by or with the written consent of
the Indenture Trustee, which by its terms is an Operative Agreement, the
Certificates outstanding at the time of reference, the Indenture, the
Indenture and Security Agreement Supplement, the Consent and Agreement, the
AVSA Consent and Agreement, the Consent and Guaranty (to the extent assigned
by the Purchase Agreement Assignment), the Engine Consent, the Tax Indemnity
Agreement, each Liquidity Facility, the Intercreditor Agreement, the
Collateral Account Control Agreement and any Assignment and Assumption
Agreement.
Opinion of Counsel. When delivered pursuant to the Indenture, a
written opinion of legal counsel, who in the case of counsel (a) for the
Lessee may be (i) an attorney employed by the Lessee who is generally
empowered to deliver such written opinions, (ii) Xxxxx Xxxx & Xxxxxxxx or a
successor firm or (iii) other counsel designated by the Lessee and reasonably
satisfactory to the Indenture Trustee and (b) for the Owner Trustee or the
Indenture Trustee, an attorney selected by such Person and, in the case of the
Owner Trustee, reasonably satisfactory to the Indenture Trustee.
Outstanding. When used with respect to Certificates, as of the date
of determination and subject to the provisions of Section 10.04 of the
Indenture, all Certificates theretofore executed and delivered under the
Indenture, with the exception of the following:
(i) Certificates theretofore cancelled by the Indenture Trustee or
delivered to the Indenture Trustee for cancellation pursuant to
Section 2.08 of the Indenture or otherwise;
(ii) Certificates for which prepayment money in the necessary amount
has been theretofore deposited with the Indenture Trustee in trust
for the Holders of such Certificates pursuant to Section 14.01 of the
Indenture; provided, that if such Certificates are to be prepaid,
notice of such prepayment has been duly given pursuant to the
Indenture or provision therefor satisfactory to the Indenture Trustee
has been made; and
(iii) Certificates in exchange for or in lieu of which other
Certificates have been executed and delivered pursuant to Article II
of the Indenture.
Owner Participant. The trustor originally named in the Trust
Agreement and any successor thereto, and any Person to which the Owner
Participant transfers, in accordance with the Trust Agreement, its right,
title and interest in and to the Operative Agreements and the Lessor's Estate.
Owner Participant Guarantor. Xxxxxx Xxxxxx Capital Corporation, a
Delaware corporation, and any other provider of an Owner Participant Guaranty.
Owner Participant Guaranty. The Owner Participant Guaranty dated the
Certificate Closing Date by the Owner Participant Guarantor in favor of the
Lessee, the Owner Trustee, the Indenture Trustee and the Pass Through Trustee,
and any guaranty delivered in compliance with Section 7.03(d) of the
Participation Agreement.
Owner Trustee. SSB, not in its individual capacity except as
otherwise expressly stated, but solely as Owner Trustee under the Trust
Agreement.
Owner Trustee Guarantor. The provider of an Owner Trustee Guaranty.
Owner Trustee Guaranty. Any guaranty delivered in compliance with
Section 11.01(b)(ii) of the Participation Agreement.
Owner's Economic Return. The Owner Participant's anticipated net
after-tax book yield and aggregate after-tax cash during the Basic Term
utilizing the multiple investment sinking fund method of analysis, computed on
the basis of the same methodology and assumptions as were utilized by the
Owner Participant in determining Basic Rent, Stipulated Loss Value and
Termination Value percentages, as the case may be, as such assumptions may be
adjusted for events which have been the basis of adjustments to Rent pursuant
to Section 3.04 of the Lease.
Participation Agreement. The Participation Agreement (Federal Express
Corporation Trust No. N670FE), dated as of May 1, 1997, among the Lessee, the
Owner Trustee not in its individual capacity except as otherwise expressly
provided therein, but solely as owner trustee, the Owner Participant, the
Indenture Trustee not in its individual capacity except as otherwise expressly
provided therein, but solely as indenture trustee, the Pass Through Trustee
not in its individual capacity except as otherwise expressly provided therein,
but solely as pass through trustee and the Subordination Agent not in its
individual capacity except as otherwise expressly provided therein, but solely
as subordination agent.
Parts. All appliances, parts, components, instruments, appurtenances,
accessories, furnishings and other equipment of whatever nature (other than
complete Engines or engines) which may from time to time be incorporated or
installed in or attached to the Airframe or any Engine or title to which
remains vested in the Lessor pursuant to Article 8 of the Lease.
Pass Through Agreement. The Pass Through Trust Agreement dated as of
May 1, 1997 between the Lessee and the Pass Through Trustee.
Pass Through Certificates. Any of the Pass Through Certificates,
1997-1-A, the Pass Through Certificates, 1997-1-B or the Pass Through
Certificates, 1997-1-C, in each case as issued by the related Pass Through
Trust; and "Pass Through Certificates" means all of the Pass Through
Certificates issued by each of the Pass Through Trusts.
Pass Through Closing Date. The Business Day on which the sale of the
Pass Through Certificates to the Underwriters pursuant to the Underwriting
Agreement takes place.
Pass Through Trust. The Federal Express Corporation 1997-1 Pass
Through Trust Class A, Federal Express Corporation 1997-1 Pass Through Trust
Class B and Federal Express Corporation 1997-1 Pass Through Trust Class C, in
each case formed pursuant to the related Series Supplement in accordance with
the Pass Through Agreement; and "Pass Through Trusts" means all of such Pass
Through Trusts.
Pass Through Trustee. First Security Bank, National Association, a
national banking association, in its capacity as Pass Through Trustee under
the Pass Through Agreement and each Pass Through Trust.
Past Due Rate. In respect of (A) any amount payable to the Owner
Participant or the Owner Trustee a rate per annum during the period from and
including the due date to but excluding the date on which such amount is paid
in full equal to 2% plus the Debt Rate and (B) any principal of or interest on
any Certificate or any other amount payable under the Indenture, any
Certificate or any other Operative Agreement that is not paid when due
(whether at Maturity, by acceleration, by optional or mandatory prepayment or
otherwise) to any Holder, the Indenture Trustee or the Pass Through Trustee, a
rate per annum during the period from and including the due date to but
excluding the date on which such amount is paid in full equal to (i) in the
case of any such amount payable to the Holder of any Certificate, 2% plus the
interest rate applicable to such Certificate and (ii) in the case of any other
such amount, 2% plus the Debt Rate.
Payment Date. Each January 15 and July 15 commencing on July 15,
1997.
Payment Default. Any event specified in Section 16.01(a) or 16.01(b)
of the Lease which with the giving of notice or lapse of time or both would
constitute an Event of Default.
Permitted Investments. Those investments enumerated in Section
23.01(a) (i), (ii), (iii) and (iv) of the Lease.
Person. Any individual, sole proprietorship, partnership, joint
venture, joint stock company, trust, unincorporated organization, association,
corporation, institution, entity or government (federal, state, local,
foreign or any agency, instrumentality, division or body thereof).
Preliminary Notice. Has the meaning specified in Section 4.01(a) of
the Lease.
Premium Termination Date. With respect to the Series A Certificates,
December 27, 2011, with respect to the Series B Certificates, February 5, 2010
and with respect to the Series C Certificates, March 22, 2007.
Prepayment Date. Has the meaning specified in Section 6.02(b) of the
Indenture.
Prepayment Price. Has the meaning specified in Section 6.02(b) of the
Indenture.
Principal Amount. With respect to a Certificate means the stated
original principal amount of such Certificate and, with respect to all
Certificates, means the aggregate stated original principal amounts of all
Certificates.
Property. Any right or interest in or to property of any kind
whatsoever, whether real, personal or mixed and whether tangible or intangible.
Proposed Termination Date. The proposed date of termination of the
Lease as specified by the Lessee in its notice given pursuant to Section 10.01
thereof.
Purchase Agreement. The Airbus A300-600R Freighter Purchase Agreement,
dated as of July 3, 1991 between AVSA and the Lessee, including all exhibits,
appendices and letter agreements attached thereto as originally executed or as
modified, amended or supplemented in accordance with the terms thereof, but
only to the extent that the foregoing relates to the Aircraft and to the
extent assigned pursuant to the Purchase Agreement Assignment.
Purchase Agreement Assignment. The Purchase Agreement Assignment
(Federal Express Corporation Trust No. N670FE), dated as of May 1, 1997 between
the Lessor and the Lessee.
Purchase Price. Has the meaning specified in Ancillary Agreement II.
Record Date. With respect to Payment Dates under the Indenture
(except a date for payment of defaulted interest), December 31 for January 15
Payment Dates and June 30 for July 15 Payment Dates, whether or not such date
is a Business Day.
Recourse Amount. Has the meaning specified in Section 17.10 of the
Participation Agreement.
Refinancing. A non-recourse loan to the Lessor arranged pursuant to
Section 15.01 of the Participation Agreement.
Register. Has the meaning set forth in Section 3.02 of the Indenture.
Registrar. Has the meaning set forth in Section 3.02 of the
Indenture.
Regulation D. Regulation D of the Board of Governors of the Federal
Reserve System (or any successor), as the same may be modified and
supplemented and in effect from time to time.
Related Indentures. Collectively, the Trust Indenture and Security
Agreement for each of Federal Express Corporation Trust Nos. N671FE, N672FE,
N673FE, N674FE, N583FE and N584FE, each dated as of May 1, 1997, between the
Owner Trustee and the Indenture Trustee, the Trust Indenture and Security
Agreement for Federal Express Corporation Trust No. N581FE, dated as of May 1,
1997, between Wilmington Trust Company, as owner trustee and the Indenture
Trustee, and the Trust Indenture and Security Agreement for Federal Express
Corporation Trust No. N587FE, dated as of December 1, 1996, as amended and
restated as of May 1, 1997, between Wilmington Trust Company, as owner trustee
and the Indenture Trustee.
Remaining Weighted Average Life. On a given date with respect to any
Certificate the number of days equal to the quotient obtained by dividing (i)
the sum of each of the products obtained by multiplying (a) the amount of each
then remaining scheduled payment of principal of such Certificate by (b) the
number of days from and including such prepayment date to but excluding the
dates on which each such payment of principal is scheduled to be made; by (ii)
the then outstanding principal amount of such Certificate.
Renewal Rent. The amount payable by the Lessee as rent in accordance
with Section 4.01 of the Lease during any Renewal Term.
Renewal Term. One or more terms with respect to which the Lessee has
exercised its option to renew the Lease pursuant to Section 4.01(a) thereof.
Rent. All payments due from the Lessee under the Lease as Basic Rent,
Renewal Rent and Supplemental Rent, collectively.
Rent Payment Date. September 2, 2020 and each January 15 and July 15
commencing on July 15, 1997.
Reoptimization Date. Has the meaning specified in Section 15.02(a)
of the Participation Agreement.
Replacement Aircraft. Any aircraft substituted for the Aircraft
pursuant to Section 11.03(a) of the Lease.
Replacement Airframe. Has the meaning set forth in Section 11.03 of
the Lease.
Replacement Engine. A General Electric CF6-80C2-A5F engine (or an
engine of the same or another manufacturer) of equal or greater value,
airworthiness, remaining useful life and utility as the Engine being replaced,
together with all Parts relating to such engine; provided, however, that if
such replacement engine is not a General Electric CF6-80C2-A5F engine, such
replacement engine must then be commonly used in the commercial aviation
industry on Airbus A300-600 airframes.
Responsible Officer. With respect to the Owner Trustee (except for
purposes of the Trust Agreement in which case the definition of Responsible
Officer set forth in Section 3.10 of the Trust Agreement is applicable) or the
Indenture Trustee, any officer in its Corporate Trust Administration, as the
case may be, designated by such Person to perform obligations under the
Operative Agreements, and with respect to any other party, any corporate
officer or (except in the case of the Owner Participant) other employee of a
party who, in the normal performance of his or her operational
responsibilities, with respect to the subject matter of any covenant,
agreement or obligation of such party pursuant to any Operative Agreement,
would have responsibility for and knowledge of such matter and the
requirements of any Operative Agreement with respect thereto.
S&P. Standard & Poor's Ratings Group.
Scheduled Delivery Date. The Delivery Date specified in the Delivery
Notice pursuant to Section 3.01 of the Participation Agreement.
SEC. The Securities and Exchange Commission of the United States and
any successor agencies or authorities.
Secured Obligations. Has the meaning specified in the Granting
Clause of the Indenture.
Securities Act. The Securities Act of 1933, as amended.
Series "A" or "Series A Certificates". Certificates issued and
designated as "Series A" under the Indenture, in the Principal Amount and
maturities and bearing interest as specified in Exhibit B to the Indenture
under the heading "Series A".
Series "B" or "Series B Certificates". Certificates issued and
designated as "Series B" under the Indenture, in the Principal Amount and
maturities and bearing interest as specified in Exhibit B to the Indenture
under the heading "Series B".
Series "C" or "Series C Certificates". Certificates issued and
designated as "Series C" under the Indenture, in the Principal Amount and
maturities and bearing interest as specified in Exhibit B to the Indenture
under the heading "Series C".
Series Supplement or Series Supplements. The Series Supplement
1997-1-A to be executed and delivered by the Lessee and the Pass Through
Trustee, the Series Supplement 1997-1-B to be executed and delivered by the
Lessee and the Pass Through Trustee or the Series Supplement 1997-1-C to be
executed and delivered by the Lessee and the Pass Through Trustee.
Sinking Fund Redemption Date. Has the meaning specified in Section
6.06 of the Indenture.
Sinking Fund Redemption Price. Has the meaning specified in Section
6.06 of the Indenture.
Special Aviation Counsel. Xxxxxxxxx, Xxxxxx & Xxxxxxxx.
Specified Investments. Shall mean (a) direct obligations of the
United States of America or obligations fully guaranteed by the United States
of America; (b) commercial paper rated A-1/P-1 by S&P and Moody's,
respectively or, if such ratings are unavailable, rated by any nationally
recognized rating organization in the United States equal to the highest
rating assigned by such rating organization; (c) investments in negotiable
certificates of deposit, time deposits, banker's acceptances, commercial paper
or other direct obligations of, or obligations guaranteed by, commercial banks
organized under the laws of the United States or of any political subdivision
thereof (or any U.S. branch of a foreign bank) with issuer ratings of at least
B/C by Thomson Bankwatch, having maturities no later than 90 days following
the date of such investment; (d) overnight federal funds transactions with
members of the Federal Reserve System arranged by federal funds brokers; or
(e) overnight repurchase agreements with respect to the securities described
in clause (a) above entered into with an office of a bank or trust company
which is located in the United States of America or any bank or trust company
which is organized under the laws of the United States or any state thereof
and has capital, surplus and undivided profits aggregating at least $500
million.
SSB. State Street Bank and Trust Company of Connecticut, National
Association, a national banking association.
Stipulated Loss Value. As of any Stipulated Loss Value Determination
Date during the Basic Term, the amount determined by multiplying the Purchase
Price by the percentage set forth in Schedule III of the Lease under the
heading "Stipulated Loss Value Factor" opposite such date (as such Schedule
III may be adjusted from time to time as provided in Section 3.04 of the
Lease), and during any Renewal Term, the amount determined pursuant to Section
4.01(b) of the Lease. Notwithstanding any other provisions of the Lease or
the Participation Agreement or the Indenture, each Stipulated Loss Value for
the Aircraft shall be, under any circumstances and in any event, an amount,
together with so much of the arrears portion of Basic Rent due and owing
through the date of payment of Stipulated Loss Value as does not constitute an
Excepted Payment, at least sufficient to pay in full as of such date of
payment the aggregate unpaid principal amount of and accrued interest on the
Certificates outstanding on such date of payment. Subject to the immediately
preceding sentence, it is understood and agreed that the amounts set forth on
Schedule III of the Lease, for dates other than Rent Payment Dates on which
arrears Basic Rent is due, fully reflect appropriate Basic Rent accruals and
credits of unearned Basic Rent through such date and, accordingly, no further
accrual or credit shall be required through such date whenever Stipulated Loss
Value is to be calculated with reference to any such date; provided that if
amounts in respect of Stipulated Loss Value are payable under the Operative
Agreements after the Stipulated Loss Determination Date in respect of which
such Stipulated Loss Value was determined, the Lessor shall be compensated
during the period from the Stipulated Loss Determination Date to such payment
date in accordance with the provisions of the Operative Agreements.
Stipulated Loss Value Determination Date. Each date set forth on
Schedule III of the Lease.
Subordination Agent. First Security Bank, National Association, a
national banking association, not in its individual capacity but solely as
Subordination Agent.
Supplemental Rent. (a) All amounts, liabilities and obligations
which the Lessee assumes or agrees to perform or pay under the Lease or under
the Participation Agreement or Tax Indemnity Agreement or any Ancillary
Agreement or any other Operative Agreement to the Lessor, the Owner
Participant, the Indenture Trustee, the Subordination Agent, any Liquidity
Provider or others, including, without limitation, payments of Stipulated Loss
Value, FPO Price and amounts calculated by reference to Termination Value, any
amounts of Make-Whole Premium payable under the Indenture to the extent
provided in Section 3.03 of the Lease, and all amounts required to be paid by
Lessee under the agreements, covenants and indemnities contained in the Lease
or in the Participation Agreement or the Tax Indemnity Agreement or any other
Operative Agreement, but excluding Basic Rent and (b) all amounts that the
Owner Trustee is obligated to pay in accordance with clause (b) of the last
paragraph of Section 2.04 of the Indenture.
Tax. Has the meaning set forth in Section 8.01(a) of the
Participation Agreement.
Tax Indemnity Agreement. The Tax Indemnity Agreement (Federal
Express Corporation Trust No. N670FE), dated as of May 1, 1997, between the
Lessee and the Owner Participant.
Term. The Basic Term of the lease for the Aircraft under the Lease
and, if renewed pursuant to Section 4.01 of the Lease, each Renewal Term for
the Aircraft for which the Lease is renewed, or such earlier date on which the
Lease is terminated pursuant to its terms.
Termination Date. A Rent Payment Date during the Basic Term that is
on or after December 31, 2004 in the case of Article 10 of the Lease, and in
the case of (i) Section 4.02(a)(A) of the Lease, the Rent Payment Date falling
on January 15, 2016, (ii) Section 4.02(a)(D) or (E) of the Lease, a Rent
Payment Date that is on or after the seventh anniversary of the Delivery Date
and (iii) Section 4.02(a)(F) of the Lease, the last day of the Basic Term.
Termination Value. As of any Termination Date, the amount determined
by multiplying the Purchase Price by the percentage set forth in Schedule IV
of the Lease under the heading "Termination Value Factor" opposite such
Termination Date (as such Schedule IV may be adjusted from time to time as
provided in Section 3.04 of the Lease). Notwithstanding any other provisions
of the Lease, the Participation Agreement or the Indenture, each Termination
Value shall be, under any circumstances and in any event, an amount, together
with so much of the arrears portion of Basic Rent due and owing through the
date of payment of any amount calculated by reference to Termination Value as
does not constitute an Excepted Payment, at least sufficient to pay in full as
of such date of payment the aggregate unpaid principal amount of and accrued
interest on the Certificates outstanding on such date of payment. Subject to
the immediately preceding sentence, it is understood and agreed that the
amounts set forth on Schedule IV of the Lease, for dates other than Rent
Payment Dates on which arrears Basic Rent is due, fully reflect appropriate
Basic Rent accruals and credits of unearned Basic Rent through such date and,
accordingly, no further accrual or credit shall be required through such date
whenever Termination Value is to be calculated with reference to any such
date; provided that if amounts in respect of Termination Value are payable
under the Operative Agreements after the Termination Date in respect of which
such Termination Value was determined, the Lessor shall be compensated during
the period from the Termination Date to such payment date in accordance with
the provisions of the Operative Agreements.
Transaction Costs. Those costs and expenses set forth in Section
10.01(a) of the Participation Agreement.
Transportation Code. Title 49 of the United States Code, as amended
and in effect on the date of the Lease or as subsequently amended, or any
successor or substituted legislation at the time in effect and applicable, and
the regulations promulgated pursuant thereto.
Treasury Yield. At the time of determination with respect to any
Certificate, the interest rate (expressed as a semi-annual equivalent and as a
decimal and, in the case of United States Treasury bills, converted to a bond
equivalent yield) determined to be the per annum rate equal to the semi-annual
yield to maturity for United States Treasury securities maturing on the
Average Life Date on such Certificate and trading in the public securities
markets either as determined by interpolation between the most recent weekly
average yield to maturity for two series of United States Treasury securities,
trading in public securities markets, (i) one maturing as close as possible to,
but earlier than, the Average Life Date of such Certificate and (ii) the other
maturing as close as possible to, but later than, the Average Life Date of
such Certificate. In each case as published in the most recent H.15(519) or,
if a weekly average yield to maturity for United States Treasury securities
maturing on the Average Life Date of such Certificate is reported on the most
recent H.15 (519), such weekly average yield to maturity as published in such
H.15(919). "H.15(519)" means the weekly statistical release designated as
such, or any successor publication, published by the Board of Governors of the
Federal Reserve System. The date of determination of a Make-Whole Premium
will be the third Business Day prior to the applicable prepayment date and the
"most recent H.15(519)" means the H.15(519) published prior to the close of
business on the third Business Day prior to the applicable prepayment date.
Trust Agreement. The Trust Agreement (Federal Express Corporation
Trust No. N670FE), dated as of May 1, 1997, between the Owner Participant and
the Owner Trustee in its individual capacity.
Trust Estate. The Lessor's Estate.
Trust Indenture Act. The Trust Indenture Act of 1939, as amended.
Trust Indenture Estate. All estate, right, title and interest of the
Indenture Trustee in and to any of the property, rights, interests and
privileges granted to the Indenture Trustee pursuant to the Granting Clause of
the Indenture, other than Excepted Payments and any and all other rights of
the Owner Trustee or the Owner Participant expressly reserved to the Owner
Trustee or the Owner Participant pursuant to the Indenture.
Underwriters. Xxxxxx Xxxxxxx & Co. Incorporated, First Chicago
Capital Markets, Inc., Xxxxxxx, Sachs & Co. and X.X. Xxxxxx & Co.
Underwriting Agreement. The Underwriting Agreement dated May 22, 1997
among the Lessee and the Underwriters.
United States, U.S. or US. The United States of America.
U.S. Air Carrier. Any United States air carrier as to which there is
in force a certificate issued pursuant to Section 41102(a) or Section 41103 of
the Transportation Code, and as to which there is in force an air carrier
operating certificate issued pursuant to Chapter 447 of the Transportation
Code and Part 121 of the regulations under such Transportation Code, for
aircraft capable of carrying ten (10) or more individuals or 6,000 pounds or
more of cargo, or which may operate as an air carrier by certification or
otherwise under any successor or substitute provision thereof or in absence
thereof.
U.S. Person. A Person described in Section 7701(a)(30) of the Code.
SCHEDULE II
BASIC RENT
(As a Percentage of Purchase Price)
Rent
Payment
Date Advance Arrears
------- ------- -------
[On each Payment Date, Lessee will pay as Basic Rent an amount
that will be at least sufficient to pay in full, as of such
Payment Date, the aggregate unpaid principal amount of due and
unpaid installments on the Certificates outstanding on such
Payment Date, together with the accrued and unpaid interest
thereon.]
SCHEDULE III
STIPULATED LOSS VALUES
Stipulated Loss
Date Value Factor
[Stipulated Loss Value will be an amount at least sufficient to
pay in full, as of the date of payment thereof, the aggregate
unpaid principal amount of the Certificates outstanding on such
date of payment, together with the accrued and unpaid interest
thereon.]
SCHEDULE IV
TERMINATION VALUES
Termination Termination
Date Value Factor
[Termination Value will be an amount at least sufficient to pay
in full, as of the date of payment thereof, the aggregate
unpaid principal amount of the Certificates outstanding on such
date of payment, together with the accrued and unpaid interest
thereon.]
SCHEDULE V
PURCHASE OPTION SCHEDULE
Exhibit A
to
Lease Agreement
---------------
THE INTEREST OF LESSOR UNDER THIS LEASE SUPPLEMENT
NO. __ IS SUBJECT TO A SECURITY INTEREST
LEASE SUPPLEMENT NO. __
(Federal Express Corporation Trust No. N670FE)
LEASE SUPPLEMENT NO. __ (Federal Express Corporation Trust No.
N670FE), dated ________ __, ____, between STATE STREET BANK AND TRUST COMPANY
OF CONNECTICUT, NATIONAL ASSOCIATION, a national banking association, not in
its individual capacity, but solely as Owner Trustee under the Trust Agreement
(Federal Express Corporation Trust No. N670FE) dated as of May 1, 1997 (the
"Lessor"), and FEDERAL EXPRESS CORPORATION, a Delaware corporation (the
"Lessee").
W I T N E S S E T H :
WHEREAS, the Lessor and the Lessee have entered into that certain
Lease Agreement (Federal Express Corporation Trust No. N670FE) dated as of May
1, 1997 (the "Lease", the defined terms in the Lease being used in this Lease
Supplement with the same meaning as in the Lease), which provides for the
execution and delivery of a Lease Supplement, substantially in the form of
this Lease Supplement No. __, for the purpose of leasing under the Lease the
aircraft and engines described below ("Aircraft") as and when delivered by the
Lessor to the Lessee in accordance with the terms of the Lease;
WHEREAS, the Lease relates to the Aircraft;
WHEREAS, a counterpart of the Lease is attached to and made a part of
this Lease Supplement, and this Lease Supplement, together with such
attachment, is being filed for recordation on this date with the FAA as one
document.
NOW, THEREFORE, for and in consideration of the premises and other
good and sufficient consideration, the Lessor and the Lessee agree as follows:
Section 1. Delivered Aircraft. The Lessor hereby delivers and
leases to the Lessee under the Lease, and the Lessee hereby accepts and leases
from the Lessor under the Lease, the following described Airbus A300F4-605R
Aircraft (the "Delivered Aircraft"), which Delivered Aircraft as of the date
of this Lease Supplement consists of the following:
(a) Airbus X000X0-000X Xxxxxxxx; U.S. Registration Number ______;
Manufacturer's Serial No. ___; and
(b) Two (2) General Electric CF6-80C2-A5F Engines bearing,
respectively, Manufacturer's Serial Nos. ___-___ and ___-___ (each of which
engines has 750 or more rated takeoff horsepower or the equivalent of such
horsepower).
Section 2. Delivery Date. The Delivery Date of the Delivered
Aircraft is the date of this Lease Supplement.
Section 3. Purchase Price. The Purchase Price of the Delivered
Aircraft shall be the amount set forth in Ancillary Agreement II.
Section 4. Term. The Term for the Delivered Aircraft shall commence
on the Delivery Date, and shall terminate on ______, ____, unless earlier
terminated or extended pursuant to the terms of the Lease.
Section 5. Rent. The Lessee hereby agrees to pay the Lessor Rent
for the Delivered Aircraft throughout the Term thereof in accordance with the
terms and provisions of the Lease.
Section 6. Lessee's Acceptance of Delivered Aircraft. The Lessee
hereby confirms to the Lessor that the Delivered Aircraft has been duly marked
in accordance with Section 7.03 of the Lease and that the Lessee has accepted
the Delivered Aircraft for all purposes hereof and of the Lease, and as being
free and clear of all Liens except Lessor's Liens. Such acceptance by the
Lessee shall be without prejudice to any rights of the Lessor or the Lessee
against AVSA, the Manufacturer, the Engine Manufacturer or any vendor of
equipment included in the Aircraft.
Section 7. Incorporation of Lease By Reference. All the provisions
of the Lease are hereby incorporated by reference in this Lease Supplement to
the same extent as if fully set forth in this Lease Supplement.
Section 8. Governing Law. THIS LEASE SUPPLEMENT SHALL IN ALL
RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE BUT WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS, AND
IS BEING DELIVERED IN THE STATE OF NEW YORK.
Section 9. Agreement as Chattel Paper. To the extent that this
Lease Supplement constitutes chattel paper (as such term is defined in the
Uniform Commercial Code as in effect in any applicable jurisdiction), no
security interest in this Lease Supplement may be created through the
transfer or possession of any counterpart other than the original
chattel-paper counterpart, which shall be the counterpart containing the
receipt executed by the Indenture Trustee on its signature page.
Section 10. Counterparts. This Lease Supplement may be executed in
any number of counterparts, each of which shall be an original (except that
only the counterpart bearing the receipt executed by Indenture Trustee shall
be the original for purposes of perfecting a security interest therein as
chattel paper under the Uniform Commercial Code), but all of which taken
together shall constitute one and the same instrument and any of the parties
hereto may execute this Lease Supplement by signing any such counterpart.
IN WITNESS WHEREOF, the Lessor and the Lessee have caused this Lease
Supplement to be duly executed as of the day and year first above written.
LESSOR: STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION,
not in its individual capacity,
but solely as Owner Trustee
By: __________________________________
Name: Xxxx X. Xxxxx
Title: Vice President
LESSEE: FEDERAL EXPRESS CORPORATION
By: ___________________________________
Name: Xxxxxx X. Xxxxxxx
Title: Assistant Treasurer and
Managing Director -
Structured Finance
Receipt of this original counterpart of the Lease Supplement is
hereby acknowledged on this ___ day of ______ ____.
Indenture Trustee: FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not in its individual capacity,
but solely as Indenture Trustee
By: _____________________________________
Name: Xxxx X. Xxxxxx
Title: Vice President
Exhibit B
to
Lease Agreement
---------------
PURCHASE AGREEMENT ASSIGNMENT
(Federal Express Corporation Trust No. N670FE)
PURCHASE AGREEMENT ASSIGNMENT (Federal Express Corporation Trust No.
N670FE), dated as of May 1, 1997 between FEDERAL EXPRESS CORPORATION, a
Delaware corporation (the "Assignor" or "Lessee"), and STATE STREET BANK AND
TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, a national banking
association, not in its individual capacity but solely as Owner Trustee ("SSB"
or the "Lessor") under the Trust Agreement (Federal Express Corporation Trust
No. N670FE), dated as of May 1, 1997 (as amended, modified or supplemented
from time to time, the "Trust Agreement"), between PMCC Leasing Corporation
(the "Owner Participant") and SSB.
W I T N E S S E T H :
WHEREAS, the Assignor and AVSA (as hereinafter defined) are parties
to the Purchase Agreement (as hereinafter defined), providing, among other
things, for the delivery by AVSA to the Assignor of certain aircraft,
including the Aircraft (as hereinafter defined) covered by the Participation
Agreement (as hereinafter defined); and
WHEREAS, pursuant to the Consent and Guaranty (as hereinafter
defined), the Guarantor (as hereinafter defined) has agreed, among other
things, to unconditionally guarantee the due and punctual performance by AVSA
of all of its liabilities and obligations as set forth in the Purchase
Agreement; and
WHEREAS, pursuant to the Lease (as hereinafter defined), the Lessor
will lease the Aircraft to the Assignor; and
WHEREAS, on the terms and conditions hereof and of the Consents and
Agreements (as hereinafter defined), (a) the Assignor desires to assign to the
Lessor (i) the Assignor's right under the Purchase Agreement and the Consent
and Guaranty (insofar as it relates to the Purchase Agreement) to purchase the
Aircraft and (ii) certain of the Assignor's remaining rights, title and
interests in, to and under the Purchase Agreement and the Consent and Guaranty
(insofar as they relate to the Purchase Agreement and the Aircraft) and (b)
the Lessor desires to accept the assignments and, except as otherwise provided
herein, to assume the obligations of the "Buyer" under the Purchase Agreement,
to the extent assigned to it pursuant hereto; and
WHEREAS, pursuant to the Indenture (as hereinafter defined), the
Lessor will assign, inter alia, its rights hereunder to the Indenture Trustee
(as hereinafter defined) to the extent set forth therein; and
WHEREAS, such assignments and acceptances are intended to permit
consummation of the transactions contemplated by the Participation Agreement;
and
WHEREAS, AVSA and the Guarantor are willing to execute and deliver
their respective Consents and Agreements;
NOW, THEREFORE, in consideration of the mutual
covenants herein contained, the parties hereto agree as follows:
1. Defined Terms. For all purposes of this Assignment, except as
otherwise expressly provided or unless the context otherwise requires, the
following terms shall have the following meanings:
"Aircraft" shall mean the Airbus A300F4-605R Freighter aircraft,
bearing manufacturer's serial number 777, delivered under the Purchase
Agreement, including the two General Electric Model CF6-80C2A5 (Fadec
equipped) engines installed on such aircraft on the date of delivery
thereof pursuant to the Purchase Agreement.
"AVSA" shall mean AVSA, S.A.R.L., a French societe a responsabilite
limitee, and its successors and assigns.
"AVSA Consent and Agreement" shall mean the Consent and Agreement of
AVSA attached hereto, as amended, modified or supplemented from time to
time.
"Xxxx of Sale" shall mean the xxxx of sale for the Aircraft to be
delivered by AVSA.
"Certificates" shall have the meaning ascribed thereto in the
Participation Agreement.
"Consent and Guaranty" shall mean the Consent and Guaranty of the
Guarantor attached to the Purchase Agreement, together with all amendments,
waivers, and consents heretofore entered into or heretofore granted
thereunder and delivered to the Lessor.
"Consents and Agreements" shall mean the AVSA Consent and Agreement
and the Guarantor Consent and Agreement.
"Delivery Date" shall have the meaning ascribed thereto in the
Purchase Agreement with respect to the Aircraft.
"Guarantor" shall mean Airbus Industrie G.I.E., a French groupement
d'interet economique, and its successors and assigns.
"Guarantor Consent and Agreement" shall mean the Consent and
Agreement of the Guarantor attached hereto, as amended, modified or
supplemented from time to time.
"Indenture" shall mean the Trust Indenture and Security Agreement
(Federal Express Corporation Trust No. N670FE), dated as of May 1, 1997,
between the Lessor and the Indenture Trustee, as amended, modified or
supplemented from time to time.
"Indenture Trustee" shall mean First Security Bank, National
Association, not in its individual capacity but solely as Indenture Trustee
under the Indenture and each other person which may from time to time be
acting as successor trustee under the Indenture.
"Lease" shall mean the Lease Agreement (Federal Express Corporation
Trust No. N670FE), dated as of May 1, 1997, between the Lessor and the
Assignor, as amended, modified or supplemented from time to time.
"Participation Agreement" shall mean the Participation Agreement
(Federal Express Corporation Trust No. N670FE), dated as of May 1, 1997,
among the Assignor, the Owner Participant (as defined herein), the Pass
Through Trustee (as defined therein), the Lessor, the Indenture Trustee and
the Subordination Agent, as amended, modified or supplemented from time to
time.
"Purchase Agreement" shall mean the Airbus A300-600F Purchase
Agreement, dated as of July 3, 1991, between the Assignor and AVSA,
together with all exhibits, appendices and letter agreements thereto and
all amendments, waivers and consents granted thereunder.
All other terms used herein in capitalized form that are defined in
the Lease shall, when used herein, have the meanings specified in the Lease.
2. Assignment. a. Generally. The Assignor has sold, assigned,
transferred and set over and does hereby sell, assign, transfer and set over
unto the Lessor (i) the right upon valid tender of the Aircraft by AVSA in
accordance with the Purchase Agreement to purchase the Aircraft pursuant to
the Purchase Agreement for the amount specified in the invoice in respect
thereof to be delivered by AVSA on the Delivery Date therefor (including,
without limitation, the right to accept delivery of the Aircraft through an
appointed representative which may be an employee of the Assignor) and the
right to be named the "Buyer" in the Xxxx of Sale and the right to enforce the
same under the Consent and Guaranty, (ii) the right to take and hold the
Aircraft and (iii) all of the Assignor's other right, title and interest in
and to the Purchase Agreement and the Consent and Guaranty (insofar as it
relates to the Purchase Agreement), as and to the extent that the same relates
to the Aircraft and, except to the extent reserved below, the operation of the
Aircraft, including, without limitation, in such assignment to the Lessor (A)
all claims for damages in respect of such Aircraft arising as a result of any
default by AVSA under the Purchase Agreement, or by any vendor or other
supplier of aircraft engines or other parts or equipment installed on or in
the Aircraft, including, without limitation, all warranty, service life policy
and indemnity provisions in the Purchase Agreement in respect of the Aircraft
and all claims thereunder and under the Consent and Guaranty and (B) any and
all rights of the Assignor to compel performance of the terms of the Purchase
Agreement and the Consent and Guaranty in respect of the Aircraft, including
all warranty and indemnification provisions in the Purchase Agreement and the
Consent and Guaranty and claims thereunder with respect to the Aircraft;
reserving to the Assignor, however,
(1) all the Assignor's rights and interests in and to the Purchase
Agreement and the Consent and Guaranty as and to the extent that the
Purchase Agreement and the Consent and Guaranty relate to aircraft other
than the Aircraft and the purchase and operation of such aircraft and to
the extent that the Purchase Agreement and the Consent and Guaranty relate
to any other matters not directly pertaining to the Aircraft,
(2) all the Assignor's rights and interests in or arising out of any
payments, advance payments or deposits made by the Assignor in respect of
the Aircraft under the Purchase Agreement or amounts credited or to be
credited or paid or to be paid by the Guarantor or AVSA to the Assignor in
respect of the Aircraft or otherwise (except amounts credited with respect
to warranty claims to the extent set forth in Section 2(b) hereof) as of
the date of purchase,
(3) the rights to demand, accept and retain all rights in and to all
property (other than the Aircraft), data and service, other than data and
service provided under Clauses 12 and 13 of the Purchase Agreement, that
AVSA and the Guarantor are obligated to provide or do provide pursuant to
the Purchase Agreement and the Consent and Guaranty, respectively, with
respect to the Aircraft,
(4) all of the Assignor's right, title and interest in and to the Purchase
Agreement and the Consent and Guaranty as and to the extent that the same
relates to specification changes, performance and operation pertaining to
the Aircraft, other than sub-Clause 2.1 and Clauses 12 and 13 of the
Purchase Agreement and under the Consent and Guaranty to the extent
relating thereto,
(5) the right to obtain services, training, data and demonstration and test
flights pursuant to the Purchase Agreement,
(6) the right to maintain plant representatives at the Guarantor's plant
pursuant to the Purchase Agreement, and
(7) all rights set forth in any exhibits, appendices and letter agreements,
as at any time amended, modified or supplemented, to the Purchase
Agreement, and under the Consent and Guaranty to the extent relating
thereto; provided, however, that the reservation set forth in this Section
2(a)(7) shall not in any way limit the rights of the Lessor arising under
Sub-clause 2.1 and Clauses 12 and 13 of the Purchase Agreement.
(b) Assignment of Rights. If and so long as there shall not exist
and be continuing an Event of Default, the Lessor hereby authorizes the
Lessee, to the exclusion of the Lessor, to exercise in the Lessee's name all
rights and powers of the "Buyer" under the Purchase Agreement and to retain
any recovery or benefit resulting from the enforcement of any warranty or
indemnity in respect of the Aircraft, except that the Lessee may not enter
into any change order or other amendment, modification or supplement to the
Purchase Agreement without the written consent or countersignature of the
Lessor if such change order, amendment, modification or supplement would
result in any rescission, cancellation or termination of the Purchase
Agreement in respect of the Aircraft or in any way limit the rights of the
Lessor arising under Clauses 12 and 13 of the Purchase Agreement or any of the
other rights assigned hereunder.
(c) Acceptance of Assignment. Subject to the terms hereof the
Lessor accepts the assignment contained in this Section 2.
(d) Requirement of Notice to AVSA. For all purposes of this
Assignment, AVSA shall not be deemed to have knowledge of and need not
recognize any Event of Default, unless and until AVSA shall have received
written notice thereof from the Lessor or the Indenture Trustee addressed to
its Chief Executive Officer, 0, Xxxx Xxxxx Xxxxxxx Xxxxxxxx, 00000 Xxxxxxx,
Xxxxxx (telex 521155F) and, in acting in accordance with the terms of the
Purchase Agreement and this Assignment, AVSA may act with acquittance and
conclusively rely upon any such notice.
3. Certain Rights and Obligations of the Parties. (a) Assignor
Remains Liable. It is expressly agreed that, anything herein contained to the
contrary notwithstanding: (a) the Assignor shall at all times remain liable
to AVSA under the Purchase Agreement to perform all the duties and obligations
of the "Buyer" thereunder to the same extent as if this Assignment had not
been executed; (b) the exercise by the Lessor of any of the rights assigned
hereunder shall not release the Assignor from any of its duties or obligations
to AVSA under the Purchase Agreement except to the extent that such exercise
by the Lessor shall constitute performance of such duties and obligations; and
(c) except as provided in the next succeeding paragraph, none of the Lessor,
the Indenture Trustee nor any Participant shall have any obligation or
liability under the Purchase Agreement by reason of, or arising out of, this
Assignment or be obligated to perform any of the obligations or duties of the
Assignor under the Purchase Agreement or to make any payment or to make any
inquiry as to the sufficiency of any payment received by any of them or to
present or file any claim or to take any other action to collect or enforce
any claim for any payment assigned hereunder.
(b) Lessor Bound by Purchase Agreement. Without in any way
releasing the Assignor from any of its duties or obligations under the
Purchase Agreement, the Lessor confirms for the benefit of AVSA that, insofar
as the provisions of the Purchase Agreement relate to the Aircraft, in
exercising any rights under the Purchase Agreement, or in making any claim
with respect to the Aircraft or other goods and services delivered or to be
delivered pursuant to the Purchase Agreement, the terms and conditions of the
Purchase Agreement disclosed to the Lessor in writing shall apply to, and be
binding upon, the Lessor to the extent of its respective interests assigned
hereunder to the same extent as the Assignor.
(c) Limit of Effect of this Assignment. Nothing contained herein
shall (i) subject AVSA or the Guarantor to any liability to which it would not
otherwise be subject under the Purchase Agreement or (ii) modify in any
respect the contractual rights of AVSA or the Guarantor thereunder (except, in
each case, as provided in the attached Consents and Agreements).
(d) Appointment as Attorney-in-Fact. The Assignor does hereby
constitute, effective at any time after an Event of Default shall have
occurred and be continuing, the Lessor and its successors and assigns to be
the Assignor's true and lawful attorney, irrevocably, with full power (in the
name of the Assignor or otherwise) to ask, require, demand, receive, compound
and give acquittance for any and all monies and claims for monies due and to
become due under, or arising out of, the Purchase Agreement and the Consent
and Guaranty in respect of the Aircraft, to the extent that the same have been
assigned as provided in this Assignment and, for such period as the Lessor,
its successors and assigns may exercise rights with respect thereto under this
Assignment, to endorse any checks or other instruments or orders in connection
therewith and to file any claims or take any action or institute (or, if
previously commenced, assume control of) any proceedings and to obtain any
recovery in connection therewith which the Lessor, its successors and assigns,
may deem to be necessary or advisable in the premises.
4. Further Assurances. The Assignor and the Lessor each agree
that, at any time and from time to time, upon the written request of any other
party hereto, it will promptly and duly execute and deliver any and all such
further instruments and documents and take such further action as the other
may reasonably request in order to obtain the full benefits of this Assignment
and of the rights and powers herein granted.
5. Assignor's Representations, Warranties and Covenants. The
Assignor does hereby represent and warrant that (a) the Purchase Agreement,
insofar as it relates to the Aircraft, is in full force and effect and is
enforceable against the Assignor in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, moratorium,
reorganization or other similar laws or equitable principles of general
application to or affecting the enforcement of creditors' rights generally,
and the Assignor is not in default thereunder, and (b) the Assignor has not
assigned or pledged, and hereby covenants that it will not assign or pledge,
the whole or any part of the rights hereby assigned or any of its rights with
respect to the Aircraft under the Purchase Agreement not assigned hereby, to
anyone other than the Lessor as herein provided.
6. No Amendment of Purchase Agreement. So long as the Lease is in
effect, the Lessor agrees that it shall not enter into any agreement that
would amend, modify, supplement, rescind, cancel or terminate the Purchase
Agreement or the Consent and Guaranty in any respect or in any way limit the
rights of the Assignor arising under Clauses 12 and 13 of the Purchase
Agreement or any of the other rights assigned hereunder (except as set forth
above when there has been an Event of Default) without the prior written
consent of the Assignor.
7. Execution of Assignment. This Assignment is executed by the
Assignor and the Lessor concurrently with the execution and delivery of the
Participation Agreement and the Lease.
8. Confidentiality. The Lessor agrees that it will not disclose
to any third party the terms of the Purchase Agreement or this Assignment,
except (a) as required by applicable law or governmental regulation, (b) as
contemplated in the Lease or the Participation Agreement (including as set
forth in Section 17.01 of the Participation Agreement) or (c) with the consent
of the Assignor, the Guarantor and AVSA.
9. Assignment as Collateral. Each party hereto consents to the
assignment and pledge by the Lessor to the Indenture Trustee, as security for
the Certificates to be issued under the Indenture and the other obligations
secured thereby as specified in the Indenture, of all of the Lessor's right,
title and interest in and to the Purchase Agreement and the Consent and
Guaranty under this Assignment.
10. Counterparts. This Assignment may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute but
one and the same instrument.
11. GOVERNING LAW. THIS ASSIGNMENT SHALL IN ALL RESPECTS BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
12. Successors and Assigns. This Assignment shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and assigns.
13. Notices. All notices with respect to the matters contained
herein shall be delivered in the manner and to the addresses provided in
Article 14 of the Participation Agreement.
14. No Oral Amendments. Neither this Assignment nor any of the
terms hereof may be terminated, amended, supplemented, waived or modified
orally, but only by an instrument in writing signed by the party against whom
the enforcement of such termination, amendment, supplement, waiver or
modification is sought.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment to
be duly executed as of the day and year first above written.
FEDERAL EXPRESS CORPORATION
By ____________________________
Name:
Title:
STATE STREET BANK AND TRUST COMPANY
OF CONNECTICUT, NATIONAL ASSOCIATION
not in its individual capacity,
but solely as Lessor
By ______________________
Name:
Title:
AIRBUS INDUSTRIE CONSENT AND AGREEMENT
The undersigned, Airbus Industrie G.I.E., a groupement d'interet
economique established under Ordonnance No. 67-821 dated September 23, 1967 of
the Republic of France (the "Guarantor"), hereby acknowledges notice of and
consents to all of the terms of the Purchase Agreement Assignment, between
Federal Express Corporation, a Delaware corporation, and State Street Bank and
Trust Company of Connecticut, National Association, a national banking
association, not in its individual capacity, but solely as Lessor, with
respect to Federal Express Corporation Trust No. N670FE, dated as of May 1,
1997, (hereinafter called the "Assignment", the defined terms therein being
hereinafter used with the same meaning), and hereby confirms to the Assignor
and the Lessor and their respective successors and assigns that:
(i) except as provided in the Assignment, all representations,
warranties, and agreements of the Guarantor under the Consent and Guaranty
with respect to the Aircraft shall inure to the benefit of the Lessor and
its respective successors and assigns, to the same extent as if the Lessor
and its successors and assigns had originally been named the "Buyer" of the
Aircraft therein;
(ii) the Guarantor will pay to the person or entity entitled to
receive the corresponding payment from AVSA under the terms of the
Assignment all amounts required to be paid by the Guarantor with respect to
the Aircraft;
(iii) the Guarantor consents to the sale of the Aircraft by AVSA to
the Lessor, the assignment of Assignor's rights and interests under the
Purchase Agreement and the Consent and Guaranty to the Lessor pursuant to
the Assignment, the assignment of the Lessor's rights and interests in the
Assignment to the Indenture Trustee pursuant to the Indenture and the lease
of the Aircraft by the Lessor to the Assignor under the Lease; and
(iv) from and after the delivery of the Aircraft pursuant to the
Purchase Agreement and payment in full for the Aircraft as described in the
Participation Agreement, the Guarantor will not assert any lien or claim
against the Aircraft or any part thereof or against the Lessee, the Lessor,
the Owner Participant or the Indenture Trustee arising on or prior to such
delivery or in respect of any work or services performed on or prior
thereto.
The Guarantor hereby represents and warrants that:
(A) the Guarantor is a groupement d'interet economique duly
organized and existing in good standing under the laws of the Republic of
France and has the requisite power and authority to enter into and perform
its obligations under the Consent and Guaranty, the Airbus Guaranty and
this Consent and Agreement;
(B) the making and performance, in accordance with their terms of
the Consent and Guaranty, the Airbus Guaranty and this Consent and
Agreement have been duly authorized by all necessary corporate action on
the part of the Guarantor, do not require the consent or approval of the
members of the Guarantor, do not require the consent or approval of, or
the giving of notice to, or registration with, or the taking of any
other action in respect of, any French governmental authority or agency
except for those that have already been obtained and do not contravene
any law binding on the Guarantor or contravene the Guarantor's charter
documents or any indenture, credit agreement or other contractual
agreement to which the Guarantor is a party or by which it is bound;
(C) the Consent and Guaranty constituted, as of the date thereof and
at all times thereafter to and including the date of this Consent and
Agreement, and each of this Consent and Agreement and the Airbus Guaranty
constitutes, binding obligations of the Guarantor enforceable against the
Guarantor in accordance with their respective terms; and
(D) the Consent and Guaranty is in full force and effect.
THIS CONSENT AND AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE.
Dated as of May 1, 1997
AIRBUS INDUSTRIE G.I.E.
By _______________________________
Name:
Title:
AVSA CONSENT AND AGREEMENT
The undersigned, AVSA, S.A.R.L., a societe a responsabilite limitee
organized and existing under the laws of the Republic of France ("AVSA"),
hereby acknowledges notice of and consents to all of the terms of the Purchase
Agreement Assignment between Federal Express Corporation, a Delaware
corporation, and State Street Bank and Trust Company of Connecticut, National
Association, a national banking association, not in its individual capacity,
but solely as Lessor, with respect to Federal Express Corporation Trust No.
N670FE, dated as of May 1, 1997, (hereinafter called the "Assignment", the
defined terms therein being hereinafter used with the same meaning), and
hereby confirms to the Assignor and the Lessor and their respective successors
and assigns that:
(i) except as provided in the Assignment, all representations,
warranties, indemnities and agreements of AVSA under the Purchase Agreement
with respect to the Aircraft shall inure to the benefit of the Lessor and
its respective successors and assigns to the same extent as if the Lessor
and its successors and assigns had originally been named the "Buyer" of the
Aircraft therein;
(ii) AVSA will pay to the Assignor all payments required to be paid
by it under the Purchase Agreement, unless and until AVSA shall have
received written notice from the Indenture Trustee or the Lessor (or, after
the Indenture shall have been discharged in full, the Lessor) addressed to
it at the address and in the manner set forth in the Assignment that an
Event of Default has occurred and is continuing, whereupon AVSA will make
any and all payments thereafter required to be made by it under the
Purchase Agreement, to the extent that the right to receive such payment
has been assigned under the Assignment ("AVSA Payments"), directly to the
Indenture Trustee (or, after the Indenture shall have been discharged in
full, the Lessor) if AVSA shall have received notice as aforesaid that an
Event of Default has occurred and is continuing;
(iii) The Lessor shall not be liable for any of the obligations or
duties of the Assignor under the Purchase Agreement, nor shall the
Assignment give rise to any duties or obligations whatsoever on the part of
the Lessor owing to AVSA, except for the agreements of the Lessor set forth
in the Assignment, including, but not limited to Section 3(b) of the
Assignment;
(iv) AVSA consents to the assignment of the Lessor's rights and
interests in the Assignment to the Indenture Trustee pursuant to the
Indenture and to the lease of the Aircraft by the Lessor to the Lessee
under the Lease; and
(v) from and after the delivery of the Aircraft pursuant to the
Purchase Agreement and payment in full for the Aircraft as described in the
Participation Agreement and the Assignment, AVSA will not assert any lien
or claim against the Aircraft or any part thereof arising on or prior to
such delivery or in respect of any work or services performed on or prior
thereto.
AVSA hereby represents and warrants that:
(A) AVSA is a societe a responsabilite limitee duly organized and
existing in good standing under the laws of the Republic of France and has
the requisite power and authority to enter into and perform its obligations
under the Purchase Agreement and this Consent and Agreement;
(B) the making and performance, in accordance with their terms, of
the Purchase Agreement and this Consent and Agreement have been duly
authorized by all necessary corporate action on the part of AVSA, do not
require any approval of AVSA's shareholders, do not require the consent or
approval of, the giving notice to, or registration with, or the taking of
any other action in respect of, any French governmental authority or agency
except for those that have already been obtained and do not contravene any
law binding on AVSA or contravene AVSA's charter documents or any
indenture, credit agreement or other contractual agreement to which AVSA is
a party or by which it is bound;
(C) each of the Purchase Agreement and this Consent and Agreement
constitutes a binding obligation of AVSA enforceable against AVSA in
accordance with its terms, subject to: (i) the limitations of applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the rights of creditors generally; and (ii) general principles of
equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law), which principles do not make the remedies
available at law or in equity with respect to the Purchase Agreement and
this Consent and Agreement inadequate for the practical realization of the
benefits intended to be provided thereby and
(D) the Purchase Agreement is in full force and effect as to AVSA.
THIS CONSENT AND AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE.
Dated as of May 1, 1997
AVSA, S.A.R.L.
By:_________________________________
Name:
Title:
Exhibit C
to
Lease Agreement
---------------
ENGINE WARRANTY ASSIGNMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N670FE)
Words and phrases appearing in this Engine Warranty Assignment (the
"Assignment") shall have the respective meanings as defined below:
A. General Terms Agreement means that agreement dated as of July 3, 1991,
(the "GTA") by and between the Engine Manufacturer and Federal Express
Corporation ("Fed Ex"), including the Engine Product Support Plan at
Exhibit B, insofar as such Product Support Plan relates to the Engine
Warranties (the "Product Support Plan"), but excluding any and all
letter agreements attached thereto.
B. Engine Warranties means the Engine Manufacturer's New Engine Warranty,
New Parts Warranty, Ultimate Life Warranty and Campaign Change
Warranty, as set forth in the Engine Manufacturer's Product Support
Plan which forms a part of the GTA, and as limited by the applicable
terms of such GTA and Product Support Plan.
C. Engine means each of the CF6-80C2-A5F series engines installed on the
aircraft at the time of delivery to the Assignor, each bearing Engine
Manufacturer's serial numbers ___-___ and ___-___, respectively.
D. Replacement Engine means each of the CF6-80C2-A5F series engines which
are not subject to this Assignment and are a replacement or
substitute for an Engine, excluding, however, any engines obtained
from the Engine Manufacturer's lease pool which are installed on the
aircraft for the limited purpose of permitting the continued
operation of the aircraft during the period necessary to effect or
complete repairs or overhaul of an Engine.
E. Lease means the Lease Agreement (Federal Express Corporation Trust No.
N670FE), dated as of May 1, 1997, (the "Lease") between State Street
Bank and Trust Company of Connecticut, National Association (not in
its individual capacity, but solely as Owner Trustee), as Lessor
("Lessor") and Fed Ex, as Lessee, as amended, modified or
supplemented from time to time.
All other capitalized terms used and not defined herein that are in the
Lease shall, when used herein, have the meanings specified in the Lease.
1
Fed Ex, pursuant to the terms and conditions herein, hereby sells, assigns,
transfers and sets over unto the Lessor all of its rights, claims and
interests in and under the GTA and the Product Support Plan, as such apply to
the Engines, to enforce in the Lessor's own name such rights as Fed Ex may
have with respect to the Engine Warranties, to the extent the same relate to
the Engines, and to retain any benefit resulting therefrom; provided, however,
that there is reserved to Fed Ex all of its other rights, claims and interests
under the GTA except as expressly stated above. Fed Ex shall, during the term
of the Lease (but only so long as no Event of Default shall have occurred and
be continuing), have the benefit of and shall be entitled to enforce (as it
shall deem appropriate), either in its own name or (at the cost of Fed Ex) in
the name of the Lessor for the use and benefit of Fed Ex, any and all Engine
Warranties available to the Lessor under the GTA in respect of the Engines and
each Part thereof, and the Lessor agrees (but only so long as no Event of
Default shall have occurred and be continuing) at Fed Ex's expense to do,
execute and deliver such further acts, deeds, matters or things as may be
reasonably requested by Fed Ex and necessary to enable Fed Ex to obtain
customary warranty services furnished for the Engines or any Part thereof
pursuant to the Engine Warranties. Fed Ex shall, at the Lessor's expense,
cooperate with the Lessor and take such action as the Lessor reasonably deems
necessary to enable the Lessor to enforce such rights, claims and interests as
assigned herein.
2
Notwithstanding anything in this Assignment or the Consent attached hereto
and incorporated herein to the contrary, Fed Ex and the Lessor confirm
expressly for the benefit of the Engine Manufacturer that:
A. The Lessor agrees that it will not, without the prior written consent
of the Engine Manufacturer, disclose, directly or indirectly, to any
third party, any of the terms of the Engine Warranties disclosed to
it by the Engine Manufacturer incident to effecting the assignment
herein; provided, however, that (1) the Lessor may use, retain and
disclose such information on a confidential basis to its special
counsel, independent insurance brokers, bank examiners or similar
regulatory authorities, auditors and public accountants, (2) the
Lessor may use, retain and disclose on a confidential basis such
information to the Owner Participant, the Indenture Trustee, the Pass
Through Trustee and any Certificate Holder, as the case may be, and
their special counsel, independent insurance brokers, bank examiners
or similar regulatory authorities, auditors and public accountants,
(3) the Lessor may disclose such information as required by
applicable laws, governmental regulations, subpoena, or other written
demand under color of legal right, but it shall first, as soon as
practicable upon receipt of such demand and to the extent permitted
by applicable laws, furnish a copy thereof to Fed Ex and to the
Engine Manufacturer, and the Lessor, to the extent permitted by
applicable law, shall afford Fed Ex and the Engine Manufacturer
reasonable opportunity, at the moving party's cost and expense, to
obtain a protective order or other assurance reasonably satisfactory
to the Engine Manufacturer of confidential treatment of the
information required to be disclosed, (4) the Lessor may disclose
such information as required to enforce its rights under the Engine
Warranties assigned to it pursuant to this Assignment, and (5) the
Lessor may disclose such information to any bona fide potential
purchaser of the Aircraft and/or Engines or any beneficial interest
therein (subject to the execution by such prospective purchaser of a
written confidentiality statement setting forth the same or
substantially similar terms as those referred to in this paragraph).
B. Without in any way releasing Fed Ex from any of its duties or
obligations under the GTA, the Lessor agrees that, insofar as the
provisions of the GTA relate to the Engines, in exercising any rights
under such Engine Warranties or in making any claim with respect
thereto, the applicable terms and conditions of the GTA, including
Article Eight (Limitation of Liability) and the Product Support Plan,
shall apply to, and be binding upon, the Lessor to the same extent as
Fed Ex.
C. Insofar as the provisions of the GTA relate to the Engines, in
exercising any rights under the Engine Warranties or in making any
claim with respect thereto, the applicable terms and conditions of
the GTA and the Product Support Plan or the Consent attached hereto
and incorporated herein shall apply to, and be binding upon, the
Lessor to the same extent as if named "Airline" therein. It is
expressly agreed that Fed Ex shall at all times remain liable to the
Engine Manufacturer under the GTA to perform all the duties and
obligations of Fed Ex thereunder to the same extent as if this
Assignment had not been executed. The performance by the Lessor of
any of the rights assigned hereunder shall not release Fed Ex from
any of its duties or obligations to the Engine Manufacturer under the
GTA except to the extent that such exercise by the Lessor shall
constitute performance of such duties and obligations.
D. Nothing contained in this Assignment shall subject the Engine
Manufacturer to any obligation or liability to which it would not
otherwise be subject under the GTA or modify in any respect the
Engine Manufacturer's contract rights thereunder, or subject the
Engine Manufacturer to any multiple or duplicative liability or
obligation under the GTA. The Engine Manufacturer recognizes and it
is consented to by all parties to this Assignment that the Lessor
shall collaterally assign its rights under the Lease and this
Assignment and will mortgage the Aircraft and Engines, to State
Street Bank and Trust Company of Connecticut, National Association,
as Indenture Trustee under the Trust Indenture, Mortgage and Security
Agreement (Federal Express Corporation Trust No. N670FE), dated as of
May 1, 1997 (on the terms set forth therein); however, no further
extension or assignment (except to a successor indenture trustee
under such agreement) of any remaining Engine Warranties, including
but not limited to extensions or assignments for security purposes,
are permitted without the prior written consent of the Engine
Manufacturer.
E. Exclusive of the assignment noted in Section 2D above, the Engine
Manufacturer shall not be deemed to have knowledge of any change in
the authority of Fed Ex or the Lessor, as the case may be, to
exercise the rights established hereunder until the Engine
Manufacturer has received written notice thereof from the Indenture
Trustee or the Lessor. Such notice shall be sent to: Commercial
Contracts Director, GE Aircraft Engines, Mail Drop F17, Xxx Xxxxxxx
Xxx, Xxx 000000, Xxxxxxxxxx, Xxxx 00000-0000, facsimile: (513)
243-8068.
F. This Assignment shall apply only in respect to each Engine and shall
not extend to any replacement or substitute engine. If, during the
term of this Assignment and the Lease, it becomes necessary to
replace or substitute an Engine due to a Failure (as such term is
defined in the Engine Product Support Plan, excluding normal wear,
tear and deterioration which can be restored by overhaul and repair),
damage or loss, the Assignor (or the Lessor) shall give the Engine
Manufacturer written notice of such Failure, damage or loss. The
notice shall include (i) a description of the event or circumstances
which constitute a Failure, damage or loss, and (ii) the serial
numbers of the (a) failed, damaged or lost Engine and (b) Replacement
Engine and shall be sent to: Customer Support Manager, GE Aircraft
Engines, 000 Xxxxxxxx Xxxxxx, Xxxx 000, Xxxxxxxxxx, Xxxx 00000. The
Engine Manufacturer shall not be deemed to have knowledge of the need
for a replacement engine until it has received the aforementioned
notice.
In the event an Engine subject to this Assignment fails, is damaged
or lost, and such Engine is replaced by a Replacement Engine, the
Assignor and the Assignee shall, prior to, or contemporaneous with,
the delivery of such Replacement Engine, obtain the written consent
of the Engine Manufacturer (which it shall be obligated to give) that
the Engine Warranties as set forth in the Engine Product Support Plan
shall apply to such Replacement Engines. The Engine Manufacturer
shall not incur any obligation or liability for a Replacement Engine
under the Engine Warranties until the execution of the aforementioned
consent.
G. At any time and upon the written request of the Engine Manufacturer,
Fed Ex and the Lessor shall promptly and duly execute and deliver any
and all such further assurances, instruments and documents and take
all such further action, at the expense of Fed Ex, as the Engine
Manufacturer may reasonably request in order to obtain the full
benefit of Fed Ex and the Lessor's agreement as set forth in this
Assignment and the Consent attached hereto and incorporated herein.
Any performance by the Engine Manufacturer that discharges its
obligation under the Engine Warranties will satisfy the respective
interests of Fed Ex and the Lessor. So long as the Engine
Manufacturer acts in good faith in accordance with this Assignment,
the Engine Manufacturer may rely conclusively on any notice given
pursuant to this Assignment without inquiring as to the accuracy of,
or the entitlement of the party to give, such notice.
3
The Engine Manufacturer shall reserve to Fed Ex all those rights, claims
and interests, as and to the extent such relates to the purchase and
operation of engines other than the Engines subject to the Assignment, as
well as other matters not directly pertaining to the Engines, and Fed Ex
will have or retain under the GTA such rights, claims and interest not
expressly assigned to the Lessor hereunder.
4
The Engine Manufacturer warrants each new Reverser (as such is defined in
the Engine Product Support Plan) installed on the Aircraft at the time of
delivery to Fed Ex under the terms of the New Engine Warranty; however,
administration of such New Engine Warranty, with respect to both installed and
replacement Reversers, shall be performed by Xxxxxx Xxxxxxxx.
5
If at some point in time, the Engine Manufacturer receives written
notification from the Indenture Trustee or the Lessor that the Lessor is or
becomes entitled to possession of the Engines, pursuant to an Event of Default
or otherwise, and desires to sell or lease the Engines to a party who is not
currently a party to a General Terms Agreement with the Engine Manufacturer,
the Engine Manufacturer agrees if such agreement is permissible under
applicable U.S. law, that it will offer to such purchaser or lessee, subject
to the execution of an agreement to sell or lease such Engines, a General
Terms Agreement on the Engine Manufacturer's standard terms and conditions.
If, however, such purchaser or lessee is currently a party to a General Terms
Agreement with the Engine Manufacturer, the remaining portion of the terms of
such General Terms Agreement shall be extended to and apply to such subsequent
purchase or lease; provided, however, that the written consent of the Engine
Manufacturer to such an extension is obtained prior to the transaction's
occurrence.
This Assignment shall be governed by the laws of the State of New York,
including all matters of construction, validity and performance, as applicable
to contracts between citizens of that state to be performed wholly within that
state, and without reference to conflicts of law principles.
In witness whereof, the parties hereto have caused this Engine Warranty
Assignment to be duly executed and delivered as of the date hereof.
General Electric Company
_____________________________
Name:
Title:
Federal Express Corporation
_____________________________
Name: Xxxxxx X. Xxxxxxx
Title: Assistant Treasurer and
Managing Director -
Structured Finance
Wilmington Trust Company
not in its individual capacity,
but solely as Owner Trustee
_____________________________
Name: Xxxxxx X. XxxXxxxxx
Title: Assistant Vice President
CONSENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N670FE)
The Engine Manufacturer, General Electric Company (the "Engine
Manufacturer"), a New York corporation, hereby consents to the Engine Warranty
Assignment attached hereto and acknowledges notice of (i) the Purchase
Agreement Assignment (Federal Express Corporation Trust No. N670FE), dated as
of May 1, 1997 and entered into by and between Federal Express Corporation, as
Assignor ("Fed Ex") and State Street Bank and Trust Company of Connecticut,
National Association (not in its individual capacity, but solely as Owner
Trustee) as Assignee ("Lessor"), (the "Purchase Agreement Assignment"); and
(ii) the Lease Agreement (Federal Express Corporation Trust No. N670FE), dated
as of May 1, 1997 and entered into by and between Fed Ex, as Lessee and the
Lessor, as Lessor (as in effect from time to time, the "Lease") and (iii) the
Trust Indenture and Security Agreement (Federal Express Corporation Trust No.
N670FE), dated as of May 1, 1997 (the "Indenture"), between the Lessor and
First Security Bank, National Association, as Indenture Trustee ("Indenture
Trustee"). The Purchase Agreement Assignment and Lease cover two GE
CF6-80C2-A5F series engines bearing Engine Manufacturer's serial numbers
___-___ and ___-___, respectively, (the "Engines") as installed on the Airbus
A300F4-605R series aircraft bearing Manufacturer's serial number 777 (the
"Aircraft"). In connection with such Purchase Agreement Assignment and Lease,
reference is made to the General Terms Agreement No. 6-9034 dated as of July
3, 1991, between the Engine Manufacturer and Fed Ex (the "General Terms
Agreement"), under which the Engine Manufacturer agreed to support certain GE
CF6-80C2-A5F series engines, including the Engines and spare parts therefor to
be purchased by Fed Ex from the Engine Manufacturer, as installed on certain
Airbus A300F4-605R series aircraft, including the Aircraft. Recognizing that
the Lessor and Fed Ex have entered into the Lease which provides for the lease
by the Lessor to Fed Ex of the Aircraft and Engines and that the Lessor has
granted a security interest in the Engines and assigned certain of its rights
under the Lease to the Indenture Trustee, the Engine Manufacturer agrees that
in furtherance of the Lease, it will so support such Engines and spare parts
therefor, subject to the applicable terms and conditions of the General Terms
Agreement, including Article Eight (Limitation of Liability).
The Engine Manufacturer represents and warrants that:
1. it is a corporation existing in good standing under the laws of
the State of New York;
2. the making and performance of this Consent in accordance with
its terms has been duly authorized by all necessary corporate
action on the part of the Engine Manufacturer, does not require
any shareholder approval and does not contravene its
certificate of incorporation or by-laws or any debenture,
credit agreement or other contractual agreement to which the
Engine Manufacturer is a party or by which it is bound or any
law binding on the Engine Manufacturer;
3. the making and performance of the Engine Warranties, as defined
in the Engine Warranty Assignment attached hereto (the "Engine
Warranties") in accordance with their terms have been duly
authorized by all necessary corporate action on the part of the
Engine Manufacturer, do not require any shareholder approval
and do not contravene the Engine Manufacturer's certificate of
incorporation or by-laws or any debenture, credit agreement or
other contractual agreement to which the Engine Manufacturer is
a party or by which it is bound or any law binding on the
Engine Manufacturer; and
4. the Engine Warranties constitute, as of the date on which they
were made and at all times thereafter, and this Consent and the
Engine Warranty Assignment attached hereto are, binding
obligations of the Engine Manufacturer enforceable against the
Engine Manufacturer in accordance with its terms subject to:
(a) the limitation of applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights
of creditors generally; and
(b) general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at
law).
This Consent shall be governed by the laws of the State of New York,
including all matters of construction, validity and performance, as applicable
to contracts between citizens of that state to be performed wholly within that
state, and without reference to conflicts of law principles.
General Electric Company
______________________________
Name:
Title:
==============================================================================
LEASE AGREEMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N671FE)
Dated as of May 1, 1997
between
STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION,
Not in its Individual Capacity,
but Solely as Owner Trustee,
Lessor
and
FEDERAL EXPRESS CORPORATION,
Lessee
COVERING ONE AIRBUS A300F4-605R AIRCRAFT
SERIAL NO. 778, REGISTRATION NO. N671FE
CERTAIN OF THE RIGHT, TITLE AND INTEREST IN AND TO THIS LEASE
AGREEMENT OF STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL
ASSOCIATION, AS OWNER TRUSTEE, HAS BEEN ASSIGNED TO AND IS SUBJECT TO A LIEN
AND SECURITY INTEREST IN FAVOR OF FIRST SECURITY BANK, NATIONAL ASSOCIATION,
AS INDENTURE TRUSTEE UNDER THE TRUST INDENTURE AND SECURITY AGREEMENT (FEDERAL
EXPRESS CORPORATION TRUST NO. N671FE) DATED AS OF MAY 1, 1997 FOR THE BENEFIT
OF THE HOLDERS OF THE CERTIFICATES REFERRED TO IN SUCH TRUST INDENTURE AND
SECURITY AGREEMENT. THIS LEASE AGREEMENT HAS BEEN EXECUTED IN SEVERAL
COUNTERPARTS. ONLY THE CHATTEL-PAPER "ORIGINAL" COUNTERPART CONTAINS THE
RECEIPT THEREFOR EXECUTED BY FIRST SECURITY BANK, NATIONAL ASSOCIATION, AS
INDENTURE TRUSTEE, ON THE SIGNATURE PAGES THEREOF.
==============================================================================
TABLE OF CONTENTS
Page
----
Initial Recitals.............................................................1
ARTICLE 1
DEFINITIONS
ARTICLE 2
ACCEPTANCE UNDER THE LEASE
Section 2.01. Sale and Lease of Aircraft; Term......................... 1
ARTICLE 3
RENT AND RENT ADJUSTMENT
Section 3.01. [Reserved]............................................... 2
Section 3.02. Basic Rent............................................... 2
Section 3.03. Supplemental Rent........................................ 2
Section 3.04. Adjustments to Basic Rent, Stipulated Loss Value and
Termination Value After the Delivery Date................ 3
Section 3.05. Minimum Basic Rent....................................... 4
Section 3.06. Payment to Indenture Trustee............................. 5
Section 3.07. Costs and Expenses....................................... 5
ARTICLE 4
RENEWAL OPTIONS AND PURCHASE OPTIONS
Section 4.01. Renewal Options.......................................... 5
Section 4.02. Purchase Options......................................... 6
Section 4.03. Appraisal Procedures..................................... 8
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
Section 5.01. Disclaimer of Representations and Warranties............. 10
Section 5.02. No Modification of Other Warranties...................... 10
Section 5.03. Certain Agreements of the Lessee......................... 11
ARTICLE 6
LIENS
Section 6.01. Liens.................................................... 11
ARTICLE 7
AIRCRAFT REGISTRATION, MAINTENANCE AND OPERATION
Section 7.01. Registration, Maintenance and Operation.................. 12
Section 7.02. Possession and Permitted Transfer and Sublease........... 14
Section 7.03. Insignia................................................. 19
ARTICLE 8
REPLACEMENT AND POOLING OF PARTS
Section 8.01. Replacement of Parts..................................... 19
Section 8.02. Pooling of Parts......................................... 20
ARTICLE 9
ALTERATIONS, MODIFICATIONS AND ADDITIONS
Section 9.01. Required Alterations and Modifications................... 21
Section 9.02. Other Alterations and Modifications...................... 21
ARTICLE 10
VOLUNTARY TERMINATION
Section 10.01. Right of Termination Upon Obsolescence or Surplus....... 23
Section 10.02. Retention of Aircraft by the Lessor..................... 25
Section 10.03. Voluntary Termination as to Engines..................... 26
ARTICLE 11
LOSS, DESTRUCTION, REQUISITION
Section 11.01. Lessee's Election Rights................................ 27
Section 11.02. Payment of Stipulated Loss Value........................ 27
Section 11.03. Replacement of Airframe and Engines..................... 28
Section 11.04. Event of Loss with Respect to an Engine................. 31
Section 11.05. Application of Payments from the Government or Others... 33
Section 11.06. Requisition of an Airframe and the Installed Engines
for Use by Government................................... 34
Section 11.07. Requisition for Use by Government of an Engine Not
Installed on the Airframe............................... 35
Section 11.08. Application of Payments During Existence of Certain
Defaults................................................ 35
ARTICLE 12
RETURN OF AIRCRAFT
Section 12.01. Return of Aircraft...................................... 35
Section 12.02. Return of Engines....................................... 36
Section 12.03. Return of Manuals....................................... 36
Section 12.04. Condition of Aircraft................................... 37
Section 12.05. [Reserved].............................................. 38
Section 12.06. Storage................................................. 38
Section 12.07. Special Markings........................................ 38
Section 12.08. Lessor's Option to Purchase Parts....................... 39
ARTICLE 13
INSURANCE
Section 13.01. Comprehensive Airline Liability and Property Damage
Liability Insurance..................................... 39
Section 13.02. Insurance Against Loss or Damage to Aircraft and Engines 41
Section 13.03. Application of Insurance Proceeds....................... 43
Section 13.04. Reports................................................. 44
Section 13.05. Lessor's Insurance...................................... 45
Section 13.06. Self-Insurance.......................................... 45
ARTICLE 14
INSPECTION
Section 14.01. Right of Inspection..................................... 46
Section 14.02. No Obligation to Inspect................................ 46
ARTICLE 15
ASSIGNMENT
Section 15.01. Lessee's Right to Assign................................ 46
Section 15.02. Citizenship............................................. 47
ARTICLE 16
EVENTS OF DEFAULT
Section 16.01. Events of Default....................................... 47
ARTICLE 17
REMEDIES
Section 17.01. Remedies Upon Lessee's Default.......................... 49
Section 17.02. Cumulative Remedies..................................... 52
Section 17.03. Waiver.................................................. 52
Section 17.04. Lessor's Right to Perform for Lessee.................... 53
ARTICLE 18
COVENANT OF QUIET ENJOYMENT
Section 18.01. Quiet Enjoyment......................................... 53
ARTICLE 19
FURTHER ASSURANCES
Section 19.01. Further Assurances...................................... 53
ARTICLE 20
NET LEASE
Section 20.01. Nature of Lease......................................... 54
ARTICLE 21
SUCCESSOR LESSOR
Section 21.01. Successor Lessor........................................ 55
ARTICLE 22
SECURITY FOR LESSOR'S OBLIGATIONS
Section 22.01. Security for Lessor's Obligations to Holders............ 56
Section 22.02. [Reserved].............................................. 56
Section 22.03. Consent of Lessee to Assignment of Lease as Security.... 56
ARTICLE 23
SECURITY FUNDS
Section 23.01. Investment of Security Funds............................ 57
ARTICLE 24
CONCERNING THE LESSOR
Section 24.01. Lessor's Entry Into Lease............................... 58
ARTICLE 25
NOTICES
Section 25.01. Notices................................................. 59
ARTICLE 26
MISCELLANEOUS
Section 26.01. Section Heading and Captions............................ 60
Section 26.02. References.............................................. 60
Section 26.03. APPLICABLE LAW.......................................... 60
Section 26.04. Severability............................................ 60
Section 26.05. No Oral Modification.................................... 60
Section 26.06. Agreement as Chattel Paper.............................. 60
Section 26.07. Counterparts............................................ 60
Section 26.08. Public Release of Information........................... 61
ARTICLE 27
TRUE LEASE
Section 27.01. Intent of the Parties................................... 61
Section 27.02. Section 1110 Compliance................................. 61
Section 27.03. Finance Lease........................................... 61
Schedule I Definitions
Schedule II Basic Rent
Schedule III Stipulated Loss Values
Schedule IV Termination Values
Schedule V Purchase Option Schedule
Exhibit A Form of Lease Supplement
Exhibit B Form of Purchase Agreement Assignment, Consent and
Agreement and AVSA Consent and Agreement
Exhibit C Form of Engine Warranty Assignment and Engine Consent
LEASE AGREEMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N671FE)
LEASE AGREEMENT (FEDERAL EXPRESS CORPORATION TRUST NO. N671FE) dated
as of May 1, 1997 (this "Lease") between STATE STREET BANK AND TRUST COMPANY
OF CONNECTICUT, NATIONAL ASSOCIATION, a national banking association, not in
its individual capacity but solely as Owner Trustee under the Trust Agreement
(as defined in Article 1 below) (the "Lessor"), and FEDERAL EXPRESS
CORPORATION, a Delaware corporation (the "Lessee").
W I T N E S S E T H :
WHEREAS, all capitalized terms used herein shall have the meanings
assigned thereto as provided in Article 1 below;
WHEREAS, subject to the terms and conditions set forth in the
Participation Agreement (as hereinafter defined), the Lessee desires on the
Delivery Date (as hereinafter defined) to lease from the Lessor and the Lessor
is willing to lease to the Lessee the Aircraft (as hereinafter defined) in
accordance with the terms and conditions set forth in this Lease.
NOW, THEREFORE, in consideration of the mutual promises herein, and
other good and valuable consideration, the receipt and adequacy of which is
hereby acknowledged by the parties, the Lessor and the Lessee agree as follows:
ARTICLE 1
DEFINITIONS
Unless the context otherwise requires, the capitalized terms herein
shall have the meanings given in Schedule I hereto, for all purposes of this
Lease and shall be equally applicable to both the singular and the plural
forms of the terms defined.
ARTICLE 2
ACCEPTANCE UNDER THE LEASE
Section 2.01. Sale and Lease of Aircraft; Term. The Lessor, subject
to satisfaction or waiver of the conditions set forth in this Lease and in the
Participation Agreement, hereby agrees to purchase the Aircraft from AVSA on
the Delivery Date and agrees immediately thereafter to lease the Aircraft to
the Lessee pursuant to this Lease, and the Lessee hereby agrees to lease the
Aircraft from the Lessor, such lease to be evidenced by the execution by the
Lessor and the Lessee of a Lease Supplement leasing the Aircraft hereunder.
Such lease shall last for the Term, at all times during which full legal title
to the Aircraft shall remain vested with the Lessor to the exclusion of the
Lessee, notwithstanding the possession and use thereof by the Lessee or any
other Person. The Lessee agrees that the Lessor will authorize one or more
employees of the Lessee, designated by the Lessee in writing, as the
authorized representative or representatives of the Lessor to accept delivery
of the Aircraft pursuant to the sale of the Aircraft described in the
Participation Agreement. The Lessee hereby agrees that in the event delivery
of the Aircraft shall be accepted by an employee or employees of the Lessee
pursuant to such authorization by the Lessor, such acceptance of delivery by
such employee or employees on behalf of the Lessor shall, without further act,
irrevocably constitute acceptance by the Lessee of the Aircraft for all
purposes of this Lease.
ARTICLE 3
RENT AND RENT ADJUSTMENT
Section 3.01. [Reserved].
Section 3.02. Basic Rent. The Lessee agrees to pay to the Lessor in
immediately available funds, on each Rent Payment Date, Basic Rent for the
Aircraft during the Basic Term, each payment being set forth on Schedule II
hereto opposite the applicable Rent Payment Date, subject to increase or
decrease as provided in Section 3.04 of this Lease. Each payment of Basic
Rent shall be made in arrears or in advance, all as stated in Schedule II
hereto. Each payment of Basic Rent designated as advance rent shall be
allocated over the six-month period beginning on the Rent Payment Date on
which such advance rent payment is scheduled to be made, and each installment
of Basic Rent that is designated as payable in arrears shall be accrued over
the six-month period ending on and including the day immediately preceding the
Rent Payment Date on which such arrears payment is scheduled to be made.
Section 3.03. Supplemental Rent. The Lessee agrees to pay or cause
to be paid to the Lessor, or to whomever shall be entitled to it, any and all
Supplemental Rent promptly as the same shall become due. If the Lessee fails
to pay any Supplemental Rent when due, the Lessor shall have all rights,
powers and remedies provided for in this Lease, or by law or equity or
otherwise in the case of nonpayment of Basic Rent. The Lessee will also pay
to the Person entitled thereto, on demand, as Supplemental Rent, to the extent
permitted by applicable law, an amount equal to interest at the Past Due Rate
on any part of any installment of Basic Rent not paid when due, for any period
until the same shall be paid and on any payment of Supplemental Rent not paid
when due, for the period until the same shall be paid. In addition, the
Lessee will pay to the Lessor, as Supplemental Rent, (i) an amount equal to
the aggregate amount of any Make-Whole Premium payable under the Indenture
(other than any Make-Whole Premium payable in connection with an Indenture
Event of Default that is not and does not arise out of a Lease Event of
Default) and (ii) an amount equal to the excess of interest at the Past Due
Rate on the principal of the Certificates in connection with an acceleration
of the Certificates pursuant to Section 7.02 of the Indenture following an
Indenture Event of Default attributable to an Event of Default over interest
payable by the Lessee at the Past Due Rate on Basic Rent. The expiration or
other termination of the Lessee's obligation to pay Basic Rent shall not limit
or otherwise modify the obligations of the Lessee with respect to the payment
of Supplemental Rent.
Section 3.04. Adjustments to Basic Rent, Stipulated Loss Value and
Termination Value After the Delivery Date. The percentages for Basic Rent
referred to in Schedule II hereto and the percentages for Stipulated Loss
Value and Termination Value referred to in Schedule III and Schedule IV
hereto, respectively, shall be adjusted (upward or downward) subject to the
minimum value established by Section 3.05 hereof and the definitions of
Stipulated Loss Value and Termination Value to reflect (i) any costs and
expenses paid by the Lessor or the Owner Participant pursuant to Section 10.01
of the Participation Agreement being greater or less than the Estimated
Expense Amount, (ii) any Refinancing pursuant to Section 15.01 of the
Participation Agreement, (iii) any reoptimization pursuant to Section 15.02(a)
of the Participation Agreement, (iv) payments pursuant to Section 5 of the Tax
Indemnity Agreement by an adjustment of Basic Rent or (v) the Delivery Date
being other than June 20, 1997. Each such adjustment pursuant to clause (i),
(ii), (iv) or (v) of the first sentence of this Section 3.04 shall maintain
the Owner's Economic Return (and, while maintaining such Owner's Economic
Return, minimize the aggregate Net Present Value of Rents to the Lessee). In
the event of an adjustment pursuant to clause (iii) of the first sentence of
this Section 3.04, the Owner Participant may recalculate Basic Rent as set
forth in Schedule II hereto in order to maintain to the extent feasible the
Owner's Economic Return and, subject to the provisions of Section 15.02 of the
Participation Agreement, recalculate the schedule of principal repayments, the
Stipulated Loss Value percentages set forth in Schedule III hereto and the
Termination Value percentages set forth in Schedule IV hereto in a manner
consistent with such recalculation of Basic Rent; provided that any such
recalculations as a result of an adjustment pursuant to such clause (iii) of
the first sentence of this Section 3.04 may not (A) increase the Net Present
Value of Rents to the Lessee, (B) increase as of any date the sum of (1) the
Net Present Value of Rents to the Lessee payable through such date plus (2) the
present value of the Stipulated Loss Value or the Termination Value as of such
date, in each case discounted to the Delivery Date at the Debt Rate, beyond
such net present values prior to such adjustment, or (C) otherwise result in
any adverse impact (including tax consequences) to the Lessee for which the
Owner Participant has not agreed to indemnify the Lessee on terms reasonably
acceptable to the Lessee.
The Owner Participant shall promptly notify the Lessee and the Lessor
and the Lessee shall promptly notify the Owner Participant and the Lessor of
the need for any such adjustment pursuant to this Section 3.04. As promptly
as feasible after any such notification, the Lessor shall furnish the Lessee
with a notice setting forth the amount of any such adjustments together with
the calculations upon which the adjustments are based; provided, however, that
the Lessor and the Owner Participant shall not be required to disclose to the
Lessee in such notice any confidential or proprietary information (including
methodology or assumptions) relating to such calculations. At the request
and, subject to the next succeeding sentence, expense of the Lessee, the
accuracy of the calculation of such adjustments and the consistency of the
calculation with the calculation used to determine Basic Rent, Stipulated Loss
Values and Termination Values shall be verified first, by First Chicago Leasing
Corporation or such other financial advisor chosen by the Lessee and second,
if such adjustments are still believed to be in error and are not reconciled
with the Owner Participant within fifteen (15) Business Days, by a firm of
nationally recognized independent public accountants selected by the Lessee
and reasonably acceptable to the Owner Participant and, in order to enable
them to verify such adjustments, the Owner Participant shall make available to
such accountants (for their own confidential use and not to be disclosed to
the Lessee or any other Person and subject to the execution of a
confidentiality agreement reasonably satisfactory to the Owner Participant)
all information reasonably necessary for such verification, including the name
of the lease analysis program used by the Owner Participant to calculate such
adjustments. The Lessee will pay the reasonable costs and expenses of the
verification process under this Section 3.04 unless as a result of such
verification process by the independent public accountants Basic Rent is
adjusted and such adjustment causes the Net Present Value of Rents, to decline
by 10 or more basis points (in which event the Owner Participant shall pay the
reasonable costs and expenses of such verification process). The Lessor and
the Lessee shall execute and deliver an amendment to this Lease to reflect
each adjustment under this Section 3.04.
All adjustments under this Section 3.04 shall be in compliance with
the requirements of Revenue Procedure 75-21, 1975-1 C.B. 715 and Sections
4.02(5), 4.07(1), 4.07(2) and 4.08(1) of Revenue Procedure 75-28, 1975-1 C.B.
752 and shall be structured so as to not cause the Lease to be a "disqualified
leaseback or long-term agreement" within the meaning of Section 467 of the
Code.
Section 3.05. Minimum Basic Rent. Notwithstanding any other
provisions of the Operative Agreements to the contrary, each installment of
Basic Rent due on each Rent Payment Date and not constituting an Excepted
Payment shall be, under any and all circumstances, an amount at least
sufficient to pay in full any installment of principal of and interest on the
Certificates required to be paid pursuant to the Certificates (other than
amounts becoming due on account of the exercise of remedies pursuant to
Article 17 hereof) on such Rent Payment Date.
Section 3.06. Payment to Indenture Trustee. All Rent payable by the
Lessee to the Lessor shall be paid to the Lessor c/o State Street Bank and
Trust Company, Xxx Xxxxxxxxxxxxx Xxxxx, 0xx Xxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000,
Attention: Corporate Trust Department, or as the Lessor may otherwise direct,
by wire transfer of immediately available funds in U.S. Dollars with
sufficient information to identify sources and applications of such funds no
later than 10:30 a.m., New York time on the due date of such payment;
provided, however, that so long as the Lien of the Indenture shall not have
been discharged the Lessor hereby directs, and the Lessee agrees, that all
Rent (other than Excepted Payments, which shall be paid by the Lessee directly
to the Person entitled thereto) (all without set-off or counterclaim as and to
the extent provided in Article 20 hereof) shall be paid directly to the
Indenture Trustee at its principal office at 00 Xxxxx Xxxx Xxxxxx, Xxxx Xxxx
Xxxx, Xxxx 00000, Attention: Corporate Trust Department, or as the Indenture
Trustee may otherwise direct within the United States by wire transfer of
immediately available funds in U.S. Dollars no later than 10:30 a.m., New York
time, on the due date of such payment. In any case where a scheduled Rent
Payment Date shall not be a Business Day such Rent Payment Date shall be
adjourned to the next succeeding Business Day without interest thereon for the
period of such extension (provided that payment is made on such next
succeeding Business Day).
Section 3.07. Costs and Expenses. As between the Lessor and the
Lessee, all obligations under this Lease shall be done, performed and complied
with at the Lessee's cost and expense, whether or not so expressed, unless
otherwise expressly stated to the contrary.
ARTICLE 4
RENEWAL OPTIONS AND PURCHASE OPTIONS
Section 4.01. Renewal Options. (a) Election to Renew. The Lessee
shall provide the Lessor with irrevocable written notice (the "Preliminary
Notice") not more than 360 days nor less than 180 days prior to the end of the
Basic Term or any Renewal Term, as the case may be, whether it will exercise
its options either to renew this Lease pursuant to this Section 4.01 or to
purchase the Aircraft pursuant to Section 4.02(a)(B), (C) or (F) hereof, as
applicable.
Provided that (i) no Event of Default shall have occurred and be
continuing at the time of renewal, (ii) this Lease has not otherwise expired
or terminated, and (iii) the Lessee shall have timely delivered the respective
Preliminary Notice, the Lessee may, by irrevocable written notice delivered to
the Lessor not less than 90 days prior to the end of the Basic Term or any
Fixed Renewal Term, extend the Term for one Fixed Renewal Term of three years
commencing on the expiration of the Basic Term and one additional Fixed
Renewal Term of one year commencing on the expiration of the preceding Fixed
Renewal Term. The Lessee shall pay the Fixed Renewal Rent during the Fixed
Renewal Term.
In addition, provided that (i) no Event of Default shall have
occurred and be continuing at the time of renewal, (ii) this Lease has not
otherwise expired or terminated, and (iii) the Lessee shall have timely
delivered the respective Preliminary Notice, the Lessee may, on no more than
two occasions, by irrevocable written notice delivered to the Lessor not less
than 90 days prior to the end of the Basic Term or the preceding Renewal Term,
as the case may be, elect to extend the Term for a Renewal Term or further
Renewal Term commencing on the expiration of the Basic Term or the preceding
Renewal Term and ending two years thereafter for a rent equal to the
then-current Fair Market Rental of the Aircraft. The Term may be extended
pursuant to this paragraph for an aggregate of no more than four years
following the Basic Term or the Fixed Renewal Term.
(b) Terms and Conditions. Any such renewal shall be on the same
terms and conditions as provided herein, except that (i) rent for the Aircraft
due during any Renewal Term shall be payable semi-annually in arrears on the
dates corresponding to the Rent Payment Dates during such Renewal Term, and
(ii) during any Renewal Term, the Stipulated Loss Value for the Aircraft shall
as of any Stipulated Loss Value Determination Date during the Renewal Term be
equal to the greater of the Stipulated Loss Value on the last day of the Basic
Term and the Fair Market Value of the Aircraft as of the commencement of such
Renewal Term.
Section 4.02. Purchase Options. (a) Election to Purchase.
Provided that (i) this Lease has not otherwise expired or terminated, (ii) the
Lessee shall have previously given the Preliminary Notice under Section
4.01(a) hereof (in the case of paragraph (B) or (F) below or, if a Renewal
Term is available, paragraph (C) below) or the applicable notice for each
other paragraph below, as the case may be, and (iii) no Event of Default shall
have occurred and be continuing on the applicable Termination Date, the Lessee
may:
(A) by written notice delivered to the Lessor, the Indenture Trustee
and the Owner Participant, not more than 180 nor less than 90 days prior to
the applicable Rent Payment Date, elect to terminate the Lease and purchase
the Aircraft on (and only on) July 15, 2015, for, at the Lessee's
option, either (1) an amount in immediately available funds equal to the
greater of the Fair Market Value or the Termination Value on such date or
(2)(i) the assumption by the Lessee, pursuant to Section 7.11 of the
Participation Agreement, of all of the obligations of the Lessor under the
Indenture, the Certificates and Section 7.04 of the Participation Agreement
and (ii) the payment to the Lessor of an amount in immediately available
funds equal to the excess of (A) the greater of the Fair Market Value or the
Termination Value on such date over (B) the unpaid principal of the
Certificates plus accrued interest as of such date. Such notice (which
shall be revocable by the Lessee upon at least 15 days' written notice
prior to the applicable Rent Payment Date) shall either direct the Lessor
to prepay the Certificates in full on such Termination Date pursuant to
Section 6.02 of the Indenture or state that the Lessee shall exercise its
option to assume the Certificates pursuant to Section 7.11 of the
Participation Agreement and Section 2.12 of the Indenture; or
(B) by irrevocable written notice delivered to the Lessor and the
Owner Participant not less than 90 days prior to the end of the Basic Term,
elect to purchase the Aircraft on the last day of the Basic Term for an
amount in immediately available funds equal to the Fair Market Value
thereof on such date; provided, however, that the Lessee shall have paid
all Rent due and payable under this Lease on or prior to the last day of
the Basic Term; or
(C) by irrevocable written notice delivered to the Lessor and the
Owner Participant not less than 90 days prior to the end of any Renewal
Term, elect to terminate the Lease and purchase the Aircraft on the last
day of such Renewal Term at a price in immediately available funds equal to
the Fair Market Value of the Aircraft on such day; provided, however, that
the Lessee shall have paid all Rent due and payable under this Lease on or
prior to the expiration of any such Renewal Term; or
(D) exercise the purchase option in this Section 4.02(a)(D) which is
more particularly described in Schedule V hereto by reference to this
Section 4.02(a)(D) and which shall be in an amount in immediately available
funds not less than the greater of the amount specified in Schedule V
hereto and the Fair Market Value of the Aircraft; or
(E) exercise the purchase option in this Section 4.02(a)(E) which is
more particularly described in Schedule V hereto by reference to this
Section 4.02(a)(E) and which shall be in an amount in immediately available
funds not less than the greater of the amount specified in Schedule V
hereto and the Fair Market Value of the Aircraft; or
(F) by irrevocable written notice delivered to the Lessor and the
Owner Participant not less than 90 days prior to the end of the Basic Term,
elect to purchase the Aircraft on the last day of the Basic Term for the
amount in immediately available funds specified in the Ancillary Agreement
II (the "FPO Price") which is not less than the estimate set forth in the
Appraisal of the Fair Market Value of the Aircraft at the time of exercise
of the purchase option under this Section 4.02(a)(F).
The Lessee shall give the Lessor, the Owner Participant and the
Indenture Trustee not more than 180 and not less than 90 days' prior written
notice of its election to purchase pursuant to Section 4.02(a)(D) or
4.02(a)(E) hereof. Such notice shall either direct the Lessor to prepay the
Certificates in full on such Termination Date pursuant to Section 6.02 of the
Indenture or state that the Lessee shall exercise its option to assume the
Certificates pursuant to Section 7.11 of the Participation Agreement and
Section 2.12 of the Indenture. In the event that the Lessee shall have given
notice to purchase the Aircraft under Section 4.02(a)(A), 4.02(a)(D) or
4.02(a)(E) hereof and shall fail to make payment (and, if applicable, assume
the Certificates) on the applicable Termination Date, the Lease shall continue
and the Lessee shall pay to the Owner Trustee any losses, costs and expenses
of the Owner Participant incurred in connection with such failure.
(b) Terms and Conditions. If the Lessee elects to purchase the
Aircraft pursuant to Section 4.02(a) hereof, the Lessee shall pay to the
Lessor on the applicable Termination Date by wire transfer of immediately
available funds any Basic Rent payable on such Termination Date (to the extent
payable in arrears but not to the extent payable in advance), the applicable
purchase price together with any other amounts past due hereunder or due on
the applicable Termination Date and all other Supplemental Rent then due under
this Lease including, without limitation, the aggregate amount of any
Make-Whole Premium applicable to any Certificate and amounts due under the
Participation Agreement and the Tax Indemnity Agreement, whereupon (and upon
discharge of the Lien of the Indenture in accordance with Section 14.01
thereof) the Lessor will transfer to the Lessee, without recourse or warranty
(except as to the absence of Lessor's Liens), all of the Lessor's right, title
and interest in and to the Aircraft on an "as-is, where is" basis. In
connection with such transfer, the Lessee shall prepare and the Lessor shall
execute or arrange for the execution of a xxxx of sale evidencing such
transfer and such other documents as the Lessee may reasonably require. In
connection with any termination or proposed termination of this Lease, the
Lessee shall pay, at the time of the applicable Termination Date, all related
reasonable costs and expenses of the Owner Participant, the Lessor and the
Indenture Trustee.
Section 4.03. Appraisal Procedures. (a) Generally. Whenever Fair
Market Rental or Fair Market Value is required to be determined under this
Lease (unless otherwise provided herein), it shall be determined by the mutual
agreement of the Lessor and the Lessee in accordance with the definitions of
such terms in Schedule I hereto. If the Lessee and the Lessor cannot agree by
the date 60 days prior to the date for exercise of the applicable option, such
amount shall be determined by independent appraisal conducted by appraisers
selected pursuant to Section 4.03(b) hereof. At any time prior to final
determination of such amount pursuant to Section 4.03(b) hereof, the Lessee
and the Lessor shall be entitled to submit to the appraisers (and shall submit
to each other any bids submitted to the appraisers) any bids from unrelated
third parties, and such bids shall be accorded the weight such appraisers deem
appropriate. The Lessor and the Lessee shall each have an opportunity to
comment on any such bids after receiving a copy thereof.
(b) Selection. If an independent appraisal is required pursuant to
this Lease, the Lessor and the Lessee shall consult for the purpose of
appointing a mutually acceptable, qualified aircraft appraiser. If they are
unable to agree on a single appraiser within ten (10) Business Days, then the
independent appraisal shall be arrived at by mutual agreement of two
nationally recognized, independent aircraft appraisers, one chosen by the
Lessor and one chosen by the Lessee, or, if such appraisers cannot agree on
the amount of such appraisal, their appraisals shall be treated in the manner
described in Section 4.03(c) hereof with an appraisal arrived at by a third
nationally recognized, independent aircraft appraiser chosen by the mutual
consent of such two appraisers; provided, however, that if either party shall
fail to appoint an appraiser within fifteen (15) Business Days after a written
request to do so by the other party, or if such two appraisers cannot agree on
the amount of such appraisal and fail to appoint a third appraiser within
twenty (20) Business Days after the date of the appointment of the second of
such appraisers, then either party may initiate an arbitration proceeding with
the American Arbitration Association for purposes of appointing a nationally
recognized, independent aircraft appraiser.
(c) Valuation. If one appraiser is chosen, the value determined by
such appraiser shall be final and binding upon the Lessor and the Lessee. If
two appraisers are chosen, one appraiser by the Lessor and one by the Lessee,
and such appraisers agree on the value, such value shall be final and binding
upon the Lessor and the Lessee. If three appraisers shall be appointed and
the difference between the determination which is farther from the middle
determination is more than 125% of the difference between the middle
determination and the third determination, then such further determination
shall be excluded, the remaining two determinations shall be averaged, and
such average shall be final and binding upon the Lessor and the Lessee.
Otherwise, the average of all three determinations shall be final and binding
upon the Lessor and the Lessee.
(d) Rules of Appraisal. Any appraisal pursuant to this Section 4.03
shall be conducted in accordance with the commercial rules of the American
Arbitration Association as then in effect, as modified by this Section 4.03
and the definitions of Fair Market Value and Fair Market Rental. All expenses
of any independent appraisal shall be borne by the Lessee, except that each of
the Lessee and the Owner Participant (in the case of the Lessor) shall bear
any fees, costs and expenses of its respective attorneys in connection with
such appraisal except in the case of an Event of Default or in the case of a
revocation by the Lessee of its election to terminate the Lease under Section
4.02 hereof, in which case such expenses shall be borne by the Lessee.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
Section 5.01. Disclaimer of Representations and Warranties. THE
LESSEE ACKNOWLEDGES AND AGREES THAT (i) THE AIRFRAME AND EACH ENGINE IS OF A
SIZE, DESIGN, AND CAPACITY AND MANUFACTURE SELECTED BY AND ACCEPTABLE TO THE
LESSEE, (ii) THE LESSEE IS SATISFIED THAT THE AIRFRAME AND EACH ENGINE IS
SUITABLE FOR ITS PURPOSES, (iii) NEITHER THE OWNER PARTICIPANT NOR THE LESSOR
IS A MANUFACTURER OR A DEALER IN PROPERTY OF SUCH KIND AND (iv) THE AIRFRAME
AND EACH ENGINE IS LEASED HEREUNDER SUBJECT TO ALL APPLICABLE LAWS AND
GOVERNMENTAL REGULATIONS, NOW IN EFFECT OR HEREAFTER ADOPTED, WITHOUT
REPRESENTATION OR WARRANTY OF ANY KIND BY THE LESSOR (IN ITS INDIVIDUAL
CAPACITY OR AS OWNER TRUSTEE), THE INDENTURE TRUSTEE, THE OWNER PARTICIPANT OR
ANY HOLDER. THE LESSOR LEASES THE AIRFRAME AND EACH ENGINE, AS-IS, WHERE-IS,
AND NEITHER THE LESSOR (IN ITS INDIVIDUAL CAPACITY OR AS OWNER TRUSTEE), THE
INDENTURE TRUSTEE, THE OWNER PARTICIPANT NOR ANY HOLDER MAKES, HAS MADE OR
SHALL BE DEEMED TO HAVE MADE, AND EACH HAS AND WILL HAVE BEEN DEEMED TO HAVE
EXPRESSLY DISCLAIMED, ANY WARRANTY OR REPRESENTATION EITHER EXPRESS OR
IMPLIED, AS TO (A) THE TITLE, AIRWORTHINESS, WORKMANSHIP, CONDITION, VALUE,
FITNESS FOR ANY PARTICULAR USE OR PURPOSE, DESIGN, OPERATION OR
MERCHANTABILITY OF THE AIRFRAME, EACH ENGINE OR ANY PART THEREOF, (B) THE
ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, (C) THE
ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR COPYRIGHT, (D) THE
ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN TORT, (E) THE LESSOR'S
TITLE THERETO, (F) THE LESSEE'S OR ANY SUBLESSEE'S RIGHT TO THE QUIET
ENJOYMENT THEREOF (EXCEPT AS PROVIDED IN ARTICLE 18 HEREOF) OR (G) ANY OTHER
MATTER WHATSOEVER. IT IS AGREED THAT ALL RISKS INCIDENT TO THE MATTERS
DISCUSSED IN THE PRECEDING SENTENCE, AS AMONG THE LESSOR, THE INDENTURE
TRUSTEE, THE OWNER PARTICIPANT AND THE LESSEE, ARE TO BE BORNE BY THE LESSEE.
The provisions of this Section 5.01 have been negotiated by the Lessor and the
Lessee and, except as provided in Article 7 of the Participation Agreement,
are intended to be a complete exclusion and negation of any representations or
warranties of the Lessor, the Indenture Trustee and the Owner Participant,
express or implied, with respect to the Airframe and each Engine that may
arise pursuant to any law now or hereafter in effect, or otherwise.
Section 5.02. No Modification of Other Warranties. None of the
provisions of this Article 5 or any other provision of this Lease shall be
deemed to amend, modify or otherwise affect the representations, warranties or
other obligations (express or implied) of the Lessee, AVSA, the Manufacturer
or the Engine Manufacturer or any of their respective subcontractors or
suppliers, with respect to the Airframe, the Engines or any Parts incorporated
or installed in or attached to the Airframe or Engines, or to release the
Lessee, AVSA, the Manufacturer or the Engine Manufacturer or any of their
respective subcontractors or suppliers from any such representation, warranty
or obligation. So long as an Event of Default shall not have occurred and be
continuing under this Lease and to the extent permitted under the applicable
warranty, patent indemnity, or service-life policy, (i) the Lessor shall
assign or otherwise make available to the Lessee such rights as the Lessor may
have under any warranty, patent indemnity, or service-life policy made or
given by the Manufacturer, AVSA or the Engine Manufacturer or any of their
respective subcontractors or suppliers, and any other claims against the
Manufacturer, AVSA and the Engine Manufacturer or any such subcontractor or
supplier with respect to the Aircraft, including all rights to demand, accept
and retain all rights in and to property (other than the Aircraft), data and
services of any kind which the Manufacturer, AVSA and the Engine Manufacturer
are obligated to provide and do provide pursuant to the Purchase Agreement or
the GTA with respect to the Aircraft; and (ii) all payments pursuant to any
manufacturer's or subcontractor's warranty, patent indemnity, or service-life
policy obligation shall be paid to the Lessee; provided that the Lessee shall
apply such payments to the cost of repair or correction of any condition of
the Aircraft which gave rise to such payments.
Section 5.03. Certain Agreements of the Lessee. The Lessee agrees
with the Lessor for the benefit of the Owner Participant that the Lessee shall
perform the agreements, covenants and indemnities of the Lessee set forth in
the Participation Agreement to the extent the same are applicable to the Owner
Participant, as fully and to the same extent and with the same force and
effect as if set forth in full in this Article 5.
ARTICLE 6
LIENS
Section 6.01. Liens. The Lessee will not directly or indirectly
create, incur, assume or suffer to exist, and will promptly, at its own cost
and expense, take such action as may be necessary to discharge, any Lien on or
with respect to the Lessor's Estate or this Lease or the Aircraft, the
Airframe or any Engine or any Part or title thereto or any interest therein
except:
(a) the respective rights of the Lessor and the Lessee as provided
in this Lease, the security interest and Lien of the Indenture and the
rights of the Owner Participant, the Lessor and the Indenture Trustee under
the Trust Agreement, the Indenture and the Participation Agreement;
(b) the rights of any sublessee or transferee or other Person under a
sublease, transfer, assignment or other such arrangement expressly
permitted by the terms of this Lease;
(c) Lessor's Liens and Indenture Trustee's Liens to the extent
required to be discharged by the Owner Participant, the Lessor or the
Indenture Trustee, as the case may be, in accordance with Section 7.03(b),
7.04(b) or 7.05(b) of the Participation Agreement;
(d) Liens for Taxes imposed against the Lessee either not yet due or
being contested in good faith by appropriate proceedings so long as such
Liens or proceedings do not involve (i) any material danger of the sale,
forfeiture or loss of the Lessor's Estate, the Aircraft, the Airframe or
any Engine or any interest therein, (ii) any material risk of civil
liabilities or (iii) any risk of the assertion of criminal charges against
the Lessor, the Owner Participant, the Indenture Trustee or any Holder;
(e) materialmen's, mechanics', workmen's, repairmen's, employees' or
other like Liens arising against the Lessee in the ordinary course of the
Lessee's business for amounts the payment of which is either not yet due or
is being contested in good faith by appropriate proceedings so long as such
Liens or proceedings do not involve any material danger of the sale,
forfeiture or loss of the Lessor's Estate, the Aircraft, the Airframe or
any Engine or any interest therein; and
(f) Liens arising from judgments or awards against the Lessee with
respect to which (i) at the time an appeal or proceeding for review is
being prosecuted in good faith and with respect to which there shall have
been secured a stay of execution pending such appeal or proceeding for
review and then only for the period of such stay and (ii) there is not, and
such proceedings do not involve, any material danger of the sale,
forfeiture or loss of the Lessor's Estate, the Aircraft, Airframe or any
Engine or any interest therein.
ARTICLE 7
AIRCRAFT REGISTRATION, MAINTENANCE AND OPERATION
Section 7.01. Registration, Maintenance and Operation. The Lessee,
at its own cost and expense, shall:
(a) upon payment by the Lessor of the Purchase Price on the Delivery
Date, cause the Aircraft to be duly registered in the name of the Lessor as
owner, pursuant to the Transportation Code and, subject to the proviso to
Section 6.03(b) of the Participation Agreement, to remain at all times duly
registered pursuant to the Transportation Code and at all times act in
accordance with the rules and regulations of the Aeronautics Authority or
the applicable laws, rules and regulations of any other jurisdiction in
which the Aircraft may then be registered in accordance with Section
6.03(b) of the Participation Agreement;
(b) maintain, inspect, service, repair, test and overhaul the
Aircraft (or cause the same to be done) so as to keep the Aircraft (and any
engine which is not an Engine but is installed on the Aircraft) in as good
operating condition as when delivered to the Lessor on the Delivery Date,
ordinary wear and tear excepted, and in any event (i) in accordance with
the applicable regulations of the Aeronautics Authority or of the
regulatory agency or body of any other jurisdiction in which the Aircraft
may then be registered pursuant to Section 6.03(b) of the Participation
Agreement and the Lessee's maintenance program approved by the Aeronautics
Authority or such agency or body, (ii) in the same manner and with the same
care used by the Lessee with respect to other A300-600 series aircraft and
CF6-80C2-A5F series engines (or other engines permitted by the terms of
this Lease to be used on the Aircraft) owned, operated or leased by the
Lessee, to the extent that the same regulations, and the Lessee's
FAA-approved maintenance program shall apply to any such aircraft and
related engines, owned or leased by the Lessee, and utilized in similar
circumstances, and without discriminating against the Aircraft, with
respect to its use, operation or maintenance in contemplation of the
expiration or termination of this Lease other than withdrawal of the
Aircraft from use and operation as is necessary to prepare the Aircraft for
return to the Lessor upon such expiration or termination, and (iii) so as
to keep the Aircraft in such condition as may be necessary to enable its
airworthiness certification to be maintained in good standing at all times
under the Transportation Code or any applicable rule or regulation of the
applicable regulatory agency or body of any other jurisdiction in which the
Aircraft may then be registered;
(c) maintain, or cause to be maintained, all records, logs and other
materials in respect of the Aircraft required by the Aeronautics Authority,
or the applicable regulatory agency or body of any other jurisdiction in
which the Aircraft may then be registered, all such records and logs to be
maintained in the English language (which records, logs and other materials
shall, as between the Lessor and the Lessee and all parties claiming
through the Lessee, be the property of the Lessor but shall become the
property of the Lessee upon purchase by the Lessee of the Aircraft pursuant
to the terms of this Lease or upon the occurrence of an Event of Loss and
the Lessee's compliance with Section 11.03 hereof);
(d) promptly furnish to the Lessor such information within the
Lessee's possession as may be required to enable the Lessor to file any
reports to be filed by the Lessor with any governmental authority because
of the Lessor's ownership of or the Owner Participant's interest in the
Aircraft;
(e) not maintain, service, repair, overhaul, use or operate the
Aircraft or any Engine in violation of any airworthiness certificate or
registration relating thereto, or in violation of any law or any license,
rule, regulation or order of or by any government or governmental authority
having jurisdiction over the Lessee or the Aircraft or any Engine or for
any purpose for which the Aircraft or any Engine is not designed; provided,
however, that the Lessee (or if a sublease shall then be in effect, the
sublessee thereunder) may in good faith contest the validity or application
of any such law, license, rule, regulation or order in any manner that does
not adversely affect the Lessor, its right, title or interest in the
Aircraft or any Engine or the interests of the Indenture Trustee or the
Owner Participant therein, or in any Operative Agreement (excluding any
interests the Lessee agrees are indemnified for under the Tax Indemnity
Agreement) and such contest or non-compliance will not result in any
material risk of loss, forfeiture or damage to the Aircraft or in any risk
of criminal liability to the Lessor, the Indenture Trustee or the Owner
Participant; and if any such law, license, rule, regulation or order
requires alteration of the Aircraft or any Engine, the Lessee will conform
the same therewith at its own cost and expense and will maintain the
Aircraft or any Engine in compliance with such law, license, rule,
regulation or order; and
(f) not operate or locate the Airframe or any Engine, or suffer the
Airframe or any Engine to be operated or located in any area excluded from
coverage by any insurance policy required by the terms of Article 13
hereof, unless the Lessee has obtained, prior to the operation or location
of the Airframe or any Engine in such area, indemnification from the
Government, or other insurance, against the risks and in the amounts
required by, and in compliance with, Article 13 hereof covering such area
(and naming the Lessor, or so long as this Lease is assigned to the
Indenture Trustee, the Indenture Trustee, as sole loss payee in respect of
indemnification or insurance payable in respect of casualties to the
Aircraft) or unless the Aircraft is only temporarily located in such area
as a result of an isolated occurrence attributable to a hijacking, medical
emergency, equipment malfunction, weather conditions, navigational error or
other similar unforeseen circumstances and the Lessee is using its good
faith efforts to remove the Aircraft from such area.
The Lessee may, at any time during the Term, install an engine or
engines on the Airframe and operate the Aircraft with such engine or engines
installed thereon and the Lessor shall have no right, title or interest in and
to any such engine until such time, if any, that such engine is returned to
the Lessor under Section 12.02 hereof.
Section 7.02. Possession and Permitted Transfer and Sublease. (a)
Conditions. The Lessee will not, without the prior written consent of the
Lessor, sublease or otherwise in any manner deliver, transfer or relinquish
possession of the Aircraft, the Airframe or any Engine or install any Engine,
or permit any Engine to be installed, on any airframe other than the Airframe;
provided, that, so long as (i) in the case of clause (i) below, no Payment
Default, Bankruptcy Default or Event of Default shall have occurred and be
continuing at the commencement of such sublease, (ii) the Lien of the
Indenture is not impaired thereby, (iii) all applicable governmental approvals
in connection therewith have been obtained and (iv) the Lessee shall comply
with the provisions of Article 13 hereof, the Lessee may without the prior
written consent of the Lessor:
(i) so long as the sublessee is generally meeting its material
obligations as they come due and is not subject to a proceeding or final
order under applicable bankruptcy, insolvency or reorganization laws on the
date the sublease is entered into and with 30 days' prior written notice to
the Lessor and the Owner Participant, (A) sublease the Aircraft or any
Engine to a U.S. Air Carrier, (B) after December 31, 2004 sublease the
Aircraft or any Engine to an Air Carrier which is principally based in and
domiciled in one of the countries listed on Schedule III of the
Participation Agreement, or (C) after December 31, 2004 sublease the
Aircraft or any Engine to any other Air Carrier not described in this
Section which shall be reasonably acceptable to the Lessor as evidenced by
its prior written consent; provided, that, with respect to clauses (B) and
(C) above, at the time of any such sublease the United States of America
maintains normal diplomatic relations with the country in which such Air
Carrier is principally based and domiciled and provided further that such
country shall not then be experiencing war. In the case of any sublease (x)
such sublease shall include the provisions required by Section 7.02(b)
hereof and expressly require the sublessee to operate and maintain the
Aircraft in compliance with the applicable provisions of this Lease, (y)
such sublease shall provide that such sublessee will not transfer
possession of, or any other rights to, the subleased Airframe or any Engine
to any other Person without the prior written consent of the Lessor (except
as permitted by subparagraphs (ii) through (viii) below and except that, in
the case of subparagraph (iv), possession of the Aircraft may only be
transferred at the direction of the Lessee) and (z) such sublease shall
expire not later than the expiration of the Basic Term or any Renewal Term
then in effect hereunder. Prior to any sublease to an Air Carrier
permitted under Section 7.02(a)(i)(C) above: (I) the maintenance standards
of the aeronautical authority of the country of domicile or principal
operation of the sublessee taken as a whole shall not be materially less
stringent than those of the FAA or at least comparable to those, taken as a
whole, required by the central civil aviation authority of any of the
United Kingdom, France, Canada, Japan or Germany; (II) the Lessee will
provide opinions of counsel (such counsel and the form and substance of
such opinions to be reasonably satisfactory to the Lessor) with respect to
(A) the legality, validity and enforceability of the Operative Agreements
and the sublease in such country, (B) that the laws of such country require
fair compensation by the government of such country payable in a currency
freely convertible into U.S. dollars for the loss of the use of or title to
the Aircraft in the event of a requisition of use or title by such
government, (C) the Lessor's title to the subleased equipment will be
recognized, (D) the required agreement of such foreign air carrier that its
rights under the sublease are subject and subordinate to all the terms of
this Lease is enforceable against such foreign air carrier under applicable
law (subject only to customary exceptions to enforceability), (E) that it
is not necessary for the Owner Participant, the Lessor or the Indenture
Trustee to register or qualify to do business in such country as a result
of the proposed sublease or in order for the Owner Participant, the Lessor
or the Indenture Trustee to enforce the terms and conditions of the
Operative Agreements, (F) there is no tort liability of the owner of an
aircraft not in possession thereof or of Persons lending money to such an
owner for the purchase of an aircraft, under the laws of such jurisdiction
other than tort liability which might reasonably have been imposed on such
owner or Persons under the laws of the United States or any state thereof
(it being understood that, in the event that such latter opinion cannot be
given in a form satisfactory to the Lessor, such opinion shall be waived if
insurance reasonably satisfactory to the Lessor is available to cover such
risk to the Owner Participant and is provided at or before the execution of
such a sublease, at the Lessee's cost and expense), (G) that there exist no
possessory rights in favor of such sublessee under the laws of such country
which would, upon bankruptcy or insolvency of the Lessee (and assuming that
at such time such sublessee is not bankrupt or insolvent) or of the
sublessee, prevent the return of the Aircraft in accordance with the terms
of this Lease and (H) all necessary governmental approvals required for the
subleased equipment, the Airframe or any Engine, as the case may be, to be
imported and, to the extent reasonably obtainable, exported from the
applicable country of domicile upon repossession of such subleased
equipment by the Lessor (and the Lessee as sublessor), shall have been
procured at the Lessee's own cost and expense by the Lessee prior to
commencement of any such sublease; (III) duties and tariffs, if applicable,
shall be paid for by the Lessee; and (IV) the Lessee shall effect or cause
to be effected at the Lessee's own cost and expense all recordings and
filings that are required, or reasonably requested by the Lessor, to
continue the Lessor's right, title and interest to the Aircraft and rights
under the Lease (and sublease) and to perfect and maintain the priority of
the Lien of the Indenture;
(ii) subject the Engines or permit any Engine to be subjected to
normal interchange or pooling agreements or arrangements, in each case
customary in the airline industry, entered into by the Lessee in the
ordinary course of its business with a vendor domiciled in the United
States or in a country with which the United States maintains normal
diplomatic relations (and which is not experiencing war) or (x) any U.S.
Air Carrier or (y) any foreign Air Carrier which is (I) organized in a
country listed on Schedule III to the Participation Agreement, (II)
organized in a country with which the United States then maintains normal
diplomatic relations, (III) is a party to the Convention on the
International Recognition of Rights in Aircraft or (IV) otherwise provides
equivalent protection to owners, lessors and mortgagees of aircraft;
provided that no transfer of the registration of or any Engine shall be
effected and that throughout the period that any Engine is subjected to
such interchange or pooling agreement or arrangement the terms of this
Lease shall be observed; and provided, further, that no such agreement or
arrangement contemplates or requires the transfer of title to or
registration of any Engine, and if the Lessor's title to any Engine shall
nonetheless be divested under any such agreement or arrangement, such
divestiture shall be deemed to be an Event of Loss with respect to such
Engine and the Lessee shall comply with Section 11.04 of this Lease in
respect of such Engine;
(iii) deliver or permit the delivery of possession of the Airframe or
any Engine to their respective manufacturers or certified maintenance
providers for testing, service, repair, maintenance or overhaul work or for
alterations or modifications in or additions to the Airframe or any Engine
to the extent required or permitted by the terms of Article 9 hereof;
(iv) transfer or permit the transfer of possession of the Airframe
or any Engine pursuant to a contract or agreement with the Government or
pursuant to the Civil Reserve Air Fleet Program administrated pursuant to
Executive Order No. 12056, as amended (the "CRAF Program"), or any similar
or substitute programs of the Government, so long as the Lessee (or any
permitted sublessee or transferee pursuant to this Section) shall promptly
notify the Lessor upon such transfer of possession and provide the Lessor
and the Indenture Trustee with the name and address of the Contracting
Officer or representative of the Military Aircraft Command of the United
States Air Force to whom notices must be given in respect of the Aircraft;
(v) install or permit the installation of an Engine on an airframe
which is owned by the Lessee or any permitted sublessee free and clear of
all Liens, except (A) Liens of the type permitted under Section 6.01
hereof, (B) Liens which apply only to the engines (other than an Engine),
appliances, parts, instruments, appurtenances, accessories, furnishings and
other equipment (other than Parts) installed on such airframe and which do
not apply to substantially all of such airframe and (C) the rights of an
Air Carrier under normal interchange or pooling agreements which are
customary in the airline industry and do not contemplate or require the
transfer of title to such airframe or the engines installed on it;
(vi) install or permit the installation of an Engine on an airframe
leased to the Lessee or any permitted sublessee or transferee or purchased
by the Lessee subject to a conditional sale or other security agreement,
provided that (A) such lease, conditional sale or other security agreement
does not cover the Engine so installed and the Lessor shall have received
from the lessor, conditional vendor or secured party of such airframe an
agreement (which may be the lease or conditional sale or other security
agreement covering such airframe), whereby such lessor, conditional vendor
or secured party expressly agrees that neither it nor its successors or
assigns will acquire or claim any right, title or interest in any Engine
by reason of such Engine being installed on such airframe at any time, and
(B) such airframe is and remains free and clear of all Liens except the
rights of the parties to the lease or conditional sale or other security
agreement covering such airframe and Liens of the type permitted by
subparagraph (v) of this Section 7.02(a);
(vii) install or permit the installation of an Engine on an airframe
owned by the Lessee, leased to the Lessee or purchased by the Lessee
subject to a conditional sale or other security agreement under
circumstances where neither subparagraph (v) nor subparagraph (vi) of this
Section 7.02(a) is applicable, provided that such installation shall be
deemed an Event of Loss with respect to such Engine and the Lessee shall
comply with Section 11.04 hereof in respect of such Engine, the Lessor not
intending to waive any right, title or interest it may have to or in such
Engine under applicable law until compliance by the Lessee with such
Section 11.04; and
(viii) enter into a wet lease under which the Lessee has effective
control of the Aircraft in the ordinary course of the Lessee's business
which shall not be considered a transfer of possession hereunder, provided
that the Lessee's obligations under this Lease shall continue in full force
and effect notwithstanding any such wet lease.
(b) Rights of Transferee. Notwithstanding the provisions of Section
7.02(a) hereof, the rights of any transferee who takes possession of the
Aircraft, the Airframe or any Engine by reason of a transfer permitted by
Section 7.02(a) hereof shall be subject and subordinate to, and any sublease
or wet lease permitted by Section 7.02(a) hereof shall be made expressly
subject and subordinate to, all the terms of this Lease, including, without
limitation, the Lessor's right to repossession pursuant to Article 17 hereof
and to avoid such sublease upon such repossession, and the Lessee shall remain
primarily liable for the performance of all the terms of this Lease and the
other Operative Agreements to the same extent as if such sublease or transfer
had not occurred. Any such sublease shall include appropriate provisions for
the maintenance, inspection (as required by Section 14.01 hereof), operation,
use and insurance of the Aircraft, the Airframe and each Engine in accordance
with the provisions of this Lease and shall provide assurances reasonably
satisfactory to the Lessor that the sublessee may not further sublease any of
such equipment. The Lessee shall promptly provide the Lessor, the Owner
Participant and the Indenture Trustee a copy of any sublease and, prior to
execution and delivery of any sublease deliver to the Lessor all other
documents (including all insurance certificates evidencing compliance with
this Lease) required hereunder relating to such sublease or transfer of
possession.
(c) No Release of Lessee/Costs of Subleasing. No sublease,
interchange or pooling agreement or other relinquishment of possession
permitted under this Article 7 of any of the Aircraft, the Airframe or any
Engine shall in any way discharge or diminish any of the Lessee's obligations
to the Lessor, the Indenture Trustee or the Owner Participant under this
Lease, the Participation Agreement or the Tax Indemnity Agreement or
constitute a waiver of any of the Lessor's rights and remedies hereunder or
thereunder or extend beyond the end of the Term. Subject to the terms and
conditions of this Lease, the Lessee will retain the right to cure any default
by any sublessee permitted pursuant to this Section 7.02 and to terminate such
sublease upon such default. The Lessee shall pay all costs of the Owner
Participant, the Indenture Trustee and the Lessor incurred in connection with
any subleasing or proposed subleasing.
Section 7.03. Insignia. (a) Nameplate. On or prior to the
Delivery Date or as soon thereafter as possible, the Lessee agrees to affix to
and maintain in the cockpit of the Airframe, in a clearly visible location,
and on each Engine, a clearly visible metal nameplate bearing the inscription
"STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, AS
OWNER TRUSTEE, OWNER AND LESSOR," and, so long as such Airframe or Engines
shall be subject to the Lien of the Indenture, the additional inscription
"FIRST SECURITY BANK, NATIONAL ASSOCIATION, AS INDENTURE TRUSTEE, MORTGAGEE"
(such nameplate to be replaced, if necessary, from time to time, with a
nameplate reflecting the name of any successor Lessor or successor Indenture
Trustee, in each case as permitted by the Operative Agreements).
(b) Lessee's Marks. Except as provided in Section 7.03(a) hereof,
the Lessee will not allow the name of any Person to be placed on the Airframe
or on any Engine as a designation that might be interpreted as a claim of
ownership; provided, that during the Term, the Lessee may cause the Aircraft
to be lettered "Federal Express Corporation" or may letter, paint or xxxx it
in some other appropriate manner for convenience of identification of the
Lessee's interest or the interest of any permitted sublessee (including but
not limited to the Lessee's or any permitted sublessee's customary colors and
insignia) and to bear insignia plates or other markings identifying the
supplier or manufacturer of the Airframe or the Engines or any Parts of either.
ARTICLE 8
REPLACEMENT AND POOLING OF PARTS
Section 8.01. Replacement of Parts. (a) Generally. The Lessee, at
its own cost and expense, will replace or cause to be replaced as promptly as
practicable all Parts which may from time to time be incorporated or installed
in or attached to the Airframe or any Engine and which may from time to time
become worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond
repair or permanently rendered unfit for use for any reason, except as
otherwise provided in Section 9.01 or 9.02 hereof. In addition, the Lessee
may, at its own cost and expense, remove or cause to be removed in the
ordinary course of maintenance, service, repair, overhaul or testing, any
Parts, whether or not worn out, lost, stolen, destroyed, seized, confiscated,
damaged beyond repair or permanently rendered unfit for use, provided that the
Lessee, except as otherwise provided in Sections 9.01 or 9.02 hereof, will, at
its own cost and expense, replace such Parts as promptly as practicable. All
replacement parts shall be free and clear of Liens (except for pooling
arrangements to the extent permitted by Section 8.02 hereof and Liens
permitted under Section 6.01 hereof, other than clauses (d) and (f) thereof)
and shall be in at least as good operating condition as, and shall have a
value and utility at least equal to, the Parts replaced, and in any event not
less than the condition and repair required to be maintained by the provisions
of this Lease.
(b) Title. All Parts at any time removed from the Airframe or any
Engine shall remain the property of the Lessor until such Parts shall be
replaced by parts which have been incorporated or installed in or attached to
the Airframe or such Engine and which meet the requirements for replacement
parts specified in Section 8.01(a) hereof. Immediately upon any replacement
part (other than, to the extent permitted by Section 8.02 hereof, a
replacement part subject to a pooling arrangement) becoming incorporated or
installed in or attached to the Airframe or any Engine, and without further
act:
(i) title to the replaced Part shall vest in the Lessee, free and
clear of all rights of the Lessor, and such replaced Part shall no longer
be deemed a Part under this Lease;
(ii) title to such replacement part shall vest in the Lessor free
and clear of all Liens except for Liens permitted by Section 6.01 hereof
(other than clauses (d) and (f) thereof) and shall thereupon be and become
a Part; and
(iii) such replacement part shall become subject to this Lease and to
the Lien of the Indenture, and shall be deemed part of the Airframe or such
Engine for all purposes to the same extent as the Parts originally
incorporated or installed in or attached to the Airframe or such Engine.
Section 8.02. Pooling of Parts. Any Part removed from the Airframe
or any Engine as permitted in Section 8.01(a) hereof may be subjected by the
Lessee to any normal pooling arrangement customary in the U.S. airline
industry and entered into with vendors and other Air Carriers in the ordinary
course of the Lessee's business, provided that the part replacing such removed
Part shall be incorporated or installed in or attached to the Airframe or such
Engine in accordance with Section 8 hereof, as promptly as practicable after
the removal of such removed Part. In addition, any replacement part when
incorporated or installed in or attached to the Airframe or any Engine in
accordance with Section 8.01(a) hereof may be owned by another Air Carrier
subject to such normal pooling arrangement, provided that the Lessee, at its
own cost and expense and as promptly as possible, either:
(a) causes title to such replacement part to vest in the Lessor in
accordance with Section 8.01(b) hereof by the Lessee acquiring title to
such replacement part for the benefit of, and transferring such title to,
the Lessor free and clear of all Liens (other than Liens permitted under
Section 6.01 hereof (other than clauses (d) and (f) thereof)); or
(b) replaces such replacement part by incorporating or installing in
or attaching to the Airframe or such Engine a further replacement part
owned by the Lessee free and clear of all Liens (other than Liens permitted
under Section 6.01 hereof (other than clauses (d) and (f) thereof)) and by
causing title to such further replacement part to vest in the Lessor in
accordance with Section 8.01(b) hereof.
All such replacement parts and further replacement parts shall meet
the standards set forth in the last sentence of Section 8.01(a) hereof.
ARTICLE 9
ALTERATIONS, MODIFICATIONS AND ADDITIONS
Section 9.01. Required Alterations and Modifications. The Lessee,
at its own cost and expense, shall make or cause to be made such alterations
and modifications in and additions to the Airframe and each Engine as may be
required from time to time to meet the applicable requirements of the
Aeronautics Authority or any other governmental authority with jurisdiction
over the Lessee's operations and aircraft; provided, however, that the Lessee
or sublessee, as the case may be, may in good faith contest the validity or
application of any such requirements in any reasonable manner that does not
involve any material risk of civil liabilities (unless indemnified by the
Lessee) or any risk of criminal penalties being imposed on or against the
Indenture Trustee, the Owner Participant or the Lessor, that does not involve
any material risk or danger of loss, forfeiture or sale of the Aircraft or any
Engine and that does not adversely affect the Lessor, its title or interest in
the Aircraft or any Engine, the first and prior perfected Lien and security
interest of the Indenture, or the interests of the Indenture Trustee or the
Owner Participant in the Airframe or any Engine, or in any Operative Agreement
(excluding any interests the Lessee agrees are indemnified for under the Tax
Indemnity Agreement). All such alterations, modifications or additions shall
be made on or before the date mandated therefor, taking into account
authorized postponements resulting from a contest or otherwise and shall be
made at such time and in such a manner so as not to discriminate against the
Aircraft whether by reason of its leased status or otherwise.
Section 9.02. Other Alterations and Modifications. (a) Generally.
The Lessee, at its own cost and expense, may from time to time make such
alterations and modifications in and additions to the Airframe or any Engine
as the Lessee may deem desirable in the proper conduct of its business,
including, without limitation, removal of Obsolete Parts in its usual course
of maintenance, provided that no such alteration, modification, addition or
removal, individually or in the aggregate, shall create any adverse tax
consequences for the Owner Participant not otherwise indemnified for, diminish
the value, remaining useful life, or utility of the Airframe or the value or
utility of any Engine or impair its condition or state of airworthiness below
its value, remaining useful life (in the case of the Airframe only), utility,
condition and state of airworthiness immediately prior to such alteration,
modification, addition or removal, assuming that the Airframe or such Engine
was then in the condition and state of airworthiness required to be maintained
by the terms of this Lease, or cause the Airframe or any Engine to become
"limited use property" within the meaning of Revenue Procedure 76-30, 1976-2
C.B. 647, except that the value (but not the remaining useful life, utility,
condition or airworthiness) of the Aircraft may be reduced by the value, if
any, of any such Obsolete Parts which shall have been removed; provided that
in no event shall the aggregate value of all such Obsolete Parts which shall
have been so removed and not replaced exceed $500,000.
(b) Title to Installed Parts. Title to each part incorporated or
installed in or attached or added to the Airframe or any Engine as the result
of any alteration, modification, removal or addition made pursuant to Section
9.01 or 9.02(a) hereof shall without further act vest in the Lessor and become
subject to this Lease; provided, however, that the Lessee may remove any such
Part at any time during the Term if:
(i) such Part is in addition to, and not in replacement of or
substitution for, any Part originally incorporated or installed in or
attached or added to the Airframe or such Engine on the Delivery Date or
any Part in replacement of, or substitution for, any such Part;
(ii) such Part is not required to be incorporated or installed in or
attached or added to the Airframe or such Engine pursuant to the terms of
Article 7 hereof or the first sentence of Section 9.01 hereof; and
(iii) such Part can be removed from the Airframe or such Engine
without (A) causing material damage to the Airframe or such Engine (it
being understood that the Lessee shall repair any damage caused by a
permitted removal) or diminishing or impairing the value, utility,
condition or state of airworthiness or remaining useful life of the
Airframe required to be maintained by the terms of this Lease or (B)
diminishing the value, utility or remaining useful life (in the case of the
Airframe) or the value and utility (in the case of such Engine) which the
Airframe or such Engine would have had at such time had such alteration,
modification, removal or addition not occurred, assuming the Airframe or
such Engine was then in the condition required to be maintained by the
terms of this Lease.
(c) Title to Removed Parts. Upon the removal by the Lessee of any
such Part as provided in subsection (b) above, title thereto shall, without
further act, vest in the Lessee and such Part shall no longer be deemed a
Part. Any Part not removed by the Lessee as above provided prior to the
return of the Aircraft to the Lessor hereunder shall remain the property of
the Lessor and subject to this Lease.
ARTICLE 10
VOLUNTARY TERMINATION
Section 10.01. Right of Termination Upon Obsolescence or Surplus.
(a) Option to Terminate. So long as no Event of Default shall have occurred
and be continuing, the Lessee shall have the right, at its option, on any
Termination Date, on no more than 180 days' and at least 90 days' irrevocable
(except as provided herein) prior written notice (which notice shall state the
Proposed Termination Date) to the Lessor and the Owner Participant to
terminate this Lease as of a Termination Date if the Aircraft shall have
become obsolete or surplus to the operations of the Lessee; provided that the
Lessee shall have furnished to the Lessor, the Indenture Trustee and the Owner
Participant a certificate of the Lessee's President, Chief Executive Officer,
Chief Financial Officer, Chief Operating Officer, Treasurer or Assistant
Treasurer stating the determination of the Lessee that the Aircraft is
obsolete or surplus to its needs. Unless the Lessor has elected to retain the
Aircraft as herein provided, the Lessee shall have the right on one occasion
to revoke its notice of termination no later than the Business Day prior to
the date 15 days prior to the Proposed Termination Date whereupon this Lease
shall continue in full force and effect.
(b) Sale Procedure. During the period from the giving of notice
pursuant to Section 10.01(a) hereof until the Proposed Termination Date, the
Lessee, as non-exclusive agent for the Lessor, shall use its reasonable
efforts to obtain bids for the cash purchase on the Proposed Termination Date
(or such earlier date as shall be consented to in writing by the Lessor) of
the Aircraft. On the Proposed Termination Date, the Engines shall be
installed on the Airframe (provided that the Airframe may be sold with engines
meeting the requirements set forth herein for Replacement Engines in lieu of
the Engines so long as the aggregate number of Engines and Replacement Engines
being sold with the Airframe equals two). The Lessor may, if it desires to do
so, seek to obtain such bids. The Owner Participant shall not inspect any bids
received by the Lessee with respect to the Aircraft, unless the Owner
Participant has given to the Lessee binding and irrevocable notice that
neither the Owner Participant nor any of its Affiliates nor any Person acting
for the Owner Participant or such Affiliate will submit a bid for the purchase
of the Aircraft and if such notice has been given, the Lessee will provide the
Lessor with copies of bids received by the Lessee. No bid may be submitted by
the Lessee or any Person affiliated with the Lessee (or with whom or which
there is any arrangement or understanding as to the subsequent use of the
Aircraft by the Lessee or any of its Affiliates) or any agent or Person acting
on behalf of the Lessee. The Lessee may reject any bid which is less than the
sum of the applicable Termination Value, the aggregate amount of any
Make-Whole Premium and all other expenses incurred by the Lessor, the Owner
Participant and the Indenture Trustee in connection with the sale. Subject to
the provisions of Section 10.02 hereof, on the Proposed Termination Date or
such earlier date of sale as shall be consented to in writing by the Lessor,
the Lessee shall deliver the Airframe which shall have the Engines installed
on it (provided that the Airframe may be delivered with installed engines
meeting the requirements set forth herein for Replacement Engines in lieu of
the Engines so long as the aggregate number of Engines and Replacement Engines
being delivered with the Airframe equals two and the Lessee shall comply with
the provisions of Section 11.04 hereof as if an Event of Loss occurred with
regard to the Engines) to the bidder which shall have submitted the highest
cash bid (whether certified to the Lessor by the Lessee or directly received
by the Lessor and certified to the Lessee) in the same manner as if delivery
were made to the Lessor pursuant to Article 12 hereof, at a location specified
by such bidder, and shall duly transfer to the Lessor title to any such
engines not owned by the Lessor, and the Lessor shall, upon payment in full to
the Lessor of the bid price and all amounts due and owing pursuant to Section
10.01(c) hereof by wire transfer of immediately available funds and upon
discharge of the Lien of the Indenture in accordance with Article XIV thereof,
sell the Airframe and Engines or engines to such bidder without recourse or
warranty (except as to the absence of Lessor's Liens).
(c) Payments to the Lessor. The total selling price realized at a
sale pursuant to Section 10.01(b) hereof net of all expenses of the sale
(including commissions and any sales or transfer taxes) (the "Net Sales
Price") shall be retained by the Lessor (or the Indenture Trustee as long as
the Indenture is in force) and, in addition, on or before the Proposed
Termination Date, the Lessee shall pay to the Lessor (or the Indenture Trustee
as long as the Indenture is in force), by wire transfer of immediately
available funds, the sum of:
(i) the excess, if any, of the Termination Value for the Aircraft
computed as of the Proposed Termination Date over the Net Sales Price; plus
(ii) the installment of Basic Rent due with respect to the Aircraft
on the Proposed Termination Date to the extent payable in arrears but not
to the extent payable in advance; plus
(iii) all other amounts then due and payable by the Lessee (including,
without limitation, the aggregate amount of any Make-Whole Premium) under
this Lease and any other Operative Agreement.
(d) Transfer of Uninstalled Engines. Upon payment of the amounts
described in Section 10.01(c) hereof and upon transfer to the Lessor of title
to engines which have been returned in lieu of Engines as provided in Section
10.01(b) hereof, and upon payment of all other amounts then due under this
Lease, the Lessor will transfer to the Lessee, without recourse or warranty
(except as to the absence of Lessor's Liens), all of the Lessor's right, title
and interest in and to any Engines which were replaced with engines pursuant
to Section 10.01(b) hereof, and shall deliver to the Lessee such instrument as
the Lessor shall have received from the Indenture Trustee releasing such
Engines from the Lien of the Indenture.
(e) Limitation on the Lessor's Duties. The Lessor shall be under no
duty to solicit bids, to inquire into the efforts of the Lessee to obtain bids
or otherwise to take any action in connection with any such sale other than to
transfer to the purchaser named in the highest cash bid (determined as
described in Section 10.01(b) above) as referred to above (or to such
purchaser and to the Lessee, as the case may be), without recourse or warranty
(except as to the absence of Lessor's Liens), all of the Lessor's right, title
and interest in and to the Aircraft, against receipt by the Lessor of the
payments provided for in Section 10.01(c) hereof.
(f) Termination of the Lessee's Obligations. Upon the sale of the
Aircraft pursuant to this Section 10.01 and upon compliance by the Lessee with
the further provisions of this Article 10, the obligation of the Lessee to pay
Basic Rent with respect to the Aircraft shall cease for any Rent Payment Date
occurring after the Proposed Termination Date and the Term shall end effective
as of the Proposed Termination Date. If no sale shall have occurred on or
before the Proposed Termination Date, this Lease shall continue in full force
and effect and, for purposes of Section 10.01(a) hereof, it shall be deemed
that the Lessee has rescinded its notice of termination, and the Lessee shall
pay the expenses incurred by the Lessor, the Indenture Trustee and the Owner
Participant in connection with the proposed sale.
Section 10.02. Retention of Aircraft by the Lessor. (a) Generally.
Notwithstanding Section 10.01 hereof, the Lessor may, subject to Section
10.02(b) hereof, elect to retain the Aircraft after receipt of the Lessee's
notice of termination given in accordance with Section 10.01(a) hereof, by
giving the Lessee and the Indenture Trustee written irrevocable notice of such
election not less than sixty (60) days prior to the Proposed Termination Date.
If the Lessor so elects, the Lessee shall pay to the Lessor on the Proposed
Termination Date, by wire transfer of immediately available funds the sum of:
(i) the installment of Basic Rent due with respect to the Aircraft on
the Proposed Termination Date to the extent payable in arrears but not to
the extent payable in advance; plus
(ii) all other amounts then due and payable by the Lessee under this
Lease and any other Operative Agreement, including the aggregate amount of
any Make- Whole Premium, on or prior to the Proposed Termination Date.
(b) Payment of the Certificates. It shall be an absolute condition
precedent to the Lessor's right to retain the Aircraft and to the termination
of the Term pursuant to this Section 10.02 that the Lessor (or the Lessee to
the extent set forth in Section 10.02(a) hereof) shall have paid to the
Holders and such Holders shall have received the entire outstanding principal
amount of, the aggregate amount of any Make-Whole Premium and accrued interest
on the Certificates on the Proposed Termination Date and all other sums due
and owing to the Indenture Trustee and the Holders on or prior to the Proposed
Termination Date under this Lease, the Indenture or any other Operative
Agreement.
(c) Delivery of Aircraft to Lessor; Title to Engines. If the Lessor
elects to retain the Aircraft pursuant to this Section 10.02, the Lessee shall
deliver the Airframe and the Engines (provided that the Airframe may be
delivered with engines meeting the requirements set forth herein for
Replacement Engines in lieu of the Engines so long as the aggregate number of
Engines and engines being delivered with the Airframe equals two and provided
that the other requirements of Section 11.04 hereof are met as if an Event of
Loss has occurred with regard to the Engines) to the Lessor in the same manner
as if delivery were made to the Lessor pursuant to Article 12 hereof, and shall
duly transfer to the Lessor right, title and interest to any such engines not
owned by the Lessor, all in accordance with Article 12 hereof. Upon such
delivery of the Airframe and Engines or engines to the Lessor and payment by
the Lessee of any amounts required to be paid by the Lessee pursuant to
Section 10.02(a) hereof, the Lessor will transfer to the Lessee, without
recourse or warranty (except as to the absence of Lessor's Liens), all of the
Lessor's right, title and interest in and to any Engines which were replaced
by engines pursuant to this Section 10.02(c), and shall deliver to the Lessee
such instrument as the Lessor shall have received from the Indenture Trustee
releasing such Engines from the Lien of the Indenture.
(d) Termination of the Lessee's Obligations. Upon compliance by the
Lessor and the Lessee with the provisions of this Section 10.02 and upon
compliance by the Lessee with the further provisions of this Article 10, the
obligation of the Lessee to pay Basic Rent with respect to the Aircraft shall
cease for any Rent Payment Date occurring after the Proposed Termination Date
and the Term shall end effective as of the Termination Date.
Section 10.03. Voluntary Termination as to Engines. The Lessee
shall have the right at its option and at any time, on at least thirty (30)
days' prior written notice to the Lessor, to terminate this Lease with respect
to any Engine not then installed or held for use on the Airframe, provided
that prior to the date of such termination, the Lessee shall comply with the
terms of Section 11.04 hereof to the same extent as if an Event of Loss had
occurred with respect to such Engine.
ARTICLE 11
LOSS, DESTRUCTION, REQUISITION
Section 11.01. Lessee's Election Rights. The Lessee shall notify
the Lessor, the Indenture Trustee and the Owner Participant as soon as
practicable but in no event more than 10 Business Days following the
occurrence of an event which constitutes, or would with the passage of time
constitute, an Event of Loss with respect to the Airframe or with respect to
the Airframe and the Engines or engines then installed on the Airframe. By
written notice to the Lessor, the Indenture Trustee and the Owner Participant
delivered within 60 days of the occurrence of any Event of Loss, the Lessee
shall have the right to elect the alternative set forth in Section 11.02
hereof or the alternative set forth in Section 11.03 hereof. The Lessee's
failure to make such election within said 60-day period shall be deemed to be
an election of the alternative set forth in Section 11.02 hereof.
Section 11.02. Payment of Stipulated Loss Value. (a) The Lessee
shall, if it has so elected or is deemed to have so elected under Section
11.01 hereof, pay to the Lessor, by wire transfer of immediately available
funds on the earlier of (i) the fifteenth day following receipt in full of
insurance proceeds or requisition proceeds, described in Section 11.05 hereof,
in connection with such Event of Loss or if later, the 15th day following the
end of the 60-day election period referred to in Section 11.01 hereof and (ii)
the 120th day after the occurrence of such Event of Loss (the earlier of such
dates being referred to herein as the "Loss Payment Date"), the sum of (A) the
Stipulated Loss Value for the Aircraft, determined as of the Stipulated Loss
Value Determination Date next succeeding the Loss Payment Date (or, if the
Loss Payment Date occurs on a Stipulated Loss Value Determination Date,
determined as of such Stipulated Loss Value Determination Date), plus (B) any
and all Basic Rent due and payable on the relevant Stipulated Loss Value
Determination Date to the extent payable in arrears but not to the extent
payable in advance, plus (C) any and all Supplemental Rent due and payable on
or prior to such Loss Payment Date, plus (D) all other amounts (including
Basic Rent due and payable with respect to Rent Payment Dates occurring prior
to such Stipulated Loss Value Determination Date and unpaid) due and payable
by the Lessee hereunder or owing by the Lessee or the Owner Trustee to the
Indenture Trustee or the Holders under the Indenture and the other Operative
Agreements, plus (E) any reasonable out-of-pocket expenses incurred in
connection with such Event of Loss and the related prepayment of the
Certificates by the Lessor, the Owner Participant and the Indenture Trustee;
provided that in no event shall the Holders not be paid in full.
(b) Termination of Lease; Title Transfer. Upon payment in full of
the amounts due pursuant to Section 11.02(a) hereof, the obligation of the
Lessee to pay Basic Rent on any Rent Payment Date occurring subsequent to the
payment of such amounts shall terminate and the Term shall end. Further, upon
such payment, the Lessor will transfer to the Lessee, without recourse or
warranty (except as to the absence of Lessor's Liens), all of the Lessor's
right, title and interest, if any, in and to the Airframe, Engines and engines
with respect to which such Event of Loss occurred, as well as all of the
Lessor's right, title and interest in and to any Engines constituting part of
the Aircraft but not installed on the Airframe when such Event of Loss
occurred, and will deliver to the Lessee such instrument as the Lessor shall
have received from the Indenture Trustee, releasing the Aircraft from the Lien
of the Indenture.
Section 11.03. Replacement of Airframe and Engines. (a) Generally.
So long as no Payment Default, Bankruptcy Default or Event of Default shall
have occurred and be continuing, and subject to Section 11.01 hereof and
provided that the Lessee shall have reimbursed the reasonable out-of-pocket
costs and expenses (including, without limitation, reasonable counsel fees and
disbursements) of the Lessor, the Owner Participant, the Indenture Trustee and
the Holders (to the extent of the reasonable fees and expenses of one legal
counsel in each relevant jurisdiction representing all of the Holders) in
connection with the matters contemplated by this Section 11.03, if the Lessee
has elected to replace the Airframe and Engines suffering an Event of Loss
pursuant to this Section 11.03, the Lessee shall cause to be duly conveyed to
the Lessor within one hundred twenty (120) days after the occurrence of such
Event of Loss, as replacement for the Airframe and Engines with respect to
which such Event of Loss has occurred, good and marketable title to an Airbus
A300-600 series airframe manufactured no earlier than January 1, 1997 (the
"Replacement Airframe") and good and marketable title to a number of
Replacement Engines equal to the number of Engines with respect to which an
Event of Loss has occurred, provided that following compliance with all other
terms of this Section 11.03 each Engine shall be of identical make and model
and, in the case of such Replacement Airframe and each such Replacement
Engine, owned by the Lessee free and clear of all Liens not excepted in
Sections 6.01(a), (b), (c) and (e) hereof, duly certified as an airworthy
aircraft by the Aeronautics Authority, and having in the case of the
Replacement Airframe a value, remaining useful life and utility, and in the
case of the Replacement Engines a value and utility, at least equal to, and
being in as good operating condition as, the Airframe and Engines with respect
to which such Event of Loss occurred, assuming that the Airframe and Engines
were then in the condition and state of airworthiness required to be
maintained by the terms of this Lease immediately prior to the occurrence of
such Event of Loss. In such case and as a condition to such substitution the
Lessee, at its own cost and expense, will also promptly:
(i) furnish the Indenture Trustee with originals of, and the Lessor
with copies of, full warranty bills of sale, in form and substance
satisfactory to the Lessor and the Indenture Trustee, with respect to such
Replacement Airframe and Replacement Engines together with an assignment in
form and substance satisfactory to the Lessor and the Indenture Trustee of
any and all manufacturer's warranties applicable thereto and a consent
reasonably satisfactory to the Lessor and the Indenture Trustee from such
manufacturer or manufacturers to such assignment;
(ii) cause such Replacement Airframe and Replacement Engines to be
duly registered in the name of the Lessor pursuant to the Transportation
Code or the applicable laws of any other jurisdiction in which the Aircraft
may then be registered in accordance with Section 6.03(b) of the
Participation Agreement;
(iii) cause a Lease Supplement with respect to such Replacement
Airframe and Replacement Engines to be duly executed by the Lessee and
recorded pursuant to the Transportation Code, or the applicable laws, rules
and regulations of any other jurisdiction in which the Aircraft may then be
registered as permitted by Section 6.03(b) of the Participation Agreement;
(iv) furnish the Lessor, the Indenture Trustee and the Owner
Participant with an appraisal or other report of a nationally recognized
aircraft appraiser based on an inspection of such Replacement Airframe and
Replacement Engines reasonably satisfactory to the Indenture Trustee and
the Owner Participant certifying that such Replacement Airframe has a
value, remaining useful life and utility, and such Replacement Engines have
a utility and value, at least equal to, and are in as good operating
condition as, the Airframe and Engines replaced, assuming such Airframe and
Engines were in the condition and repair required by the terms of this Lease
immediately prior to the occurrence of such Event of Loss;
(v) furnish the Lessor, the Indenture Trustee and the Owner
Participant with such evidence as the Lessor or the Indenture Trustee may
reasonably request of compliance with the insurance provisions of Article
13 hereof with respect to such Replacement Airframe and Replacement Engines;
(vi) provide the Owner Participant and the Lessor with (A) an opinion
of counsel selected by the Owner Participant and reasonably acceptable to
the Lessee (which opinion shall be reasonably satisfactory in form and
substance to the Owner Participant and the Lessor) that it will suffer no
adverse tax consequence not otherwise indemnified for to its reasonable
satisfaction as of the Delivery Date as a result of such substitution or
(B) an indemnity reasonably acceptable to the Lessor and the Owner
Participant against such consequences;
(vii) comply with the provisions of Section 9.08 of the Indenture;
(viii) cause an Indenture and Security Agreement Supplement with
respect to such Replacement Airframe and Replacement Engines to be duly
executed by the Lessor and the Indenture Trustee and recorded pursuant to
the Transportation Code, or the applicable laws, rules and regulations of
any other jurisdiction in which the Aircraft may then be registered as
permitted by Section 6.03(b) of the Participation Agreement in order that
the Lien of the Indenture shall constitute a first priority, duly perfected
Lien and security interest on and in respect of such Replacement Airframe
and Replacement Engines;
(ix) take such other action, including the filing of UCC financing
statements naming the Indenture Trustee as a secured party with the
Secretary of State of Connecticut and the filing of a notice with the
Secretary of State of Tennessee, as the Lessor or the Indenture Trustee may
reasonably request in order that such Replacement Airframe and Replacement
Engines shall be duly and properly titled in the Lessor, leased under this
Lease and subjected to the Lien of the Indenture to the same extent as the
replaced Airframe and Engines;
(x) furnish the Indenture Trustee with an opinion (reasonably
satisfactory in form and substance to the Lessor, the Owner Participant and
the Indenture Trustee) of counsel to the Lessee (which may be the Lessee's
General Counsel) addressed to the Indenture Trustee and the Owner
Participant to the effect that (A) the Lessor has good title to such
Replacement Airframe and Replacement Engines, and (B) such Replacement
Airframe and Replacement Engines have been validly subjected to the Lien of
the Indenture (with the effect and result that the Indenture constitutes a
first priority duly perfected security interest and Lien on such
Replacement Airframe and Replacement Engines); and
(xi) cause to be delivered to the Lessor, the Owner Participant and
the Indenture Trustee an opinion of counsel to the Lessee addressed to the
Lessor, the Owner Participant and the Indenture Trustee as to the due
registration of the Aircraft and the due recordation of the requisite
documents or instruments and the validity and perfection of the Lien in
such Replacement Airframe and Replacement Engines.
(b) Title to Replaced Equipment. Upon compliance by the Lessee with
the terms of Section 11.03(a) hereof, the Lessor will transfer to the Lessee
(subject to any insurer's salvage rights), without recourse or warranty
(except as to the absence of Lessor's Liens), all of the Lessor's right, title
and interest, if any, in and to the Airframe and Engines with respect to which
such Event of Loss occurred. In connection with such transfer, the Lessee
shall prepare and the Lessor shall execute or forward to the Indenture Trustee
for execution, as the case may be, all in recordable form, a xxxx of sale
evidencing such transfer, a release of the Airframe and Engines with respect to
which such Event of Loss occurred from the Indenture and such other documents
as the Lessee reasonably requests, all at the Lessee's sole cost and expense.
Any Engine constituting part of the Aircraft, but not installed on the
Airframe when such Event of Loss occurred, shall continue to be property of
the Lessor and leased under this Lease as part of the same equipment as the
Replacement Airframe and Replacement Engines.
(c) Definitions. Each Replacement Airframe and Replacement Engine
shall be deemed part of the property leased under this Lease, each such
Replacement Airframe shall be deemed an "Airframe," each such Replacement
Engine shall be deemed an "Engine" and each such Replacement Airframe and
Replacement Engine shall be deemed part of the same Aircraft as was the
Airframe or Engine replaced.
(d) Rent Adjustments. An Event of Loss covered by this Section
11.03 shall not result in any change in Basic Rent, Stipulated Loss Values or
Termination Values except as may be provided pursuant to the Tax Indemnity
Agreement and the Participation Agreement.
(e) Time Limitations. If the Lessee has elected to proceed under
this Section 11.03 but has not fully performed its obligations under this
Section 11.03 within 120 days of the occurrence of the applicable Event of
Loss, in the event that any amounts held by the Lessor (or, so long as the
Indenture shall be in effect, the Indenture Trustee) in respect of such Event
of Loss are less than the Stipulated Loss Value thereof, the Lessee will
deposit with the Lessor or the Indenture Trustee, as the case may be, the
amount of any deficiency as security on such 120th day. If the Lessee has
elected to proceed under this Section 11.03 but has not fully performed its
obligations under this Section 11.03 within 180 days of the occurrence of such
Event of Loss, the Lessee shall be deemed to have elected to proceed under
Section 11.02 hereof and shall immediately perform its obligations thereunder,
and the Indenture Trustee, or the Lessor if the Indenture shall have been
discharged, shall apply the amounts held by it pursuant to the preceding
sentence as a credit against such obligations.
Section 11.04. Event of Loss with Respect to an Engine. (a)
Generally. Upon the occurrence of an Event of Loss with respect to an Engine
under circumstances in which there has not occurred an Event of Loss with
respect to the Airframe, the Lessee shall give the Lessor and the Indenture
Trustee prompt written notice thereof and shall, as soon as practicable but in
any event within sixty (60) days after the occurrence of such Event of Loss,
duly convey or cause to be conveyed to the Lessor, a Replacement Engine for
the Engine with respect to which such Event of Loss occurred, good and
marketable title to a Replacement Engine, free and clear of all Liens not
excepted in Sections 6.01(a), (b) (provided that if there are any Liens of the
type described in Section 6.01(b) hereof, such Liens are subordinate to the
Lien of the Indenture), (c) and (e) hereof and having a value and utility at
least equal to, and being in as good operating condition as, the Engine with
respect to which such Event of Loss occurred, assuming such Engine was of the
value and utility and in the condition and repair required by the terms of
this Lease immediately prior to the occurrence of such Event of Loss, provided
that after any replacement, each Engine shall be of identical make and model.
The standards set forth in this Section with respect to Replacement Engines
shall apply upon any replacement or substitution of an Engine with a
Replacement Engine pursuant to any other provision of this Lease.
(b) Conditions Precedent. Prior to or at the time of any conveyance
of an Engine pursuant to Section 11.04(a) hereof, the Lessee, at its own cost
and expense will:
(i) furnish the Indenture Trustee with an original of, and the Lessor
with a copy of, a full warranty xxxx of sale, in form and substance
satisfactory to the Lessor, with respect to such Replacement Engine
together with an assignment in form and substance satisfactory to the
Lessor of any and all manufacturer's warranties applicable thereto and a
consent reasonably satisfactory to the Lessor and the Indenture Trustee
from such manufacturer to such assignment;
(ii) cause a Lease Supplement covering such Replacement Engine to be
duly executed by the Lessee and filed for recordation pursuant to the
Transportation Code, or the applicable laws, rules and regulations of any
other jurisdiction in which the Aircraft may then be registered as
permitted by Section 6.03(b) of the Participation Agreement and, if the
Engine being replaced was registered under the applicable laws of the
jurisdiction in which the Aircraft is then registered, the Replacement
Engine shall be registered in the same fashion;
(iii) furnish the Lessor and the Indenture Trustee with a certificate
of a nationally recognized aircraft appraiser reasonably satisfactory to
the Lessor certifying that such Replacement Engine has a value and utility
at least equal to, and is in as good operating condition as, the Engine
replaced, assuming such Engine was in at least the condition and repair
required by the terms of this Lease immediately prior to the occurrence of
such Event of Loss;
(iv) furnish the Lessor with such evidence of compliance with the
insurance provisions of Article 13 hereof with respect to such Replacement
Engine as the Lessor or the Indenture Trustee may reasonably request;
(v) comply with the provisions of Section 9.08 of the Indenture;
(vi) cause an Indenture and Security Agreement Supplement with
respect to such Replacement Engine to be duly executed by the Lessor and
the Indenture Trustee and recorded pursuant to the Transportation Code, or
the applicable laws, rules and regulations of any other jurisdiction in
which the Aircraft may be registered as permitted by Section 6.03(b) of the
Participation Agreement in order that the Indenture shall constitute a
first priority duly perfected Lien and security interest on and in respect
of such Replacement Engine;
(vii) take such other action, including the filing of UCC financing
statements naming the Indenture Trustee as Secured Party with the Secretary
of State of Connecticut and a notice filing with the Secretary of State of
Tennessee, as the Lessor or the Indenture Trustee may reasonably request in
order that such Replacement Engine be duly and properly titled in the
Lessor, leased under this Lease and subjected to the Lien of the Indenture
to the same extent as the replaced Engine;
(viii) furnish the Lessor, the Owner Participant and the Indenture
Trustee with an opinion (reasonably satisfactory in form and substance to
the Lessor, the Owner Participant and the Indenture Trustee) of counsel to
the Lessee (which may be the Lessee's General Counsel) addressed to the
Indenture Trustee and the Owner Participant to the effect that (A) the
Lessor has good title to such Replacement Engine, and (B) such Replacement
Engine has been validly subjected to the Lien of the Indenture (with the
effect and result that the Indenture constitutes a first priority duly
perfected security interest and Lien on such Replacement Engine); and
(ix) take such other action as the Indenture Trustee may reasonably
request in order that such Replacement Engine be duly and properly
subjected to the Lien of the Indenture to the same extent as the replaced
Engine.
(c) Title Transfer. Upon compliance by the Lessee with the terms of
Sections 11.04(a) and (b) hereof, the Lessor will transfer to the Lessee
(subject to any insurer's salvage rights), without recourse or warranty
(except as to the absence of Lessor's Liens), all of the Lessor's right, title
and interest, if any, in and to the Engine with respect to which such Event of
Loss occurred. In connection with such transfer, the Lessee shall prepare and
the Lessor shall execute or forward to the Indenture Trustee for execution, as
the case may be, all in recordable form, a xxxx of sale evidencing such
transfer, a release of the Engine with respect to which such Event of Loss
occurred from the Indenture and such other documents as the Lessee reasonably
requests, all at the Lessee's sole cost and expense. Each Replacement Engine
shall, after such conveyance, be deemed part of the property leased under this
Lease. An Event of Loss covered by this Section 11.04 shall not result in any
change in Basic Rent, Stipulated Loss Values or Termination Values, but may
result in payments to be made pursuant to the Tax Indemnity Agreement and the
Participation Agreement.
Section 11.05. Application of Payments from the Government or
Others. (a) Generally. Any payments (other than insurance proceeds the
application of which is provided for in Section 13.03 hereof) received at any
time by the Lessor or by the Lessee from any governmental authority or any
other party, foreign or domestic, with respect to an Event of Loss resulting
from the condemnation, confiscation, theft or seizure of, or requisition of
title to or use of, the Airframe or any Engine will be applied, as
appropriate, in accordance with Section 11.05(b) or Section 11.05(c) hereof.
(b) Payments of Stipulated Loss Value. If the payments described in
Section 11.05(a) hereof are received with respect to the Airframe or with
respect to the Airframe and Engines or engines then installed on the Airframe
and the Lessee has elected the alternative set forth in Section 11.02 hereof,
so much of such payments as shall not exceed the amount required to be paid by
the Lessee pursuant to Section 11.02 hereof shall be paid to the Lessor (or,
if the Lien of the Indenture has not been discharged, the Indenture Trustee)
in reduction of the Lessee's obligations under Section 11.02 hereof if not
already paid by the Lessee, or, if such obligations have already been
discharged in full by the Lessee, such payments shall be applied to reimburse
the Lessee for its payment of such Stipulated Loss Value and, if and to the
extent specifically included in such payment, to pay to the Lessee interest on
such amount of Stipulated Loss Value at the rate included in such payment if
any, or otherwise at the applicable Debt Rate, for the period from the date of
payment by the Lessee of the Stipulated Loss Value to the date of
reimbursement of the Lessee under this Section 11.05(b). The excess, if any,
remaining after such application shall be divided between the Lessor and the
Lessee as their respective interests may appear.
(c) Payment if the Lessee Elects Replacement. If the payments
described in Section 11.05(a) hereof are received with respect to the Airframe
or with respect to the Airframe and the Engines or engines then installed on
the Airframe and the Lessee has elected the alternative set forth in Section
11.03 hereof, or if such payments are received with respect to an Engine not
then installed on the Airframe under the circumstances contemplated by Section
11.04 hereof, all such payments shall, subject to Section 11.08 hereof, be
paid over to or retained by the Lessee, provided that the Lessee shall have
fully performed its obligations pursuant to Section 11.03 or Section 11.04
hereof, as the case may be, with respect to the Event of Loss for which such
payments are made.
Section 11.06. Requisition of an Airframe and the Installed Engines
for Use by Government. In the event of the requisition for use by the
Government or any other government of registry of the Aircraft, or any agency
or instrumentality of either (a "Requisitioning Government") of the Airframe
and the Engines or engines then installed on the Airframe during the Term,
which requisition does not constitute an Event of Loss, the Lessee shall
promptly notify the Lessor, the Indenture Trustee and the Owner Participant of
such requisition and all of the Lessee's obligations under this Lease with
respect to such Airframe and Engines or engines shall continue to the same
extent as if such requisition had not occurred except to the extent that any
failure or delay in repairing or maintaining the Aircraft by the Lessee shall
have been caused by such requisition. All payments received by the Lessor,
the Lessee or any permitted sublessee or transferee from the Requisitioning
Government for such use of the Airframe and Engines or engines during the Term
(other than any such requisition which constitutes an Event of Loss, as to
which the provisions of Section 11.05 hereof shall govern) shall, subject to
Section 11.08 hereof, be paid over to, or retained by the Lessee or such
permitted sublessee or transferee. All payments received by the Lessor, the
Lessee or any such permitted sublessee or transferee from the Requisitioning
Government for the use of the Airframe and Engines or engines after the Term
shall be paid over to, or retained by, the Lessor (or the Lessee if it shall
have purchased the Lessor's interest therein in accordance with the provisions
hereof).
Section 11.07. Requisition for Use by Government of an Engine Not
Installed on the Airframe. In the event of the requisition for use by a
Requisitioning Government of registry of the Aircraft or any agency or
instrumentality thereof of any Engine not then installed on the Airframe, the
Lessee shall replace such Engine by complying with the terms of Section 11.04
hereof to the same extent as if an Event of Loss had occurred with respect to
such Engine as of the date of such requisition, and any payments received by
the Lessor or the Lessee from the Requisitioning Government with respect to
such requisition shall, subject to Section 11.08 hereof, be paid over to or
retained by the Lessee, provided that the Lessee shall have fully performed
its obligations under Section 11.04 hereof.
Section 11.08. Application of Payments During Existence of Certain
Defaults. Any amount referred to in Section 11.05, 11.06 or 11.07 hereof
which is payable to the Lessee shall not be paid to the Lessee, or, if it has
been previously paid directly to the Lessee, shall not be retained by the
Lessee, if at the time of such payment a Payment Default, Bankruptcy Default
or Event of Default shall have occurred and be continuing, but shall be paid
to and held by the Lessor (or the Indenture Trustee so long as the Lien of the
Indenture is in effect) as provided in Article 23 hereof as security for the
obligations of the Lessee under this Agreement, and at such time as there
shall not be continuing any such Payment Default, Bankruptcy Default or Event
of Default, such amount to the extent not theretofore applied as provided
herein, shall be paid to the Lessee.
ARTICLE 12
RETURN OF AIRCRAFT
Section 12.01. Return of Aircraft. Unless the Aircraft is purchased
by the Lessee as provided in Section 4.02 hereof, at the end of the Term, or
upon the termination of this Lease pursuant to Article 10 or Article 17 hereof
or otherwise, the Lessee, at its own cost and expense, will return the
Aircraft by delivering it to the Lessor on the last day of the Term or on the
Termination Date, as the case may be, at the Lessee's principal maintenance
facility in Memphis, Tennessee or such other location specified by the Lessee
(and reasonably acceptable to the Owner Participant), or if such termination
is pursuant to Article 17 hereof, selected by the Lessor in its reasonable
discretion, within or, if the Aircraft is then registered outside the United
States, outside of the continental United States (on the Lessee's route
structure as in effect on the return date and provided that the Lessee shall
pay any incremental expenses incurred in connection with a redelivery outside
the United States) and the Airframe shall be fully equipped with two Engines
of the same or an improved make and model as were delivered on the Delivery
Date (or Replacement Engines), free and clear of all Liens (other than
Lessor's Liens), including any rights of third parties under pooling,
interchange, overhaul, repair or similar agreements or arrangements, it being
understood that all such Engines and Replacement Engines so returned shall be
of identical make and model and that any Replacement Engine shall be in at
least as good operating condition and have at least the same value and utility
as the Engines being replaced, assuming such Engines were in the condition
required hereunder. The Lessee will give the Lessor at least 30 days' prior
written notice of the place of such return; provided, however, that if the
Lessor shall have made the request for storage pursuant to Section 12.06
hereof, the Lessee shall return the Aircraft to the Lessor at the site of the
storage.
Section 12.02. Return of Engines. If any engine not owned by the
Lessor shall be delivered with the Airframe as set forth in Section 12.01
hereof, the Lessee, concurrently with such delivery, will, at its own cost and
expense furnish the Lessor with (i) a full warranty xxxx of sale, in form and
substance reasonably satisfactory to the Lessor, with respect to such engine,
(ii) an opinion of the Lessee's counsel to the effect that, upon such return,
the Lessor will acquire full right, title and interest to such engine free and
clear of all Liens (other than Lessor's Liens) and (iii) a certificate as
described in Section 11.04(b)(iii) hereof. The Lessee shall take such other
action as the Lessor may reasonably request in order that such Replacement
Engine shall be duly and properly titled in the Lessor free and clear of all
Liens (other than Lessor's Liens), and the Lessor will then (i) transfer to
the Lessee, without recourse or warranty (except as to the absence of Lessor's
Liens), and subject to the disclaimers provided in Section 5.01 hereof, all
the Lessor's right, title and interest in and to any Engine in lieu of which a
Replacement Engine has been delivered pursuant to Section 12.01 hereof, "as
is, where is" and (ii) deliver to the Lessee such instrument as the Lessor
shall have received from the Indenture Trustee, releasing such Engine from the
Lien of the Indenture.
Section 12.03. Return of Manuals. Upon the return of the Aircraft,
the Lessee shall deliver to the Lessor all original (or photocopied or
microfilmed copies thereof, if then permitted to be maintained in such form
under applicable law) logs, manuals, certificates and technical data, and
inspection, modification and overhaul records pertaining to the Airframe,
Engines or engines, which are required to be maintained under applicable rules
and regulations of the Aeronautics Authority or pursuant to the Lessee's or
any permitted sublessee's Aeronautics Authority-approved maintenance program
and all original (or photocopied or microfilmed copies thereof, if then
permitted to be maintained in such form under applicable law) records required
to be maintained with respect to the Aircraft under the maintenance program
approved by the aeronautical authority of any other country of registry of the
Aircraft. All records shall be returned in the format necessary to allow the
Lessee or any sublessee to comply with Section 12.04(a)(i) hereof.
Section 12.04. Condition of Aircraft. (a) Required Condition. The
Aircraft when returned to the Lessor shall, at the Lessee's own cost and
expense, meet the following requirements:
(i) it shall, unless otherwise requested by the Lessor not less than
90 days prior to the end of the Term to retain the then-existing
registration of the Aircraft, be duly registered in the name of the Lessor
or its designee pursuant to the Transportation Code;
(ii) it shall be clean by airline and cargo handling operating
standards;
(iii) the Airframe shall be returned with the Engines, or any
replacements thereto as herein authorized, provided that the Airframe shall
have an aggregate of two Engines or engines (as herein authorized under
Section 12.02 hereof), both of the same make and model, installed thereon,
together with the equipment, accessories or parts installed thereon on the
Delivery Date or replacements therefor (as herein authorized) and
alterations, modifications and additions thereto made in accordance with
the provisions of this Lease;
(iv) it shall be in the condition required by Section 12.04(b) hereof
and in as good operating condition as when delivered to the Lessor on the
Delivery Date, ordinary wear and tear excepted;
(v) it shall have a currently effective airworthiness certificate
issued by the Aeronautics Authority;
(vi) it shall comply with any then applicable rules and regulations
imposed by the Aeronautics Authority and, without limitation of the
foregoing, terminate all airworthiness directives of, and mandatory
modifications required by, the Aeronautics Authority (or any government or
governmental authority, domestic or foreign, having jurisdiction over the
Aircraft) to be terminated during the Term of the Lease and the Airframe
and each Engine (including any Replacement Engine) shall be serviceable in
accordance with the Lessee's FAA-approved maintenance program;
(vii) it shall be free and clear of all Liens and rights of others
(other than Lessor's Liens) including, without limitation, rights of third
parties under pooling, interchange, overhaul, repair and other similar
agreements or arrangements referred to in Section 7.02(a) hereof; and
(viii) it shall be in a standard cargo configuration.
(b) Remaining Time. If, at the time of return of the Aircraft, the
Airframe is not being maintained under a continuous maintenance program, then
the Airframe shall have remaining until the next scheduled "C" check at least
25% of the allowable hours between "C" checks permitted under the Lessee's
FAA-approved maintenance program (or other permitted maintenance program).
If, at the time of return of the Aircraft, the Engines or engines are not
being maintained under an on-condition maintenance program, then the average
number of hours of operation on such Engines or engines remaining until the
next scheduled engine heavy maintenance visit under the Lessee's FAA-approved
maintenance program (or other permitted maintenance program) shall be at least
25% of the allowable hours between engine heavy maintenance visits. With
respect to maintenance under the Lessee's FAA-approved maintenance program,
the Lessee shall have treated the Aircraft in a nondiscriminatory manner with
other Airbus A300-600 series aircraft in the Lessee's fleet, and the Aircraft
shall be free and clear of all Liens and rights of others other than Lessor's
Liens and shall be in compliance in every material respect with the Lessee's
FAA-approved maintenance program as if the Term were not ending.
Section 12.05. [Reserved].
Section 12.06. Storage. Upon any expiration or termination of this
Lease, at the written request of the Lessor given at least 45 days prior to
such expiration or termination, the Lessee will arrange, or will cause to be
arranged, at no charge to the Lessor (subject, however, to the last sentence
of this Section 12.06), storage at a ramp storage facility for the Aircraft at
the Lessee's principal maintenance facilities in Memphis, Tennessee or one of
the Lessee's other maintenance facilities or at a location selected by the
Lessee used as a location for the parking or storage of aircraft for a period
of up to 30 days; provided that if storage is available at no additional cost
or expense to the Lessee at the location at which the Lessor has specified
pursuant to Section 12.01 hereof that return of the Aircraft shall take place,
the Lessee shall provide storage at such location. At the end of such 30 day
period, if the Lessor so requests within 10 days of before the end of such
period, the Lessee will continue to provide such ramp storage facility at such
facility or location for an additional 30 days at the Lessor's expense. If
the Lessee is required to move the Aircraft from one storage facility to
another, such move shall be at the risk and expense of the Lessor. The
maintenance and risk of loss of, and responsibility for obtaining insurance
on, the Aircraft shall be the responsibility of the Lessor during any period
of storage; provided, however, the Lessee will, upon written request of the
Lessor and at the Lessor's expense, not to exceed the Lessee's incremental
cost of such service, obtain insurance for such property (including, if
possible, coverage through its fleet policy).
Section 12.07. Special Markings. If requested by the Lessor, the
Lessee shall, at the Lessee's cost, remove or paint over all insignias and
other distinctive markings of the Lessee or any sublessee on the Aircraft and
repaint the stripped down areas in a workmanlike manner to match exterior
colors.
Section 12.08. Lessor's Option to Purchase Parts. At any time after
the Lessee has advised the Lessor that it has determined not to renew this
Lease or purchase the Aircraft, or the Aircraft is otherwise to be returned to
the Lessor, the Lessee shall advise the Lessor of any Part which the Lessee
intends, and is permitted, to remove as provided in Section 9.02(b) above, and
the Lessor may, at its option, upon 30 days' notice to the Lessee, purchase
any or all of such Parts from the Lessee upon the expiration of the Term at
their then Fair Market Value (taking into account the provisions of this
Lease) determined in accordance with the provisions of Section 4.03 hereof.
Upon any return of the Aircraft pursuant to this Article 12, if the Lessor does
not elect to exercise its option under this Section 12.08, the Lessee will, at
its own cost and expense, remove such Parts described in subparagraph (i),
(ii) or (iii) of Section 9.02(b) hereof as the Lessor may request.
ARTICLE 13
INSURANCE
Section 13.01. Comprehensive Airline Liability and Property Damage
Liability Insurance. (a) Comprehensive Airline Liability and Property Damage
Liability Insurance. The Lessee, at its own cost and expense, will maintain
or cause to be maintained with respect to the Aircraft, (i) comprehensive
airline liability insurance including, without limitation, passenger legal and
bodily injury liability and property damage liability insurance and cargo
legal liability in such amounts, against such risks (including, without
limitation, contractual liability and allied perils liability but excluding
war risk insurance (except as required under the second sentence of this
Section 13.01(a)), with such retentions (subject to the limitations set forth
in Section 13.06 hereof) and on such terms and conditions (including coverage
for cost of claims) as the Lessee customarily maintains with respect to
aircraft and engines of the same type and model which comprise the fleet of
the Lessee, and (ii) such insurance against such other risks as is usually
carried by similar corporations engaged in the same or similar business and
similarly situated as the Lessee and owning or operating aircraft and engines
similar to the Aircraft and Engines; provided that in no event shall the
limits of liability for all such insurance be less than the amount, per
occurrence, as set forth on the insurance certificate delivered on the
Delivery Date unless and only so long as the Aircraft is not operated and all
risk-ground insurance for the Aircraft on the ground is maintained in the same
manner and covering the same risks as is from time to time applicable to other
aircraft owned or operated by the Lessee of the same type and model on the
ground and not in operation. The Lessee will be required to maintain war risk
insurance only if the Aircraft is operated in a war zone or a recognized area
of armed hostilities. All insurance required by this Section 13.01(a) shall
be maintained with insurers of recognized reputation and responsibility.
(b) Government Indemnification. Notwithstanding Section 13.01(a)
hereof, in the event of the requisition for use by the Government of the
Airframe or the Airframe and the Engines or engines then installed on the
Airframe, the Lessee shall maintain throughout the period of such requisition
such insurance as would otherwise be required under this Section 13.01;
provided that the Lessor shall accept, in lieu of such insurance coverage,
written indemnification or insurance from the Government which is
substantially the same as otherwise required under this Article 13.
(c) Policy Terms. Any policy of insurance carried and maintained in
accordance with this Section 13.01, and any policy taken out in substitution or
replacement for any such policy subject to the terms, conditions and
limitations thereof, shall:
(i) name or be amended to name the Lessor in its individual capacity
and as owner of the Aircraft, the Indenture Trustee in its individual
capacity and as trustee/mortgagee of the Aircraft and the Owner
Participant, each Liquidity Provider and each of their respective officers
and directors in their respective capacities as such as additional insureds
(hereinafter in this paragraph (c) sometimes referred to as "Additional
Insured");
(ii) provide that, in respect of the interest of any Additional
Insured in such policies, the insurance shall not be invalidated by any
action or inaction of the Lessee or any Additional Insured as defined under
the policy of insurance required under this Section 13.01 (other than any
action or inaction of such Additional Insured) and shall insure each
Additional Insured regardless of any breach or violation of any warranty,
declaration or condition contained in such policies by the Lessee or any
other Additional Insured (other than any breach or violation of any
warranty, declaration or condition by such Additional Insured) as defined
under the policy of insurance required under this Section 13.01;
(iii) provide that if such insurance is cancelled for any reason, or
any substantial change is made in the policies which adversely affect the
scope of the coverage required herein, or if such insurance is allowed to
lapse for nonpayment of premium, such cancellation, change or lapse shall
not be effective as to any Additional Insured for thirty (30) days (except
in the case of war risk coverage in which event the applicable period shall
be seven (7) days or such other period as may be customary) after receipt
by each such Additional Insured of written notice from such insurers or
such insurers' broker of such cancellation, change or lapse;
(iv) provide that the insurers shall waive any rights of subrogation
against each Additional Insured, to the extent that the Lessee has waived
its rights under this Lease and the Participation Agreement; provided that
the exercise by insurers of rights of subrogation derived from rights
retained by the Lessee shall not, in any way, delay payment of any claim
that would otherwise be payable by such insurers but for the existence of
rights of subrogation derived from rights retained by the Lessee;
(v) provide that all of the provisions of such policy shall operate
in the same manner as if there were a separate policy covering each
Additional Insured; provided, that such policies shall not operate to
increase any insurer's limit of liability;
(vi) be primary, without right of contribution from any other
insurance which is carried by the Lessee or any sublessee or any Additional
Insured with respect to its interest in the Aircraft;
(vii) provide that no Additional Insured shall have any obligation or
liability for premiums or other payments, if any, in connection with such
insurance; and
(viii) provide that such insurer shall waive the right of such
insurer to any set-off or counterclaim or any other deduction, whether by
attachment or otherwise, in respect of any liability of any Additional
Insured.
Section 13.02. Insurance Against Loss or Damage to Aircraft and
Engines. (a) Hull Insurance. The Lessee, at its own cost and expense, shall
maintain or cause to be maintained in effect, with insurers of recognized
reputation and responsibility, all-risk ground and flight aircraft hull
insurance covering the Aircraft and all-risk coverage with respect to any
Engines and Parts while removed from the Aircraft and not replaced by similar
Engines or Parts, including in each case war-risk and allied perils, hijacking
(air piracy) and governmental confiscation and expropriation insurance (except
with respect to the country of registry) with such retentions (subject to the
limitations set forth in Section 13.06 hereof) and in such form, and upon such
terms and conditions (including coverage for cost of claims), and in amounts
as the Lessee customarily maintains with respect to the aircraft in the
Lessee's fleet of the same type and model and operated on the same routes as
the Aircraft (except that the Lessee shall be required to maintain (i) allied
perils, hijacking (air piracy) and governmental confiscation and expropriation
insurance (except with respect to the country of registry) if the Aircraft is
operated on routes where the custom is for major international Air Carriers
flying comparable routes to carry such insurance and (ii) war risk insurance
only if the Aircraft is operated in a war zone or a recognized area of armed
hostilities), provided that such insurance shall at all times while the
Aircraft is subject to this Lease and the Lien of the Indenture be on an
agreed-value basis for an amount not less than an amount equal to the
Stipulated Loss Value for the Aircraft from time to time.
(b) Policy Terms. Any policies carried and maintained in accordance
with this Section 13.02 and any policies taken out in substitution or
replacement for any such policies subject to the terms, conditions and
limitations thereof shall:
(i) name or be amended to name the Lessor in its individual capacity
and as owner of the Aircraft (or, so long as the Indenture shall not have
been discharged, the Indenture Trustee) as an additional insured and as the
sole loss payee (hereinafter in this paragraph (b) sometimes referred to as
"Loss Payee");
(ii) provide with respect to coverage provided under this Section
13.02, (except as otherwise provided under Section 13.03 hereof when an
Event of Loss or a Payment Default, Bankruptcy Default or Event of Default
has occurred and is continuing), that (i) in the event of a loss involving
proceeds in the aggregate in excess of $6,000,000, the proceeds in respect
of such loss up to an amount equal to the Stipulated Loss Value for the
Aircraft shall be payable to the Lessor (or, so long as the Indenture shall
not have been discharged, the Indenture Trustee), it being understood and
agreed that in the case of any payment to the Lessor (or the Indenture
Trustee) otherwise than in respect of an Event of Loss, the Lessor (or the
Indenture Trustee) shall in the aggregate upon receipt of evidence
satisfactory to it that the damage giving rise to such payment shall have
been repaired or that such payment shall then be required to pay for
repairs then being made, pay the amount of such payment to the Lessee or
its order, and (ii) the entire amount of any loss involving proceeds in the
aggregate of $6,000,000 or less or the amount of any proceeds of any loss
in excess of the Stipulated Loss Value for the Aircraft shall be paid to
the Lessee or its order to pay for repairs or replacement property;
(iii) provide that if such insurance is cancelled for any reason or
any substantial change is made in the policies which adversely affect the
scope of the coverage required herein, or if such insurance is allowed to
lapse for nonpayment of premium, such cancellation, change or lapse shall
not be effective as to the Loss Payee for thirty days (except in the case
of war-risk coverage in which event the applicable period shall be seven
(7) days or such other period as may be customary) after receipt by the
Loss Payee of written notice from such insurer of such cancellation, change
or lapse;
(iv) provide that, in respect of the interest of the Lessor (in its
individual capacity and as the Owner Trustee), the Owner Participant or the
Indenture Trustee (in their respective capacities as such) in such
policies, the insurance shall not be invalidated by any action or inaction
of the Lessee or the Loss Payee (other than any action or inaction of such
Loss Payee) and shall insure the Lessor (in its individual capacity and as
Owner Trustee), the Owner Participant and the Indenture Trustee regardless
of any breach or violation of any warranty, declaration or condition
contained in such policies by the Lessee or the Loss Payee (other than any
breach or violation of any warranty, declaration or condition by the Loss
Payee) as defined under the policy of insurance required under this Section
13.02;
(v) provide that the insurers shall waive any rights of subrogation
against the Lessor (in its individual capacity and as Owner Trustee), the
Owner Participant and the Indenture Trustee to the extent that the Lessee
has waived its rights under this Lease or the Participation Agreement;
provided that the exercise by insurers of rights of subrogation derived
from rights retained by the Lessee shall not, in any way, delay payment of
any claim that would otherwise be payable by such insurers but for the
existence of rights of subrogation derived from rights retained by the
Lessee;
(vi) be primary and without rights of contribution from any other
insurance which is carried by the Loss Payee with respect to its interest
in the Aircraft;
(vii) provide that (except in the case of insurance with respect to
Engines and spare parts that have been removed from the Aircraft and
replaced with other Engines or engines, or spare parts, as the case may be)
such insurer shall waive any right of such insurer to any set-off or
counterclaim or any other deduction, whether by attachment or otherwise, in
respect of any liability of the Loss Payee;
(viii) provide that (except in the case of insurance with respect to
Engines and spare parts that have been removed from the Aircraft and
replaced with other Engines or engines or spare parts, as the case may be)
no Loss Payee shall have any obligation or liability for premiums or other
payments, if any, in connection with such insurance; and
(ix) in the event that separate policies are maintained to cover
all-risk ground and flight aircraft, hull and war risks and allied perils
insurance, include a 50/50 provisional claims settlement clause as
contained in the policies of insurance maintained by the Lessee with
respect to all other aircraft in the Lessee's fleet, and a copy of the
50/50 provisional claims settlement clause in effect on the Delivery Date
shall be attached to the insurance certificate issued on the Delivery Date.
Section 13.03. Application of Insurance Proceeds. (a) Generally.
All insurance proceeds (other than proceeds from policies carried by the
Lessor, the Indenture Trustee or the Owner Participant) received under
policies described in Section 13.02 hereof as the result of the occurrence of
an Event of Loss with respect to the Airframe or an Engine will be applied as
follows:
(i) if such proceeds are received with respect to the Airframe or with
respect to the Airframe and the Engines or engines then installed on the
Airframe and the Lessee has elected or is deemed to have elected the
alternative set forth in Section 11.02 hereof, so much of such proceeds as
shall not exceed the amounts required to be paid by the Lessee pursuant to
said Section 11.02 hereof shall be applied in reduction of the Lessee's
obligation to pay such amounts if not already paid by the Lessee, or if
already paid by the Lessee, shall be applied to reimburse the Lessee for
its payment of such amounts; or
(ii) if such proceeds are received with respect to the Airframe or the
Airframe and the Engines or engines then installed on the Airframe and the
Lessee has elected the alternative set forth in Section 11.03 hereof, or if
such proceeds are received with respect to an Engine not then installed on
the Airframe and not replaced by an Engine or engine under the
circumstances contemplated by Section 11.04 hereof, all such proceeds shall
be paid to the Indenture Trustee (unless the Indenture has been discharged
in which case paid to the Lessor) for disbursement to the order of the
Lessee, after the Lessee shall have fully performed the terms of Section
11.03 or 11.04 hereof, as applicable, with respect to the Event of Loss for
which such proceeds are paid.
(b) Payment if no Event of Loss. The insurance proceeds of any
property damage loss not constituting an Event of Loss with respect to the
Airframe or an Engine will be applied in payment (or to reimburse the Lessee)
for repairs or for replacement property in accordance with Articles 7 and 8
hereof, if not already paid for by the Lessee, and any balance remaining after
compliance with said Articles 7 and 8 hereof with respect to such loss shall
be paid to the order of the Lessee.
(c) Application of Payments During Existence of Certain Defaults. Any
amount referred to in this Article 13 which is payable to or retainable by the
Lessee shall not be paid to or retained by the Lessee if at the time of such
payment or retention a Payment Default, Bankruptcy Default or Event of Default
shall have occurred and be continuing, but shall be held by or paid over to
the Indenture Trustee (unless the Indenture has been discharged in which case
such amount shall be paid to the Lessor) to be held in accordance with Article
23 hereof, as security for the obligations of the Lessee under this Lease and,
if an Event of Default shall have occurred and be continuing, applied against
the Lessee's obligations hereunder as and when due. At such time as there
shall not be continuing any such Payment Default, Bankruptcy Default or Event
of Default, such amount shall be paid to the Lessee to the extent not
previously applied in accordance with the preceding sentence.
(d) Information. If any Additional Insured becomes subject to any
claim covered by any insurance policy maintained pursuant to this Article 13,
the Lessee shall make available any information required by such Additional
Insured in connection with such claim.
Section 13.04. Reports. On or before the Delivery Date and
thereafter annually on or before the scheduled expiration date for such policy
during the Term, the Lessee will cause its aviation insurance broker to
furnish to the Lessor and the Indenture Trustee a signed report, stating the
types of coverage and limits carried and maintained on the Aircraft and
certifying that such insurance complies with the terms and conditions of this
Lease. The Lessee will cause such aviation insurance broker to advise the
Lessor, the Owner Participant and the Indenture Trustee in writing promptly
of any default in the payment of any premium and of any other act or omission
on the part of the Lessee of which it has knowledge and which might
invalidate, cause cancellation of or render unenforceable all or any part of
any insurance carried by the Lessee with respect to the Aircraft. The Lessee
will cause such insurance broker to agree to advise the Lessor, the Indenture
Trustee and the Owner Participant in writing if and when it becomes evident to
such broker that any insurance policy carried and maintained on the Aircraft
pursuant to this Article 13 will not be renewed at the scheduled expiration
date for such policy. If the Lessee shall fail to maintain insurance as
required, the Lessor may, at its option, provide such insurance, and in such
event, the Lessee shall, upon demand, reimburse the Lessor, as Supplemental
Rent, for the cost of such insurance; provided, however, that no exercise of
said option shall affect the provisions of this Lease, including the
provisions that failure by the Lessee to maintain the prescribed insurance
shall constitute an Event of Default or otherwise constitute a waiver of any
other rights the Lessor may have against the Lessee.
Section 13.05. Lessor's Insurance. The Lessor, the Indenture
Trustee or the Owner Participant may insure the Airframe or any Engine at its
own cost and expense, including insuring the Aircraft for amounts in excess of
the Stipulated Loss Value of the Aircraft, provided that any insurance so
maintained by the Lessor, the Indenture Trustee or the Owner Participant shall
not result in a reduction of coverage or amounts payable under insurance
required or permitted to be maintained by the Lessee under this Article 13 or
increase the cost to the Lessee of maintaining such insurance; provided
further, that any insurance policies of the Lessor, the Indenture Trustee or
the Owner Participant insuring the Airframe or any Engine shall provide for a
release to the Lessee of any and all salvage rights in and to the Airframe or
any Engine.
Section 13.06. Self-Insurance. The Lessee may self-insure the risks
required to be insured against by Sections 13.01 and 13.02 hereof in such
manner and in such reasonable amounts as are then generally applicable to
other aircraft or engines of the Lessee of the same type and model as the
Aircraft, but in no case shall such self-insurance with respect to all
aircraft (whether owned or leased) in the Lessee's fleet in aggregate exceed
for any 12-month policy year an amount equal to the lesser of (i) 50% of the
highest insured value of any single aircraft in the Lessee's fleet and (ii)
1.5% of the average aggregate insured value from time to time of the Lessee's
entire aircraft fleet provided that a standard deductible per occurrence per
aircraft (and/or retentions) not in excess of the amount imposed by the
aircraft hull or liability insurer shall be permitted in addition to the
above-mentioned self-insurance. The foregoing shall not permit the Lessee to
discriminate as between insurance coverage on the Aircraft and insurance which
the Lessee maintains with respect to similar aircraft owned or operated by the
Lessee operating on similar routes in similar locations.
ARTICLE 14
INSPECTION
Section 14.01. Right of Inspection. At reasonable times, and upon
at least ten (10) Business Days' prior written notice to the Lessee, the
Lessor, the Indenture Trustee or the Owner Participant, or their respective
authorized representatives, may inspect the Aircraft and upon at least ten
(10) Business Days' prior written notice, all Aeronautics Authority required
books and records of the Lessee or any sublessee relating to the maintenance
of the Aircraft and such Persons shall keep any information obtained thereby
confidential and shall not disclose the same to any Person, except to a Person
described in Section 18.01 of the Participation Agreement. Any such
inspection of the Aircraft shall be a visual, walk-around inspection of the
interior and exterior of the Aircraft and shall not include opening any panel,
bays or the like without the express consent of the Lessee (except to the
extent any such inspection takes place when any such panel, bays or the like
are open). Notwithstanding the first sentence of this Section 14.01, unless a
material Default relating to maintenance or an Event of Default shall have
occurred and be continuing, the Lessor, the Indenture Trustee, the Owner
Participant or their respective authorized representatives shall each be
entitled to inspect the Aircraft only one time during any consecutive
twelve-month period. The Lessee shall make any permitted sublease or transfer
permitted under Section 7.02 hereof expressly subject to inspection rights
consistent with this Article 14.
Section 14.02. No Obligation to Inspect. None of the Lessor, the
Indenture Trustee or the Owner Participant shall have any duty to make any
inspection pursuant to Section 14.01 hereof and no such party shall incur any
liability or obligation by reason of making or not making any such inspection.
ARTICLE 15
ASSIGNMENT
Section 15.01. Lessee's Right to Assign. The Lessee shall not, and
shall have no authority or power to assign, convey or sublease any of its
rights under this Lease without the prior written consent of the Lessor except
(i) as expressly provided in Section 7.02 hereof, or (ii) to a wholly-owned
domestic subsidiary of the Lessee which shall be a certificated U.S. Air
Carrier. Any such assignment, conveyance or sublease shall in no way relieve
the Lessee from any obligation hereunder or under any other Operative
Agreement or any written agreement of the Lessee entered into in connection
with the transactions contemplated by the Operative Agreements, which shall be
and remain primary obligations of the Lessee. The Lessor agrees that it will
not assign or convey its right, title and interest in and to this Lease or the
Aircraft except as contemplated by or provided in this Lease, the Trust
Agreement, the Indenture or the Participation Agreement. The terms and
provisions of this Lease shall be binding upon and inure to the benefit of the
Lessor and the Lessee and their respective successors and permitted assigns,
and shall inure, to the extent expressly provided herein and therein, to the
direct benefit of, and in accordance with the provisions of the Indenture and
the Participation Agreement shall be enforceable by, the Indenture Trustee,
the Lessor and their respective successors and permitted assigns.
Section 15.02. Citizenship. The Lessee will at all times be a duly
certificated U.S. Air Carrier under the Transportation Code.
ARTICLE 16
EVENTS OF DEFAULT
Section 16.01. Events of Default. After the Delivery Date, each of
the following events shall constitute an Event of Default, whether any such
event shall be voluntary or involuntary or come about or be effected by
operation of law or pursuant to or in compliance with any judgment, decree or
order of any court or any order, rule or regulation of any administrative or
governmental body:
(a) the Lessee shall fail to make any payment of Basic Rent, Renewal
Rent, Stipulated Loss Value or Termination Value, as the case may be, or
any payment pursuant to Section 17.02 of the Participation Agreement,
within ten Business Days after the date when due (except that with respect
to any failure to pay Excepted Payments, such failure shall constitute an
Event of Default at the discretion of the Owner Participant); or
(b) the Lessee shall fail to make any payment of Supplemental Rent
(other than amounts described in clause (a) above) within 30 days after the
Lessee has received written notice from the Person entitled to receive such
payment stating that such payment is due (except that with respect to any
failure to pay Excepted Payments for such period, such failure shall
constitute an Event of Default at the discretion of the Owner Participant);
or
(c) (i) the Lessee shall fail to procure, carry and maintain
insurance on or in respect of the Aircraft at any time in accordance with
the provisions of Article 13 or such insurance lapses or is cancelled,
provided that, in the case of insurance with respect to which cancellation
or lapse for nonpayment is not effective as to the Lessor, the Indenture
Trustee, the Holders or the Owner Participant for 30 days (seven days, in
the case of any aircraft war risk coverage) no such lapse or cancellation
shall constitute an Event of Default until the earlier of (A) 30 days (or
seven days or such shorter time as may be standard in the industry with
respect to war risk coverage) after receipt by any Additional Insured of
written notice of such lapse or cancellation and (B) the date that such
lapse or cancellation is effective as to any Additional Insured and
provided further that such failure shall not constitute an Event of Default
as long as the Aircraft is insured as required while on the ground and not
operated, or (ii) the Aircraft shall be operated at any time when
comprehensive airline liability insurance required under Section 13.01
hereof shall not be in effect (it being understood that the Lessee is not
required to maintain such insurance under Section 13.01 hereof while the
indemnification or insurance referred to in the proviso to Section 13.01(b)
hereof is in effect); or
(d) the Lessee shall fail to perform or observe any other covenant,
condition or agreement to be performed or observed by it under any
Operative Agreement (excluding the Tax Indemnity Agreement) or any other
written agreement of the Lessee entered into in connection with the
transactions contemplated by the Operative Agreements and such failure
shall continue unremedied for a period of thirty (30) days after the Lessee
shall have received written notice from the Lessor or the Owner Participant
of such failure, provided, that in the event such failure is curable and so
long as (but for no longer than 150 days after such 30-day period) the
Lessee shall have promptly undertaken such cure after the Lessee receives
notice thereof which undertaking shall be diligently and continuously
pursued using the Lessee's reasonable best efforts, such failure shall not
constitute an Event of Default; provided, further, that failure of the
Lessee to maintain the registration of the Aircraft under the
Transportation Code pursuant to the Lessee's covenants and agreement in
Section 6.03(b) of the Participation Agreement and in Section 7.01(a) of
this Lease, when the lapse of such registration is solely because the Owner
Participant or the Lessor has ceased to be a Citizen of the United States,
shall not constitute a Default or an Event of Default; or
(e) an order for relief shall be entered in respect of the Lessee by
a court having jurisdiction in the premises in an involuntary case under
the federal bankruptcy laws as now or hereafter in effect; or the Lessee
shall consent to the appointment of a custodian, receiver, trustee or
liquidator of itself or of a substantial part of its property; or the
Lessee is not paying, or shall admit in writing its inability to pay, its
debts generally as they come due or shall make a general assignment for the
benefit of creditors; or the Lessee shall file, or the Board of Directors
of the Lessee shall authorize the filing of, or grant one or more persons
authority (at their discretion) to make a filing for, a voluntary petition
in bankruptcy or a voluntary petition or an answer seeking reorganization
in a proceeding under any bankruptcy laws (as now or hereafter in effect)
or an answer admitting the material allegations of a petition filed against
the Lessee in any such proceeding; or the Lessee shall file, or the Board
of Directors of the Lessee shall authorize the Lessee to, or grant one or
more persons authority (at their discretion) to, seek relief by voluntary
petition, answer or consent, under the provisions of any other or future
bankruptcy or other similar law providing for the reorganization or
winding-up of corporations, or providing for an agreement, composition,
extension or adjustment with its creditors; or
(f) an order, judgment or decree shall be entered by any court of
competent jurisdiction appointing, without the consent of the Lessee, a
custodian, receiver, trustee, or liquidator of the Lessee or of any
substantial part of its property, or sequestering any substantial part of
the property of the Lessee, or granting any other relief in respect of the
Lessee under the federal bankruptcy laws or other insolvency laws, and any
such order, judgment or decree of appointment or sequestration shall remain
in force undismissed or unvacated for a period of 60 days after the date of
its entry; or
(g) a petition against the Lessee in a proceeding under the federal
bankruptcy law or other insolvency laws (as now or hereafter in effect)
shall be filed and shall not be withdrawn or dismissed within 60 days, or
under the provisions of any law providing for reorganization or winding-up
of corporations which may apply to the Lessee, any court of competent
jurisdiction shall assume jurisdiction, custody or control of the Lessee or
of any substantial part of its property and such jurisdiction, custody or
control shall remain in force unrelinquished or unterminated for 60 days; or
(h) any representation or warranty made by the Lessee in this Lease
or in the Participation Agreement or in any document or certificate
furnished by the Lessee in connection with or pursuant to this Lease or the
Participation Agreement (except for the Tax Indemnity Agreement) shall at
any time prove to have been incorrect at the time made in any respect
material to the transactions contemplated by this Lease and, if originally
made by the Lessee in good faith, shall remain material and unremedied for
a period of 120 days after the Lessee shall have received written notice of
such misstatement.
ARTICLE 17
REMEDIES
Section 17.01. Remedies Upon Lessee's Default. (a) Remedies
Generally. Upon the occurrence of any Event of Default and at any time after
such occurrence so long as the same shall be continuing, the Lessor may, at
its option, declare this Lease to be in default (except that no such
declaration shall be required in the case of an Event of Default pursuant to
paragraph (e), (f) or (g) of Section 16.01 hereof and this Lease shall be
deemed declared in default without any further act or notice), and at any time
thereafter the Lessor may do, and the Lessee shall comply with, one or more
of the following with respect to all or any part of the Airframe and the
Engines, as the Lessor in its sole discretion shall elect, to the extent
permitted by, and subject to compliance with, any mandatory requirements of
applicable law then in effect:
(i) Demand in writing that the Lessee shall, and upon such written
demand the Lessee shall, at the Lessee's own cost and expense, return
promptly to the Lessor all or such part of the Airframe and the Engines as
the Lessor may demand in the manner and condition required by, and
otherwise in accordance with all of the provisions of this Lease (provided
that, unless the Lessor shall require otherwise, the Aircraft shall be
returned within the continental United States), or the Lessor, at its
option, may enter upon the premises where such Airframe or Engines are
located or believed to be located and take immediate possession of and
remove such Airframe and Engines (together with any engine which is not an
Engine but is installed on the Airframe, subject to all of the rights of
the owner, lessor, Lien holder or secured party of such engine) without the
necessity for first instituting proceedings, or by summary proceedings or
otherwise, all without liability of the Lessor to the Lessee for or by
reason of such entry or taking of possession, whether for the restoration
of damage to property caused by such action or otherwise;
(ii) With or without taking possession thereof, sell or otherwise
dispose of the Airframe or any Engine, at public or private sale and with
or without advertisement or notice to the Lessee, as the Lessor may
determine, and the Lessor may hold the Lessee liable for any installment of
Basic Rent and Renewal Rent due on or before the date of such sale (and, if
Basic Rent or Renewal Rent is payable in arrears, the pro rata portion of
the installment of Basic Rent or Renewal Rent due on the next succeeding
Rent Payment Date in respect of any period commencing on the immediately
preceding Rent Payment Date to the date of such sale), or hold, use,
operate, lease to others or keep idle all or any part of the Airframe or any
Engine as the Lessor, in its sole discretion, may determine, in any such
case free and clear of any rights of the Lessee except as otherwise set
forth in this Article 17, and without any duty to account to the Lessee
with respect to such action or inaction or for any proceeds except to the
extent required by Section 17.01(a)(iv) hereof; in the event the Lessor
elects to exercise its rights under said Section, and in connection with
any sale of the Aircraft or any part thereof pursuant to this Article 17,
the Lessor, the Indenture Trustee, the Owner Participant or any Holder may
bid for and purchase such property;
(iii) Whether or not the Lessor shall have exercised or shall later
at any time exercise any of its rights under Section 17.01(a)(i) or
17.01(a)(ii) hereof, the Lessor, by written notice to the Lessee specifying
a payment date not earlier than 10 days from the date of such notice, may
demand that the Lessee pay to the Lessor, and the Lessee shall pay to the
Lessor on the payment date specified in such notice, as liquidated damages
for loss of a bargain and not as a penalty (in lieu of the Basic Rent or
Renewal Rent due on Rent Payment Dates occurring after the payment date
specified in such notice), any installment of Basic Rent, Renewal Rent and
any Supplemental Rent due on or before such payment date (and, to the
extent Basic Rent or Renewal Rent is payable in arrears, the pro rata
portion of the installment of Basic Rent or Renewal Rent due on the next
succeeding Rent Payment Date in respect of the period commencing on the
Stipulated Loss Value Determination Date referred to below and ending on
the date of such payment), plus an amount equal to the excess, if any, of
the Stipulated Loss Value for the Aircraft, computed as of the Stipulated
Loss Value Determination Date on or next preceding the payment date
specified in such notice over the Fair Market Value of the Aircraft,
computed as of such Stipulated Loss Value Determination Date, together with
(A), if Basic Rent is payable in advance, interest, to the extent permitted
by applicable law, at the Debt Rate on the amount of such Stipulated Loss
Value from such Stipulated Loss Value Determination Date to the date for
payment set forth in such notice from the Lessor and (B) in all cases,
interest, to the extent permitted by applicable law at the Past Due Rate on
the excess of such Stipulated Loss Value over such Fair Market Value, from
the date as of which such Stipulated Loss Value is payable to the date of
actual payment of such amount; provided, however, that if (and in any event
prior to the time for payment hereunder) the Lessor is unable within a
reasonable period of time to recover possession of the Aircraft, or any
portion thereof, pursuant to clause (i) above unencumbered by this Lease
and free and clear of all Liens (other than Lessor's Liens), the Fair
Market Value of the Aircraft or such portion shall, at the option of the
Lessor to the extent legally enforceable, be zero and, if the Fair Market
Value of the Aircraft is deemed to be zero, after payment in full by the
Lessee of the amount specified above and all other amounts due from the
Lessee under this Lease and the other Operative Agreements, the Lessor
shall promptly transfer (without recourse or warranty other than as to the
absence of the Lessor's Liens) all of its right, title and interest in the
Aircraft or such portion, to the Lessee;
(iv) In the event the Lessor, pursuant to Section 17.01(a)(ii)
hereof, shall have sold the Airframe and/or any Engine, the Lessor, in lieu
of exercising its rights under Section 17.01(a)(iii) hereof, may, if it
shall so elect, demand that the Lessee pay the Lessor, and the Lessee shall
pay to the Lessor, on the date of such sale, as liquidated damages for loss
of a bargain and not as a penalty (in lieu of the Basic Rent or Renewal
Rent due after the date on which such sale occurs) any unpaid Basic Rent or
Renewal Rent due on or before the date on which such sale occurs (and, to
the extent Basic Rent or Renewal Rent is payable in arrears, the pro rata
portion of the installment of Basic Rent or Renewal Rent due on the next
succeeding Rent Payment Date in respect of any period commencing on the
Stipulated Loss Value Determination Date referred to below and ending on
the date of such sale), and any Supplemental Rent due on or before the date
on which such sale occurs, plus an amount equal to the excess, if any, of
(A) the Stipulated Loss Value for the Aircraft, computed as of the
Stipulated Loss Value Determination Date next preceding the sale date, over
(B) the net proceeds of such sale (after deduction of all of the Lessor's
costs and expenses of such sale, including, without limitation, sales or
transfer taxes, costs of storage, overhaul, maintenance, preparation and
transportation of the Aircraft and brokers' and attorneys' fees) together
with (x), if Basic Rent is payable in advance, interest, to the extent
permitted by applicable law, at the Debt Rate on such Stipulated Loss Value
from such Stipulated Loss Value Determination Date to the date of such sale
and (y) in all cases, interest to the extent permitted by applicable law at
the Past Due Rate, on the amount of such excess from the date of such sale
to the date of actual payment by the Lessee;
(v) Proceed by appropriate court action to enforce the terms of this
Lease or to recover damages for its breach;
(vi) Terminate or rescind this Lease as to the Airframe or any or all
of the Engines; or
(vii) Exercise any other right or remedy which may be available to
the Lessor under applicable law.
(b) Cost of Exercise of Remedies. In addition, the Lessee shall be
liable, except as otherwise provided above, for any and all unpaid Rent due
before, after or during the exercise of any of the Lessor's remedies, for all
amounts payable by the Lessee under the Participation Agreement before or
after any termination hereof, and for all reasonable legal fees and other
costs and expenses incurred by the Lessor, the Indenture Trustee or the Owner
Participant by reason of the occurrence of any Event of Default or the
exercise of the Lessor's remedies, including, without limitation, all costs
and expenses incurred in connection with the return of the Airframe or any
Engine in accordance with the terms of Article 12 hereof or in placing the
Airframe or Engines in the condition and state of airworthiness required by
such Article or in connection with any inspection, use, operation,
maintenance, insurance, storage, or leasing carried out as part of such
exercise.
Section 17.02. Cumulative Remedies. Except as otherwise provided, no
remedy referred to in this Article 17 is intended to be exclusive, but each
shall be cumulative and in addition to any other remedy referred to above or
otherwise available to the Lessor at law or in equity; and the exercise or
beginning of exercise by the Lessor of any one or more of such remedies shall
not preclude the simultaneous or later exercise by the Lessor of any or all of
such other remedies.
Section 17.03. Waiver. No express or implied waiver by the Lessor
of any Event of Default shall in any way be, or be construed to be, a waiver
of any future or subsequent Event of Default. To the extent permitted by
applicable law, the Lessee waives any rights now or in the future conferred by
statute or otherwise which may require the Lessor to sell, lease or otherwise
use the Airframe or any Engine in mitigation of the Lessor's damages or which
may otherwise limit or modify any of the Lessor's rights or remedies under
this Article 17. The Lessor's access to the Aircraft is of the essence and
shall not be impaired.
Section 17.04. Lessor's Right to Perform for Lessee. If the Lessee
fails to make any required payment of Rent or fails to perform or comply with
any of its agreements contained in this Lease, whether or not such failure
shall constitute an Event of Default hereunder, the Lessor may (but shall not
be obligated to) make such payments or perform or comply with such agreement,
and the amount of such payment and the amount of the reasonable costs and
expenses of the Lessor incurred in connection with such payment or the
performance of or compliance with such agreement, together with interest (to
the extent permitted by applicable law) at the Past Due Rate from the date of
the making of such payment or the incurring of such costs and expenses by the
Lessor to the date of payment of such Rent or other amount by the Lessee,
shall be deemed Supplemental Rent payable by the Lessee upon demand. No such
payment or performance by the Lessor shall be deemed to waive any Default or
Event of Default or relieve the Lessee of its obligations hereunder.
ARTICLE 18
COVENANT OF QUIET ENJOYMENT
Section 18.01. Quiet Enjoyment. So long as no Event of Default
shall have occurred and be continuing, the Lessor covenants that neither it
nor any other Person lawfully claiming through it (other than the holder of a
Lien which the Lessee is obligated to discharge pursuant to Article 6 hereof,
and it being understood that the Lessor shall not be liable for any act or
omission of the Indenture Trustee or any other Person claiming through the
Indenture Trustee) shall interfere with the Lessee's right to quietly enjoy
the Aircraft without hindrance or disturbance by it or any such other Person.
ARTICLE 19
FURTHER ASSURANCES
Section 19.01. Further Assurances. Promptly upon the execution and
delivery of the Lease Supplement and the Indenture and Security Agreement
Supplement, the Lessee will cause each of them and this Lease, the Trust
Agreement and the Indenture, to be duly filed for recordation in accordance
with the Transportation Code and will maintain the recordation of the
Indenture until the Lien of the Indenture shall have been discharged pursuant
to the terms of the Indenture. In addition, the Lessee will, at the Lessee's
own cost and expense, promptly and duly execute and deliver to the Lessor, the
Owner Participant and the Indenture Trustee such further documents and
assurances to carry out the intent and purpose of this Lease and the Indenture
and to establish and protect the rights and remedies created or intended to be
created in favor of the Lessor under this Lease, and of the Owner Participant
under the Trust Agreement, and of the Indenture Trustee under the Indenture,
including, without limitation, the execution and filing of Uniform Commercial
Code financing and continuation statements, the execution and delivery of
supplements and amendments to this Lease and the Indenture, in recordable form,
subjecting to this Lease and the Indenture any Replacement Airframe and/or
Replacement Engines delivered by the Lessee pursuant to Section 11.03 hereof
and any Replacement Engine delivered by the Lessee pursuant to Section 11.04
hereof and the recording and filing of counterparts of this Lease and the
Indenture in accordance with the laws of such jurisdictions as the Lessor or
the Indenture Trustee may from time to time deem advisable. The foregoing
does not impose upon the Lessor any additional liabilities not otherwise
contemplated by this Lease.
ARTICLE 20
NET LEASE
Section 20.01. Nature of Lease. (a) This Lease is a net lease, it
being the intention of the parties hereto that the obligations of the Lessee
to pay all costs and expenses of every character, whether seen or unforeseen,
ordinary or extraordinary, or structural or nonstructural, in connection with
the use, operation, maintenance, repair and reconstruction of the Airframe and
each Engine by the Lessee, including, without limitation, the costs and
expenses particularly set forth in this Lease (unless expressly excluded from
the terms hereof, the costs and expenses of the Lessor and the Owner
Participant shall include the reasonable fees and expenses of their respective
outside counsel), shall be absolute and unconditional, shall be separate and
independent covenants and agreements, and shall continue unaffected unless and
until the covenants have been terminated pursuant to an express provision of
this Lease. The obligation to pay Rent and all amounts payable by the Lessee
under this Lease or the Participation Agreement shall be absolute and
unconditional and (except as otherwise expressly provided with respect to
Supplemental Rent) shall be paid without notice or demand and such obligation
shall not be affected by any circumstance, including, without limitation:
(i) any set-off, counterclaim, recoupment, defense or other right
which the Lessee may have against the Lessor, the Owner Participant, any
Holder, the Indenture Trustee or anyone else for any reason (including,
without limitation, any breach by the Lessor or the Owner Participant or
the Indenture Trustee or any Holder of their respective representations,
warranties, agreements or covenants contained in any of the Operative
Agreements);
(ii) any defect in the title, airworthiness, registration,
eligibility for registration under the Transportation Code (and the
regulations thereunder) or under any of the laws or regulations of any
other country of registry of the Aircraft, condition, design, operation,
merchantability or fitness for use of, suitability for a particular purpose
of, or any damage to or loss or destruction of, the Aircraft or any portion
thereof, or any interruption or cessation in the use or possession of the
Aircraft by the Lessee or any sublessee for any reason including, without
limitation, by reason of governmental action or any doctrine of force
majeure or impossibility of performance;
(iii) any insolvency, bankruptcy, reorganization or similar case or
proceedings by or against the Lessor, the Lessee, the Indenture Trustee or
the Owner Participant or any other Person;
(iv) any Liens, encumbrances or rights of any other Person with
respect to the Aircraft, the invalidity or unenforceability or lack of due
authorization or other infirmity of this Lease or any other Operative
Agreement or document or instrument executed pursuant hereto or thereto, or
any lack of right, power or authority of the Lessor or the Lessee or any
sublessee or any other party to any other Operative Agreement to enter into
this Lease or any other Operative Agreement or any such document or
instrument; or
(v) any other circumstance, happening or event whatsoever, whether or
not unforeseen, or similar to any of the foregoing.
(b) To the extent permitted by applicable law, the Lessee waives any
and all rights which it may now have or which at any time it may have
conferred upon it, by statute or otherwise, to suspend performance under,
terminate, cancel, quit, rescind or surrender this Lease, the Airframe, or any
Engine or part thereof, other than in accordance with the terms hereof.
(c) Each payment of Rent made by the Lessee shall be final as to the
Lessor and the Lessee, and the Lessee will not seek to return nor to recover,
xxxxx, suspend, defer or reduce all or any part of any such payment of Rent
from the Lessor or from the Indenture Trustee for any reason.
ARTICLE 21
SUCCESSOR LESSOR
Section 21.01. Successor Lessor. The Lessee agrees that in the case
of the appointment of any successor trustee for the Lessor pursuant to the
terms of the Participation Agreement, such successor trustee shall, upon
written notice by such successor to the Lessee, succeed to all the rights,
powers and title of the Lessor under this Lease and shall be deemed to be the
Lessor and the owner of the Aircraft for all purposes of this Lease without
the necessity of any consent or approval by the Lessee and without in any way
altering the terms of this Lease or the Lessee's obligations. One such
appointment and designation of a successor trustee shall not exhaust the right
to appoint and designate a further successor trustee pursuant to the
Participation Agreement, but such right may be exercised repeatedly so long as
this Lease shall be in effect.
ARTICLE 22
SECURITY FOR LESSOR'S OBLIGATIONS
Section 22.01. Security for Lessor's Obligations to Holders. In
order to secure the indebtedness evidenced by the Certificates, the Indenture
provides among other things, for the assignment by the Lessor to the Indenture
Trustee of this Lease and the Lease Supplement and for the creation of a first
mortgage and security interest in favor of the Indenture Trustee on the
Aircraft. The Lessee consents to and acknowledges such assignment (subject to
the reservations and conditions therein set forth) and the receipt of a copy
of the Indenture.
Section 22.02. [Reserved].
Section 22.03. Consent of Lessee to Assignment of Lease as Security.
The Lessee hereby acknowledges and consents to the Indenture Trustee's rights
pursuant to the terms of the Indenture to receive payments (other than
Excepted Payments not constituting Basic Rent) due under this Lease, to
transfer or assign title to the Aircraft subject to this Lease, to make
(jointly with the Lessor where provided in the Indenture) all waivers and
agreements except as otherwise provided in the Indenture (including Section
8.01 thereof), to give all notices, consents and releases and to take all
action upon the happening of a Default or Event of Default under this Lease
(except as otherwise specifically provided in the Indenture, including Section
8.01 thereof), or to do any and all other things whatsoever which the Lessor
is or may become entitled to do under this Lease (except as otherwise provided
in the Indenture, including Section 8.01 thereof); all or any of which rights,
obligations, benefits and interests may, pursuant to the terms of the
Indenture, be reassigned or retransferred by the Indenture Trustee at any time
and from time to time (except as otherwise provided in the Indenture);
provided, however, that the Lessor, except to the extent, and for such time
as, it is unable to do so by virtue of the Indenture, shall remain liable for
the performance of all the terms, conditions, covenants and provisions for
which it is obligated under this Lease notwithstanding such assignment.
ARTICLE 23
SECURITY FUNDS
Section 23.01. Investment of Security Funds. (a) Any amounts
otherwise payable to the Lessee in accordance with the terms hereof shall
instead be held by the Lessor as security for, and may be applied by the
Lessor against, the obligations of the Lessee under this Lease during such
time as there shall have occurred and be continuing a Payment Default,
Bankruptcy Default or Event of Default, and, at such times as there shall not
be continuing a Payment Default, Bankruptcy Default or Event of Default, such
amounts, net of any amounts which have been applied by the Lessor against the
Lessee's obligations hereunder, shall be paid to the Lessee as provided in
this Lease. Any amounts which are held by the Lessor pending payment to the
Lessee shall, until paid to the Lessee or applied against the Lessee's
obligations hereunder, be invested by the Lessor, as directed from time to
time, in writing (and in the absence of a written direction by the Lessee, the
Lessor shall invest such monies in direct obligations of the United States of
America), by the Lessee and at the expense and risk of the Lessee, in the
following securities (which in the case of securities referred to in
subparagraphs (i) through (iv) of this Section 23.01(a) hereof shall mature
within ninety (90) days of the date of purchase):
(i) direct obligations of the United States of America; or
(ii) obligations fully guaranteed by the United States of America; or
(iii) certificates of deposit issued by, or bankers' acceptances of,
or time deposits or a deposit account with, any bank, trust company or
national banking association incorporated or doing business under the laws
of the United States of America or one of its States (which may include the
Owner Trustee or the Indenture Trustee in their respective individual
capacities or any Affiliate thereof), having a combined capital and surplus
of at least $500,000,000 and having a rating of "A" or better from Xxxxx'x
or S&P; or
(iv) commercial paper rated A-1/P-1 by S&P or Xxxxx'x, respectively
(or if neither such organization shall rate such commercial paper at any
time, a rating by any nationally recognized statistical rating organization
in the United States of America equal to the highest rating assigned by
such rating organization) (which may include commercial paper issued by the
Owner Trustee or the Indenture Trustee in their respective individual
capacities or any Affiliate thereof).
(b) At any time any invested funds are distributed to the Lessee,
there shall be promptly remitted to the Lessee any gain (including interest
received) realized as the result of any investment pursuant to Section
23.01(a) hereof (net of any fees, commissions and other costs, Taxes and
expenses, if any, incurred by the Lessor or the Owner Participant in
connection with such investment), unless a Payment Default, Bankruptcy Default
or Event of Default shall have occurred and be continuing in which case such
funds shall be applied in the same manner as the principal so invested. The
Lessee shall be responsible for and will promptly pay to the Indenture Trustee
or the Lessor, as the case may be, on demand, the amount of any loss realized
as the result of any such investment (together with any fees, commissions and
other costs, Taxes and expenses, if any, incurred by the Indenture Trustee or
the Lessor or the Owner Participant in connection with such investment), such
amount to be disposed of in accordance with the terms of the Indenture or the
Lease, as the case may be.
ARTICLE 24
CONCERNING THE LESSOR
Section 24.01. Lessor's Entry Into Lease. Except as expressly
provided herein, the Lessor and the Lessee agree that this Lease is executed
by SSB not individually but solely as Owner Trustee under the Trust Agreement
in the exercise of the power and authority conferred and vested in it as such
Owner Trustee, that each and all of the representations, undertakings and
agreements by the Lessor herein are for the purpose and with the intention of
binding only the Lessor's Estate, and that in no case whatsoever shall SSB be
personally liable for any loss in respect of such representations,
undertakings and agreements, that actions to be taken by the Lessor pursuant
to its obligations hereunder may, in certain instances, be taken by the Lessor
only upon specific authority of the Owner Participant and the Indenture
Trustee, that nothing herein contained shall be construed as creating any
liability on SSB, individually or personally, to perform any covenant, either
express or implied, herein, all such liability, if any, being expressly waived
by the Lessee and by each and every Person now or hereafter claiming by,
through or under the Lessee except with respect to the gross negligence or
willful misconduct of SSB, and that so far as SSB, individually or personally
is concerned, the Lessee and any Person claiming by, through or under the
Lessee shall look solely to the Lessor's Estate for the performance by the
Lessor of any of its obligations under this Lease; provided, that nothing in
this Section 24.01 shall be construed to limit in scope or substance those
representations and warranties of SSB in its individual capacity set forth in
the Participation Agreement and the Trust Agreement. The term "Lessor" as
used in this Lease shall include any trustee succeeding SSB as Owner Trustee
under the Trust Agreement. Any obligation of the Lessor hereunder may be
performed by the Owner Participant, and any such performance shall not be
construed as revocation of the trust created by the Trust Agreement. Nothing
contained in this Lease shall restrict the operation of the provisions of the
Trust Agreement with respect to its revocation of the resignation or removal
of the Owner Trustee hereunder.
ARTICLE 25
NOTICES
Section 25.01. Notices. All notices, demands, declarations and other
communications required by this Lease shall be in writing and shall be deemed
received (a) if given by telecopier, when transmitted and the appropriate
telephonic confirmation received if transmitted on a Business Day and during
normal business hours of the recipient, and otherwise on the next Business Day
following transmission, (b) if given by certified mail, return receipt
requested, postage prepaid, five Business Days after being deposited in the
United States mail and (c) if given by FedEx service (or, if a Default or
Event of Default shall have occurred and be continuing, by other comparable
courier service), when received or personally delivered, addressed:
(a) If to the Lessee, to its office at 0000 Xxxxxxxxx Xxxxxx,
Xxxxxxx, Xxxxxxxxx 00000, Attention: Senior Vice President and Chief
Financial Officer with a copy to Senior Vice President and General Counsel;
telephone (000) 000-0000, facsimile (000) 000-0000; or at such other
address as the Lessee shall from time to time designate in writing to the
Lessor, the Indenture Trustee and the Owner Participant;
(b) If to the Lessor or Owner Trustee, to it x/x Xxxxx Xxxxxx Xxxx
and Trust Company, Xxx Xxxxxxxxxxxxx Xxxxx, 0xx Xxxxx, Xxxxxx,
Xxxxxxxxxxxxx 00000, Attention: Corporate Trust Department; telephone
(000) 000-0000, facsimile (000) 000-0000; or to such other address as the
Lessor shall from time to time designate in writing to the Lessee and the
Indenture Trustee, with a copy to Owner Participant at the Owner
Participant's address as provided in subsection (c) below;
(c) If to the Owner Participant, in accordance with the Participation
Agreement; and
(d) If to the Indenture Trustee, to its office at 00 Xxxxx Xxxx
Xxxxxx, Xxxx Xxxx Xxxx, Xxxx 00000, Attention: Corporate Trust Department,
telephone (000) 000-0000, facsimile (000) 000-0000; or to such other
address as the Indenture Trustee shall from time to time designate in
writing to the Lessor, the Lessee and the Owner Participant.
ARTICLE 26
MISCELLANEOUS
Section 26.01. Section Heading and Captions. All article and section
headings and captions used in this Lease are purely for convenience and shall
not affect the interpretation of this Lease.
Section 26.02. References. Any reference to a specific article or
section number shall be interpreted as a reference to that article or section
of this Lease unless otherwise expressly provided.
Section 26.03. APPLICABLE LAW. THIS LEASE SHALL IN ALL RESPECTS BE
GOVERNED BY, AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW
YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE BUT
WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS, AND IS BEING
DELIVERED IN NEW YORK.
Section 26.04. Severability. Any provision of this Lease which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
Section 26.05. No Oral Modification. The terms and provisions of
this Lease may not be changed, waived, discharged or terminated orally, but
only by an instrument in writing signed by the party against which enforcement
of the change, waiver, discharge or termination is sought. Any such change,
waiver, discharge or termination is also subject to the provisions of Section
8.01 and Article XIII of the Indenture.
Section 26.06. Agreement as Chattel Paper. To the extent that this
Lease constitutes chattel paper (as such term is defined in the Uniform
Commercial Code as in effect in any applicable jurisdiction), no security
interest in this Lease may be created through the transfer or possession of
any counterpart other than the original chattel-paper counterpart, which shall
be the counterpart containing the receipt executed by the Indenture Trustee on
its signature page.
Section 26.07. Counterparts. This Lease may be executed in any
number of counterparts, each of which shall be an original (except that only
the counterpart bearing the receipt executed by the Indenture Trustee shall be
the original for purposes of perfecting a security interest therein as chattel
paper under the Uniform Commercial Code), but all of which taken together
shall constitute one and the same instrument and any of the parties hereto may
execute this Lease by signing any such counterpart.
Section 26.08. Public Release of Information. Provided no Event of
Default shall have occurred and be continuing, each party shall in each
instance obtain the prior written approval of each party concerning the exact
text and timing of news releases, articles and other informational releases to
the public media concerning this Lease.
ARTICLE 27
TRUE LEASE
Section 27.01. Intent of the Parties. It is the intent of the
parties to this Lease that for all purposes (including, without limitation,
U.S. Federal income tax purposes) this Lease will be a true lease, and that
this Lease conveys to the Lessee no right, title or interest in the Aircraft
except as a lessee.
Section 27.02. Section 1110 Compliance. Notwithstanding any
provision herein or elsewhere contained to the contrary, it is understood and
agreed among the parties hereto that the transactions contemplated by this
Lease and the other Operative Agreements are expressly intended to be, shall
be and should be construed so as to be, entitled to the full benefits of
Section 1110 of the Bankruptcy Code and any successor provision thereof.
Section 27.03. Finance Lease. This Lease is a "finance lease"
within the meaning of Section 2-A--103(g) of the Uniform Commercial Code.
IN WITNESS WHEREOF, the Lessor and the Lessee have each caused this
Lease to be duly executed as of the date first above written.
LESSOR: STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION,
not in its individual capacity,
but solely as Owner Trustee
By: ______________________________________________
Name: Xxxx X. Xxxxx
Title: Vice President
LESSEE: FEDERAL EXPRESS CORPORATION
By: _______________________________________________
Name: Xxxxxx X. Xxxxxxx
Title: Assistant Treasurer and
Managing Director - Structured Finance
Receipt of this original counterpart of the Lease is hereby
acknowledged on this __ day of May 1997.
Indenture Trustee: FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not in its individual capacity,
but solely as Indenture Trustee
By: _____________________________________________
Name: Xxxx X. Xxxxxx
Title: Vice President
SCHEDULE I
DEFINITIONS
(FEDERAL EXPRESS CORPORATION TRUST NO. N671FE)
GENERAL PROVISIONS
The following terms shall have the following meanings for all
purposes of the Operative Agreements (other than the Pass Through Agreement,
the Series Supplements, the Intercreditor Agreement and the Liquidity
Facilities) referred to below, unless otherwise defined in an Operative
Agreement or the context thereof shall otherwise require. In the case of any
conflict between the provisions of this Schedule and the provisions of any
Operative Agreement, the provisions of such Operative Agreement shall control
the construction of such Operative Agreement.
Unless the context otherwise requires, (i) references to agreements
shall be deemed to mean and include such agreements as amended and
supplemented from time to time, and (ii) references to parties to agreements
shall be deemed to include the successors and permitted assigns of such
parties.
DEFINED TERMS:
Additional Insured. As defined in Article 13 of the Lease.
Aeronautics Authority. As appropriate, the Federal Aviation
Administration and/or the Administrator of the Federal Aviation
Administration, any successor to the former United States Civil Aeronautics
Board, or any Person, governmental department, bureau, commission or agency
located in the United States succeeding to the functions of any of the
foregoing.
Affidavits. The affidavits of citizenship of the Owner Trustee and
the Owner Participant.
Affiliate. With respect to any Person, any other Person directly or
indirectly controlling, controlled by or under common control with such
Person. For the purposes of this definition, "control" (including "controlled
by" and "under common control with") shall mean the power, directly or
indirectly, to direct or cause the direction of the management and policies of
such Person whether through the ownership of voting securities or by contract
or otherwise. In no event shall the Owner Trustee or the Lessor be deemed an
Affiliate of the Owner Participant.
After-Tax Basis. A basis such that any payment to be received by a
Person shall be supplemented by a further payment to such Person so that the
sum of the two payments, after deduction of all Taxes resulting from the
receipt or accrual of such payments, shall be equal to the payment to be
received. In the case of amounts payable to the Lessor, the Owner Participant,
or any corporate Affiliate of the Owner Participant, it shall be presumed that
such Person is at all times subject to Federal income tax at the maximum
marginal rate generally applicable to corporations from time to time and
actual state, local and foreign income taxes.
Air Carrier. Any U.S. Air Carrier and any "foreign air carrier" (as
defined in the Transportation Code) as to which there is in force a permit
granted under Section 41302 of the Transportation Code.
Airbus Guaranty. The Guaranty to be dated the Delivery Date executed
by the Manufacturer and guaranteeing AVSA's Warranty Xxxx of Sale.
Aircraft. The Airframe to be sold by AVSA to the Owner Trustee as
provided in the Participation Agreement and to be leased under the Lease (or
any permitted substitute airframe thereunder) together with two Engines
(whether either is an initial Engine or a Replacement Engine) whether or not
any of such initial or Replacement Engines may from time to time be installed
on such Airframe or may be installed on any other airframe or on any other
aircraft, including any aircraft substituted pursuant to Section 11.03 of the
Lease. Prior to delivery of the initial Lease Supplement, references in the
Operative Agreements (including Section 3.05 of the Participation Agreement)
to Aircraft shall mean the Airbus A300F4-605R airframe bearing FAA
Registration Number N671FE and Manufacturer's serial number 778, together with
two General Electric CF6-80C2-A5F engines.
Airframe. The Airbus A300F4-605R aircraft (excluding the Engines or
engines from time to time installed thereon) to be leased by the Lessor to the
Lessee pursuant to the Lease and the initial Lease Supplement and having the
United States FAA Registration Number initially and manufacturer's serial
number specified in the initial Lease Supplement, including (i) all Parts in
respect thereof and (ii) any Replacement Airframe which may be substituted
pursuant to Section 11.03 of the Lease.
Ancillary Agreement. Any written agreement of the Lessee to which the
Lessor is a party or to which the Lessor has consented in writing entered into
on or prior to the Delivery Date or any date thereafter in connection with the
transactions contemplated by the Operative Agreements, as such agreement may
be amended and supplemented from time to time with the consent of the Lessor
and delivered to the Owner Trustee, the Indenture Trustee, the Pass Through
Trustee, the Subordination Agent, each Liquidity Provider and the Owner
Participant.
Ancillary Agreement I. The Ancillary Agreement I (Federal Express
Corporation Trust No. N671FE), dated the Certificate Closing Date, among the
Lessee, the Owner Trustee, not in its individual capacity, but solely as Owner
Trustee, the Owner Participant and the Indenture Trustee not in its individual
capacity, but solely as Indenture Trustee, as originally executed or as
amended, modified or supplemented with the consent of all the parties thereto.
Ancillary Agreement II. The Ancillary Agreement II (Federal Express
Corporation Trust No. N671FE), dated the Certificate Closing Date, among the
Lessee, the Owner Trustee, not in its individual capacity, but solely as Owner
Trustee, the Owner Participant and the Indenture Trustee not in its individual
capacity, but solely as Indenture Trustee, as originally executed or as
amended, modified or supplemented with the consent of all the parties thereto.
Application. The application for registration of the Aircraft with
the FAA in the name of the Owner Trustee.
Appraisal. The report prepared by BK Associates, Inc. and to be
delivered to the Owner Participant (with an abbreviated report to the Lessee)
on the Delivery Date pursuant to Section 4.02(h) of the Participation
Agreement.
Assignment and Assumption Agreement. Any agreement delivered in
compliance with Section 7.03(d) of the Participation Agreement.
Average Life Date. For any Certificate, the date which follows the
prepayment date by a period equal to the Remaining Weighted Average Life of
such Certificate.
AVSA. AVSA S.A.R.L., a societe a responsabilite limitee, organized
and existing under the laws of France.
AVSA Consent and Agreement. The Consent and Agreement dated as of
May 1, 1997, executed by AVSA.
AVSA's FAA Xxxx of Sale. The xxxx of sale for the Airframe on AC
Form 8050-2, or such other form as may be approved by the Aeronautics
Authority, executed by AVSA in favor of the Owner Trustee and to be dated the
Delivery Date.
AVSA's Warranty Xxxx of Sale. The full warranty xxxx of sale
covering the Aircraft (and specifically referring to each Engine) executed by
AVSA as owner of the Aircraft in favor of the Owner Trustee and to be dated
the Delivery Date.
Bankruptcy Code. The Federal Bankruptcy Code of 1978, as amended, and
any successor thereto.
Bankruptcy Default. An event specified in Section 16.01(e), (f) or
(g) of the Lease which either does or, with the giving of notice or lapse of
time or both, would constitute an Event of Default.
Basic Rent. The aggregate periodic rent payable for the Aircraft
throughout the Basic Term pursuant to Section 3.02 of the Lease, adjusted
pursuant to Article 3 of the Lease.
Basic Term. The period commencing at the beginning of the day on the
Delivery Date and ending at the end of the day on September 20, 2020, or such
earlier date on which the Lease shall be terminated as provided therein.
Beneficial Interest. The interest of the Owner Participant under the
Trust Agreement.
Business Day. Any day on which commercial banks are not authorized or
required to close in New York, New York, Memphis, Tennessee and the city in the
United States in which the office or agency is maintained by the Pass Through
Trustee for the payment of the Pass Through Certificates, and after the Lien
of the Indenture is discharged, Boston, Massachusetts.
Certificate Closing Date. The date of the closing with respect to the
purchase of Certificates by the Pass Through Trustee contemplated by Section
2.01(b) of the Participation Agreement.
Certificates. The Equipment Trust Certificates (Federal Express
Corporation Trust No. N671FE), issued by the Owner Trustee pursuant to the
Indenture and any certificate issued in exchange therefor or replacement
thereof pursuant to the Indenture.
Change in Tax Law. Any change to the Code or the Treasury regulations
promulgated thereunder or the publication of any revenue ruling, revenue
procedure or any informational release by the Internal Revenue Service or the
Department of Treasury either of which would change or would allow a change in
the tax assumptions or structure upon which the lease economics were based,
provided that the Owner Participant or the Lessee has notified the other party
of such change in writing prior to the Delivery Date.
Change in Tax Rate. Any amendment, modification, deletion, addition,
or change to the Code which is enacted into law after the Delivery Date which
changes the highest marginal statutory rate of Federal income tax applicable
to the Owner Participant (other than a change which is in the nature of a
minimum tax).
Citizen of the United States. A citizen of the United States as
defined in Section 40102(a)(15) of the Transportation Code, or any analogous
part of any successor or substituted legislation or regulation at the time in
effect.
Class A Liquidity Provider. Has the meaning specified in Section
1.01 of the Intercreditor Agreement.
Class B Liquidity Provider. Has the meaning specified in Section
1.01 of the Intercreditor Agreement.
Closings. The closing with respect to the acquisition of the Pass
Through Certificates by the Underwriters and the closing with respect to the
acquisition of Certificates by the Pass Through Trustee.
Code. Except as otherwise provided, the Internal Revenue Code of
1986, as amended from time to time.
Collateral Account. The deposit account established and maintained
pursuant to Section 2.13 of the Indenture.
Collateral Account Control Agreement. The Collateral Account Control
Agreement dated as of May 1, 1997 among State Street Bank and Trust Company,
the Indenture Trustee and the Owner Trustee.
Commitment. The amount of the Owner Participant's participation in
the Purchase Price required to be made available or paid as provided in
Section 3.02 of the Participation Agreement.
Consent and Agreement. The Consent and Agreement dated as of May 1,
1997 executed by the Manufacturer.
Consent and Guaranty. The Consent and Guaranty of the Manufacturer
attached to the Purchase Agreement.
Corporate Trust Administration. The Corporate Trust Administration
office of the Owner Trustee located at 000 Xxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxxx
00000, Attention: Corporation Trust Administration, or such other office at
which the Owner Trustee's corporate trust business shall be administered which
the Owner Trustee shall have specified by notice in writing to the Lessee, the
Owner Participant and the Indenture Trustee.
Corporate Trust Department. The Corporate Trust Department office of
the Indenture Trustee located at 00 Xxxxx Xxxx Xxxxxx, Xxxx Xxxx Xxxx, Xxxx
00000, Attention: Corporate Trust Department, or such other office at which
the Indenture Trustee's corporate trust business shall be administered which
the Indenture Trustee shall have specified by notice in writing to the Lessee,
the Owner Participant and the Owner Trustee.
CRAF Program. Has the meaning specified in Section 7.01(f) of the
Lease.
Cut-Off Date. September 18, 1997.
Debt Portion. The amount specified as such on Schedule IV to the
Participation Agreement.
Debt Rate. The weighted average (based on Outstanding principal
amount) rate of interest on the Certificates issued pursuant to the Indenture.
Default. Any event or condition which, with the lapse of time or the
giving of notice, or both, would constitute an Event of Default.
Delivery Date. The date on which the Aircraft is delivered and sold
by AVSA to the Lessor and leased by the Lessor to the Lessee under the Lease,
which date shall also be the date of the initial Lease Supplement.
Delivery Notice. Notice of the Aircraft's Delivery Date, given by
the Lessee as provided in Section 3.01 of the Participation Agreement and
including any notice with respect to a postponed Delivery Date given by the
Lessee pursuant to Section 3.05(c) of the Participation Agreement.
Eligible Deposit Account. Either (a) a segregated account with an
Eligible Institution or (b) a segregated trust account with the corporate
trust department of a depository institution with corporate trust powers
organized under the laws of the United States or any state thereof, or the
District of Columbia, and whose deposits are insured by the Federal Deposit
Insurance Corporation, provided that such institution also has a combined
capital and surplus of at least $100,000,000 and a rating of A or better from
the Thomson Bank Watch.
Eligible Institution. A depository institution organized under the
laws of the United States or any one of the states thereof, or the District of
Columbia, or any domestic branch of a foreign bank, which in any such case at
all times (a) has either (x) a long-term unsecured debt rating of at least Aa2
by Xxxxx'x or (y) a short-term certificate of deposit rating of P-1 by
Xxxxx'x, (b) has either (x) a long-term unsecured debt rating of a least AA by
S&P or (y) a short-term certificate of deposit rating of A-1+ by S&P and (c)
is a member of the Federal Deposit Insurance Corporation.
Engine. Each of the two General Electric CF6-80C2-A5F engines listed
by its manufacturer's serial number in the initial Lease Supplement and leased
pursuant to the Lease, whether or not from time to time installed on the
Airframe or installed on any other airframe or on any other aircraft, and any
Replacement Engine which may from time to time be substituted for an Engine
pursuant to Section 7.02(a)(vii), 10.02(c), 10.03, 11.03, 11.04 or 12.02 of
the Lease, together with all Parts related thereto. Except as otherwise
provided, at such time as a Replacement Engine shall be so substituted and the
Engine for which the substitution is made shall be released from the Lien of
the Indenture, such replaced Engine shall cease to be an "Engine" under the
Lease. The term "Engines" means, as of any date of determination, both Engines
then leased to the Lessee pursuant to the Lease.
Engine Consent. The Engine Consent dated as of May 1, 1997, executed
by the Engine Manufacturer.
Engine Manufacturer. General Electric Company, a New York
corporation.
Engine Warranty Assignment. The Engine Warranty Assignment (Federal
Express Corporation Trust No. N671FE), dated as of May 1, 1997 between the
Lessor and the Lessee.
ERISA. The Employee Retirement Income Security Act of 1974, as
amended.
ERISA Plan. As defined in Section 8.01(b)(xii) of the Participation
Agreement.
Estimated Expense Amount. Has the meaning specified in Section
10.01(a) of the Participation Agreement.
Event of Default. Each of the events specified in Article 16 of the
Lease.
Event of Loss. Any of the following events with respect to the
Aircraft, the Airframe or any Engine: (i) loss of such property or its use (A)
for a period in excess of 60 days due to theft or disappearance or such longer
period, not to exceed 180 days from the end of such initial 60-day period, if
and so long as the location of such property is known to the Lessee and the
Lessee is diligently pursuing recovery of such property, or to the end of the
Term, if less (unless such theft or disappearance constitutes an Event of Loss
pursuant to (i)(B) or (ii) hereof) or (B) for a period in excess of 60 days
due to the destruction, damage beyond economic repair or rendition of such
property permanently unfit for normal use by Lessee for any reason whatsoever;
(ii) any damage to such property which results in an insurance settlement with
respect to such property on the basis of a total loss, or constructive or
compromised total loss; (iii) (1) condemnation, confiscation or seizure of, or
requisition of title to such property by the Government, any foreign
government or purported government or any agency or instrumentality thereof,
or (2) condemnation, confiscation, or seizure of, or requisition or taking of,
use of such property (A) by a foreign government or instrumentality or agency
of any such foreign government, for a period in excess of 180 days (or such
shorter period ending on the earlier of the expiration of the Term or on the
date on which an insurance settlement with respect to such property on the
basis of a total loss or constructive or compromised total loss shall occur)
or (B) by the Government for a period extending beyond the Term; and (iv) as a
result of any law, rule, regulation, order or other action by the Aeronautics
Authority or other governmental body having jurisdiction, the use of the
Aircraft or Airframe in the normal course of air transportation of cargo shall
have been prohibited by virtue of a condition affecting all Airbus A300-600
series aircraft equipped with engines of the same make and model as the
Engines for a period of twelve (12) consecutive months, unless the Lessee,
prior to the expiration of such twelve (12) month period, shall be diligently
carrying forward all steps which are necessary or desirable to permit the
normal use of the Aircraft or Airframe or, in any event, if such use of the
Aircraft or the Airframe shall have been prohibited for a period of
twenty-four (24) consecutive months or until the end of the Term, if earlier.
The date of such Event of Loss shall be (s) the 61st day or the 241st day, as
the case may be, following loss of such property or its use due to theft or
disappearance (or the end of the Term or the Lessee's abandonment of diligent
efforts to recover such property, if earlier); (t) the 61st day following the
date of any destruction, damage beyond economic repair or rendition of such
property permanently unfit for normal use; (u) the date of any insurance
settlement on the basis of a total loss or constructive or compromised total
loss; (v) the date of any condemnation, confiscation, seizure or requisition
of title of such property; (w) the 181st day following condemnation,
confiscation, seizure or requisition for use of such property by a foreign
government referred to in clause (iii)(2)(A) above (or the end of the Term or
the date of any insurance settlement described therein, if earlier than such
181st day); (x) the last day of the Term in the case of requisition for use of
such property by the Government; (y) the last day of the 12 month or 24 month
period, referred to in clause (iv) above (or if earlier, the end of the Term
or abandonment of the Lessee's efforts to restore the normal use of the
Aircraft). An Event of Loss with respect to the Aircraft shall be deemed to
have occurred if any Event of Loss occurs with respect to the Airframe.
Excepted Payments. Collectively, (i) indemnity, expense,
reimbursement or other payments paid or payable by the Lessee in respect of
the Owner Participant, the Owner Trustee in its individual capacity or any of
their respective successors, permitted assigns, directors, officers,
employees, servants and agents or Affiliates, pursuant to the Participation
Agreement or any other Operative Agreement or any indemnity hereafter granted
to the Owner Participant or the Owner Trustee in its individual capacity
pursuant to the Lease or the Participation Agreement, (ii) proceeds of public
liability insurance (or government indemnities in lieu thereof) in respect of
the Aircraft payable as a result of insurance claims paid for the benefit of,
or losses suffered by, the Owner Trustee or the Indenture Trustee in their
respective individual capacities or by the Owner Participant, or their
respective successors, permitted assigns or Affiliates, (iii) proceeds of
insurance maintained with respect to the Aircraft by the Owner Participant
(whether directly or through the Owner Trustee) maintained in accordance with
Section 13.05 of the Lease but not required under Article 13 of the Lease,
(iv) payments of Supplemental Rent by the Lessee in respect of any amounts
payable under the Tax Indemnity Agreement, (v) any purchase price paid to the
Owner Participant for its interest in the Trust Estate pursuant to Section
7.03(d) of the Participation Agreement, (vi) subject to Section 3.05 of the
Lease, payments constituting increases in Basic Rent attributable to payments
arising pursuant to Section 5 of the Tax Indemnity Agreement, (vii) any
payments in respect of interest to the extent attributable to payments
referred to in clauses (i) through (vi) above and (viii) any right to demand,
collect or otherwise receive and enforce the payment of any amount described
in clauses (i) through (v) and (vii) above (except with respect to interest
attributable to payments referred to in clause (vi) above).
Expense; Expenses. Have the meaning specified in Section 9.01(a) of
the Participation Agreement.
Fair Market Renewal Term. A term with respect to which the Lessee has
exercised its option to renew the Lease pursuant to the second paragraph of
Section 4.01(a) thereof and with respect to which the conditions set forth in
such Section 4.01(a) are met.
Fair Market Rental. An amount determined on the basis of, and equal
in amount to, the rental which would be obtained in an arm's-length
transaction between an informed and willing lessee and an informed and willing
lessor unaffiliated with such lessee, neither being under any compulsion to
lease. In such determination, it shall be assumed that the Aircraft is in the
condition required under the Lease in the case of return of the Aircraft
pursuant to Article 12 of the Lease and Fair Market Rental shall be determined
in accordance with the provisions of Section 4.03 of the Lease.
Fair Market Value. An amount determined on the basis of, and equal in
amount to, the value which would be obtained in an arm's-length transaction
between an informed and willing purchaser under no compulsion to buy and an
informed and willing seller unaffiliated with such purchaser and under no
compulsion to sell, assuming the Aircraft (or other property) is unencumbered
by the Lease. In such determination, except for purposes of Section 17.01 of
the Lease (when it shall be determined based upon the actual condition and
location of the Aircraft), it shall be assumed that the Aircraft is in the
condition required under the Lease in the case of return of the Aircraft
pursuant to Article 12 of the Lease and Fair Market Value shall be determined
in accordance with the provisions of Section 4.03 of the Lease.
Federal Aviation Administration; FAA. The United States Federal
Aviation Administration and any successor agency or agencies thereto.
Final Drawing. Has the meaning specified in Section 1.01 of the
Intercreditor Agreement.
Fixed Renewal Rent. Semi-annual payments of rent during the Fixed
Renewal Term equal to the lesser of (i) Fair Market Rental as determined as of
the commencement of such Fixed Renewal Term and (ii) 50% of the average actual
semi-annual Basic Rent payable during the Basic Term.
Fixed Renewal Term. The term with respect to which the Lessee has
exercised its option to renew the Lease pursuant to the first paragraph of
Section 4.01(a) thereof and with respect to which the conditions set forth in
such Section 4.01(a) are met.
FPO Price. Has the meaning set forth in Section 4.02(a)(F) of the
Lease.
French Pledge Agreement. The French Pledge Agreement dated as of May
1, 1997 between the Owner Trustee and the Indenture Trustee.
FSB. First Security Bank, National Association, a national banking
association.
Government. The United States of America or an agency or
instrumentality thereof the obligations of which bear the full faith and
credit of the United States of America.
GTA. The General Terms Agreement dated as of July 3, 1991 between the
Engine Manufacturer and the Lessee related to the purchase by the Lessee of the
Engines as originally executed or as modified, amended or supplemented in
accordance with the terms thereof, but only insofar as the General Terms
Agreement relates to the Engines, to the extent assigned to the Owner Trustee
pursuant to the Engine Warranty Assignment.
Holder of a Certificate; Certificate Holder; Holder. As of any
particular time, the Person in whose name a Certificate shall be registered
(but not including the holder of any Pass Through Certificate).
Indemnitee. Each of SSB, in its individual capacity and as Owner
Trustee and Lessor, the Subordination Agent, in its individual capacity and in
its capacity as Subordination Agent, each Liquidity Provider, the Owner
Participant, the Indenture Trustee, in its individual capacity and as trustee,
the Owner Participant Guarantor and any successor (including any trustee which
may succeed to the Lessor's interest under the Lease), Affiliate, assign,
officer, director, employee, agent and servant of any of the foregoing, the
Lessor's Estate and the Trust Indenture Estate. Neither the Pass Through
Trustee nor any holder of a Pass Through Certificate shall be deemed to be an
Indemnitee.
Indenture. The Trust Indenture and Security Agreement (Federal
Express Corporation Trust No. N671FE), dated as of May 1, 1997, between the
Lessor and the Indenture Trustee, as supplemented by the Indenture and
Security Agreement Supplement.
Indenture and Security Agreement Supplement. The Indenture and
Security Agreement Supplement No. 1 (Federal Express Corporation Trust No.
N671FE) to be dated the Delivery Date, substantially in the form of Exhibit A
to the Indenture.
Indenture Default. Any event or condition which, with the lapse of
time or the giving of notice, or both, would constitute an Indenture Event of
Default.
Indenture Documents. Has the meaning specified in the Granting
Clause of the Indenture.
Indenture Event of Default. Each of the events specified in Section
7.01 of the Indenture.
Indenture Trustee. First Security Bank, National Association, a
national banking association, not in its individual capacity but solely as
Indenture Trustee under the Indenture.
Indenture Trustee's Liens. Any Lien against, on or with respect to
the Aircraft, the Lessor's Estate or the Trust Indenture Estate or any part
thereof resulting from (i) claims against the Indenture Trustee not related to
the administration of the Trust Indenture Estate or any transactions pursuant
to the Indenture or any document included in the Trust Indenture Estate, (ii)
any act or omission of the Indenture Trustee which is not related to the
transactions contemplated by the Operative Agreements or is in violation of
any of the terms of the Operative Agreements or (iii) Taxes imposed against
the Indenture Trustee in its individual capacity in respect of which the Lessee
has not indemnified (and is not obligated to indemnify) the Indenture Trustee
in such capacity.
Independent Appraisal. An appraisal conducted pursuant to Section
4.03 of the Lease.
Independent Investment Banker. An independent investment banking
institution of national standing appointed by the Lessee that is independent
in fact, does not have any direct financial interests, or any material
indirect financial interest, in the Lessee or any Affiliate of the Lessee, and
is not connected with the Lessee or any Affiliate of the Lessee, as an
officer, employee, promoter, underwriter, trustee, partner, director or Person
performing similar functions; provided, that if the Indenture Trustee shall
not have received written notice of such an appointment at least 10 days prior
to the Prepayment Date, "Independent Investment Banker" shall mean such an
institution appointed by the Indenture Trustee.
Intercreditor Agreement. The Intercreditor Agreement dated as of May
1, 1997, among the Pass Through Trustee, the Class A Liquidity Provider, the
Class B Liquidity Provider and the Subordination Agent.
Interest Drawing. Has the meaning specified in Section 1.01 of the
Intercreditor Agreement.
Invoice. The invoice for the Aircraft given by AVSA to the Lessor.
Lease. The Lease Agreement (Federal Express Corporation Trust No.
N671FE) dated as of May 1, 1997, entered into by the Lessor and the Lessee
concurrently with the execution and delivery of the Indenture, including,
without limitation, supplementation by one or more Lease Supplements entered
into pursuant to the applicable provisions of the Lease.
Lease Supplement. The Lease Supplement No. 1 (Federal Express
Corporation Trust No. N671FE) to be dated the Delivery Date, substantially in
the form of Exhibit A to the Lease.
Lease Term. The period commencing on the Delivery Date and ending at
the end of the Basic Term.
Lessee. Federal Express Corporation, a Delaware corporation.
Lessee Documents. Has the meaning set forth in Section 6.01(b) of the
Participation Agreement.
Lessor. State Street Bank and Trust Company of Connecticut, National
Association, a national banking association, not in its individual capacity
but solely as Owner Trustee under the Trust Agreement.
Lessor's Estate. All estate, right, title and interest of the Owner
Trustee in and to the Collateral Account, the Liquid Collateral, the Aircraft,
the Lease, any Lease Supplement, the Participation Agreement, AVSA's FAA Xxxx
of Sale, AVSA's Warranty Xxxx of Sale, the Airbus Guaranty, the Purchase
Agreement, the Purchase Agreement Assignment, the Consent and Agreement, the
AVSA Consent and Agreement, the Consent and Guaranty (to the extent assigned
by the Purchase Agreement Assignment), any Ancillary Agreement, the GTA, the
Engine Warranty Assignment, the Engine Consent, any warranty with respect to
the Airframe and the Engines, all amounts of Basic Rent and Supplemental Rent,
including without limitation, insurance proceeds (other than insurance
proceeds payable to or for the benefit of the Owner Trustee in its individual
capacity or the Owner Participant) and requisition, indemnity or other
payments of any kind for or with respect to the Aircraft (except amounts owing
to the Owner Participant, to the Indenture Trustee, to the Owner Trustee in its
individual capacity, or to any of their respective directors, officers,
employees and agents pursuant to Articles 8 and 9 of the Participation
Agreement), and all other property of the Owner Trustee purportedly subjected
to the Lien of the Indenture by the Granting Clause thereof; provided that in
no event shall "Lessor's Estate" include any Excepted Payment.
Lessor's Liens. Liens against, on or with respect to the Aircraft,
the Lessor's Estate or the Trust Indenture Estate or any part thereof, title
thereto or any interest therein arising as a result of (i) claims against the
Lessor, in its individual capacity or as Owner Trustee, or the Owner
Participant, in each case not related to the transactions contemplated by the
Operative Agreements, (ii) acts or omissions of the Lessor in its individual
capacity or as Owner Trustee, and, in the case of the Lessor in its individual
capacity, arising from its gross negligence or willful misconduct or expressly
prohibited under the Operative Agreements and any act or omission of the Owner
Participant which is in violation of any of the terms of the Operative
Agreements, (iii) Taxes or Expenses imposed against the Lessor, in its
individual capacity or as Owner Trustee, Owner Participant, Lessor's Estate or
the trust created by the Trust Agreement which are not required to be
indemnified against by the Lessee pursuant to the Participation Agreement by
reason of Section 8.01(b) or 9.01(b) thereof and which are not required to be
indemnified against by the Lessee pursuant to the Tax Indemnity Agreement, or
(iv) claims against the Lessor or the Owner Participant arising from the
voluntary transfer by the Lessor or the Owner Participant of its interests in
the Aircraft other than a transfer of the Aircraft pursuant to Section 4.02(a)
or Article 10 or 11 of the Lease and other than a transfer pursuant to the
exercise of the remedies set forth in Article 17 of the Lease.
Lien. Any mortgage, pledge, lien, charge, encumbrance, lease or
security interest or other similar interest.
Liquid Collateral. All amounts and securities deposited from time to
time in the Collateral Account and all the products, investments, earnings and
proceeds of the foregoing, including, but not limited to, all proceeds of the
investment or conversion thereof, voluntary or involuntary, into cash,
Specified Investments or other property, all rights to payment of any and
every kind, and other forms of obligations, and instruments and other property
which at any time constitute all or part or are included in the proceeds of
any of the foregoing.
Liquidity Facility. Has the meaning specified in Section 1.01 of the
Intercreditor Agreement.
Liquidity Provider. Has the meaning specified in Section 1.01 of the
Intercreditor Agreement.
Losses. Has the meaning specified in Section 17.02(a) of the
Participation Agreement.
Loss Payee. Has the meaning specified in Section 13.02(b)(i) of the
Lease.
Majority in Interest of Certificate Holders. As of a particular date
of determination, the Holders of more than 50% of the aggregate unpaid
principal amount of all Certificates outstanding as of such date excluding for
purposes of this definition any Certificates held by (i) the Owner Trustee or
the Owner Participant or any interests of the Owner Participant unless all
Certificates then outstanding shall be held by the Owner Participant, (ii) the
Lessee or (iii) any Affiliate of any thereof.
Make-Whole Premium. An amount determined as of the day before the
applicable Prepayment Date (or date of purchase, as the case may be) which an
Independent Investment Banker determines to be equal to the excess, if any, of
(i) the present value of the remaining scheduled payments of such principal
amount or portion thereof and interest thereon (excluding interest accrued
from the immediately preceding Payment Date to such Prepayment Date or date of
purchase, as the case may be) to the Maturity of such Certificate in
accordance with generally accepted financial practices assuming a 360-day year
consisting of twelve 30-day months at a discount rate equal to the Treasury
Yield, all as determined by the Independent Investment Banker over (ii) the
outstanding principal amount of such Certificate plus accrued interest.
Manufacturer. Airbus Industrie G.I.E., a groupement d'interet
economique formed under the laws of France.
Maturity. With respect to any Certificate, the date on which the
final principal amount of such Certificate is scheduled to be due and payable.
Moody's. Xxxxx'x Investors Service, Inc.
Net Present Value of Rents. The net present value, as of the
Delivery Date, of Basic Rent set forth in Schedule II of the Lease, discounted
at a rate equal to the Debt Rate per annum compounded semi-annually.
Non-U.S. Person. Any Person other than a U.S. Person.
Obsolete Parts. Parts which are severable from the Aircraft in
accordance with clauses (ii) and (iii) of the proviso to Section 9.02(b) of
the Lease and the Lessee in good faith determines to be obsolete or no longer
suitable or appropriate for use on the Airframe or any Engine.
Officer's Certificate. When delivered pursuant to the Indenture, a
certificate signed by a Responsible Officer of the Lessee or the Owner
Trustee, as the case may be, and delivered to the Indenture Trustee. Each
such certificate shall include the statements provided for in Section 15.07 of
the Indenture.
Operative Agreements. The Participation Agreement, the Trust
Agreement, AVSA's FAA Xxxx of Sale, AVSA's Warranty Xxxx of Sale, the Airbus
Guaranty, the Purchase Agreement, the Purchase Agreement Assignment, the GTA,
the Engine Warranty Assignment, the French Pledge Agreement, the Lease, the
Lease Supplement, the Owner Participant Guaranty, the Owner Trustee Guaranty,
if any, any Ancillary Agreement entered into by or with the written consent of
the Indenture Trustee, which by its terms is an Operative Agreement, the
Certificates outstanding at the time of reference, the Indenture, the
Indenture and Security Agreement Supplement, the Consent and Agreement, the
AVSA Consent and Agreement, the Consent and Guaranty (to the extent assigned
by the Purchase Agreement Assignment), the Engine Consent, the Tax Indemnity
Agreement, each Liquidity Facility, the Intercreditor Agreement, the
Collateral Account Control Agreement and any Assignment and Assumption
Agreement.
Opinion of Counsel. When delivered pursuant to the Indenture, a
written opinion of legal counsel, who in the case of counsel (a) for the
Lessee may be (i) an attorney employed by the Lessee who is generally
empowered to deliver such written opinions, (ii) Xxxxx Xxxx & Xxxxxxxx or a
successor firm or (iii) other counsel designated by the Lessee and reasonably
satisfactory to the Indenture Trustee and (b) for the Owner Trustee or the
Indenture Trustee, an attorney selected by such Person and, in the case of the
Owner Trustee, reasonably satisfactory to the Indenture Trustee.
Outstanding. When used with respect to Certificates, as of the date
of determination and subject to the provisions of Section 10.04 of the
Indenture, all Certificates theretofore executed and delivered under the
Indenture, with the exception of the following:
(i) Certificates theretofore cancelled by the Indenture Trustee or
delivered to the Indenture Trustee for cancellation pursuant to
Section 2.08 of the Indenture or otherwise;
(ii) Certificates for which prepayment money in the necessary amount
has been theretofore deposited with the Indenture Trustee in trust
for the Holders of such Certificates pursuant to Section 14.01 of the
Indenture; provided, that if such Certificates are to be prepaid,
notice of such prepayment has been duly given pursuant to the
Indenture or provision therefor satisfactory to the Indenture Trustee
has been made; and
(iii) Certificates in exchange for or in lieu of which other
Certificates have been executed and delivered pursuant to Article II
of the Indenture.
Owner Participant. The trustor originally named in the Trust
Agreement and any successor thereto, and any Person to which the Owner
Participant transfers, in accordance with the Trust Agreement, its right,
title and interest in and to the Operative Agreements and the Lessor's Estate.
Owner Participant Guarantor. Xxxxxx Xxxxxx Capital Corporation, a
Delaware corporation, and any other provider of an Owner Participant Guaranty.
Owner Participant Guaranty. The Owner Participant Guaranty dated the
Certificate Closing Date by the Owner Participant Guarantor in favor of the
Lessee, the Owner Trustee, the Indenture Trustee and the Pass Through Trustee,
and any guaranty delivered in compliance with Section 7.03(d) of the
Participation Agreement.
Owner Trustee. SSB, not in its individual capacity except as
otherwise expressly stated, but solely as Owner Trustee under the Trust
Agreement.
Owner Trustee Guarantor. The provider of an Owner Trustee Guaranty.
Owner Trustee Guaranty. Any guaranty delivered in compliance with
Section 11.01(b)(ii) of the Participation Agreement.
Owner's Economic Return. The Owner Participant's anticipated net
after-tax book yield and aggregate after-tax cash during the Basic Term
utilizing the multiple investment sinking fund method of analysis, computed on
the basis of the same methodology and assumptions as were utilized by the
Owner Participant in determining Basic Rent, Stipulated Loss Value and
Termination Value percentages, as the case may be, as such assumptions may be
adjusted for events which have been the basis of adjustments to Rent pursuant
to Section 3.04 of the Lease.
Participation Agreement. The Participation Agreement (Federal Express
Corporation Trust No. N671FE), dated as of May 1, 1997, among the Lessee, the
Owner Trustee not in its individual capacity except as otherwise expressly
provided therein, but solely as owner trustee, the Owner Participant, the
Indenture Trustee not in its individual capacity except as otherwise expressly
provided therein, but solely as indenture trustee, the Pass Through Trustee
not in its individual capacity except as otherwise expressly provided therein,
but solely as pass through trustee and the Subordination Agent not in its
individual capacity except as otherwise expressly provided therein, but solely
as subordination agent.
Parts. All appliances, parts, components, instruments, appurtenances,
accessories, furnishings and other equipment of whatever nature (other than
complete Engines or engines) which may from time to time be incorporated or
installed in or attached to the Airframe or any Engine or title to which
remains vested in the Lessor pursuant to Article 8 of the Lease.
Pass Through Agreement. The Pass Through Trust Agreement dated as of
May 1, 1997 between the Lessee and the Pass Through Trustee.
Pass Through Certificates. Any of the Pass Through Certificates,
1997-1-A, the Pass Through Certificates, 1997-1-B or the Pass Through
Certificates, 1997-1-C, in each case as issued by the related Pass Through
Trust; and "Pass Through Certificates" means all of the Pass Through
Certificates issued by each of the Pass Through Trusts.
Pass Through Closing Date. The Business Day on which the sale of the
Pass Through Certificates to the Underwriters pursuant to the Underwriting
Agreement takes place.
Pass Through Trust. The Federal Express Corporation 1997-1 Pass
Through Trust Class A, Federal Express Corporation 1997-1 Pass Through Trust
Class B and Federal Express Corporation 1997-1 Pass Through Trust Class C, in
each case formed pursuant to the related Series Supplement in accordance with
the Pass Through Agreement; and "Pass Through Trusts" means all of such Pass
Through Trusts.
Pass Through Trustee. First Security Bank, National Association, a
national banking association, in its capacity as Pass Through Trustee under
the Pass Through Agreement and each Pass Through Trust.
Past Due Rate. In respect of (A) any amount payable to the Owner
Participant or the Owner Trustee a rate per annum during the period from and
including the due date to but excluding the date on which such amount is paid
in full equal to 2% plus the Debt Rate and (B) any principal of or interest on
any Certificate or any other amount payable under the Indenture, any
Certificate or any other Operative Agreement that is not paid when due
(whether at Maturity, by acceleration, by optional or mandatory prepayment or
otherwise) to any Holder, the Indenture Trustee or the Pass Through Trustee, a
rate per annum during the period from and including the due date to but
excluding the date on which such amount is paid in full equal to (i) in the
case of any such amount payable to the Holder of any Certificate, 2% plus the
interest rate applicable to such Certificate and (ii) in the case of any other
such amount, 2% plus the Debt Rate.
Payment Date. Each January 15 and July 15 commencing on July 15,
1997.
Payment Default. Any event specified in Section 16.01(a) or 16.01(b)
of the Lease which with the giving of notice or lapse of time or both would
constitute an Event of Default.
Permitted Investments. Those investments enumerated in Section
23.01(a) (i), (ii), (iii) and (iv) of the Lease.
Person. Any individual, sole proprietorship, partnership, joint
venture, joint stock company, trust, unincorporated organization, association,
corporation, institution, entity or government (federal, state, local,
foreign or any agency, instrumentality, division or body thereof).
Preliminary Notice. Has the meaning specified in Section 4.01(a) of
the Lease.
Premium Termination Date. With respect to the Series A Certificates,
December 27, 2011, with respect to the Series B Certificates, February 5, 2010
and with respect to the Series C Certificates, March 22, 2007.
Prepayment Date. Has the meaning specified in Section 6.02(b) of the
Indenture.
Prepayment Price. Has the meaning specified in Section 6.02(b) of the
Indenture.
Principal Amount. With respect to a Certificate means the stated
original principal amount of such Certificate and, with respect to all
Certificates, means the aggregate stated original principal amounts of all
Certificates.
Property. Any right or interest in or to property of any kind
whatsoever, whether real, personal or mixed and whether tangible or intangible.
Proposed Termination Date. The proposed date of termination of the
Lease as specified by the Lessee in its notice given pursuant to Section 10.01
thereof.
Purchase Agreement. The Airbus A300-600R Freighter Purchase Agreement,
dated as of July 3, 1991 between AVSA and the Lessee, including all exhibits,
appendices and letter agreements attached thereto as originally executed or as
modified, amended or supplemented in accordance with the terms thereof, but
only to the extent that the foregoing relates to the Aircraft and to the
extent assigned pursuant to the Purchase Agreement Assignment.
Purchase Agreement Assignment. The Purchase Agreement Assignment
(Federal Express Corporation Trust No. N670FE), dated as of May 1, 1997 between
the Lessor and the Lessee.
Purchase Price. Has the meaning specified in Ancillary Agreement II.
Record Date. With respect to Payment Dates under the Indenture
(except a date for payment of defaulted interest), December 31 for January 15
Payment Dates and June 30 for July 15 Payment Dates, whether or not such date
is a Business Day.
Recourse Amount. Has the meaning specified in Section 17.10 of the
Participation Agreement.
Refinancing. A non-recourse loan to the Lessor arranged pursuant to
Section 15.01 of the Participation Agreement.
Register. Has the meaning set forth in Section 3.02 of the Indenture.
Registrar. Has the meaning set forth in Section 3.02 of the
Indenture.
Regulation D. Regulation D of the Board of Governors of the Federal
Reserve System (or any successor), as the same may be modified and
supplemented and in effect from time to time.
Related Indentures. Collectively, the Trust Indenture and Security
Agreement for each of Federal Express Corporation Trust Nos. N670FE, N672FE,
N673FE, N674FE, N583FE and N584FE, each dated as of May 1, 1997, between the
Owner Trustee and the Indenture Trustee, the Trust Indenture and Security
Agreement for Federal Express Corporation Trust No. N581FE, dated as of May 1,
1997, between Wilmington Trust Company, as owner trustee and the Indenture
Trustee, and the Trust Indenture and Security Agreement for Federal Express
Corporation Trust No. N587FE, dated as of December 1, 1996, as amended and
restated as of May 1, 1997, between Wilmington Trust Company, as owner trustee
and the Indenture Trustee.
Remaining Weighted Average Life. On a given date with respect to any
Certificate the number of days equal to the quotient obtained by dividing (i)
the sum of each of the products obtained by multiplying (a) the amount of each
then remaining scheduled payment of principal of such Certificate by (b) the
number of days from and including such prepayment date to but excluding the
dates on which each such payment of principal is scheduled to be made; by (ii)
the then outstanding principal amount of such Certificate.
Renewal Rent. The amount payable by the Lessee as rent in accordance
with Section 4.01 of the Lease during any Renewal Term.
Renewal Term. One or more terms with respect to which the Lessee has
exercised its option to renew the Lease pursuant to Section 4.01(a) thereof.
Rent. All payments due from the Lessee under the Lease as Basic Rent,
Renewal Rent and Supplemental Rent, collectively.
Rent Payment Date. September 20, 2020 and each January 15 and
July 15 commencing on July 15, 1997.
Reoptimization Date. Has the meaning specified in Section 15.02(a)
of the Participation Agreement.
Replacement Aircraft. Any aircraft substituted for the Aircraft
pursuant to Section 11.03(a) of the Lease.
Replacement Airframe. Has the meaning set forth in Section 11.03 of
the Lease.
Replacement Engine. A General Electric CF6-80C2-A5F engine (or an
engine of the same or another manufacturer) of equal or greater value,
airworthiness, remaining useful life and utility as the Engine being replaced,
together with all Parts relating to such engine; provided, however, that if
such replacement engine is not a General Electric CF6-80C2-A5F engine, such
replacement engine must then be commonly used in the commercial aviation
industry on Airbus A300-600 airframes.
Responsible Officer. With respect to the Owner Trustee (except for
purposes of the Trust Agreement in which case the definition of Responsible
Officer set forth in Section 3.10 of the Trust Agreement is applicable) or the
Indenture Trustee, any officer in its Corporate Trust Administration, as the
case may be, designated by such Person to perform obligations under the
Operative Agreements, and with respect to any other party, any corporate
officer or (except in the case of the Owner Participant) other employee of a
party who, in the normal performance of his or her operational
responsibilities, with respect to the subject matter of any covenant,
agreement or obligation of such party pursuant to any Operative Agreement,
would have responsibility for and knowledge of such matter and the
requirements of any Operative Agreement with respect thereto.
S&P. Standard & Poor's Ratings Group.
Scheduled Delivery Date. The Delivery Date specified in the Delivery
Notice pursuant to Section 3.01 of the Participation Agreement.
SEC. The Securities and Exchange Commission of the United States and
any successor agencies or authorities.
Secured Obligations. Has the meaning specified in the Granting
Clause of the Indenture.
Securities Act. The Securities Act of 1933, as amended.
Series "A" or "Series A Certificates". Certificates issued and
designated as "Series A" under the Indenture, in the Principal Amount and
maturities and bearing interest as specified in Exhibit B to the Indenture
under the heading "Series A".
Series "B" or "Series B Certificates". Certificates issued and
designated as "Series B" under the Indenture, in the Principal Amount and
maturities and bearing interest as specified in Exhibit B to the Indenture
under the heading "Series B".
Series "C" or "Series C Certificates". Certificates issued and
designated as "Series C" under the Indenture, in the Principal Amount and
maturities and bearing interest as specified in Exhibit B to the Indenture
under the heading "Series C".
Series Supplement or Series Supplements. The Series Supplement
1997-1-A to be executed and delivered by the Lessee and the Pass Through
Trustee, the Series Supplement 1997-1-B to be executed and delivered by the
Lessee and the Pass Through Trustee or the Series Supplement 1997-1-C to be
executed and delivered by the Lessee and the Pass Through Trustee.
Sinking Fund Redemption Date. Has the meaning specified in Section
6.06 of the Indenture.
Sinking Fund Redemption Price. Has the meaning specified in Section
6.06 of the Indenture.
Special Aviation Counsel. Xxxxxxxxx, Xxxxxx & Xxxxxxxx.
Specified Investments. Shall mean (a) direct obligations of the
United States of America or obligations fully guaranteed by the United States
of America; (b) commercial paper rated A-1/P-1 by S&P and Moody's,
respectively or, if such ratings are unavailable, rated by any nationally
recognized rating organization in the United States equal to the highest
rating assigned by such rating organization; (c) investments in negotiable
certificates of deposit, time deposits, banker's acceptances, commercial paper
or other direct obligations of, or obligations guaranteed by, commercial banks
organized under the laws of the United States or of any political subdivision
thereof (or any U.S. branch of a foreign bank) with issuer ratings of at least
B/C by Thomson Bankwatch, having maturities no later than 90 days following
the date of such investment; (d) overnight federal funds transactions with
members of the Federal Reserve System arranged by federal funds brokers; or
(e) overnight repurchase agreements with respect to the securities described
in clause (a) above entered into with an office of a bank or trust company
which is located in the United States of America or any bank or trust company
which is organized under the laws of the United States or any state thereof
and has capital, surplus and undivided profits aggregating at least $500
million.
SSB. State Street Bank and Trust Company of Connecticut, National
Association, a national banking association.
Stipulated Loss Value. As of any Stipulated Loss Value Determination
Date during the Basic Term, the amount determined by multiplying the Purchase
Price by the percentage set forth in Schedule III of the Lease under the
heading "Stipulated Loss Value Factor" opposite such date (as such Schedule
III may be adjusted from time to time as provided in Section 3.04 of the
Lease), and during any Renewal Term, the amount determined pursuant to Section
4.01(b) of the Lease. Notwithstanding any other provisions of the Lease or
the Participation Agreement or the Indenture, each Stipulated Loss Value for
the Aircraft shall be, under any circumstances and in any event, an amount,
together with so much of the arrears portion of Basic Rent due and owing
through the date of payment of Stipulated Loss Value as does not constitute an
Excepted Payment, at least sufficient to pay in full as of such date of
payment the aggregate unpaid principal amount of and accrued interest on the
Certificates outstanding on such date of payment. Subject to the immediately
preceding sentence, it is understood and agreed that the amounts set forth on
Schedule III of the Lease, for dates other than Rent Payment Dates on which
arrears Basic Rent is due, fully reflect appropriate Basic Rent accruals and
credits of unearned Basic Rent through such date and, accordingly, no further
accrual or credit shall be required through such date whenever Stipulated Loss
Value is to be calculated with reference to any such date; provided that if
amounts in respect of Stipulated Loss Value are payable under the Operative
Agreements after the Stipulated Loss Determination Date in respect of which
such Stipulated Loss Value was determined, the Lessor shall be compensated
during the period from the Stipulated Loss Determination Date to such payment
date in accordance with the provisions of the Operative Agreements.
Stipulated Loss Value Determination Date. Each date set forth on
Schedule III of the Lease.
Subordination Agent. First Security Bank, National Association, a
national banking association, not in its individual capacity but solely as
Subordination Agent.
Supplemental Rent. (a) All amounts, liabilities and obligations
which the Lessee assumes or agrees to perform or pay under the Lease or under
the Participation Agreement or Tax Indemnity Agreement or any Ancillary
Agreement or any other Operative Agreement to the Lessor, the Owner
Participant, the Indenture Trustee, the Subordination Agent, any Liquidity
Provider or others, including, without limitation, payments of Stipulated Loss
Value, FPO Price and amounts calculated by reference to Termination Value, any
amounts of Make-Whole Premium payable under the Indenture to the extent
provided in Section 3.03 of the Lease, and all amounts required to be paid by
Lessee under the agreements, covenants and indemnities contained in the Lease
or in the Participation Agreement or the Tax Indemnity Agreement or any other
Operative Agreement, but excluding Basic Rent and (b) all amounts that the
Owner Trustee is obligated to pay in accordance with clause (b) of the last
paragraph of Section 2.04 of the Indenture.
Tax. Has the meaning set forth in Section 8.01(a) of the
Participation Agreement.
Tax Indemnity Agreement. The Tax Indemnity Agreement (Federal
Express Corporation Trust No. N670FE), dated as of May 1, 1997, between the
Lessee and the Owner Participant.
Term. The Basic Term of the lease for the Aircraft under the Lease
and, if renewed pursuant to Section 4.01 of the Lease, each Renewal Term for
the Aircraft for which the Lease is renewed, or such earlier date on which the
Lease is terminated pursuant to its terms.
Termination Date. A Rent Payment Date during the Basic Term that is
on or after December 31, 2004 in the case of Article 10 of the Lease, and in
the case of (i) Section 4.02(a)(A) of the Lease, the Rent Payment Date falling
on July 15, 2015, (ii) Section 4.02(a)(D) or (E) of the Lease, a Rent
Payment Date that is on or after the seventh anniversary of the Delivery Date
and (iii) Section 4.02(a)(F) of the Lease, the last day of the Basic Term.
Termination Value. As of any Termination Date, the amount determined
by multiplying the Purchase Price by the percentage set forth in Schedule IV
of the Lease under the heading "Termination Value Factor" opposite such
Termination Date (as such Schedule IV may be adjusted from time to time as
provided in Section 3.04 of the Lease). Notwithstanding any other provisions
of the Lease, the Participation Agreement or the Indenture, each Termination
Value shall be, under any circumstances and in any event, an amount, together
with so much of the arrears portion of Basic Rent due and owing through the
date of payment of any amount calculated by reference to Termination Value as
does not constitute an Excepted Payment, at least sufficient to pay in full as
of such date of payment the aggregate unpaid principal amount of and accrued
interest on the Certificates outstanding on such date of payment. Subject to
the immediately preceding sentence, it is understood and agreed that the
amounts set forth on Schedule IV of the Lease, for dates other than Rent
Payment Dates on which arrears Basic Rent is due, fully reflect appropriate
Basic Rent accruals and credits of unearned Basic Rent through such date and,
accordingly, no further accrual or credit shall be required through such date
whenever Termination Value is to be calculated with reference to any such
date; provided that if amounts in respect of Termination Value are payable
under the Operative Agreements after the Termination Date in respect of which
such Termination Value was determined, the Lessor shall be compensated during
the period from the Termination Date to such payment date in accordance with
the provisions of the Operative Agreements.
Transaction Costs. Those costs and expenses set forth in Section
10.01(a) of the Participation Agreement.
Transportation Code. Title 49 of the United States Code, as amended
and in effect on the date of the Lease or as subsequently amended, or any
successor or substituted legislation at the time in effect and applicable, and
the regulations promulgated pursuant thereto.
Treasury Yield. At the time of determination with respect to any
Certificate, the interest rate (expressed as a semi-annual equivalent and as a
decimal and, in the case of United States Treasury bills, converted to a bond
equivalent yield) determined to be the per annum rate equal to the semi-annual
yield to maturity for United States Treasury securities maturing on the
Average Life Date on such Certificate and trading in the public securities
markets either as determined by interpolation between the most recent weekly
average yield to maturity for two series of United States Treasury securities,
trading in public securities markets, (i) one maturing as close as possible to,
but earlier than, the Average Life Date of such Certificate and (ii) the other
maturing as close as possible to, but later than, the Average Life Date of
such Certificate. In each case as published in the most recent H.15(519) or,
if a weekly average yield to maturity for United States Treasury securities
maturing on the Average Life Date of such Certificate is reported on the most
recent H.15 (519), such weekly average yield to maturity as published in such
H.15(919). "H.15(519)" means the weekly statistical release designated as
such, or any successor publication, published by the Board of Governors of the
Federal Reserve System. The date of determination of a Make-Whole Premium
will be the third Business Day prior to the applicable prepayment date and the
"most recent H.15(519)" means the H.15(519) published prior to the close of
business on the third Business Day prior to the applicable prepayment date.
Trust Agreement. The Trust Agreement (Federal Express Corporation
Trust No. N671FE), dated as of May 1, 1997, between the Owner Participant and
the Owner Trustee in its individual capacity.
Trust Estate. The Lessor's Estate.
Trust Indenture Act. The Trust Indenture Act of 1939, as amended.
Trust Indenture Estate. All estate, right, title and interest of the
Indenture Trustee in and to any of the property, rights, interests and
privileges granted to the Indenture Trustee pursuant to the Granting Clause of
the Indenture, other than Excepted Payments and any and all other rights of
the Owner Trustee or the Owner Participant expressly reserved to the Owner
Trustee or the Owner Participant pursuant to the Indenture.
Underwriters. Xxxxxx Xxxxxxx & Co. Incorporated, First Chicago
Capital Markets, Inc., Xxxxxxx, Sachs & Co. and X.X. Xxxxxx & Co.
Underwriting Agreement. The Underwriting Agreement dated May 22, 1997
among the Lessee and the Underwriters.
United States, U.S. or US. The United States of America.
U.S. Air Carrier. Any United States air carrier as to which there is
in force a certificate issued pursuant to Section 41102(a) or Section 41103 of
the Transportation Code, and as to which there is in force an air carrier
operating certificate issued pursuant to Chapter 447 of the Transportation
Code and Part 121 of the regulations under such Transportation Code, for
aircraft capable of carrying ten (10) or more individuals or 6,000 pounds or
more of cargo, or which may operate as an air carrier by certification or
otherwise under any successor or substitute provision thereof or in absence
thereof.
U.S. Person. A Person described in Section 7701(a)(30) of the Code.
SCHEDULE II
BASIC RENT
(As a Percentage of Purchase Price)
Rent
Payment
Date Advance Arrears
------- ------- -------
[On each Payment Date, Lessee will pay as Basic Rent an amount
that will be at least sufficient to pay in full, as of such
Payment Date, the aggregate unpaid principal amount of due and
unpaid installments on the Certificates outstanding on such
Payment Date, together with the accrued and unpaid interest
thereon.]
SCHEDULE III
STIPULATED LOSS VALUES
Stipulated Loss
Date Value Factor
[Stipulated Loss Value will be an amount at least sufficient to
pay in full, as of the date of payment thereof, the aggregate
unpaid principal amount of the Certificates outstanding on such
date of payment, together with the accrued and unpaid interest
thereon.]
SCHEDULE IV
TERMINATION VALUES
Termination Termination
Date Value Factor
[Termination Value will be an amount at least sufficient to pay
in full, as of the date of payment thereof, the aggregate
unpaid principal amount of the Certificates outstanding on such
date of payment, together with the accrued and unpaid interest
thereon.]
SCHEDULE V
PURCHASE OPTION SCHEDULE
Exhibit A
to
Lease Agreement
---------------
THE INTEREST OF LESSOR UNDER THIS LEASE SUPPLEMENT
NO. __ IS SUBJECT TO A SECURITY INTEREST
LEASE SUPPLEMENT NO. __
(Federal Express Corporation Trust No. N671FE)
LEASE SUPPLEMENT NO. __ (Federal Express Corporation Trust No.
N671FE), dated ________ __, ____, between STATE STREET BANK AND TRUST COMPANY
OF CONNECTICUT, NATIONAL ASSOCIATION, a national banking association, not in
its individual capacity, but solely as Owner Trustee under the Trust Agreement
(Federal Express Corporation Trust No. N671FE) dated as of May 1, 1997 (the
"Lessor"), and FEDERAL EXPRESS CORPORATION, a Delaware corporation (the
"Lessee").
W I T N E S S E T H :
WHEREAS, the Lessor and the Lessee have entered into that certain
Lease Agreement (Federal Express Corporation Trust No. N671FE) dated as of May
1, 1997 (the "Lease", the defined terms in the Lease being used in this Lease
Supplement with the same meaning as in the Lease), which provides for the
execution and delivery of a Lease Supplement, substantially in the form of
this Lease Supplement No. __, for the purpose of leasing under the Lease the
aircraft and engines described below ("Aircraft") as and when delivered by the
Lessor to the Lessee in accordance with the terms of the Lease;
WHEREAS, the Lease relates to the Aircraft;
WHEREAS, a counterpart of the Lease is attached to and made a part of
this Lease Supplement, and this Lease Supplement, together with such
attachment, is being filed for recordation on this date with the FAA as one
document.
NOW, THEREFORE, for and in consideration of the premises and other
good and sufficient consideration, the Lessor and the Lessee agree as follows:
Section 1. Delivered Aircraft. The Lessor hereby delivers and
leases to the Lessee under the Lease, and the Lessee hereby accepts and leases
from the Lessor under the Lease, the following described Airbus A300F4-605R
Aircraft (the "Delivered Aircraft"), which Delivered Aircraft as of the date
of this Lease Supplement consists of the following:
(a) Airbus X000X0-000X Xxxxxxxx; U.S. Registration Number ______;
Manufacturer's Serial No. ___; and
(b) Two (2) General Electric CF6-80C2-A5F Engines bearing,
respectively, Manufacturer's Serial Nos. ___-___ and ___-___ (each of which
engines has 750 or more rated takeoff horsepower or the equivalent of such
horsepower).
Section 2. Delivery Date. The Delivery Date of the Delivered
Aircraft is the date of this Lease Supplement.
Section 3. Purchase Price. The Purchase Price of the Delivered
Aircraft shall be the amount set forth in Ancillary Agreement II.
Section 4. Term. The Term for the Delivered Aircraft shall commence
on the Delivery Date, and shall terminate on ______, ____, unless earlier
terminated or extended pursuant to the terms of the Lease.
Section 5. Rent. The Lessee hereby agrees to pay the Lessor Rent
for the Delivered Aircraft throughout the Term thereof in accordance with the
terms and provisions of the Lease.
Section 6. Lessee's Acceptance of Delivered Aircraft. The Lessee
hereby confirms to the Lessor that the Delivered Aircraft has been duly marked
in accordance with Section 7.03 of the Lease and that the Lessee has accepted
the Delivered Aircraft for all purposes hereof and of the Lease, and as being
free and clear of all Liens except Lessor's Liens. Such acceptance by the
Lessee shall be without prejudice to any rights of the Lessor or the Lessee
against AVSA, the Manufacturer, the Engine Manufacturer or any vendor of
equipment included in the Aircraft.
Section 7. Incorporation of Lease By Reference. All the provisions
of the Lease are hereby incorporated by reference in this Lease Supplement to
the same extent as if fully set forth in this Lease Supplement.
Section 8. Governing Law. THIS LEASE SUPPLEMENT SHALL IN ALL
RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE BUT WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS, AND
IS BEING DELIVERED IN THE STATE OF NEW YORK.
Section 9. Agreement as Chattel Paper. To the extent that this Lease
Supplement constitutes chattel paper (as such term is defined in the Uniform
Commercial Code as in effect in any applicable jurisdiction), no security
interest in this Lease Supplement may be created through the transfer or
possession of any counterpart other than the original chattel-paper
counterpart, which shall be the counterpart containing the receipt executed by
the Indenture Trustee on its signature page.
Section 10. Counterparts. This Lease Supplement may be executed in
any number of counterparts, each of which shall be an original (except that
only the counterpart bearing the receipt executed by Indenture Trustee shall
be the original for purposes of perfecting a security interest therein as
chattel paper under the Uniform Commercial Code), but all of which taken
together shall constitute one and the same instrument and any of the parties
hereto may execute this Lease Supplement by signing any such counterpart.
IN WITNESS WHEREOF, the Lessor and the Lessee have caused this Lease
Supplement to be duly executed as of the day and year first above written.
LESSOR: STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION,
not in its individual capacity,
but solely as Owner Trustee
By: __________________________________
Name: Xxxx X. Xxxxx
Title: Vice President
LESSEE: FEDERAL EXPRESS CORPORATION
By: ___________________________________
Name: Xxxxxx X. Xxxxxxx
Title: Assistant Treasurer and
Managing Director -
Structured Finance
Receipt of this original counterpart of the Lease Supplement is
hereby acknowledged on this ___ day of ______ _____.
Indenture Trustee: FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not in its individual capacity,
but solely as Indenture Trustee
By: _____________________________________
Name: Xxxx X. Xxxxxx
Title: Vice President
Exhibit B
to
Lease Agreement
---------------
PURCHASE AGREEMENT ASSIGNMENT
(Federal Express Corporation Trust No. N671FE)
PURCHASE AGREEMENT ASSIGNMENT (Federal Express Corporation Trust No.
N671FE), dated as of May 1, 1997 between FEDERAL EXPRESS CORPORATION, a
Delaware corporation (the "Assignor" or "Lessee"), and STATE STREET BANK AND
TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, a national banking
association, not in its individual capacity but solely as Owner Trustee ("SSB"
or the "Lessor") under the Trust Agreement (Federal Express Corporation Trust
No. N671FE), dated as of May 1, 1997 (as amended, modified or supplemented
from time to time, the "Trust Agreement"), between PMCC Leasing Corporation
(the "Owner Participant") and SSB.
W I T N E S S E T H :
WHEREAS, the Assignor and AVSA (as hereinafter defined) are parties
to the Purchase Agreement (as hereinafter defined), providing, among other
things, for the delivery by AVSA to the Assignor of certain aircraft,
including the Aircraft (as hereinafter defined) covered by the Participation
Agreement (as hereinafter defined); and
WHEREAS, pursuant to the Consent and Guaranty (as hereinafter
defined), the Guarantor (as hereinafter defined) has agreed, among other
things, to unconditionally guarantee the due and punctual performance by AVSA
of all of its liabilities and obligations as set forth in the Purchase
Agreement; and
WHEREAS, pursuant to the Lease (as hereinafter defined), the Lessor
will lease the Aircraft to the Assignor; and
WHEREAS, on the terms and conditions hereof and of the Consents and
Agreements (as hereinafter defined), (a) the Assignor desires to assign to the
Lessor (i) the Assignor's right under the Purchase Agreement and the Consent
and Guaranty (insofar as it relates to the Purchase Agreement) to purchase the
Aircraft and (ii) certain of the Assignor's remaining rights, title and
interests in, to and under the Purchase Agreement and the Consent and Guaranty
(insofar as they relate to the Purchase Agreement and the Aircraft) and (b)
the Lessor desires to accept the assignments and, except as otherwise provided
herein, to assume the obligations of the "Buyer" under the Purchase Agreement,
to the extent assigned to it pursuant hereto; and
WHEREAS, pursuant to the Indenture (as hereinafter defined), the
Lessor will assign, inter alia, its rights hereunder to the Indenture Trustee
(as hereinafter defined) to the extent set forth therein; and
WHEREAS, such assignments and acceptances are intended to permit
consummation of the transactions contemplated by the Participation Agreement;
and
WHEREAS, AVSA and the Guarantor are willing to execute and deliver
their respective Consents and Agreements;
NOW, THEREFORE, in consideration of the mutual
covenants herein contained, the parties hereto agree as follows:
1. Defined Terms. For all purposes of this Assignment, except as
otherwise expressly provided or unless the context otherwise requires, the
following terms shall have the following meanings:
"Aircraft" shall mean the Airbus A300F4-605R Freighter aircraft,
bearing manufacturer's serial number 778, delivered under the Purchase
Agreement, including the two General Electric Model CF6-80C2A5 (Fadec
equipped) engines installed on such aircraft on the date of delivery
thereof pursuant to the Purchase Agreement.
"AVSA" shall mean AVSA, S.A.R.L., a French societe a responsabilite
limitee, and its successors and assigns.
"AVSA Consent and Agreement" shall mean the Consent and Agreement of
AVSA attached hereto, as amended, modified or supplemented from time to
time.
"Xxxx of Sale" shall mean the xxxx of sale for the Aircraft to be
delivered by AVSA.
"Certificates" shall have the meaning ascribed thereto in the
Participation Agreement.
"Consent and Guaranty" shall mean the Consent and Guaranty of the
Guarantor attached to the Purchase Agreement, together with all amendments,
waivers, and consents heretofore entered into or heretofore granted
thereunder and delivered to the Lessor.
"Consents and Agreements" shall mean the AVSA Consent and Agreement
and the Guarantor Consent and Agreement.
"Delivery Date" shall have the meaning ascribed thereto in the
Purchase Agreement with respect to the Aircraft.
"Guarantor" shall mean Airbus Industrie G.I.E., a French groupement
d'interet economique, and its successors and assigns.
"Guarantor Consent and Agreement" shall mean the Consent and Agreement
of the Guarantor attached hereto, as amended, modified or supplemented from
time to time.
"Indenture" shall mean the Trust Indenture and Security Agreement
(Federal Express Corporation Trust No. N671FE), dated as of May 1, 1997,
between the Lessor and the Indenture Trustee, as amended, modified or
supplemented from time to time.
"Indenture Trustee" shall mean First Security Bank, National
Association, not in its individual capacity but solely as Indenture Trustee
under the Indenture and each other person which may from time to time be
acting as successor trustee under the Indenture.
"Lease" shall mean the Lease Agreement (Federal Express Corporation
Trust No. N671FE), dated as of May 1, 1997, between the Lessor and the
Assignor, as amended, modified or supplemented from time to time.
"Participation Agreement" shall mean the Participation Agreement
(Federal Express Corporation Trust No. N671FE), dated as of May 1, 1997,
among the Assignor, the Owner Participant (as defined herein), the Pass
Through Trustee (as defined therein), the Lessor, the Indenture Trustee and
the Subordination Agent, as amended, modified or supplemented from time to
time.
"Purchase Agreement" shall mean the Airbus A300-600F Purchase
Agreement, dated as of July 3, 1991, between the Assignor and AVSA,
together with all exhibits, appendices and letter agreements thereto and
all amendments, waivers and consents granted thereunder.
All other terms used herein in capitalized form that are defined in
the Lease shall, when used herein, have the meanings specified in the Lease.
2. Assignment. a. Generally. The Assignor has sold, assigned,
transferred and set over and does hereby sell, assign, transfer and set over
unto the Lessor (i) the right upon valid tender of the Aircraft by AVSA in
accordance with the Purchase Agreement to purchase the Aircraft pursuant to
the Purchase Agreement for the amount specified in the invoice in respect
thereof to be delivered by AVSA on the Delivery Date therefor (including,
without limitation, the right to accept delivery of the Aircraft through an
appointed representative which may be an employee of the Assignor) and the
right to be named the "Buyer" in the Xxxx of Sale and the right to enforce the
same under the Consent and Guaranty, (ii) the right to take and hold the
Aircraft and (iii) all of the Assignor's other right, title and interest in
and to the Purchase Agreement and the Consent and Guaranty (insofar as it
relates to the Purchase Agreement), as and to the extent that the same relates
to the Aircraft and, except to the extent reserved below, the operation of the
Aircraft, including, without limitation, in such assignment to the Lessor (A)
all claims for damages in respect of such Aircraft arising as a result of any
default by AVSA under the Purchase Agreement, or by any vendor or other
supplier of aircraft engines or other parts or equipment installed on or in
the Aircraft, including, without limitation, all warranty, service life policy
and indemnity provisions in the Purchase Agreement in respect of the Aircraft
and all claims thereunder and under the Consent and Guaranty and (B) any and
all rights of the Assignor to compel performance of the terms of the Purchase
Agreement and the Consent and Guaranty in respect of the Aircraft, including
all warranty and indemnification provisions in the Purchase Agreement and the
Consent and Guaranty and claims thereunder with respect to the Aircraft;
reserving to the Assignor, however,
(1) all the Assignor's rights and interests in and to the Purchase
Agreement and the Consent and Guaranty as and to the extent that the
Purchase Agreement and the Consent and Guaranty relate to aircraft other
than the Aircraft and the purchase and operation of such aircraft and to
the extent that the Purchase Agreement and the Consent and Guaranty relate
to any other matters not directly pertaining to the Aircraft,
(2) all the Assignor's rights and interests in or arising out of any
payments, advance payments or deposits made by the Assignor in respect of
the Aircraft under the Purchase Agreement or amounts credited or to be
credited or paid or to be paid by the Guarantor or AVSA to the Assignor in
respect of the Aircraft or otherwise (except amounts credited with respect
to warranty claims to the extent set forth in Section 2(b) hereof) as of
the date of purchase,
(3) the rights to demand, accept and retain all rights in and to all
property (other than the Aircraft), data and service, other than data and
service provided under Clauses 12 and 13 of the Purchase Agreement, that
AVSA and the Guarantor are obligated to provide or do provide pursuant to
the Purchase Agreement and the Consent and Guaranty, respectively, with
respect to the Aircraft,
(4) all of the Assignor's right, title and interest in and to the Purchase
Agreement and the Consent and Guaranty as and to the extent that the same
relates to specification changes, performance and operation pertaining to
the Aircraft, other than sub-Clause 2.1 and Clauses 12 and 13 of the
Purchase Agreement and under the Consent and Guaranty to the extent
relating thereto,
(5) the right to obtain services, training, data and demonstration and test
flights pursuant to the Purchase Agreement,
(6) the right to maintain plant representatives at the Guarantor's plant
pursuant to the Purchase Agreement, and
(7) all rights set forth in any exhibits, appendices and letter agreements,
as at any time amended, modified or supplemented, to the Purchase
Agreement, and under the Consent and Guaranty to the extent relating
thereto; provided, however, that the reservation set forth in this Section
2(a)(7) shall not in any way limit the rights of the Lessor arising under
Sub-clause 2.1 and Clauses 12 and 13 of the Purchase Agreement.
(b) Assignment of Rights. If and so long as there shall not exist
and be continuing an Event of Default, the Lessor hereby authorizes the
Lessee, to the exclusion of the Lessor, to exercise in the Lessee's name all
rights and powers of the "Buyer" under the Purchase Agreement and to retain
any recovery or benefit resulting from the enforcement of any warranty or
indemnity in respect of the Aircraft, except that the Lessee may not enter
into any change order or other amendment, modification or supplement to the
Purchase Agreement without the written consent or countersignature of the
Lessor if such change order, amendment, modification or supplement would
result in any rescission, cancellation or termination of the Purchase
Agreement in respect of the Aircraft or in any way limit the rights of the
Lessor arising under Clauses 12 and 13 of the Purchase Agreement or any of the
other rights assigned hereunder.
(c) Acceptance of Assignment. Subject to the terms hereof the
Lessor accepts the assignment contained in this Section 2.
(d) Requirement of Notice to AVSA. For all purposes of this
Assignment, AVSA shall not be deemed to have knowledge of and need not
recognize any Event of Default, unless and until AVSA shall have received
written notice thereof from the Lessor or the Indenture Trustee addressed to
its Chief Executive Officer, 0, Xxxx Xxxxx Xxxxxxx Xxxxxxxx, 00000 Xxxxxxx,
Xxxxxx (telex 521155F) and, in acting in accordance with the terms of the
Purchase Agreement and this Assignment, AVSA may act with acquittance and
conclusively rely upon any such notice.
3. Certain Rights and Obligations of the Parties. (a) Assignor
Remains Liable. It is expressly agreed that, anything herein contained to the
contrary notwithstanding: (a) the Assignor shall at all times remain liable
to AVSA under the Purchase Agreement to perform all the duties and obligations
of the "Buyer" thereunder to the same extent as if this Assignment had not
been executed; (b) the exercise by the Lessor of any of the rights assigned
hereunder shall not release the Assignor from any of its duties or obligations
to AVSA under the Purchase Agreement except to the extent that such exercise
by the Lessor shall constitute performance of such duties and obligations; and
(c) except as provided in the next succeeding paragraph, none of the Lessor,
the Indenture Trustee nor any Participant shall have any obligation or
liability under the Purchase Agreement by reason of, or arising out of, this
Assignment or be obligated to perform any of the obligations or duties of the
Assignor under the Purchase Agreement or to make any payment or to make any
inquiry as to the sufficiency of any payment received by any of them or to
present or file any claim or to take any other action to collect or enforce
any claim for any payment assigned hereunder.
(b) Lessor Bound by Purchase Agreement. Without in any way
releasing the Assignor from any of its duties or obligations under the
Purchase Agreement, the Lessor confirms for the benefit of AVSA that, insofar
as the provisions of the Purchase Agreement relate to the Aircraft, in
exercising any rights under the Purchase Agreement, or in making any claim
with respect to the Aircraft or other goods and services delivered or to be
delivered pursuant to the Purchase Agreement, the terms and conditions of the
Purchase Agreement disclosed to the Lessor in writing shall apply to, and be
binding upon, the Lessor to the extent of its respective interests assigned
hereunder to the same extent as the Assignor.
(c) Limit of Effect of this Assignment. Nothing contained herein
shall (i) subject AVSA or the Guarantor to any liability to which it would not
otherwise be subject under the Purchase Agreement or (ii) modify in any
respect the contractual rights of AVSA or the Guarantor thereunder (except, in
each case, as provided in the attached Consents and Agreements).
(d) Appointment as Attorney-in-Fact. The Assignor does hereby
constitute, effective at any time after an Event of Default shall have
occurred and be continuing, the Lessor and its successors and assigns to be
the Assignor's true and lawful attorney, irrevocably, with full power (in the
name of the Assignor or otherwise) to ask, require, demand, receive, compound
and give acquittance for any and all monies and claims for monies due and to
become due under, or arising out of, the Purchase Agreement and the Consent
and Guaranty in respect of the Aircraft, to the extent that the same have been
assigned as provided in this Assignment and, for such period as the Lessor,
its successors and assigns may exercise rights with respect thereto under this
Assignment, to endorse any checks or other instruments or orders in connection
therewith and to file any claims or take any action or institute (or, if
previously commenced, assume control of) any proceedings and to obtain any
recovery in connection therewith which the Lessor, its successors and assigns,
may deem to be necessary or advisable in the premises.
4. Further Assurances. The Assignor and the Lessor each agree
that, at any time and from time to time, upon the written request of any other
party hereto, it will promptly and duly execute and deliver any and all such
further instruments and documents and take such further action as the other
may reasonably request in order to obtain the full benefits of this Assignment
and of the rights and powers herein granted.
5. Assignor's Representations, Warranties and Covenants. The
Assignor does hereby represent and warrant that (a) the Purchase Agreement,
insofar as it relates to the Aircraft, is in full force and effect and is
enforceable against the Assignor in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, moratorium,
reorganization or other similar laws or equitable principles of general
application to or affecting the enforcement of creditors' rights generally,
and the Assignor is not in default thereunder, and (b) the Assignor has not
assigned or pledged, and hereby covenants that it will not assign or pledge,
the whole or any part of the rights hereby assigned or any of its rights with
respect to the Aircraft under the Purchase Agreement not assigned hereby, to
anyone other than the Lessor as herein provided.
6. No Amendment of Purchase Agreement. So long as the Lease is in
effect, the Lessor agrees that it shall not enter into any agreement that
would amend, modify, supplement, rescind, cancel or terminate the Purchase
Agreement or the Consent and Guaranty in any respect or in any way limit the
rights of the Assignor arising under Clauses 12 and 13 of the Purchase
Agreement or any of the other rights assigned hereunder (except as set forth
above when there has been an Event of Default) without the prior written
consent of the Assignor.
7. Execution of Assignment. This Assignment is executed by the
Assignor and the Lessor concurrently with the execution and delivery of the
Participation Agreement and the Lease.
8. Confidentiality. The Lessor agrees that it will not disclose
to any third party the terms of the Purchase Agreement or this Assignment,
except (a) as required by applicable law or governmental regulation, (b) as
contemplated in the Lease or the Participation Agreement (including as set
forth in Section 17.01 of the Participation Agreement) or (c) with the consent
of the Assignor, the Guarantor and AVSA.
9. Assignment as Collateral. Each party hereto consents to the
assignment and pledge by the Lessor to the Indenture Trustee, as security for
the Certificates to be issued under the Indenture and the other obligations
secured thereby as specified in the Indenture, of all of the Lessor's right,
title and interest in and to the Purchase Agreement and the Consent and
Guaranty under this Assignment.
10. Counterparts. This Assignment may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute but
one and the same instrument.
11. GOVERNING LAW. THIS ASSIGNMENT SHALL IN ALL RESPECTS BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
12. Successors and Assigns. This Assignment shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and assigns.
13. Notices. All notices with respect to the matters contained
herein shall be delivered in the manner and to the addresses provided in
Article 14 of the Participation Agreement.
14. No Oral Amendments. Neither this Assignment nor any of the
terms hereof may be terminated, amended, supplemented, waived or modified
orally, but only by an instrument in writing signed by the party against whom
the enforcement of such termination, amendment, supplement, waiver or
modification is sought.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment to
be duly executed as of the day and year first above written.
FEDERAL EXPRESS CORPORATION
By ____________________________
Name:
Title:
STATE STREET BANK AND TRUST COMPANY
OF CONNECTICUT, NATIONAL ASSOCIATION
not in its individual capacity,
but solely as Lessor
By ______________________
Name:
Title:
AIRBUS INDUSTRIE CONSENT AND AGREEMENT
The undersigned, Airbus Industrie G.I.E., a groupement d'interet
economique established under Ordonnance No. 67-821 dated September 23, 1967 of
the Republic of France (the "Guarantor"), hereby acknowledges notice of and
consents to all of the terms of the Purchase Agreement Assignment, between
Federal Express Corporation, a Delaware corporation, and State Street Bank and
Trust Company of Connecticut, National Association, a national banking
association, not in its individual capacity, but solely as Lessor, with
respect to Federal Express Corporation Trust No. N671FE, dated as of May 1,
1997, (hereinafter called the "Assignment", the defined terms therein being
hereinafter used with the same meaning), and hereby confirms to the Assignor
and the Lessor and their respective successors and assigns that:
(i) except as provided in the Assignment, all representations,
warranties, and agreements of the Guarantor under the Consent and Guaranty
with respect to the Aircraft shall inure to the benefit of the Lessor and
its respective successors and assigns, to the same extent as if the Lessor
and its successors and assigns had originally been named the "Buyer" of the
Aircraft therein;
(ii) the Guarantor will pay to the person or entity entitled to
receive the corresponding payment from AVSA under the terms of the
Assignment all amounts required to be paid by the Guarantor with respect to
the Aircraft;
(iii) the Guarantor consents to the sale of the Aircraft by AVSA to
the Lessor, the assignment of Assignor's rights and interests under the
Purchase Agreement and the Consent and Guaranty to the Lessor pursuant to
the Assignment, the assignment of the Lessor's rights and interests in the
Assignment to the Indenture Trustee pursuant to the Indenture and the lease
of the Aircraft by the Lessor to the Assignor under the Lease; and
(iv) from and after the delivery of the Aircraft pursuant to the
Purchase Agreement and payment in full for the Aircraft as described in the
Participation Agreement, the Guarantor will not assert any lien or claim
against the Aircraft or any part thereof or against the Lessee, the Lessor,
the Owner Participant or the Indenture Trustee arising on or prior to such
delivery or in respect of any work or services performed on or prior
thereto.
The Guarantor hereby represents and warrants that:
(A) the Guarantor is a groupement d'interet economique duly
organized and existing in good standing under the laws of the Republic of
France and has the requisite power and authority to enter into and perform
its obligations under the Consent and Guaranty, the Airbus Guaranty and
this Consent and Agreement;
(B) the making and performance, in accordance with their terms of
the Consent and Guaranty, the Airbus Guaranty and this Consent and
Agreement have been duly authorized by all necessary corporate action on
the part of the Guarantor, do not require the consent or approval of the
members of the Guarantor, do not require the consent or approval of,or
the giving of notice to, or registration with, or the taking of any
other action in respect of, any French governmental authority or agency
except for those that have already been obtained and do not contravene
any law binding on the Guarantor or contravene the Guarantor's charter
documents or any indenture, credit agreement or other contractual
agreement to which the Guarantor is a party or by which it is bound;
(C) the Consent and Guaranty constituted, as of the date thereof and
at all times thereafter to and including the date of this Consent and
Agreement, and each of this Consent and Agreement and the Airbus Guaranty
constitutes, binding obligations of the Guarantor enforceable against the
Guarantor in accordance with their respective terms; and
(D) the Consent and Guaranty is in full force and effect.
THIS CONSENT AND AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE.
Dated as of May 1, 1997
AIRBUS INDUSTRIE G.I.E.
By _______________________________
Name:
Title:
AVSA CONSENT AND AGREEMENT
The undersigned, AVSA, S.A.R.L., a societe a responsabilite limitee
organized and existing under the laws of the Republic of France ("AVSA"),
hereby acknowledges notice of and consents to all of the terms of the Purchase
Agreement Assignment between Federal Express Corporation, a Delaware
corporation, and State Street Bank and Trust Company of Connecticut, National
Association, a national banking association, not in its individual capacity,
but solely as Lessor, with respect to Federal Express Corporation Trust No.
N671FE, dated as of May 1, 1997, (hereinafter called the "Assignment", the
defined terms therein being hereinafter used with the same meaning), and
hereby confirms to the Assignor and the Lessor and their respective successors
and assigns that:
(i) except as provided in the Assignment, all representations,
warranties, indemnities and agreements of AVSA under the Purchase Agreement
with respect to the Aircraft shall inure to the benefit of the Lessor and
its respective successors and assigns to the same extent as if the Lessor
and its successors and assigns had originally been named the "Buyer" of the
Aircraft therein;
(ii) AVSA will pay to the Assignor all payments required to be paid
by it under the Purchase Agreement, unless and until AVSA shall have
received written notice from the Indenture Trustee or the Lessor (or, after
the Indenture shall have been discharged in full, the Lessor) addressed to
it at the address and in the manner set forth in the Assignment that an
Event of Default has occurred and is continuing, whereupon AVSA will make
any and all payments thereafter required to be made by it under the
Purchase Agreement, to the extent that the right to receive such payment
has been assigned under the Assignment ("AVSA Payments"), directly to the
Indenture Trustee (or, after the Indenture shall have been discharged in
full, the Lessor) if AVSA shall have received notice as aforesaid that an
Event of Default has occurred and is continuing;
(iii) The Lessor shall not be liable for any of the obligations or
duties of the Assignor under the Purchase Agreement, nor shall the
Assignment give rise to any duties or obligations whatsoever on the part of
the Lessor owing to AVSA, except for the agreements of the Lessor set forth
in the Assignment, including, but not limited to Section 3(b) of the
Assignment;
(iv) AVSA consents to the assignment of the Lessor's rights and
interests in the Assignment to the Indenture Trustee pursuant to the
Indenture and to the lease of the Aircraft by the Lessor to the Lessee
under the Lease; and
(v) from and after the delivery of the Aircraft pursuant to the
Purchase Agreement and payment in full for the Aircraft as described in the
Participation Agreement and the Assignment, AVSA will not assert any lien
or claim against the Aircraft or any part thereof arising on or prior to
such delivery or in respect of any work or services performed on or prior
thereto.
AVSA hereby represents and warrants that:
(A) AVSA is a societe a responsabilite limitee duly organized and
existing in good standing under the laws of the Republic of France and has
the requisite power and authority to enter into and perform its obligations
under the Purchase Agreement and this Consent and Agreement;
(B) the making and performance, in accordance with their terms, of
the Purchase Agreement and this Consent and Agreement have been duly
authorized by all necessary corporate action on the part of AVSA, do not
require any approval of AVSA's shareholders, do not require the consent or
approval of, the giving notice to, or registration with, or the taking of
any other action in respect of, any French governmental authority or agency
except for those that have already been obtained and do not contravene any
law binding on AVSA or contravene AVSA's charter documents or any
indenture, credit agreement or other contractual agreement to which AVSA is
a party or by which it is bound;
(C) each of the Purchase Agreement and this Consent and Agreement
constitutes a binding obligation of AVSA enforceable against AVSA in
accordance with its terms, subject to: (i) the limitations of applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the rights of creditors generally; and (ii) general principles of
equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law), which principles do not make the remedies
available at law or in equity with respect to the Purchase Agreement and
this Consent and Agreement inadequate for the practical realization of the
benefits intended to be provided thereby and
(D) the Purchase Agreement is in full force and effect as to AVSA.
THIS CONSENT AND AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE.
Dated as of May 1, 1997
AVSA, S.A.R.L.
By: _________________________________
Name:
Title:
Exhibit C
to
Lease Agreement
---------------
ENGINE WARRANTY ASSIGNMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N671FE)
Words and phrases appearing in this Engine Warranty Assignment (the
"Assignment") shall have the respective meanings as defined below:
A. General Terms Agreement means that agreement dated as of July 3, 1991,
(the "GTA") by and between the Engine Manufacturer and Federal Express
Corporation ("Fed Ex"), including the Engine Product Support Plan at
Exhibit B, insofar as such Product Support Plan relates to the Engine
Warranties (the "Product Support Plan"), but excluding any and all
letter agreements attached thereto.
B. Engine Warranties means the Engine Manufacturer's New Engine
Warranty, New Parts Warranty, Ultimate Life Warranty and Campaign
Change Warranty, as set forth in the Engine Manufacturer's Product
Support Plan which forms a part of the GTA, and as limited by the
applicable terms of such GTA and Product Support Plan.
C. Engine means each of the CF6-80C2-A5F series engines installed on the
aircraft at the time of delivery to the Assignor, each bearing Engine
Manufacturer's serial numbers ___-___ and ___-___, respectively.
D. Replacement Engine means each of the CF6-80C2-A5F series engines
which are not subject to this Assignment and are a replacement or
substitute for an Engine, excluding, however, any engines obtained
from the Engine Manufacturer's lease pool which are installed on
the aircraft for the limited purpose of permitting the continued
operation of the aircraft during the period necessary to effect or
complete repairs or overhaul of an Engine.
E. Lease means the Lease Agreement (Federal Express Corporation Trust
No. N671FE), dated as of May 1, 1997, (the "Lease") between State
Street Bank and Trust Company of Connecticut, National Association
(not in its individual capacity, but solely as Owner Trustee), as
Lessor ("Lessor") and Fed Ex, as Lessee, as amended, modified or
supplemented from time to time.
All other capitalized terms used and not defined herein that are in the
Lease shall, when used herein, have the meanings specified in the Lease.
1
Fed Ex, pursuant to the terms and conditions herein, hereby sells, assigns,
transfers and sets over unto the Lessor all of its rights, claims and
interests in and under the GTA and the Product Support Plan, as such apply to
the Engines, to enforce in the Lessor's own name such rights as Fed Ex may
have with respect to the Engine Warranties, to the extent the same relate to
the Engines, and to retain any benefit resulting therefrom; provided, however,
that there is reserved to Fed Ex all of its other rights, claims and interests
under the GTA except as expressly stated above. Fed Ex shall, during the term
of the Lease (but only so long as no Event of Default shall have occurred and
be continuing), have the benefit of and shall be entitled to enforce (as it
shall deem appropriate), either in its own name or (at the cost of Fed Ex) in
the name of the Lessor for the use and benefit of Fed Ex, any and all Engine
Warranties available to the Lessor under the GTA in respect of the Engines and
each Part thereof, and the Lessor agrees (but only so long as no Event of
Default shall have occurred and be continuing) at Fed Ex's expense to do,
execute and deliver such further acts, deeds, matters or things as may be
reasonably requested by Fed Ex and necessary to enable Fed Ex to obtain
customary warranty services furnished for the Engines or any Part thereof
pursuant to the Engine Warranties. Fed Ex shall, at the Lessor's expense,
cooperate with the Lessor and take such action as the Lessor reasonably deems
necessary to enable the Lessor to enforce such rights, claims and interests as
assigned herein.
2
Notwithstanding anything in this Assignment or the Consent attached hereto
and incorporated herein to the contrary, Fed Ex and the Lessor confirm
expressly for the benefit of the Engine Manufacturer that:
A. The Lessor agrees that it will not, without the prior written consent
of the Engine Manufacturer, disclose, directly or indirectly, to any
third party, any of the terms of the Engine Warranties disclosed to
it by the Engine Manufacturer incident to effecting the assignment
herein; provided, however, that (1) the Lessor may use, retain and
disclose such information on a confidential basis to its special
counsel, independent insurance brokers, bank examiners or similar
regulatory authorities, auditors and public accountants, (2) the
Lessor may use, retain and disclose on a confidential basis such
information to the Owner Participant, the Indenture Trustee, the Pass
Through Trustee and any Certificate Holder, as the case may be, and
their special counsel, independent insurance brokers, bank examiners
or similar regulatory authorities, auditors and public accountants,
(3) the Lessor may disclose such information as required by
applicable laws, governmental regulations, subpoena, or other written
demand under color of legal right, but it shall first, as soon as
practicable upon receipt of such demand and to the extent permitted
by applicable laws, furnish a copy thereof to Fed Ex and to the
Engine Manufacturer, and the Lessor, to the extent permitted by
applicable law, shall afford Fed Ex and the Engine Manufacturer
reasonable opportunity, at the moving party's cost and expense, to
obtain a protective order or other assurance reasonably satisfactory
to the Engine Manufacturer of confidential treatment of the
information required to be disclosed, (4) the Lessor may disclose
such information as required to enforce its rights under the Engine
Warranties assigned to it pursuant to this Assignment, and (5) the
Lessor may disclose such information to any bona fide potential
purchaser of the Aircraft and/or Engines or any beneficial interest
therein (subject to the execution by such prospective purchaser of a
written confidentiality statement setting forth the same or
substantially similar terms as those referred to in this paragraph).
B. Without in any way releasing Fed Ex from any of its duties or
obligations under the GTA, the Lessor agrees that, insofar as the
provisions of the GTA relate to the Engines, in exercising any rights
under such Engine Warranties or in making any claim with respect
thereto, the applicable terms and conditions of the GTA, including
Article Eight (Limitation of Liability) and the Product Support Plan,
shall apply to, and be binding upon, the Lessor to the same extent as
Fed Ex.
C. Insofar as the provisions of the GTA relate to the Engines, in
exercising any rights under the Engine Warranties or in making any
claim with respect thereto, the applicable terms and conditions of
the GTA and the Product Support Plan or the Consent attached hereto
and incorporated herein shall apply to, and be binding upon, the
Lessor to the same extent as if named "Airline" therein. It is
expressly agreed that Fed Ex shall at all times remain liable to the
Engine Manufacturer under the GTA to perform all the duties and
obligations of Fed Ex thereunder to the same extent as if this
Assignment had not been executed. The performance by the Lessor of
any of the rights assigned hereunder shall not release Fed Ex from
any of its duties or obligations to the Engine Manufacturer under the
GTA except to the extent that such exercise by the Lessor shall
constitute performance of such duties and obligations.
D. Nothing contained in this Assignment shall subject the Engine
Manufacturer to any obligation or liability to which it would not
otherwise be subject under the GTA or modify in any respect the
Engine Manufacturer's contract rights thereunder, or subject the
Engine Manufacturer to any multiple or duplicative liability or
obligation under the GTA. The Engine Manufacturer recognizes and it
is consented to by all parties to this Assignment that the Lessor
shall collaterally assign its rights under the Lease and this
Assignment and will mortgage the Aircraft and Engines, to State
Street Bank and Trust Company of Connecticut, National Association,
as Indenture Trustee under the Trust Indenture, Mortgage and Security
Agreement (Federal Express Corporation Trust No. N671FE), dated as of
May 1, 1997 (on the terms set forth therein); however, no further
extension or assignment (except to a successor indenture trustee
under such agreement) of any remaining Engine Warranties, including
but not limited to extensions or assignments for security purposes,
are permitted without the prior written consent of the Engine
Manufacturer.
E. Exclusive of the assignment noted in Section 2D above, the Engine
Manufacturer shall not be deemed to have knowledge of any change in
the authority of Fed Ex or the Lessor, as the case may be, to
exercise the rights established hereunder until the Engine
Manufacturer has received written notice thereof from the Indenture
Trustee or the Lessor. Such notice shall be sent to: Commercial
Contracts Director, GE Aircraft Engines, Mail Drop F17, Xxx Xxxxxxx
Xxx, Xxx 000000, Xxxxxxxxxx, Xxxx 00000-0000, facsimile: (513)
243-8068.
F. This Assignment shall apply only in respect to each Engine and shall
not extend to any replacement or substitute engine. If, during the
term of this Assignment and the Lease, it becomes necessary to
replace or substitute an Engine due to a Failure (as such term is
defined in the Engine Product Support Plan, excluding normal wear,
tear and deterioration which can be restored by overhaul and repair),
damage or loss, the Assignor (or the Lessor) shall give the Engine
Manufacturer written notice of such Failure, damage or loss. The
notice shall include (i) a description of the event or circumstances
which constitute a Failure, damage or loss, and (ii) the serial
numbers of the (a) failed, damaged or lost Engine and (b) Replacement
Engine and shall be sent to: Customer Support Manager, GE Aircraft
Engines, 000 Xxxxxxxx Xxxxxx, Xxxx 000, Xxxxxxxxxx, Xxxx 00000. The
Engine Manufacturer shall not be deemed to have knowledge of the need
for a replacement engine until it has received the aforementioned
notice.
In the event an Engine subject to this Assignment fails, is damaged
or lost, and such Engine is replaced by a Replacement Engine, the
Assignor and the Assignee shall, prior to, or contemporaneous with,
the delivery of such Replacement Engine, obtain the written consent
of the Engine Manufacturer (which it shall be obligated to give) that
the Engine Warranties as set forth in the Engine Product Support Plan
shall apply to such Replacement Engines. The Engine Manufacturer
shall not incur any obligation or liability for a Replacement Engine
under the Engine Warranties until the execution of the aforementioned
consent.
G. At any time and upon the written request of the Engine Manufacturer,
Fed Ex and the Lessor shall promptly and duly execute and deliver any
and all such further assurances, instruments and documents and take
all such further action, at the expense of Fed Ex, as the Engine
Manufacturer may reasonably request in order to obtain the full
benefit of Fed Ex and the Lessor's agreement as set forth in this
Assignment and the Consent attached hereto and incorporated herein.
Any performance by the Engine Manufacturer that discharges its
obligation under the Engine Warranties will satisfy the respective
interests of Fed Ex and the Lessor. So long as the Engine
Manufacturer acts in good faith in accordance with this Assignment,
the Engine Manufacturer may rely conclusively on any notice given
pursuant to this Assignment without inquiring as to the accuracy of,
or the entitlement of the party to give, such notice.
3
The Engine Manufacturer shall reserve to Fed Ex all those rights, claims and
interests, as and to the extent such relates to the purchase and operation of
engines other than the Engines subject to the Assignment, as well as other
matters not directly pertaining to the Engines, and Fed Ex will have or retain
under the GTA such rights, claims and interest not expressly assigned to the
Lessor hereunder.
4
The Engine Manufacturer warrants each new Reverser (as such is defined in
the Engine Product Support Plan) installed on the Aircraft at the time of
delivery to Fed Ex under the terms of the New Engine Warranty; however,
administration of such New Engine Warranty, with respect to both installed and
replacement Reversers, shall be performed by Xxxxxx Xxxxxxxx.
5
If at some point in time, the Engine Manufacturer receives written
notification from the Indenture Trustee or the Lessor that the Lessor is or
becomes entitled to possession of the Engines, pursuant to an Event of Default
or otherwise, and desires to sell or lease the Engines to a party who is not
currently a party to a General Terms Agreement with the Engine Manufacturer,
the Engine Manufacturer agrees if such agreement is permissible under
applicable U.S. law, that it will offer to such purchaser or lessee, subject
to the execution of an agreement to sell or lease such Engines, a General
Terms Agreement on the Engine Manufacturer's standard terms and conditions.
If, however, such purchaser or lessee is currently a party to a General Terms
Agreement with the Engine Manufacturer, the remaining portion of the terms of
such General Terms Agreement shall be extended to and apply to such subsequent
purchase or lease; provided, however, that the written consent of the Engine
Manufacturer to such an extension is obtained prior to the transaction's
occurrence.
This Assignment shall be governed by the laws of the State of New York,
including all matters of construction, validity and performance, as applicable
to contracts between citizens of that state to be performed wholly within that
state, and without reference to conflicts of law principles.
In witness whereof, the parties hereto have caused this Engine Warranty
Assignment to be duly executed and delivered as of the date hereof.
General Electric Company
_____________________________
Name:
Title:
Federal Express Corporation
_____________________________
Name: Xxxxxx X. Xxxxxxx
Title: Assistant Treasurer and
Managing Director -
Structured Finance
Wilmington Trust Company
not in its individual capacity,
but solely as Owner Trustee
_____________________________
Name: Xxxxxx X. XxxXxxxxx
Title: Assistant Vice President
CONSENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N671FE)
The Engine Manufacturer, General Electric Company (the "Engine
Manufacturer"), a New York corporation, hereby consents to the Engine Warranty
Assignment attached hereto and acknowledges notice of (i) the Purchase
Agreement Assignment (Federal Express Corporation Trust No. N671FE), dated as
of May 1, 1997 and entered into by and between Federal Express Corporation, as
Assignor ("Fed Ex") and State Street Bank and Trust Company of Connecticut,
National Association (not in its individual capacity, but solely as Owner
Trustee) as Assignee ("Lessor"), (the "Purchase Agreement Assignment"); and
(ii) the Lease Agreement (Federal Express Corporation Trust No. N671FE), dated
as of May 1, 1997 and entered into by and between Fed Ex, as Lessee and the
Lessor, as Lessor (as in effect from time to time, the "Lease") and (iii) the
Trust Indenture and Security Agreement (Federal Express Corporation Trust No.
N671FE), dated as of May 1, 1997 (the "Indenture"), between the Lessor and
First Security Bank, National Association, as Indenture Trustee ("Indenture
Trustee"). The Purchase Agreement Assignment and Lease cover two GE
CF6-80C2-A5F series engines bearing Engine Manufacturer's serial numbers
___-___ and ___-___, respectively, (the "Engines") as installed on the Airbus
A300F4-605R series aircraft bearing Manufacturer's serial number 778 (the
"Aircraft"). In connection with such Purchase Agreement Assignment and Lease,
reference is made to the General Terms Agreement No. 6-9034 dated as of July
3, 1991, between the Engine Manufacturer and Fed Ex (the "General Terms
Agreement"), under which the Engine Manufacturer agreed to support certain GE
CF6-80C2-A5F series engines, including the Engines and spare parts therefor to
be purchased by Fed Ex from the Engine Manufacturer, as installed on certain
Airbus A300F4-605R series aircraft, including the Aircraft. Recognizing that
the Lessor and Fed Ex have entered into the Lease which provides for the lease
by the Lessor to Fed Ex of the Aircraft and Engines and that the Lessor has
granted a security interest in the Engines and assigned certain of its rights
under the Lease to the Indenture Trustee, the Engine Manufacturer agrees that
in furtherance of the Lease, it will so support such Engines and spare parts
therefor, subject to the applicable terms and conditions of the General Terms
Agreement, including Article Eight (Limitation of Liability).
The Engine Manufacturer represents and warrants that:
1. it is a corporation existing in good standing under the laws of
the State of New York;
2. the making and performance of this Consent in accordance with
its terms has been duly authorized by all necessary corporate
action on the part of the Engine Manufacturer, does not require
any shareholder approval and does not contravene its
certificate of incorporation or by-laws or any debenture,
credit agreement or other contractual agreement to which the
Engine Manufacturer is a party or by which it is bound or any
law binding on the Engine Manufacturer;
3. the making and performance of the Engine Warranties, as defined
in the Engine Warranty Assignment attached hereto (the "Engine
Warranties") in accordance with their terms have been duly
authorized by all necessary corporate action on the part of the
Engine Manufacturer, do not require any shareholder approval
and do not contravene the Engine Manufacturer's certificate of
incorporation or by-laws or any debenture, credit agreement or
other contractual agreement to which the Engine Manufacturer is
a party or by which it is bound or any law binding on the
Engine Manufacturer; and
4. the Engine Warranties constitute, as of the date on which they
were made and at all times thereafter, and this Consent and the
Engine Warranty Assignment attached hereto are, binding
obligations of the Engine Manufacturer enforceable against the
Engine Manufacturer in accordance with its terms subject to:
(a) the limitation of applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights
of creditors generally; and
(b) general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at
law).
This Consent shall be governed by the laws of the State of New York,
including all matters of construction, validity and performance, as applicable
to contracts between citizens of that state to be performed wholly within that
state, and without reference to conflicts of law principles.
General Electric Company
______________________________
Name:
Title:
___________________________________________________________________________
LEASE AGREEMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N672FE)
Dated as of May 1, 1997
between
STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION,
Not in its Individual Capacity,
but Solely as Owner Trustee,
Lessor
and
FEDERAL EXPRESS CORPORATION,
Lessee
COVERING ONE AIRBUS A300F4-605R AIRCRAFT
SERIAL NO. 779, REGISTRATION NO. N672FE
CERTAIN OF THE RIGHT, TITLE AND INTEREST IN AND TO THIS LEASE
AGREEMENT OF STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL
ASSOCIATION, AS OWNER TRUSTEE, HAS BEEN ASSIGNED TO AND IS SUBJECT TO A LIEN
AND SECURITY INTEREST IN FAVOR OF FIRST SECURITY BANK, NATIONAL ASSOCIATION,
AS INDENTURE TRUSTEE UNDER THE TRUST INDENTURE AND SECURITY AGREEMENT (FEDERAL
EXPRESS CORPORATION TRUST NO. N672FE) DATED AS OF MAY 1, 1997 FOR THE BENEFIT
OF THE HOLDERS OF THE CERTIFICATES REFERRED TO IN SUCH TRUST INDENTURE AND
SECURITY AGREEMENT. THIS LEASE AGREEMENT HAS BEEN EXECUTED IN SEVERAL
COUNTERPARTS. ONLY THE CHATTEL-PAPER "ORIGINAL" COUNTERPART CONTAINS THE
RECEIPT THEREFOR EXECUTED BY FIRST SECURITY BANK, NATIONAL ASSOCIATION, AS
INDENTURE TRUSTEE, ON THE SIGNATURE PAGES THEREOF.
___________________________________________________________________________
TABLE OF CONTENTS
Page
Initial Recitals.............................................................1
ARTICLE 1
DEFINITIONS
ARTICLE 2
ACCEPTANCE UNDER THE LEASE
Section 2.01. Sale and Lease of Aircraft; Term......................... 1
ARTICLE 3
RENT AND RENT ADJUSTMENT
Section 3.01. [Reserved]............................................... 2
Section 3.02. Basic Rent............................................... 2
Section 3.03. Supplemental Rent........................................ 2
Section 3.04. Adjustments to Basic Rent, Stipulated Loss Value and
Termination Value After the Delivery Date............... 3
Section 3.05. Minimum Basic Rent....................................... 4
Section 3.06. Payment to Indenture Trustee............................. 5
Section 3.07. Costs and Expenses....................................... 5
ARTICLE 4
RENEWAL OPTIONS AND PURCHASE OPTIONS
Section 4.01. Renewal Options.......................................... 5
Section 4.02. Purchase Options......................................... 6
Section 4.03. Appraisal Procedures..................................... 8
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
Section 5.01. Disclaimer of Representations and Warranties............. 10
Section 5.02. No Modification of Other Warranties...................... 10
Section 5.03. Certain Agreements of the Lessee......................... 11
ARTICLE 6
LIENS
Section 6.01. Liens.................................................... 11
ARTICLE 7
AIRCRAFT REGISTRATION, MAINTENANCE AND OPERATION
Section 7.01. Registration, Maintenance and Operation.................. 12
Section 7.02. Possession and Permitted Transfer and Sublease........... 14
Section 7.03. Insignia................................................. 19
ARTICLE 8
REPLACEMENT AND POOLING OF PARTS
Section 8.01. Replacement of Parts..................................... 19
Section 8.02. Pooling of Parts......................................... 20
ARTICLE 9
ALTERATIONS, MODIFICATIONS AND ADDITIONS
Section 9.01. Required Alterations and Modifications................... 21
Section 9.02. Other Alterations and Modifications...................... 21
ARTICLE 10
VOLUNTARY TERMINATION
Section 10.01. Right of Termination Upon Obsolescence or Surplus....... 23
Section 10.02. Retention of Aircraft by the Lessor..................... 25
Section 10.03. Voluntary Termination as to Engines..................... 26
ARTICLE 11
LOSS, DESTRUCTION, REQUISITION
Section 11.01. Lessee's Election Rights................................ 27
Section 11.02. Payment of Stipulated Loss Value........................ 27
Section 11.03. Replacement of Airframe and Engines..................... 28
Section 11.04. Event of Loss with Respect to an Engine................. 31
Section 11.05. Application of Payments from the Government or Others... 33
Section 11.06. Requisition of an Airframe and the Installed Engines for
Use by Government...................................... 34
Section 11.07. Requisition for Use by Government of an Engine
Not Installed on the Airframe.......................... 35
Section 11.08. Application of Payments During Existence of Certain
Defaults............................................... 35
ARTICLE 12
RETURN OF AIRCRAFT
Section 12.01. Return of Aircraft...................................... 35
Section 12.02. Return of Engines....................................... 36
Section 12.03. Return of Manuals....................................... 36
Section 12.04. Condition of Aircraft................................... 37
Section 12.05. [Reserved].............................................. 38
Section 12.06. Storage................................................. 38
Section 12.07. Special Markings........................................ 38
Section 12.08. Lessor's Option to Purchase Parts....................... 39
ARTICLE 13
INSURANCE
Section 13.01. Comprehensive Airline Liability and Property Damage
Liability Insurance.................................... 39
Section 13.02. Insurance Against Loss or Damage to Aircraft and Engines 41
Section 13.03. Application of Insurance Proceeds....................... 43
Section 13.04. Reports................................................. 44
Section 13.05. Lessor's Insurance...................................... 45
Section 13.06. Self-Insurance.......................................... 45
ARTICLE 14
INSPECTION
Section 14.01. Right of Inspection..................................... 46
Section 14.02. No Obligation to Inspect................................ 46
ARTICLE 15
ASSIGNMENT
Section 15.01. Lessee's Right to Assign................................ 46
Section 15.02. Citizenship............................................. 47
ARTICLE 16
EVENTS OF DEFAULT
Section 16.01. Events of Default....................................... 47
ARTICLE 17
REMEDIES
Section 17.01. Remedies Upon Lessee's Default.......................... 49
Section 17.02. Cumulative Remedies..................................... 52
Section 17.03. Waiver.................................................. 52
Section 17.04. Lessor's Right to Perform for Lessee.................... 53
ARTICLE 18
COVENANT OF QUIET ENJOYMENT
Section 18.01. Quiet Enjoyment......................................... 53
ARTICLE 19
FURTHER ASSURANCES
Section 19.01. Further Assurances...................................... 53
ARTICLE 20
NET LEASE
Section 20.01. Nature of Lease......................................... 54
ARTICLE 21
SUCCESSOR LESSOR
Section 21.01. Successor Lessor........................................ 55
ARTICLE 22
SECURITY FOR LESSOR'S OBLIGATIONS
Section 22.01. Security for Lessor's Obligations to Holders............ 56
Section 22.02. [Reserved].............................................. 56
Section 22.03. Consent of Lessee to Assignment of Lease as Security.... 56
ARTICLE 23
SECURITY FUNDS
Section 23.01. Investment of Security Funds............................ 57
ARTICLE 24
CONCERNING THE LESSOR
Section 24.01. Lessor's Entry Into Lease............................... 58
ARTICLE 25
NOTICES
Section 25.01. Notices................................................. 59
ARTICLE 26
MISCELLANEOUS
Section 26.01. Section Heading and Captions............................ 60
Section 26.02. References.............................................. 60
Section 26.03. APPLICABLE LAW.......................................... 60
Section 26.04. Severability............................................ 60
Section 26.05. No Oral Modification.................................... 60
Section 26.06. Agreement as Chattel Paper.............................. 60
Section 26.07. Counterparts............................................ 60
Section 26.08. Public Release of Information........................... 61
ARTICLE 27
TRUE LEASE
Section 27.01. Intent of the Parties................................... 61
Section 27.02. Section 1110 Compliance................................. 61
Section 27.03. Finance Lease........................................... 61
Schedule I Definitions
Schedule II Basic Rent
Schedule III Stipulated Loss Values
Schedule IV Termination Values
Schedule V Purchase Option Schedule
Exhibit A Form of Lease Supplement
Exhibit B Form of Purchase Agreement Assignment, Consent and
Agreement and AVSA Consent and Agreement
Exhibit C Form of Engine Warranty Assignment and Engine Consent
LEASE AGREEMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N672FE)
LEASE AGREEMENT (FEDERAL EXPRESS CORPORATION TRUST NO. N672FE) dated
as of May 1, 1997 (this "Lease") between STATE STREET BANK AND TRUST COMPANY
OF CONNECTICUT, NATIONAL ASSOCIATION, a national banking association, not in
its individual capacity but solely as Owner Trustee under the Trust Agreement
(as defined in Article 1 below) (the "Lessor"), and FEDERAL EXPRESS
CORPORATION, a Delaware corporation (the "Lessee").
W I T N E S S E T H :
WHEREAS, all capitalized terms used herein shall have the meanings
assigned thereto as provided in Article 1 below;
WHEREAS, subject to the terms and conditions set forth in the
Participation Agreement (as hereinafter defined), the Lessee desires on the
Delivery Date (as hereinafter defined) to lease from the Lessor and the Lessor
is willing to lease to the Lessee the Aircraft (as hereinafter defined) in
accordance with the terms and conditions set forth in this Lease.
NOW, THEREFORE, in consideration of the mutual promises herein,
and other good and valuable consideration, the receipt and adequacy of
which is hereby acknowledged by the parties, the Lessor and the Lessee
agree as follows:
ARTICLE 1
DEFINITIONS
Unless the context otherwise requires, the capitalized terms herein
shall have the meanings given in Schedule I hereto, for all purposes of this
Lease and shall be equally applicable to both the singular and the plural
forms of the terms defined.
ARTICLE 2
ACCEPTANCE UNDER THE LEASE
Section 2.01. Sale and Lease of Aircraft; Term. The Lessor, subject
to satisfaction or waiver of the conditions set forth in this Lease and in the
Participation Agreement, hereby agrees to purchase the Aircraft from AVSA on
the Delivery Date and agrees immediately thereafter to lease the Aircraft to
the Lessee pursuant to this Lease, and the Lessee hereby agrees to lease the
Aircraft from the Lessor, such lease to be evidenced by the execution by the
Lessor and the Lessee of a Lease Supplement leasing the Aircraft hereunder.
Such lease shall last for the Term, at all times during which full legal title
to the Aircraft shall remain vested with the Lessor to the exclusion of the
Lessee, notwithstanding the possession and use thereof by the Lessee or any
other Person. The Lessee agrees that the Lessor will authorize one or more
employees of the Lessee, designated by the Lessee in writing, as the
authorized representative or representatives of the Lessor to accept delivery
of the Aircraft pursuant to the sale of the Aircraft described in the
Participation Agreement. The Lessee hereby agrees that in the event delivery
of the Aircraft shall be accepted by an employee or employees of the Lessee
pursuant to such authorization by the Lessor, such acceptance of delivery by
such employee or employees on behalf of the Lessor shall, without further act,
irrevocably constitute acceptance by the Lessee of the Aircraft for all
purposes of this Lease.
ARTICLE 3
RENT AND RENT ADJUSTMENT
Section 3.01. [Reserved].
Section 3.02. Basic Rent. The Lessee agrees to pay to the Lessor in
immediately available funds, on each Rent Payment Date, Basic Rent for the
Aircraft during the Basic Term, each payment being set forth on Schedule II
hereto opposite the applicable Rent Payment Date, subject to increase or
decrease as provided in Section 3.04 of this Lease. Each payment of Basic
Rent shall be made in arrears or in advance, all as stated in Schedule II
hereto. Each payment of Basic Rent designated as advance rent shall be
allocated over the six-month period beginning on the Rent Payment Date on
which such advance rent payment is scheduled to be made, and each installment
of Basic Rent that is designated as payable in arrears shall be accrued over
the six-month period ending on and including the day immediately preceding the
Rent Payment Date on which such arrears payment is scheduled to be made.
Section 3.03. Supplemental Rent. The Lessee agrees to pay or cause
to be paid to the Lessor, or to whomever shall be entitled to it, any and all
Supplemental Rent promptly as the same shall become due. If the Lessee fails
to pay any Supplemental Rent when due, the Lessor shall have all rights,
powers and remedies provided for in this Lease, or by law or equity or
otherwise in the case of nonpayment of Basic Rent. The Lessee will also pay
to the Person entitled thereto, on demand, as Supplemental Rent, to the extent
permitted by applicable law, an amount equal to interest at the Past Due Rate
on any part of any installment of Basic Rent not paid when due, for any period
until the same shall be paid and on any payment of Supplemental Rent not paid
when due, for the period until the same shall be paid. In addition, the
Lessee will pay to the Lessor, as Supplemental Rent, (i) an amount equal to
the aggregate amount of any Make-Whole Premium payable under the Indenture
(other than any Make-Whole Premium payable in connection with an Indenture
Event of Default that is not and does not arise out of a Lease Event of
Default) and (ii) an amount equal to the excess of interest at the Past Due
Rate on the principal of the Certificates in connection with an acceleration
of the Certificates pursuant to Section 7.02 of the Indenture following an
Indenture Event of Default attributable to an Event of Default over interest
payable by the Lessee at the Past Due Rate on Basic Rent. The expiration or
other termination of the Lessee's obligation to pay Basic Rent shall not limit
or otherwise modify the obligations of the Lessee with respect to the payment
of Supplemental Rent.
Section 3.04. Adjustments to Basic Rent, Stipulated Loss Value
and Termination Value After the Delivery Date. The percentages for Basic
Rent referred to in Schedule II hereto and the percentages for Stipulated
Loss Value and Termination Value referred to in Schedule III and Schedule
IV hereto, respectively, shall be adjusted (upward or downward) subject to
the minimum value established by Section 3.05 hereof and the definitions of
Stipulated Loss Value and Termination Value to reflect (i) any costs and
expenses paid by the Lessor or the Owner Participant pursuant to Section
10.01 of the Participation Agreement being greater or less than the
Estimated Expense Amount, (ii) any Refinancing pursuant to Section 15.01 of
the Participation Agreement, (iii) any reoptimization pursuant to Section
15.02(a) of the Participation Agreement, (iv) payments pursuant to Section
5 of the Tax Indemnity Agreement by an adjustment of Basic Rent or (v) the
Delivery Date being other than August 19, 1997. Each such adjustment
pursuant to clause (i), (ii), (iv) or (v) of the first sentence of this
Section 3.04 shall maintain the Owner's Economic Return (and, while
maintaining such Owner's Economic Return, minimize the aggregate Net
Present Value of Rents to the Lessee). In the event of an adjustment
pursuant to clause (iii) of the first sentence of this Section 3.04, the
Owner Participant may recalculate Basic Rent as set forth in Schedule II
hereto in order to maintain to the extent feasible the Owner's Economic
Return and, subject to the provisions of Section 15.02 of the Participation
Agreement, recalculate the schedule of principal repayments, the Stipulated
Loss Value percentages set forth in Schedule III hereto and the Termination
Value percentages set forth in Schedule IV hereto in a manner consistent
with such recalculation of Basic Rent; provided that any such
recalculations as a result of an adjustment pursuant to such clause (iii)
of the first sentence of this Section 3.04 may not (A) increase the Net
Present Value of Rents to the Lessee, (B) increase as of any date the sum
of (1) the Net Present Value of Rents to the Lessee payable through such
date plus (2) the present value of the Stipulated Loss Value or the
Termination Value as of such date, in each case discounted to the Delivery
Date at the Debt Rate, beyond such net present values prior to such
adjustment, or (C) otherwise result in any adverse impact (including tax
consequences) to the Lessee for which the Owner Participant has not agreed
to indemnify the Lessee on terms reasonably acceptable to the Lessee.
The Owner Participant shall promptly notify the Lessee and the
Lessor and the Lessee shall promptly notify the Owner Participant and the
Lessor of the need for any such adjustment pursuant to this Section 3.04.
As promptly as feasible after any such notification, the Lessor shall
furnish the Lessee with a notice setting forth the amount of any such
adjustments together with the calculations upon which the adjustments are
based; provided, however, that the Lessor and the Owner Participant shall
not be required to disclose to the Lessee in such notice any confidential
or proprietary information (including methodology or assumptions) relating
to such calculations. At the request and, subject to the next succeeding
sentence, expense of the Lessee, the accuracy of the calculation of such
adjustments and the consistency of the calculation with the calculation
used to determine Basic Rent, Stipulated Loss Values and Termination Values
shall be verified first, by First Chicago Leasing Corporation or such other
financial advisor chosen by the Lessee and second, if such adjustments are
still believed to be in error and are not reconciled with the Owner
Participant within fifteen (15) Business Days, by a firm of nationally
recognized independent public accountants selected by the Lessee and
reasonably acceptable to the Owner Participant and, in order to enable them
to verify such adjustments, the Owner Participant shall make available to
such accountants (for their own confidential use and not to be disclosed to
the Lessee or any other Person and subject to the execution of a
confidentiality agreement reasonably satisfactory to the Owner Participant)
all information reasonably necessary for such verification, including the
name of the lease analysis program used by the Owner Participant to
calculate such adjustments. The Lessee will pay the reasonable costs and
expenses of the verification process under this Section 3.04 unless as a
result of such verification process by the independent public accountants
Basic Rent is adjusted and such adjustment causes the Net Present Value of
Rents, to decline by 10 or more basis points (in which event the Owner
Participant shall pay the reasonable costs and expenses of such
verification process). The Lessor and the Lessee shall execute and deliver
an amendment to this Lease to reflect each adjustment under this Section
3.04.
All adjustments under this Section 3.04 shall be in compliance with
the requirements of Revenue Procedure 75-21, 1975-1 C.B. 715 and Sections
4.02(5), 4.07(1), 4.07(2) and 4.08(1) of Revenue Procedure 75-28, 1975-1 C.B.
752 and shall be structured so as to not cause the Lease to be a "disqualified
leaseback or long-term agreement" within the meaning of Section 467 of the
Code.
Section 3.05. Minimum Basic Rent. Notwithstanding any other
provisions of the Operative Agreements to the contrary, each installment of
Basic Rent due on each Rent Payment Date and not constituting an Excepted
Payment shall be, under any and all circumstances, an amount at least
sufficient to pay in full any installment of principal of and interest on the
Certificates required to be paid pursuant to the Certificates (other than
amounts becoming due on account of the exercise of remedies pursuant to
Article 17 hereof) on such Rent Payment Date.
Section 3.06. Payment to Indenture Trustee. All Rent payable by
the Lessee to the Lessor shall be paid to the Lessor c/o State Street Bank
and Trust Company, Xxx Xxxxxxxxxxxxx Xxxxx, 0xx Xxxxx, Xxxxxx,
Xxxxxxxxxxxxx 00000, Attention: Corporate Trust Department, or as the
Lessor may otherwise direct, by wire transfer of immediately available
funds in U.S. Dollars with sufficient information to identify sources and
applications of such funds no later than 10:30 a.m., New York time on the
due date of such payment; provided, however, that so long as the Lien of
the Indenture shall not have been discharged the Lessor hereby directs, and
the Lessee agrees, that all Rent (other than Excepted Payments, which shall
be paid by the Lessee directly to the Person entitled thereto) (all
without set-off or counterclaim as and to the extent provided in Article 20
hereof) shall be paid directly to the Indenture Trustee at its principal
office at 00 Xxxxx Xxxx Xxxxxx, Xxxx Xxxx Xxxx, Xxxx 00000, Attention:
Corporate Trust Department, or as the Indenture Trustee may otherwise
direct within the United States by wire transfer of immediately available
funds in U.S. Dollars no later than 10:30 a.m., New York time, on the due
date of such payment. In any case where a scheduled Rent Payment Date
shall not be a Business Day such Rent Payment Date shall be adjourned to
the next succeeding Business Day without interest thereon for the period of
such extension (provided that payment is made on such next succeeding
Business Day).
Section 3.07. Costs and Expenses. As between the Lessor and the
Lessee, all obligations under this Lease shall be done, performed and complied
with at the Lessee's cost and expense, whether or not so expressed, unless
otherwise expressly stated to the contrary.
ARTICLE 4
RENEWAL OPTIONS AND PURCHASE OPTIONS
Section 4.01. Renewal Options. (a) Election to Renew. The Lessee
shall provide the Lessor with irrevocable written notice (the "Preliminary
Notice") not more than 360 days nor less than 180 days prior to the end of the
Basic Term or any Renewal Term, as the case may be, whether it will exercise
its options either to renew this Lease pursuant to this Section 4.01 or to
purchase the Aircraft pursuant to Section 4.02(a)(B), (C) or (F) hereof, as
applicable.
Provided that (i) no Event of Default shall have occurred and be
continuing at the time of renewal, (ii) this Lease has not otherwise expired
or terminated, and (iii) the Lessee shall have timely delivered the respective
Preliminary Notice, the Lessee may, by irrevocable written notice delivered to
the Lessor not less than 90 days prior to the end of the Basic Term or any
Fixed Renewal Term, extend the Term for one Fixed Renewal Term of three years
commencing on the expiration of the Basic Term and one additional Fixed
Renewal Term of one year commencing on the expiration of the preceding Fixed
Renewal Term. The Lessee shall pay the Fixed Renewal Rent during the Fixed
Renewal Term.
In addition, provided that (i) no Event of Default shall have
occurred and be continuing at the time of renewal, (ii) this Lease has not
otherwise expired or terminated, and (iii) the Lessee shall have timely
delivered the respective Preliminary Notice, the Lessee may, on no more than
two occasions, by irrevocable written notice delivered to the Lessor not less
than 90 days prior to the end of the Basic Term or the preceding Renewal Term,
as the case may be, elect to extend the Term for a Renewal Term or further
Renewal Term commencing on the expiration of the Basic Term or the preceding
Renewal Term and ending two years thereafter for a rent equal to the
then-current Fair Market Rental of the Aircraft. The Term may be extended
pursuant to this paragraph for an aggregate of no more than four years
following the Basic Term or the Fixed Renewal Term.
(b) Terms and Conditions. Any such renewal shall be on the same
terms and conditions as provided herein, except that (i) rent for the Aircraft
due during any Renewal Term shall be payable semi-annually in arrears on the
dates corresponding to the Rent Payment Dates during such Renewal Term, and
(ii) during any Renewal Term, the Stipulated Loss Value for the Aircraft shall
as of any Stipulated Loss Value Determination Date during the Renewal Term be
equal to the greater of the Stipulated Loss Value on the last day of the Basic
Term and the Fair Market Value of the Aircraft as of the commencement of such
Renewal Term.
Section 4.02. Purchase Options. (a) Election to Purchase.
Provided that (i) this Lease has not otherwise expired or terminated, (ii) the
Lessee shall have previously given the Preliminary Notice under Section
4.01(a) hereof (in the case of paragraph (B) or (F) below or, if a Renewal
Term is available, paragraph (C) below) or the applicable notice for each
other paragraph below, as the case may be, and (iii) no Event of Default shall
have occurred and be continuing on the applicable Termination Date, the Lessee
may:
(A) by written notice delivered to the Lessor, the Indenture Trustee
and the Owner Participant, not more than 180 nor less than 90 days prior to
the applicable Rent Payment Date, elect to terminate the Lease and purchase
the Aircraft on (and only on) July 15, 2014, for, at the Lessee's option,
either (1) an amount in immediately available funds equal to the greater of
the Fair Market Value or the Termination Value on such date or (2)(i) the
assumption by the Lessee, pursuant to Section 7.11 of the Participation
Agreement, of all of the obligations of the Lessor under the Indenture, the
Certificates and Section 7.04 of the Participation Agreement and (ii) the
payment to the Lessor of an amount in immediately available funds equal to
the excess of (A) the greater of the Fair Market Value or the Termination
Value on such date over (B) the unpaid principal of the Certificates plus
accrued interest as of such date. Such notice (which shall be revocable by
the Lessee upon at least 15 days' written notice prior to the applicable
Rent Payment Date) shall either direct the Lessor to prepay the
Certificates in full on such Termination Date pursuant to Section 6.02 of
the Indenture or state that the Lessee shall exercise its option to assume
the Certificates pursuant to Section 7.11 of the Participation Agreement
and Section 2.12 of the Indenture; or
(B) by irrevocable written notice delivered to the Lessor and the
Owner Participant not less than 90 days prior to the end of the Basic Term,
elect to purchase the Aircraft on the last day of the Basic Term for an
amount in immediately available funds equal to the Fair Market Value
thereof on such date; provided, however, that the Lessee shall have paid
all Rent due and payable under this Lease on or prior to the last day of
the Basic Term; or
(C) by irrevocable written notice delivered to the Lessor and the
Owner Participant not less than 90 days prior to the end of any Renewal
Term, elect to terminate the Lease and purchase the Aircraft on the last
day of such Renewal Term at a price in immediately available funds equal to
the Fair Market Value of the Aircraft on such day; provided, however, that
the Lessee shall have paid all Rent due and payable under this Lease on or
prior to the expiration of any such Renewal Term; or
(D) exercise the purchase option in this Section 4.02(a)(D) which is
more particularly described in Schedule V hereto by reference to this
Section 4.02(a)(D) and which shall be in an amount in immediately available
funds not less than the greater of the amount specified in Schedule V
hereto and the Fair Market Value of the Aircraft; or
(E) exercise the purchase option in this Section 4.02(a)(E) which is
more particularly described in Schedule V hereto by reference to this
Section 4.02(a)(E) and which shall be in an amount in immediately available
funds not less than the greater of the amount specified in Schedule V
hereto and the Fair Market Value of the Aircraft; or
(F) by irrevocable written notice delivered to the Lessor and the
Owner Participant not less than 90 days prior to the end of the Basic Term,
elect to purchase the Aircraft on the last day of the Basic Term for the
amount in immediately available funds specified in the Ancillary Agreement
II (the "FPO Price") which is not less than the estimate set forth in the
Appraisal of the Fair Market Value of the Aircraft at the time of exercise
of the purchase option under this Section 4.02(a)(F).
The Lessee shall give the Lessor, the Owner Participant and the
Indenture Trustee not more than 180 and not less than 90 days' prior written
notice of its election to purchase pursuant to Section 4.02(a)(D) or
4.02(a)(E) hereof. Such notice shall either direct the Lessor to prepay the
Certificates in full on such Termination Date pursuant to Section 6.02 of the
Indenture or state that the Lessee shall exercise its option to assume the
Certificates pursuant to Section 7.11 of the Participation Agreement and
Section 2.12 of the Indenture. In the event that the Lessee shall have given
notice to purchase the Aircraft under Section 4.02(a)(A), 4.02(a)(D) or
4.02(a)(E) hereof and shall fail to make payment (and, if applicable, assume
the Certificates) on the applicable Termination Date, the Lease shall continue
and the Lessee shall pay to the Owner Trustee any losses, costs and expenses
of the Owner Participant incurred in connection with such failure.
(b) Terms and Conditions. If the Lessee elects to purchase the
Aircraft pursuant to Section 4.02(a) hereof, the Lessee shall pay to the
Lessor on the applicable Termination Date by wire transfer of immediately
available funds any Basic Rent payable on such Termination Date (to the extent
payable in arrears but not to the extent payable in advance), the applicable
purchase price together with any other amounts past due hereunder or due on
the applicable Termination Date and all other Supplemental Rent then due under
this Lease including, without limitation, the aggregate amount of any
Make-Whole Premium applicable to any Certificate and amounts due under the
Participation Agreement and the Tax Indemnity Agreement, whereupon (and upon
discharge of the Lien of the Indenture in accordance with Section 14.01
thereof) the Lessor will transfer to the Lessee, without recourse or warranty
(except as to the absence of Lessor's Liens), all of the Lessor's right, title
and interest in and to the Aircraft on an "as-is, where is" basis. In
connection with such transfer, the Lessee shall prepare and the Lessor shall
execute or arrange for the execution of a xxxx of sale evidencing such
transfer and such other documents as the Lessee may reasonably require. In
connection with any termination or proposed termination of this Lease, the
Lessee shall pay, at the time of the applicable Termination Date, all related
reasonable costs and expenses of the Owner Participant, the Lessor and the
Indenture Trustee.
Section 4.03. Appraisal Procedures. (a) Generally. Whenever Fair
Market Rental or Fair Market Value is required to be determined under this
Lease (unless otherwise provided herein), it shall be determined by the mutual
agreement of the Lessor and the Lessee in accordance with the definitions of
such terms in Schedule I hereto. If the Lessee and the Lessor cannot agree by
the date 60 days prior to the date for exercise of the applicable option, such
amount shall be determined by independent appraisal conducted by appraisers
selected pursuant to Section 4.03(b) hereof. At any time prior to final
determination of such amount pursuant to Section 4.03(b) hereof, the Lessee
and the Lessor shall be entitled to submit to the appraisers (and shall submit
to each other any bids submitted to the appraisers) any bids from unrelated
third parties, and such bids shall be accorded the weight such appraisers deem
appropriate. The Lessor and the Lessee shall each have an opportunity to
comment on any such bids after receiving a copy thereof.
(b) Selection. If an independent appraisal is required pursuant to
this Lease, the Lessor and the Lessee shall consult for the purpose of
appointing a mutually acceptable, qualified aircraft appraiser. If they are
unable to agree on a single appraiser within ten (10) Business Days, then the
independent appraisal shall be arrived at by mutual agreement of two
nationally recognized, independent aircraft appraisers, one chosen by the
Lessor and one chosen by the Lessee, or, if such appraisers cannot agree on
the amount of such appraisal, their appraisals shall be treated in the manner
described in Section 4.03(c) hereof with an appraisal arrived at by a third
nationally recognized, independent aircraft appraiser chosen by the mutual
consent of such two appraisers; provided, however, that if either party shall
fail to appoint an appraiser within fifteen (15) Business Days after a written
request to do so by the other party, or if such two appraisers cannot agree on
the amount of such appraisal and fail to appoint a third appraiser within
twenty (20) Business Days after the date of the appointment of the second of
such appraisers, then either party may initiate an arbitration proceeding with
the American Arbitration Association for purposes of appointing a nationally
recognized, independent aircraft appraiser.
(c) Valuation. If one appraiser is chosen, the value determined by
such appraiser shall be final and binding upon the Lessor and the Lessee. If
two appraisers are chosen, one appraiser by the Lessor and one by the Lessee,
and such appraisers agree on the value, such value shall be final and binding
upon the Lessor and the Lessee. If three appraisers shall be appointed and
the difference between the determination which is farther from the middle
determination is more than 125% of the difference between the middle
determination and the third determination, then such further determination
shall be excluded, the remaining two determinations shall be averaged, and
such average shall be final and binding upon the Lessor and the Lessee.
Otherwise, the average of all three determinations shall be final and binding
upon the Lessor and the Lessee.
(d) Rules of Appraisal. Any appraisal pursuant to this Section 4.03
shall be conducted in accordance with the commercial rules of the American
Arbitration Association as then in effect, as modified by this Section 4.03
and the definitions of Fair Market Value and Fair Market Rental. All expenses
of any independent appraisal shall be borne by the Lessee, except that each of
the Lessee and the Owner Participant (in the case of the Lessor) shall bear
any fees, costs and expenses of its respective attorneys in connection with
such appraisal except in the case of an Event of Default or in the case of a
revocation by the Lessee of its election to terminate the Lease under Section
4.02 hereof, in which case such expenses shall be borne by the Lessee.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
Section 5.01. Disclaimer of Representations and Warranties. THE
LESSEE ACKNOWLEDGES AND AGREES THAT (i) THE AIRFRAME AND EACH ENGINE IS OF
A SIZE, DESIGN, AND CAPACITY AND MANUFACTURE SELECTED BY AND ACCEPTABLE TO
THE LESSEE, (ii) THE LESSEE IS SATISFIED THAT THE AIRFRAME AND EACH ENGINE
IS SUITABLE FOR ITS PURPOSES, (iii) NEITHER THE OWNER PARTICIPANT NOR THE
LESSOR IS A MANUFACTURER OR A DEALER IN PROPERTY OF SUCH KIND AND (iv) THE
AIRFRAME AND EACH ENGINE IS LEASED HEREUNDER SUBJECT TO ALL APPLICABLE LAWS
AND GOVERNMENTAL REGULATIONS, NOW IN EFFECT OR HEREAFTER ADOPTED, WITHOUT
REPRESENTATION OR WARRANTY OF ANY KIND BY THE LESSOR (IN ITS INDIVIDUAL
CAPACITY OR AS OWNER TRUSTEE), THE INDENTURE TRUSTEE, THE OWNER PARTICIPANT
OR ANY HOLDER. THE LESSOR LEASES THE AIRFRAME AND EACH ENGINE, AS-IS,
WHERE-IS, AND NEITHER THE LESSOR (IN ITS INDIVIDUAL CAPACITY OR AS OWNER
TRUSTEE), THE INDENTURE TRUSTEE, THE OWNER PARTICIPANT NOR ANY HOLDER
MAKES, HAS MADE OR SHALL BE DEEMED TO HAVE MADE, AND EACH HAS AND WILL HAVE
BEEN DEEMED TO HAVE EXPRESSLY DISCLAIMED, ANY WARRANTY OR REPRESENTATION
EITHER EXPRESS OR IMPLIED, AS TO (A) THE TITLE, AIRWORTHINESS,
WORKMANSHIP, CONDITION, VALUE, FITNESS FOR ANY PARTICULAR USE OR PURPOSE,
DESIGN, OPERATION OR MERCHANTABILITY OF THE AIRFRAME, EACH ENGINE OR ANY
PART THEREOF, (B) THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT
DISCOVERABLE, (C) THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK
OR COPYRIGHT, (D) THE ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN
TORT, (E) THE LESSOR'S TITLE THERETO, (F) THE LESSEE'S OR ANY SUBLESSEE'S
RIGHT TO THE QUIET ENJOYMENT THEREOF (EXCEPT AS PROVIDED IN ARTICLE 18
HEREOF) OR (G) ANY OTHER MATTER WHATSOEVER. IT IS AGREED THAT ALL RISKS
INCIDENT TO THE MATTERS DISCUSSED IN THE PRECEDING SENTENCE, AS AMONG THE
LESSOR, THE INDENTURE TRUSTEE, THE OWNER PARTICIPANT AND THE LESSEE, ARE TO
BE BORNE BY THE LESSEE. The provisions of this Section 5.01 have been
negotiated by the Lessor and the Lessee and, except as provided in Article
7 of the Participation Agreement, are intended to be a complete exclusion
and negation of any representations or warranties of the Lessor, the
Indenture Trustee and the Owner Participant, express or implied, with
respect to the Airframe and each Engine that may arise pursuant to any law
now or hereafter in effect, or otherwise.
Section 5.02. No Modification of Other Warranties. None of the
provisions of this Article 5 or any other provision of this Lease shall be
deemed to amend, modify or otherwise affect the representations, warranties or
other obligations (express or implied) of the Lessee, AVSA, the Manufacturer
or the Engine Manufacturer or any of their respective subcontractors or
suppliers, with respect to the Airframe, the Engines or any Parts incorporated
or installed in or attached to the Airframe or Engines, or to release the
Lessee, AVSA, the Manufacturer or the Engine Manufacturer or any of their
respective subcontractors or suppliers from any such representation, warranty
or obligation. So long as an Event of Default shall not have occurred and be
continuing under this Lease and to the extent permitted under the applicable
warranty, patent indemnity, or service-life policy, (i) the Lessor shall
assign or otherwise make available to the Lessee such rights as the Lessor may
have under any warranty, patent indemnity, or service-life policy made or
given by the Manufacturer, AVSA or the Engine Manufacturer or any of their
respective subcontractors or suppliers, and any other claims against the
Manufacturer, AVSA and the Engine Manufacturer or any such subcontractor or
supplier with respect to the Aircraft, including all rights to demand, accept
and retain all rights in and to property (other than the Aircraft), data and
services of any kind which the Manufacturer, AVSA and the Engine Manufacturer
are obligated to provide and do provide pursuant to the Purchase Agreement or
the GTA with respect to the Aircraft; and (ii) all payments pursuant to any
manufacturer's or subcontractor's warranty, patent indemnity, or service-life
policy obligation shall be paid to the Lessee; provided that the Lessee shall
apply such payments to the cost of repair or correction of any condition of
the Aircraft which gave rise to such payments.
Section 5.03. Certain Agreements of the Lessee. The Lessee agrees
with the Lessor for the benefit of the Owner Participant that the Lessee shall
perform the agreements, covenants and indemnities of the Lessee set forth in
the Participation Agreement to the extent the same are applicable to the Owner
Participant, as fully and to the same extent and with the same force and
effect as if set forth in full in this Article 5.
ARTICLE 6
LIENS
Section 6.01. Liens. The Lessee will not directly or indirectly
create, incur, assume or suffer to exist, and will promptly, at its own cost
and expense, take such action as may be necessary to discharge, any Lien on or
with respect to the Lessor's Estate or this Lease or the Aircraft, the
Airframe or any Engine or any Part or title thereto or any interest therein
except:
(a) the respective rights of the Lessor and the Lessee as provided
in this Lease, the security interest and Lien of the Indenture and the
rights of the Owner Participant, the Lessor and the Indenture Trustee under
the Trust Agreement, the Indenture and the Participation Agreement;
(b) the rights of any sublessee or transferee or other Person
under a sublease, transfer, assignment or other such arrangement
expressly permitted by the terms of this Lease;
(c) Lessor's Liens and Indenture Trustee's Liens to the extent
required to be discharged by the Owner Participant, the Lessor or the
Indenture Trustee, as the case may be, in accordance with Section 7.03(b),
7.04(b) or 7.05(b) of the Participation Agreement;
(d) Liens for Taxes imposed against the Lessee either not yet due or
being contested in good faith by appropriate proceedings so long as such
Liens or proceedings do not involve (i) any material danger of the sale,
forfeiture or loss of the Lessor's Estate, the Aircraft, the Airframe or
any Engine or any interest therein, (ii) any material risk of civil
liabilities or (iii) any risk of the assertion of criminal charges against
the Lessor, the Owner Participant, the Indenture Trustee or any Holder;
(e) materialmen's, mechanics', workmen's, repairmen's, employees' or
other like Liens arising against the Lessee in the ordinary course of the
Lessee's business for amounts the payment of which is either not yet due or
is being contested in good faith by appropriate proceedings so long as such
Liens or proceedings do not involve any material danger of the sale,
forfeiture or loss of the Lessor's Estate, the Aircraft, the Airframe or
any Engine or any interest therein; and
(f) Liens arising from judgments or awards against the Lessee with
respect to which (i) at the time an appeal or proceeding for review is
being prosecuted in good faith and with respect to which there shall have
been secured a stay of execution pending such appeal or proceeding for
review and then only for the period of such stay and (ii) there is not, and
such proceedings do not involve, any material danger of the sale,
forfeiture or loss of the Lessor's Estate, the Aircraft, Airframe or any
Engine or any interest therein.
ARTICLE 7
AIRCRAFT REGISTRATION, MAINTENANCE AND OPERATION
Section 7.01. Registration, Maintenance and Operation. The Lessee,
at its own cost and expense, shall:
(a) upon payment by the Lessor of the Purchase Price on the Delivery
Date, cause the Aircraft to be duly registered in the name of the Lessor as
owner, pursuant to the Transportation Code and, subject to the proviso to
Section 6.03(b) of the Participation Agreement, to remain at all times duly
registered pursuant to the Transportation Code and at all times act in
accordance with the rules and regulations of the Aeronautics Authority or
the applicable laws, rules and regulations of any other jurisdiction in
which the Aircraft may then be registered in accordance with Section
6.03(b) of the Participation Agreement;
(b) maintain, inspect, service, repair, test and overhaul the
Aircraft (or cause the same to be done) so as to keep the Aircraft (and any
engine which is not an Engine but is installed on the Aircraft) in as good
operating condition as when delivered to the Lessor on the Delivery Date,
ordinary wear and tear excepted, and in any event (i) in accordance with
the applicable regulations of the Aeronautics Authority or of the
regulatory agency or body of any other jurisdiction in which the Aircraft
may then be registered pursuant to Section 6.03(b) of the Participation
Agreement and the Lessee's maintenance program approved by the Aeronautics
Authority or such agency or body, (ii) in the same manner and with the same
care used by the Lessee with respect to other A300-600 series aircraft and
CF6-80C2-A5F series engines (or other engines permitted by the terms of
this Lease to be used on the Aircraft) owned, operated or leased by the
Lessee, to the extent that the same regulations, and the Lessee's
FAA-approved maintenance program shall apply to any such aircraft and
related engines, owned or leased by the Lessee, and utilized in similar
circumstances, and without discriminating against the Aircraft, with
respect to its use, operation or maintenance in contemplation of the
expiration or termination of this Lease other than withdrawal of the
Aircraft from use and operation as is necessary to prepare the Aircraft for
return to the Lessor upon such expiration or termination, and (iii) so as
to keep the Aircraft in such condition as may be necessary to enable its
airworthiness certification to be maintained in good standing at all times
under the Transportation Code or any applicable rule or regulation of the
applicable regulatory agency or body of any other jurisdiction in which the
Aircraft may then be registered;
(c) maintain, or cause to be maintained, all records, logs and other
materials in respect of the Aircraft required by the Aeronautics Authority,
or the applicable regulatory agency or body of any other jurisdiction in
which the Aircraft may then be registered, all such records and logs to be
maintained in the English language (which records, logs and other materials
shall, as between the Lessor and the Lessee and all parties claiming
through the Lessee, be the property of the Lessor but shall become the
property of the Lessee upon purchase by the Lessee of the Aircraft pursuant
to the terms of this Lease or upon the occurrence of an Event of Loss and
the Lessee's compliance with Section 11.03 hereof);
(d) promptly furnish to the Lessor such information within the
Lessee's possession as may be required to enable the Lessor to file any
reports to be filed by the Lessor with any governmental authority because
of the Lessor's ownership of or the Owner Participant's interest in the
Aircraft;
(e) not maintain, service, repair, overhaul, use or operate the
Aircraft or any Engine in violation of any airworthiness certificate or
registration relating thereto, or in violation of any law or any license,
rule, regulation or order of or by any government or governmental authority
having jurisdiction over the Lessee or the Aircraft or any Engine or for
any purpose for which the Aircraft or any Engine is not designed; provided,
however, that the Lessee (or if a sublease shall then be in effect, the
sublessee thereunder) may in good faith contest the validity or application
of any such law, license, rule, regulation or order in any manner that does
not adversely affect the Lessor, its right, title or interest in the
Aircraft or any Engine or the interests of the Indenture Trustee or the
Owner Participant therein, or in any Operative Agreement (excluding any
interests the Lessee agrees are indemnified for under the Tax Indemnity
Agreement) and such contest or non-compliance will not result in any
material risk of loss, forfeiture or damage to the Aircraft or in any risk
of criminal liability to the Lessor, the Indenture Trustee or the Owner
Participant; and if any such law, license, rule, regulation or order
requires alteration of the Aircraft or any Engine, the Lessee will conform
the same therewith at its own cost and expense and will maintain the
Aircraft or any Engine in compliance with such law, license, rule,
regulation or order; and
(f) not operate or locate the Airframe or any Engine, or suffer the
Airframe or any Engine to be operated or located in any area excluded from
coverage by any insurance policy required by the terms of Article 13
hereof, unless the Lessee has obtained, prior to the operation or location
of the Airframe or any Engine in such area, indemnification from the
Government, or other insurance, against the risks and in the amounts
required by, and in compliance with, Article 13 hereof covering such area
(and naming the Lessor, or so long as this Lease is assigned to the
Indenture Trustee, the Indenture Trustee, as sole loss payee in respect of
indemnification or insurance payable in respect of casualties to the
Aircraft) or unless the Aircraft is only temporarily located in such area
as a result of an isolated occurrence attributable to a hijacking, medical
emergency, equipment malfunction, weather conditions, navigational error or
other similar unforeseen circumstances and the Lessee is using its good
faith efforts to remove the Aircraft from such area.
The Lessee may, at any time during the Term, install an engine or
engines on the Airframe and operate the Aircraft with such engine or engines
installed thereon and the Lessor shall have no right, title or interest in and
to any such engine until such time, if any, that such engine is returned to
the Lessor under Section 12.02 hereof.
Section 7.02. Possession and Permitted Transfer and Sublease. (a)
Conditions. The Lessee will not, without the prior written consent of the
Lessor, sublease or otherwise in any manner deliver, transfer or relinquish
possession of the Aircraft, the Airframe or any Engine or install any Engine,
or permit any Engine to be installed, on any airframe other than the Airframe;
provided, that, so long as (i) in the case of clause (i) below, no Payment
Default, Bankruptcy Default or Event of Default shall have occurred and be
continuing at the commencement of such sublease, (ii) the Lien of the
Indenture is not impaired thereby, (iii) all applicable governmental approvals
in connection therewith have been obtained and (iv) the Lessee shall comply
with the provisions of Article 13 hereof, the Lessee may without the prior
written consent of the Lessor:
(i) so long as the sublessee is generally meeting its material
obligations as they come due and is not subject to a proceeding or final
order under applicable bankruptcy, insolvency or reorganization laws on
the date the sublease is entered into and with 30 days' prior written
notice to the Lessor and the Owner Participant, (A) sublease the
Aircraft or any Engine to a U.S. Air Carrier, (B) after December 31,
2004 sublease the Aircraft or any Engine to an Air Carrier which is
principally based in and domiciled in one of the countries listed on
Schedule III of the Participation Agreement, or (C) after December 31,
2004 sublease the Aircraft or any Engine to any other Air Carrier not
described in this Section which shall be reasonably acceptable to the
Lessor as evidenced by its prior written consent; provided, that, with
respect to clauses (B) and (C) above, at the time of any such sublease
the United States of America maintains normal diplomatic relations with
the country in which such Air Carrier is principally based and domiciled
and provided further that such country shall not then be experiencing
war. In the case of any sublease (x) such sublease shall include the
provisions required by Section 7.02(b) hereof and expressly require the
sublessee to operate and maintain the Aircraft in compliance with the
applicable provisions of this Lease, (y) such sublease shall provide
that such sublessee will not transfer possession of, or any other rights
to, the subleased Airframe or any Engine to any other Person without the
prior written consent of the Lessor (except as permitted by
subparagraphs (ii) through (viii) below and except that, in the case of
subparagraph (iv), possession of the Aircraft may only be transferred at
the direction of the Lessee) and (z) such sublease shall expire not
later than the expiration of the Basic Term or any Renewal Term then in
effect hereunder. Prior to any sublease to an Air Carrier permitted
under Section 7.02(a)(i)(C) above: (I) the maintenance standards of the
aeronautical authority of the country of domicile or principal operation
of the sublessee taken as a whole shall not be materially less stringent
than those of the FAA or at least comparable to those, taken as a whole,
required by the central civil aviation authority of any of the United
Kingdom, France, Canada, Japan or Germany; (II) the Lessee will provide
opinions of counsel (such counsel and the form and substance of such
opinions to be reasonably satisfactory to the Lessor) with respect to
(A) the legality, validity and enforceability of the Operative
Agreements and the sublease in such country, (B) that the laws of such
country require fair compensation by the government of such country
payable in a currency freely convertible into U.S. dollars for the loss
of the use of or title to the Aircraft in the event of a requisition of
use or title by such government, (C) the Lessor's title to the subleased
equipment will be recognized, (D) the required agreement of such foreign
air carrier that its rights under the sublease are subject and
subordinate to all the terms of this Lease is enforceable against such
foreign air carrier under applicable law (subject only to customary
exceptions to enforceability), (E) that it is not necessary for the
Owner Participant, the Lessor or the Indenture Trustee to register or
qualify to do business in such country as a result of the proposed
sublease or in order for the Owner Participant, the Lessor or the
Indenture Trustee to enforce the terms and conditions of the Operative
Agreements, (F) there is no tort liability of the owner of an aircraft
not in possession thereof or of Persons lending money to such an owner
for the purchase of an aircraft, under the laws of such jurisdiction
other than tort liability which might reasonably have been imposed on
such owner or Persons under the laws of the United States or any state
thereof (it being understood that, in the event that such latter opinion
cannot be given in a form satisfactory to the Lessor, such opinion shall
be waived if insurance reasonably satisfactory to the Lessor is
available to cover such risk to the Owner Participant and is provided at
or before the execution of such a sublease, at the Lessee's cost and
expense), (G) that there exist no possessory rights in favor of such
sublessee under the laws of such country which would, upon bankruptcy or
insolvency of the Lessee (and assuming that at such time such sublessee
is not bankrupt or insolvent) or of the sublessee, prevent the return of
the Aircraft in accordance with the terms of this Lease and (H) all
necessary governmental approvals required for the subleased equipment,
the Airframe or any Engine, as the case may be, to be imported and, to
the extent reasonably obtainable, exported from the applicable country
of domicile upon repossession of such subleased equipment by the Lessor
(and the Lessee as sublessor), shall have been procured at the Lessee's
own cost and expense by the Lessee prior to commencement of any such
sublease; (III) duties and tariffs, if applicable, shall be paid for by
the Lessee; and (IV) the Lessee shall effect or cause to be effected at
the Lessee's own cost and expense all recordings and filings that are
required, or reasonably requested by the Lessor, to continue the
Lessor's right, title and interest to the Aircraft and rights under the
Lease (and sublease) and to perfect and maintain the priority of the
Lien of the Indenture;
(ii) subject the Engines or permit any Engine to be subjected to
normal interchange or pooling agreements or arrangements, in each case
customary in the airline industry, entered into by the Lessee in the
ordinary course of its business with a vendor domiciled in the United
States or in a country with which the United States maintains normal
diplomatic relations (and which is not experiencing war) or (x) any U.S.
Air Carrier or (y) any foreign Air Carrier which is (I) organized in a
country listed on Schedule III to the Participation Agreement, (II)
organized in a country with which the United States then maintains normal
diplomatic relations, (III) is a party to the Convention on the
International Recognition of Rights in Aircraft or (IV) otherwise provides
equivalent protection to owners, lessors and mortgagees of aircraft;
provided that no transfer of the registration of or any Engine shall be
effected and that throughout the period that any Engine is subjected to
such interchange or pooling agreement or arrangement the terms of this
Lease shall be observed; and provided, further, that no such agreement or
arrangement contemplates or requires the transfer of title to or
registration of any Engine, and if the Lessor's title to any Engine shall
nonetheless be divested under any such agreement or arrangement, such
divestiture shall be deemed to be an Event of Loss with respect to such
Engine and the Lessee shall comply with Section 11.04 of this Lease in
respect of such Engine;
(iii) deliver or permit the delivery of possession of the Airframe or
any Engine to their respective manufacturers or certified maintenance
providers for testing, service, repair, maintenance or overhaul work or for
alterations or modifications in or additions to the Airframe or any Engine
to the extent required or permitted by the terms of Article 9 hereof;
(iv) transfer or permit the transfer of possession of the Airframe
or any Engine pursuant to a contract or agreement with the Government or
pursuant to the Civil Reserve Air Fleet Program administrated pursuant to
Executive Order No. 12056, as amended (the "CRAF Program"), or any similar
or substitute programs of the Government, so long as the Lessee (or any
permitted sublessee or transferee pursuant to this Section) shall promptly
notify the Lessor upon such transfer of possession and provide the Lessor
and the Indenture Trustee with the name and address of the Contracting
Officer or representative of the Military Aircraft Command of the United
States Air Force to whom notices must be given in respect of the Aircraft;
(v) install or permit the installation of an Engine on an airframe
which is owned by the Lessee or any permitted sublessee free and clear of
all Liens, except (A) Liens of the type permitted under Section 6.01
hereof, (B) Liens which apply only to the engines (other than an Engine),
appliances, parts, instruments, appurtenances, accessories, furnishings and
other equipment (other than Parts) installed on such airframe and which do
not apply to substantially all of such airframe and (C) the rights of an
Air Carrier under normal interchange or pooling agreements which are
customary in the airline industry and do not contemplate or require the
transfer of title to such airframe or the engines installed on it;
(vi) install or permit the installation of an Engine on an airframe
leased to the Lessee or any permitted sublessee or transferee or purchased
by the Lessee subject to a conditional sale or other security agreement,
provided that (A) such lease, conditional sale or other security agreement
does not cover the Engine so installed and the Lessor shall have received
from the lessor, conditional vendor or secured party of such airframe an
agreement (which may be the lease or conditional sale or other security
agreement covering such airframe), whereby such lessor, conditional vendor
or secured party expressly agrees that neither it nor its successors or
assigns will acquire or claim any right, title or interest in any Engine
by reason of such Engine being installed on such airframe at any time, and
(B) such airframe is and remains free and clear of all Liens except the
rights of the parties to the lease or conditional sale or other security
agreement covering such airframe and Liens of the type permitted by
subparagraph (v) of this Section 7.02(a);
(vii) install or permit the installation of an Engine on an airframe
owned by the Lessee, leased to the Lessee or purchased by the Lessee
subject to a conditional sale or other security agreement under
circumstances where neither subparagraph (v) nor subparagraph (vi) of this
Section 7.02(a) is applicable, provided that such installation shall be
deemed an Event of Loss with respect to such Engine and the Lessee shall
comply with Section 11.04 hereof in respect of such Engine, the Lessor not
intending to waive any right, title or interest it may have to or in such
Engine under applicable law until compliance by the Lessee with such
Section 11.04; and
(viii) enter into a wet lease under which the Lessee has effective
control of the Aircraft in the ordinary course of the Lessee's business
which shall not be considered a transfer of possession hereunder, provided
that the Lessee's obligations under this Lease shall continue in full force
and effect notwithstanding any such wet lease.
(b) Rights of Transferee. Notwithstanding the provisions of Section
7.02(a) hereof, the rights of any transferee who takes possession of the
Aircraft, the Airframe or any Engine by reason of a transfer permitted by
Section 7.02(a) hereof shall be subject and subordinate to, and any sublease
or wet lease permitted by Section 7.02(a) hereof shall be made expressly
subject and subordinate to, all the terms of this Lease, including, without
limitation, the Lessor's right to repossession pursuant to Article 17 hereof
and to avoid such sublease upon such repossession, and the Lessee shall remain
primarily liable for the performance of all the terms of this Lease and the
other Operative Agreements to the same extent as if such sublease or transfer
had not occurred. Any such sublease shall include appropriate provisions for
the maintenance, inspection (as required by Section 14.01 hereof), operation,
use and insurance of the Aircraft, the Airframe and each Engine in accordance
with the provisions of this Lease and shall provide assurances reasonably
satisfactory to the Lessor that the sublessee may not further sublease any of
such equipment. The Lessee shall promptly provide the Lessor, the Owner
Participant and the Indenture Trustee a copy of any sublease and, prior to
execution and delivery of any sublease deliver to the Lessor all other
documents (including all insurance certificates evidencing compliance with
this Lease) required hereunder relating to such sublease or transfer of
possession.
(c) No Release of Lessee/Costs of Subleasing. No sublease,
interchange or pooling agreement or other relinquishment of possession
permitted under this Article 7 of any of the Aircraft, the Airframe or any
Engine shall in any way discharge or diminish any of the Lessee's obligations
to the Lessor, the Indenture Trustee or the Owner Participant under this
Lease, the Participation Agreement or the Tax Indemnity Agreement or
constitute a waiver of any of the Lessor's rights and remedies hereunder or
thereunder or extend beyond the end of the Term. Subject to the terms and
conditions of this Lease, the Lessee will retain the right to cure any default
by any sublessee permitted pursuant to this Section 7.02 and to terminate such
sublease upon such default. The Lessee shall pay all costs of the Owner
Participant, the Indenture Trustee and the Lessor incurred in connection with
any subleasing or proposed subleasing.
Section 7.03. Insignia. (a) Nameplate. On or prior to the
Delivery Date or as soon thereafter as possible, the Lessee agrees to affix to
and maintain in the cockpit of the Airframe, in a clearly visible location,
and on each Engine, a clearly visible metal nameplate bearing the inscription
"STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, AS
OWNER TRUSTEE, OWNER AND LESSOR," and, so long as such Airframe or Engines
shall be subject to the Lien of the Indenture, the additional inscription
"FIRST SECURITY BANK, NATIONAL ASSOCIATION, AS INDENTURE TRUSTEE, MORTGAGEE"
(such nameplate to be replaced, if necessary, from time to time, with a
nameplate reflecting the name of any successor Lessor or successor Indenture
Trustee, in each case as permitted by the Operative Agreements).
(b) Lessee's Marks. Except as provided in Section 7.03(a)
hereof, the Lessee will not allow the name of any Person to be placed on
the Airframe or on any Engine as a designation that might be interpreted as
a claim of ownership; provided, that during the Term, the Lessee may cause
the Aircraft to be lettered "Federal Express Corporation" or may letter,
paint or xxxx it in some other appropriate manner for convenience of
identification of the Lessee's interest or the interest of any permitted
sublessee (including but not limited to the Lessee's or any permitted
sublessee's customary colors and insignia) and to bear insignia plates or
other markings identifying the supplier or manufacturer of the Airframe or
the Engines or any Parts of either.
ARTICLE 8
REPLACEMENT AND POOLING OF PARTS
Section 8.01. Replacement of Parts. (a) Generally. The Lessee, at
its own cost and expense, will replace or cause to be replaced as promptly as
practicable all Parts which may from time to time be incorporated or installed
in or attached to the Airframe or any Engine and which may from time to time
become worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond
repair or permanently rendered unfit for use for any reason, except as
otherwise provided in Section 9.01 or 9.02 hereof. In addition, the Lessee
may, at its own cost and expense, remove or cause to be removed in the
ordinary course of maintenance, service, repair, overhaul or testing, any
Parts, whether or not worn out, lost, stolen, destroyed, seized, confiscated,
damaged beyond repair or permanently rendered unfit for use, provided that the
Lessee, except as otherwise provided in Sections 9.01 or 9.02 hereof, will, at
its own cost and expense, replace such Parts as promptly as practicable. All
replacement parts shall be free and clear of Liens (except for pooling
arrangements to the extent permitted by Section 8.02 hereof and Liens
permitted under Section 6.01 hereof, other than clauses (d) and (f) thereof)
and shall be in at least as good operating condition as, and shall have a
value and utility at least equal to, the Parts replaced, and in any event not
less than the condition and repair required to be maintained by the provisions
of this Lease.
(b) Title. All Parts at any time removed from the Airframe or any
Engine shall remain the property of the Lessor until such Parts shall be
replaced by parts which have been incorporated or installed in or attached to
the Airframe or such Engine and which meet the requirements for replacement
parts specified in Section 8.01(a) hereof. Immediately upon any replacement
part (other than, to the extent permitted by Section 8.02 hereof, a
replacement part subject to a pooling arrangement) becoming incorporated or
installed in or attached to the Airframe or any Engine, and without further
act:
(i) title to the replaced Part shall vest in the Lessee, free and
clear of all rights of the Lessor, and such replaced Part shall no longer
be deemed a Part under this Lease;
(ii) title to such replacement part shall vest in the Lessor free
and clear of all Liens except for Liens permitted by Section 6.01 hereof
(other than clauses (d) and (f) thereof) and shall thereupon be and become
a Part; and
(iii) such replacement part shall become subject to this Lease and to
the Lien of the Indenture, and shall be deemed part of the Airframe or such
Engine for all purposes to the same extent as the Parts originally
incorporated or installed in or attached to the Airframe or such Engine.
Section 8.02. Pooling of Parts. Any Part removed from the Airframe
or any Engine as permitted in Section 8.01(a) hereof may be subjected by the
Lessee to any normal pooling arrangement customary in the U.S. airline
industry and entered into with vendors and other Air Carriers in the ordinary
course of the Lessee's business, provided that the part replacing such removed
Part shall be incorporated or installed in or attached to the Airframe or such
Engine in accordance with Section 8 hereof, as promptly as practicable after
the removal of such removed Part. In addition, any replacement part when
incorporated or installed in or attached to the Airframe or any Engine in
accordance with Section 8.01(a) hereof may be owned by another Air Carrier
subject to such normal pooling arrangement, provided that the Lessee, at its
own cost and expense and as promptly as possible, either:
(a) causes title to such replacement part to vest in the Lessor in
accordance with Section 8.01(b) hereof by the Lessee acquiring title to
such replacement part for the benefit of, and transferring such title to,
the Lessor free and clear of all Liens (other than Liens permitted under
Section 6.01 hereof (other than clauses (d) and (f) thereof)); or
(b) replaces such replacement part by incorporating or installing in
or attaching to the Airframe or such Engine a further replacement part
owned by the Lessee free and clear of all Liens (other than Liens permitted
under Section 6.01 hereof (other than clauses (d) and (f) thereof)) and by
causing title to such further replacement part to vest in the Lessor in
accordance with Section 8.01(b) hereof.
All such replacement parts and further replacement parts shall meet
the standards set forth in the last sentence of Section 8.01(a) hereof.
ARTICLE 9
ALTERATIONS, MODIFICATIONS AND ADDITIONS
Section 9.01. Required Alterations and Modifications. The Lessee,
at its own cost and expense, shall make or cause to be made such alterations
and modifications in and additions to the Airframe and each Engine as may be
required from time to time to meet the applicable requirements of the
Aeronautics Authority or any other governmental authority with jurisdiction
over the Lessee's operations and aircraft; provided, however, that the Lessee
or sublessee, as the case may be, may in good faith contest the validity or
application of any such requirements in any reasonable manner that does not
involve any material risk of civil liabilities (unless indemnified by the
Lessee) or any risk of criminal penalties being imposed on or against the
Indenture Trustee, the Owner Participant or the Lessor, that does not involve
any material risk or danger of loss, forfeiture or sale of the Aircraft or any
Engine and that does not adversely affect the Lessor, its title or interest in
the Aircraft or any Engine, the first and prior perfected Lien and security
interest of the Indenture, or the interests of the Indenture Trustee or the
Owner Participant in the Airframe or any Engine, or in any Operative Agreement
(excluding any interests the Lessee agrees are indemnified for under the Tax
Indemnity Agreement). All such alterations, modifications or additions shall
be made on or before the date mandated therefor, taking into account
authorized postponements resulting from a contest or otherwise and shall be
made at such time and in such a manner so as not to discriminate against the
Aircraft whether by reason of its leased status or otherwise.
Section 9.02. Other Alterations and Modifications. (a) Generally.
The Lessee, at its own cost and expense, may from time to time make such
alterations and modifications in and additions to the Airframe or any Engine
as the Lessee may deem desirable in the proper conduct of its business,
including, without limitation, removal of Obsolete Parts in its usual course
of maintenance, provided that no such alteration, modification, addition or
removal, individually or in the aggregate, shall create any adverse tax
consequences for the Owner Participant not otherwise indemnified for, diminish
the value, remaining useful life, or utility of the Airframe or the value or
utility of any Engine or impair its condition or state of airworthiness below
its value, remaining useful life (in the case of the Airframe only), utility,
condition and state of airworthiness immediately prior to such alteration,
modification, addition or removal, assuming that the Airframe or such Engine
was then in the condition and state of airworthiness required to be maintained
by the terms of this Lease, or cause the Airframe or any Engine to become
"limited use property" within the meaning of Revenue Procedure 76-30, 1976-2
C.B. 647, except that the value (but not the remaining useful life, utility,
condition or airworthiness) of the Aircraft may be reduced by the value, if
any, of any such Obsolete Parts which shall have been removed; provided that
in no event shall the aggregate value of all such Obsolete Parts which shall
have been so removed and not replaced exceed $500,000.
(b) Title to Installed Parts. Title to each part incorporated or
installed in or attached or added to the Airframe or any Engine as the result
of any alteration, modification, removal or addition made pursuant to Section
9.01 or 9.02(a) hereof shall without further act vest in the Lessor and become
subject to this Lease; provided, however, that the Lessee may remove any such
Part at any time during the Term if:
(i) such Part is in addition to, and not in replacement of or
substitution for, any Part originally incorporated or installed in or
attached or added to the Airframe or such Engine on the Delivery Date or
any Part in replacement of, or substitution for, any such Part;
(ii) such Part is not required to be incorporated or installed in or
attached or added to the Airframe or such Engine pursuant to the terms of
Article 7 hereof or the first sentence of Section 9.01 hereof; and
(iii) such Part can be removed from the Airframe or such Engine
without (A) causing material damage to the Airframe or such Engine (it
being understood that the Lessee shall repair any damage caused by a
permitted removal) or diminishing or impairing the value, utility,
condition or state of airworthiness or remaining useful life of the
Airframe required to be maintained by the terms of this Lease or (B)
diminishing the value, utility or remaining useful life (in the case of the
Airframe) or the value and utility (in the case of such Engine) which the
Airframe or such Engine would have had at such time had such alteration,
modification, removal or addition not occurred, assuming the Airframe or
such Engine was then in the condition required to be maintained by the
terms of this Lease.
(c) Title to Removed Parts. Upon the removal by the Lessee of any
such Part as provided in subsection (b) above, title thereto shall, without
further act, vest in the Lessee and such Part shall no longer be deemed a
Part. Any Part not removed by the Lessee as above provided prior to the
return of the Aircraft to the Lessor hereunder shall remain the property of
the Lessor and subject to this Lease.
ARTICLE 10
VOLUNTARY TERMINATION
Section 10.01. Right of Termination Upon Obsolescence or Surplus.
(a) Option to Terminate. So long as no Event of Default shall have occurred
and be continuing, the Lessee shall have the right, at its option, on any
Termination Date, on no more than 180 days' and at least 90 days' irrevocable
(except as provided herein) prior written notice (which notice shall state the
Proposed Termination Date) to the Lessor and the Owner Participant to
terminate this Lease as of a Termination Date if the Aircraft shall have
become obsolete or surplus to the operations of the Lessee; provided that the
Lessee shall have furnished to the Lessor, the Indenture Trustee and the Owner
Participant a certificate of the Lessee's President, Chief Executive Officer,
Chief Financial Officer, Chief Operating Officer, Treasurer or Assistant
Treasurer stating the determination of the Lessee that the Aircraft is
obsolete or surplus to its needs. Unless the Lessor has elected to retain the
Aircraft as herein provided, the Lessee shall have the right on one occasion
to revoke its notice of termination no later than the Business Day prior to
the date 15 days prior to the Proposed Termination Date whereupon this Lease
shall continue in full force and effect.
(b) Sale Procedure. During the period from the giving of notice
pursuant to Section 10.01(a) hereof until the Proposed Termination Date,
the Lessee, as non-exclusive agent for the Lessor, shall use its reasonable
efforts to obtain bids for the cash purchase on the Proposed Termination
Date (or such earlier date as shall be consented to in writing by the
Lessor) of the Aircraft. On the Proposed Termination Date, the Engines
shall be installed on the Airframe (provided that the Airframe may be sold
with engines meeting the requirements set forth herein for Replacement
Engines in lieu of the Engines so long as the aggregate number of Engines
and Replacement Engines being sold with the Airframe equals two). The
Lessor may, if it desires to do so, seek to obtain such bids. The Owner
Participant shall not inspect any bids received by the Lessee with respect
to the Aircraft, unless the Owner Participant has given to the Lessee
binding and irrevocable notice that neither the Owner Participant nor any
of its Affiliates nor any Person acting for the Owner Participant or such
Affiliate will submit a bid for the purchase of the Aircraft and if such
notice has been given, the Lessee will provide the Lessor with copies of
bids received by the Lessee. No bid may be submitted by the Lessee or any
Person affiliated with the Lessee (or with whom or which there is any
arrangement or understanding as to the subsequent use of the Aircraft by
the Lessee or any of its Affiliates) or any agent or Person acting on
behalf of the Lessee. The Lessee may reject any bid which is less than the
sum of the applicable Termination Value, the aggregate amount of any Make-
Whole Premium and all other expenses incurred by the Lessor, the Owner
Participant and the Indenture Trustee in connection with the sale. Subject
to the provisions of Section 10.02 hereof, on the Proposed Termination Date
or such earlier date of sale as shall be consented to in writing by the
Lessor, the Lessee shall deliver the Airframe which shall have the Engines
installed on it (provided that the Airframe may be delivered with installed
engines meeting the requirements set forth herein for Replacement Engines
in lieu of the Engines so long as the aggregate number of Engines and
Replacement Engines being delivered with the Airframe equals two and the
Lessee shall comply with the provisions of Section 11.04 hereof as if an
Event of Loss occurred with regard to the Engines) to the bidder which
shall have submitted the highest cash bid (whether certified to the Lessor
by the Lessee or directly received by the Lessor and certified to the
Lessee) in the same manner as if delivery were made to the Lessor pursuant
to Article 12 hereof, at a location specified by such bidder, and shall
duly transfer to the Lessor title to any such engines not owned by the
Lessor, and the Lessor shall, upon payment in full to the Lessor of the bid
price and all amounts due and owing pursuant to Section 10.01(c) hereof by
wire transfer of immediately available funds and upon discharge of the Lien
of the Indenture in accordance with Article XIV thereof, sell the Airframe
and Engines or engines to such bidder without recourse or warranty (except
as to the absence of Lessor's Liens).
(c) Payments to the Lessor. The total selling price realized at a
sale pursuant to Section 10.01(b) hereof net of all expenses of the sale
(including commissions and any sales or transfer taxes) (the "Net Sales
Price") shall be retained by the Lessor (or the Indenture Trustee as long as
the Indenture is in force) and, in addition, on or before the Proposed
Termination Date, the Lessee shall pay to the Lessor (or the Indenture Trustee
as long as the Indenture is in force), by wire transfer of immediately
available funds, the sum of:
(i) the excess, if any, of the Termination Value for the Aircraft
computed as of the Proposed Termination Date over the Net Sales Price; plus
(ii) the installment of Basic Rent due with respect to the Aircraft
on the Proposed Termination Date to the extent payable in arrears but not
to the extent payable in advance; plus
(iii) all other amounts then due and payable by the Lessee
(including, without limitation, the aggregate amount of any Make-Whole
Premium) under this Lease and any other Operative Agreement.
(d) Transfer of Uninstalled Engines. Upon payment of the amounts
described in Section 10.01(c) hereof and upon transfer to the Lessor of title
to engines which have been returned in lieu of Engines as provided in Section
10.01(b) hereof, and upon payment of all other amounts then due under this
Lease, the Lessor will transfer to the Lessee, without recourse or warranty
(except as to the absence of Lessor's Liens), all of the Lessor's right, title
and interest in and to any Engines which were replaced with engines pursuant
to Section 10.01(b) hereof, and shall deliver to the Lessee such instrument as
the Lessor shall have received from the Indenture Trustee releasing such
Engines from the Lien of the Indenture.
(e) Limitation on the Lessor's Duties. The Lessor shall be under no
duty to solicit bids, to inquire into the efforts of the Lessee to obtain bids
or otherwise to take any action in connection with any such sale other than to
transfer to the purchaser named in the highest cash bid (determined as
described in Section 10.01(b) above) as referred to above (or to such
purchaser and to the Lessee, as the case may be), without recourse or warranty
(except as to the absence of Lessor's Liens), all of the Lessor's right, title
and interest in and to the Aircraft, against receipt by the Lessor of the
payments provided for in Section 10.01(c) hereof.
(f) Termination of the Lessee's Obligations. Upon the sale of the
Aircraft pursuant to this Section 10.01 and upon compliance by the Lessee with
the further provisions of this Article 10, the obligation of the Lessee to pay
Basic Rent with respect to the Aircraft shall cease for any Rent Payment Date
occurring after the Proposed Termination Date and the Term shall end effective
as of the Proposed Termination Date. If no sale shall have occurred on or
before the Proposed Termination Date, this Lease shall continue in full force
and effect and, for purposes of Section 10.01(a) hereof, it shall be deemed
that the Lessee has rescinded its notice of termination, and the Lessee shall
pay the expenses incurred by the Lessor, the Indenture Trustee and the Owner
Participant in connection with the proposed sale.
Section 10.02. Retention of Aircraft by the Lessor. (a) Generally.
Notwithstanding Section 10.01 hereof, the Lessor may, subject to Section
10.02(b) hereof, elect to retain the Aircraft after receipt of the Lessee's
notice of termination given in accordance with Section 10.01(a) hereof, by
giving the Lessee and the Indenture Trustee written irrevocable notice of such
election not less than sixty (60) days prior to the Proposed Termination Date.
If the Lessor so elects, the Lessee shall pay to the Lessor on the Proposed
Termination Date, by wire transfer of immediately available funds the sum of:
(i) the installment of Basic Rent due with respect to the Aircraft on
the Proposed Termination Date to the extent payable in arrears but not to
the extent payable in advance; plus
(ii) all other amounts then due and payable by the Lessee under this
Lease and any other Operative Agreement, including the aggregate amount of
any Make-Whole Premium, on or prior to the Proposed Termination Date.
(b) Payment of the Certificates. It shall be an absolute condition
precedent to the Lessor's right to retain the Aircraft and to the termination
of the Term pursuant to this Section 10.02 that the Lessor (or the Lessee to
the extent set forth in Section 10.02(a) hereof) shall have paid to the
Holders and such Holders shall have received the entire outstanding principal
amount of, the aggregate amount of any Make-Whole Premium and accrued interest
on the Certificates on the Proposed Termination Date and all other sums due
and owing to the Indenture Trustee and the Holders on or prior to the Proposed
Termination Date under this Lease, the Indenture or any other Operative
Agreement.
(c) Delivery of Aircraft to Lessor; Title to Engines. If the
Lessor elects to retain the Aircraft pursuant to this Section 10.02, the
Lessee shall deliver the Airframe and the Engines (provided that the
Airframe may be delivered with engines meeting the requirements set forth
herein for Replacement Engines in lieu of the Engines so long as the
aggregate number of Engines and engines being delivered with the Airframe
equals two and provided that the other requirements of Section 11.04 hereof
are met as if an Event of Loss has occurred with regard to the Engines) to
the Lessor in the same manner as if delivery were made to the Lessor
pursuant to Article 12 hereof, and shall duly transfer to the Lessor right,
title and interest to any such engines not owned by the Lessor, all in
accordance with Article 12 hereof. Upon such delivery of the Airframe and
Engines or engines to the Lessor and payment by the Lessee of any amounts
required to be paid by the Lessee pursuant to Section 10.02(a) hereof, the
Lessor will transfer to the Lessee, without recourse or warranty (except as
to the absence of Lessor's Liens), all of the Lessor's right, title and
interest in and to any Engines which were replaced by engines pursuant to
this Section 10.02(c), and shall deliver to the Lessee such instrument as
the Lessor shall have received from the Indenture Trustee releasing such
Engines from the Lien of the Indenture.
(d) Termination of the Lessee's Obligations. Upon compliance by the
Lessor and the Lessee with the provisions of this Section 10.02 and upon
compliance by the Lessee with the further provisions of this Article 10, the
obligation of the Lessee to pay Basic Rent with respect to the Aircraft shall
cease for any Rent Payment Date occurring after the Proposed Termination Date
and the Term shall end effective as of the Termination Date.
Section 10.03. Voluntary Termination as to Engines. The Lessee
shall have the right at its option and at any time, on at least thirty (30)
days' prior written notice to the Lessor, to terminate this Lease with respect
to any Engine not then installed or held for use on the Airframe, provided
that prior to the date of such termination, the Lessee shall comply with the
terms of Section 11.04 hereof to the same extent as if an Event of Loss had
occurred with respect to such Engine.
ARTICLE 11
LOSS, DESTRUCTION, REQUISITION
Section 11.01. Lessee's Election Rights. The Lessee shall notify
the Lessor, the Indenture Trustee and the Owner Participant as soon as
practicable but in no event more than 10 Business Days following the
occurrence of an event which constitutes, or would with the passage of time
constitute, an Event of Loss with respect to the Airframe or with respect to
the Airframe and the Engines or engines then installed on the Airframe. By
written notice to the Lessor, the Indenture Trustee and the Owner Participant
delivered within 60 days of the occurrence of any Event of Loss, the Lessee
shall have the right to elect the alternative set forth in Section 11.02
hereof or the alternative set forth in Section 11.03 hereof. The Lessee's
failure to make such election within said 60-day period shall be deemed to be
an election of the alternative set forth in Section 11.02 hereof.
Section 11.02. Payment of Stipulated Loss Value. (a) The Lessee
shall, if it has so elected or is deemed to have so elected under Section
11.01 hereof, pay to the Lessor, by wire transfer of immediately available
funds on the earlier of (i) the fifteenth day following receipt in full of
insurance proceeds or requisition proceeds, described in Section 11.05 hereof,
in connection with such Event of Loss or if later, the 15th day following the
end of the 60-day election period referred to in Section 11.01 hereof and (ii)
the 120th day after the occurrence of such Event of Loss (the earlier of such
dates being referred to herein as the "Loss Payment Date"), the sum of (A) the
Stipulated Loss Value for the Aircraft, determined as of the Stipulated Loss
Value Determination Date next succeeding the Loss Payment Date (or, if the
Loss Payment Date occurs on a Stipulated Loss Value Determination Date,
determined as of such Stipulated Loss Value Determination Date), plus (B) any
and all Basic Rent due and payable on the relevant Stipulated Loss Value
Determination Date to the extent payable in arrears but not to the extent
payable in advance, plus (C) any and all Supplemental Rent due and payable on
or prior to such Loss Payment Date, plus (D) all other amounts (including
Basic Rent due and payable with respect to Rent Payment Dates occurring prior
to such Stipulated Loss Value Determination Date and unpaid) due and payable
by the Lessee hereunder or owing by the Lessee or the Owner Trustee to the
Indenture Trustee or the Holders under the Indenture and the other Operative
Agreements, plus (E) any reasonable out-of-pocket expenses incurred in
connection with such Event of Loss and the related prepayment of the
Certificates by the Lessor, the Owner Participant and the Indenture Trustee;
provided that in no event shall the Holders not be paid in full.
(b) Termination of Lease; Title Transfer. Upon payment in full of
the amounts due pursuant to Section 11.02(a) hereof, the obligation of the
Lessee to pay Basic Rent on any Rent Payment Date occurring subsequent to the
payment of such amounts shall terminate and the Term shall end. Further, upon
such payment, the Lessor will transfer to the Lessee, without recourse or
warranty (except as to the absence of Lessor's Liens), all of the Lessor's
right, title and interest, if any, in and to the Airframe, Engines and engines
with respect to which such Event of Loss occurred, as well as all of the
Lessor's right, title and interest in and to any Engines constituting part of
the Aircraft but not installed on the Airframe when such Event of Loss
occurred, and will deliver to the Lessee such instrument as the Lessor shall
have received from the Indenture Trustee, releasing the Aircraft from the Lien
of the Indenture.
Section 11.03. Replacement of Airframe and Engines. (a) Generally.
So long as no Payment Default, Bankruptcy Default or Event of Default shall
have occurred and be continuing, and subject to Section 11.01 hereof and
provided that the Lessee shall have reimbursed the reasonable out-of-pocket
costs and expenses (including, without limitation, reasonable counsel fees and
disbursements) of the Lessor, the Owner Participant, the Indenture Trustee and
the Holders (to the extent of the reasonable fees and expenses of one legal
counsel in each relevant jurisdiction representing all of the Holders) in
connection with the matters contemplated by this Section 11.03, if the Lessee
has elected to replace the Airframe and Engines suffering an Event of Loss
pursuant to this Section 11.03, the Lessee shall cause to be duly conveyed to
the Lessor within one hundred twenty (120) days after the occurrence of such
Event of Loss, as replacement for the Airframe and Engines with respect to
which such Event of Loss has occurred, good and marketable title to an Airbus
A300-600 series airframe manufactured no earlier than January 1, 1997 (the
"Replacement Airframe") and good and marketable title to a number of
Replacement Engines equal to the number of Engines with respect to which an
Event of Loss has occurred, provided that following compliance with all other
terms of this Section 11.03 each Engine shall be of identical make and model
and, in the case of such Replacement Airframe and each such Replacement
Engine, owned by the Lessee free and clear of all Liens not excepted in
Sections 6.01(a), (b), (c) and (e) hereof, duly certified as an airworthy
aircraft by the Aeronautics Authority, and having in the case of the
Replacement Airframe a value, remaining useful life and utility, and in the
case of the Replacement Engines a value and utility, at least equal to, and
being in as good operating condition as, the Airframe and Engines with respect
to which such Event of Loss occurred, assuming that the Airframe and Engines
were then in the condition and state of airworthiness required to be
maintained by the terms of this Lease immediately prior to the occurrence of
such Event of Loss. In such case and as a condition to such substitution the
Lessee, at its own cost and expense, will also promptly:
(i) furnish the Indenture Trustee with originals of, and the Lessor
with copies of, full warranty bills of sale, in form and substance
satisfactory to the Lessor and the Indenture Trustee, with respect to such
Replacement Airframe and Replacement Engines together with an assignment in
form and substance satisfactory to the Lessor and the Indenture Trustee of
any and all manufacturer's warranties applicable thereto and a consent
reasonably satisfactory to the Lessor and the Indenture Trustee from such
manufacturer or manufacturers to such assignment;
(ii) cause such Replacement Airframe and Replacement Engines to be
duly registered in the name of the Lessor pursuant to the Transportation
Code or the applicable laws of any other jurisdiction in which the Aircraft
may then be registered in accordance with Section 6.03(b) of the
Participation Agreement;
(iii) cause a Lease Supplement with respect to such Replacement
Airframe and Replacement Engines to be duly executed by the Lessee and
recorded pursuant to the Transportation Code, or the applicable laws, rules
and regulations of any other jurisdiction in which the Aircraft may then be
registered as permitted by Section 6.03(b) of the Participation Agreement;
(iv) furnish the Lessor, the Indenture Trustee and the Owner
Participant with an appraisal or other report of a nationally recognized
aircraft appraiser based on an inspection of such Replacement Airframe
and Replacement Engines reasonably satisfactory to the Indenture Trustee
and the Owner Participant certifying that such Replacement Airframe has
a value, remaining useful life and utility, and such Replacement Engines
have a utility and value, at least equal to, and are in as good
operating condition as, the Airframe and Engines replaced, assuming such
Airframe and Engines were in the condition and repair required by the
terms of this Lease immediately prior to the occurrence of such Event of
Loss;
(v) furnish the Lessor, the Indenture Trustee and the Owner
Participant with such evidence as the Lessor or the Indenture Trustee
may reasonably request of compliance with the insurance provisions of
Article 13 hereof with respect to such Replacement Airframe and
Replacement Engines;
(vi) provide the Owner Participant and the Lessor with (A) an opinion
of counsel selected by the Owner Participant and reasonably acceptable to
the Lessee (which opinion shall be reasonably satisfactory in form and
substance to the Owner Participant and the Lessor) that it will suffer no
adverse tax consequence not otherwise indemnified for to its reasonable
satisfaction as of the Delivery Date as a result of such substitution or
(B) an indemnity reasonably acceptable to the Lessor and the Owner
Participant against such consequences;
(vii) comply with the provisions of Section 9.08 of the Indenture;
(viii) cause an Indenture and Security Agreement Supplement with
respect to such Replacement Airframe and Replacement Engines to be duly
executed by the Lessor and the Indenture Trustee and recorded pursuant to
the Transportation Code, or the applicable laws, rules and regulations of
any other jurisdiction in which the Aircraft may then be registered as
permitted by Section 6.03(b) of the Participation Agreement in order that
the Lien of the Indenture shall constitute a first priority, duly perfected
Lien and security interest on and in respect of such Replacement Airframe
and Replacement Engines;
(ix) take such other action, including the filing of UCC financing
statements naming the Indenture Trustee as a secured party with the
Secretary of State of Connecticut and the filing of a notice with the
Secretary of State of Tennessee, as the Lessor or the Indenture Trustee may
reasonably request in order that such Replacement Airframe and Replacement
Engines shall be duly and properly titled in the Lessor, leased under this
Lease and subjected to the Lien of the Indenture to the same extent as the
replaced Airframe and Engines;
(x) furnish the Indenture Trustee with an opinion (reasonably
satisfactory in form and substance to the Lessor, the Owner Participant and
the Indenture Trustee) of counsel to the Lessee (which may be the Lessee's
General Counsel) addressed to the Indenture Trustee and the Owner
Participant to the effect that (A) the Lessor has good title to such
Replacement Airframe and Replacement Engines, and (B) such Replacement
Airframe and Replacement Engines have been validly subjected to the Lien of
the Indenture (with the effect and result that the Indenture constitutes a
first priority duly perfected security interest and Lien on such
Replacement Airframe and Replacement Engines); and
(xi) cause to be delivered to the Lessor, the Owner Participant and
the Indenture Trustee an opinion of counsel to the Lessee addressed to the
Lessor, the Owner Participant and the Indenture Trustee as to the due
registration of the Aircraft and the due recordation of the requisite
documents or instruments and the validity and perfection of the Lien in
such Replacement Airframe and Replacement Engines.
(b) Title to Replaced Equipment. Upon compliance by the Lessee
with the terms of Section 11.03(a) hereof, the Lessor will transfer to the
Lessee (subject to any insurer's salvage rights), without recourse or
warranty (except as to the absence of Lessor's Liens), all of the Lessor's
right, title and interest, if any, in and to the Airframe and Engines with
respect to which such Event of Loss occurred. In connection with such
transfer, the Lessee shall prepare and the Lessor shall execute or forward
to the Indenture Trustee for execution, as the case may be, all in
recordable form, a xxxx of sale evidencing such transfer, a release of the
Airframe and Engines with respect to which such Event of Loss occurred from
the Indenture and such other documents as the Lessee reasonably requests,
all at the Lessee's sole cost and expense. Any Engine constituting part of
the Aircraft, but not installed on the Airframe when such Event of Loss
occurred, shall continue to be property of the Lessor and leased under this
Lease as part of the same equipment as the Replacement Airframe and
Replacement Engines.
(c) Definitions. Each Replacement Airframe and Replacement Engine
shall be deemed part of the property leased under this Lease, each such
Replacement Airframe shall be deemed an "Airframe," each such Replacement
Engine shall be deemed an "Engine" and each such Replacement Airframe and
Replacement Engine shall be deemed part of the same Aircraft as was the
Airframe or Engine replaced.
(d) Rent Adjustments. An Event of Loss covered by this Section
11.03 shall not result in any change in Basic Rent, Stipulated Loss Values or
Termination Values except as may be provided pursuant to the Tax Indemnity
Agreement and the Participation Agreement.
(e) Time Limitations. If the Lessee has elected to proceed under
this Section 11.03 but has not fully performed its obligations under this
Section 11.03 within 120 days of the occurrence of the applicable Event of
Loss, in the event that any amounts held by the Lessor (or, so long as the
Indenture shall be in effect, the Indenture Trustee) in respect of such Event
of Loss are less than the Stipulated Loss Value thereof, the Lessee will
deposit with the Lessor or the Indenture Trustee, as the case may be, the
amount of any deficiency as security on such 120th day. If the Lessee has
elected to proceed under this Section 11.03 but has not fully performed its
obligations under this Section 11.03 within 180 days of the occurrence of such
Event of Loss, the Lessee shall be deemed to have elected to proceed under
Section 11.02 hereof and shall immediately perform its obligations thereunder,
and the Indenture Trustee, or the Lessor if the Indenture shall have been
discharged, shall apply the amounts held by it pursuant to the preceding
sentence as a credit against such obligations.
Section 11.04. Event of Loss with Respect to an Engine. (a)
Generally. Upon the occurrence of an Event of Loss with respect to an Engine
under circumstances in which there has not occurred an Event of Loss with
respect to the Airframe, the Lessee shall give the Lessor and the Indenture
Trustee prompt written notice thereof and shall, as soon as practicable but in
any event within sixty (60) days after the occurrence of such Event of Loss,
duly convey or cause to be conveyed to the Lessor, a Replacement Engine for
the Engine with respect to which such Event of Loss occurred, good and
marketable title to a Replacement Engine, free and clear of all Liens not
excepted in Sections 6.01(a), (b) (provided that if there are any Liens of the
type described in Section 6.01(b) hereof, such Liens are subordinate to the
Lien of the Indenture), (c) and (e) hereof and having a value and utility at
least equal to, and being in as good operating condition as, the Engine with
respect to which such Event of Loss occurred, assuming such Engine was of the
value and utility and in the condition and repair required by the terms of
this Lease immediately prior to the occurrence of such Event of Loss, provided
that after any replacement, each Engine shall be of identical make and model.
The standards set forth in this Section with respect to Replacement Engines
shall apply upon any replacement or substitution of an Engine with a
Replacement Engine pursuant to any other provision of this Lease.
(b) Conditions Precedent. Prior to or at the time of any conveyance
of an Engine pursuant to Section 11.04(a) hereof, the Lessee, at its own cost
and expense will:
(i) furnish the Indenture Trustee with an original of, and the Lessor
with a copy of, a full warranty xxxx of sale, in form and substance
satisfactory to the Lessor, with respect to such Replacement Engine
together with an assignment in form and substance satisfactory to the
Lessor of any and all manufacturer's warranties applicable thereto and a
consent reasonably satisfactory to the Lessor and the Indenture Trustee
from such manufacturer to such assignment;
(ii) cause a Lease Supplement covering such Replacement Engine to be
duly executed by the Lessee and filed for recordation pursuant to the
Transportation Code, or the applicable laws, rules and regulations of any
other jurisdiction in which the Aircraft may then be registered as
permitted by Section 6.03(b) of the Participation Agreement and, if the
Engine being replaced was registered under the applicable laws of the
jurisdiction in which the Aircraft is then registered, the Replacement
Engine shall be registered in the same fashion;
(iii) furnish the Lessor and the Indenture Trustee with a certificate
of a nationally recognized aircraft appraiser reasonably satisfactory to
the Lessor certifying that such Replacement Engine has a value and utility
at least equal to, and is in as good operating condition as, the Engine
replaced, assuming such Engine was in at least the condition and repair
required by the terms of this Lease immediately prior to the occurrence of
such Event of Loss;
(iv) furnish the Lessor with such evidence of compliance with the
insurance provisions of Article 13 hereof with respect to such Replacement
Engine as the Lessor or the Indenture Trustee may reasonably request;
(v) comply with the provisions of Section 9.08 of the Indenture;
(vi) cause an Indenture and Security Agreement Supplement with
respect to such Replacement Engine to be duly executed by the Lessor and
the Indenture Trustee and recorded pursuant to the Transportation Code, or
the applicable laws, rules and regulations of any other jurisdiction in
which the Aircraft may be registered as permitted by Section 6.03(b) of the
Participation Agreement in order that the Indenture shall constitute a
first priority duly perfected Lien and security interest on and in respect
of such Replacement Engine;
(vii) take such other action, including the filing of UCC financing
statements naming the Indenture Trustee as Secured Party with the Secretary
of State of Connecticut and a notice filing with the Secretary of State of
Tennessee, as the Lessor or the Indenture Trustee may reasonably request in
order that such Replacement Engine be duly and properly titled in the
Lessor, leased under this Lease and subjected to the Lien of the Indenture
to the same extent as the replaced Engine;
(viii) furnish the Lessor, the Owner Participant and the Indenture
Trustee with an opinion (reasonably satisfactory in form and substance to
the Lessor, the Owner Participant and the Indenture Trustee) of counsel to
the Lessee (which may be the Lessee's General Counsel) addressed to the
Indenture Trustee and the Owner Participant to the effect that (A) the
Lessor has good title to such Replacement Engine, and (B) such Replacement
Engine has been validly subjected to the Lien of the Indenture (with the
effect and result that the Indenture constitutes a first priority duly
perfected security interest and Lien on such Replacement Engine); and
(ix) take such other action as the Indenture Trustee may reasonably
request in order that such Replacement Engine be duly and properly
subjected to the Lien of the Indenture to the same extent as the replaced
Engine.
(c) Title Transfer. Upon compliance by the Lessee with the terms of
Sections 11.04(a) and (b) hereof, the Lessor will transfer to the Lessee
(subject to any insurer's salvage rights), without recourse or warranty
(except as to the absence of Lessor's Liens), all of the Lessor's right, title
and interest, if any, in and to the Engine with respect to which such Event of
Loss occurred. In connection with such transfer, the Lessee shall prepare and
the Lessor shall execute or forward to the Indenture Trustee for execution, as
the case may be, all in recordable form, a xxxx of sale evidencing such
transfer, a release of the Engine with respect to which such Event of Loss
occurred from the Indenture and such other documents as the Lessee reasonably
requests, all at the Lessee's sole cost and expense. Each Replacement Engine
shall, after such conveyance, be deemed part of the property leased under this
Lease. An Event of Loss covered by this Section 11.04 shall not result in any
change in Basic Rent, Stipulated Loss Values or Termination Values, but may
result in payments to be made pursuant to the Tax Indemnity Agreement and the
Participation Agreement.
Section 11.05. Application of Payments from the Government or
Others. (a) Generally. Any payments (other than insurance proceeds the
application of which is provided for in Section 13.03 hereof) received at any
time by the Lessor or by the Lessee from any governmental authority or any
other party, foreign or domestic, with respect to an Event of Loss resulting
from the condemnation, confiscation, theft or seizure of, or requisition of
title to or use of, the Airframe or any Engine will be applied, as
appropriate, in accordance with Section 11.05(b) or Section 11.05(c) hereof.
(b) Payments of Stipulated Loss Value. If the payments described in
Section 11.05(a) hereof are received with respect to the Airframe or with
respect to the Airframe and Engines or engines then installed on the Airframe
and the Lessee has elected the alternative set forth in Section 11.02 hereof,
so much of such payments as shall not exceed the amount required to be paid by
the Lessee pursuant to Section 11.02 hereof shall be paid to the Lessor (or,
if the Lien of the Indenture has not been discharged, the Indenture Trustee)
in reduction of the Lessee's obligations under Section 11.02 hereof if not
already paid by the Lessee, or, if such obligations have already been
discharged in full by the Lessee, such payments shall be applied to reimburse
the Lessee for its payment of such Stipulated Loss Value and, if and to the
extent specifically included in such payment, to pay to the Lessee interest on
such amount of Stipulated Loss Value at the rate included in such payment if
any, or otherwise at the applicable Debt Rate, for the period from the date of
payment by the Lessee of the Stipulated Loss Value to the date of
reimbursement of the Lessee under this Section 11.05(b). The excess, if any,
remaining after such application shall be divided between the Lessor and the
Lessee as their respective interests may appear.
(c) Payment if the Lessee Elects Replacement. If the payments
described in Section 11.05(a) hereof are received with respect to the Airframe
or with respect to the Airframe and the Engines or engines then installed on
the Airframe and the Lessee has elected the alternative set forth in Section
11.03 hereof, or if such payments are received with respect to an Engine not
then installed on the Airframe under the circumstances contemplated by Section
11.04 hereof, all such payments shall, subject to Section 11.08 hereof, be
paid over to or retained by the Lessee, provided that the Lessee shall have
fully performed its obligations pursuant to Section 11.03 or Section 11.04
hereof, as the case may be, with respect to the Event of Loss for which such
payments are made.
Section 11.06. Requisition of an Airframe and the Installed Engines
for Use by Government. In the event of the requisition for use by the
Government or any other government of registry of the Aircraft, or any agency
or instrumentality of either (a "Requisitioning Government") of the Airframe
and the Engines or engines then installed on the Airframe during the Term,
which requisition does not constitute an Event of Loss, the Lessee shall
promptly notify the Lessor, the Indenture Trustee and the Owner Participant of
such requisition and all of the Lessee's obligations under this Lease with
respect to such Airframe and Engines or engines shall continue to the same
extent as if such requisition had not occurred except to the extent that any
failure or delay in repairing or maintaining the Aircraft by the Lessee shall
have been caused by such requisition. All payments received by the Lessor,
the Lessee or any permitted sublessee or transferee from the Requisitioning
Government for such use of the Airframe and Engines or engines during the Term
(other than any such requisition which constitutes an Event of Loss, as to
which the provisions of Section 11.05 hereof shall govern) shall, subject to
Section 11.08 hereof, be paid over to, or retained by the Lessee or such
permitted sublessee or transferee. All payments received by the Lessor, the
Lessee or any such permitted sublessee or transferee from the Requisitioning
Government for the use of the Airframe and Engines or engines after the Term
shall be paid over to, or retained by, the Lessor (or the Lessee if it shall
have purchased the Lessor's interest therein in accordance with the provisions
hereof).
Section 11.07. Requisition for Use by Government of an Engine Not
Installed on the Airframe. In the event of the requisition for use by a
Requisitioning Government of registry of the Aircraft or any agency or
instrumentality thereof of any Engine not then installed on the Airframe, the
Lessee shall replace such Engine by complying with the terms of Section 11.04
hereof to the same extent as if an Event of Loss had occurred with respect to
such Engine as of the date of such requisition, and any payments received by
the Lessor or the Lessee from the Requisitioning Government with respect to
such requisition shall, subject to Section 11.08 hereof, be paid over to or
retained by the Lessee, provided that the Lessee shall have fully performed
its obligations under Section 11.04 hereof.
Section 11.08. Application of Payments During Existence of Certain
Defaults. Any amount referred to in Section 11.05, 11.06 or 11.07 hereof
which is payable to the Lessee shall not be paid to the Lessee, or, if it has
been previously paid directly to the Lessee, shall not be retained by the
Lessee, if at the time of such payment a Payment Default, Bankruptcy Default
or Event of Default shall have occurred and be continuing, but shall be paid
to and held by the Lessor (or the Indenture Trustee so long as the Lien of the
Indenture is in effect) as provided in Article 23 hereof as security for the
obligations of the Lessee under this Agreement, and at such time as there
shall not be continuing any such Payment Default, Bankruptcy Default or Event
of Default, such amount to the extent not theretofore applied as provided
herein, shall be paid to the Lessee.
ARTICLE 12
RETURN OF AIRCRAFT
Section 12.01. Return of Aircraft. Unless the Aircraft is purchased
by the Lessee as provided in Section 4.02 hereof, at the end of the Term, or
upon the termination of this Lease pursuant to Article 10 or Article 17 hereof
or otherwise, the Lessee, at its own cost and expense, will return the
Aircraft by delivering it to the Lessor on the last day of the Term or on the
Termination Date, as the case may be, at the Lessee's principal maintenance
facility in Memphis, Tennessee or such other location specified by the Lessee
(and reasonably acceptable to the Owner Participant), or if such termination
is pursuant to Article 17 hereof, selected by the Lessor in its reasonable
discretion, within or, if the Aircraft is then registered outside the United
States, outside of the continental United States (on the Lessee's route
structure as in effect on the return date and provided that the Lessee shall
pay any incremental expenses incurred in connection with a redelivery outside
the United States) and the Airframe shall be fully equipped with two Engines
of the same or an improved make and model as were delivered on the Delivery
Date (or Replacement Engines), free and clear of all Liens (other than
Lessor's Liens), including any rights of third parties under pooling,
interchange, overhaul, repair or similar agreements or arrangements, it being
understood that all such Engines and Replacement Engines so returned shall be
of identical make and model and that any Replacement Engine shall be in at
least as good operating condition and have at least the same value and utility
as the Engines being replaced, assuming such Engines were in the condition
required hereunder. The Lessee will give the Lessor at least 30 days' prior
written notice of the place of such return; provided, however, that if the
Lessor shall have made the request for storage pursuant to Section 12.06
hereof, the Lessee shall return the Aircraft to the Lessor at the site of the
storage.
Section 12.02. Return of Engines. If any engine not owned by the
Lessor shall be delivered with the Airframe as set forth in Section 12.01
hereof, the Lessee, concurrently with such delivery, will, at its own cost and
expense furnish the Lessor with (i) a full warranty xxxx of sale, in form and
substance reasonably satisfactory to the Lessor, with respect to such engine,
(ii) an opinion of the Lessee's counsel to the effect that, upon such return,
the Lessor will acquire full right, title and interest to such engine free and
clear of all Liens (other than Lessor's Liens) and (iii) a certificate as
described in Section 11.04(b)(iii) hereof. The Lessee shall take such other
action as the Lessor may reasonably request in order that such Replacement
Engine shall be duly and properly titled in the Lessor free and clear of all
Liens (other than Lessor's Liens), and the Lessor will then (i) transfer to
the Lessee, without recourse or warranty (except as to the absence of Lessor's
Liens), and subject to the disclaimers provided in Section 5.01 hereof, all
the Lessor's right, title and interest in and to any Engine in lieu of which a
Replacement Engine has been delivered pursuant to Section 12.01 hereof, "as
is, where is" and (ii) deliver to the Lessee such instrument as the Lessor
shall have received from the Indenture Trustee, releasing such Engine from the
Lien of the Indenture.
Section 12.03. Return of Manuals. Upon the return of the Aircraft,
the Lessee shall deliver to the Lessor all original (or photocopied or
microfilmed copies thereof, if then permitted to be maintained in such form
under applicable law) logs, manuals, certificates and technical data, and
inspection, modification and overhaul records pertaining to the Airframe,
Engines or engines, which are required to be maintained under applicable rules
and regulations of the Aeronautics Authority or pursuant to the Lessee's or
any permitted sublessee's Aeronautics Authority-approved maintenance program
and all original (or photocopied or microfilmed copies thereof, if then
permitted to be maintained in such form under applicable law) records required
to be maintained with respect to the Aircraft under the maintenance program
approved by the aeronautical authority of any other country of registry of the
Aircraft. All records shall be returned in the format necessary to allow the
Lessee or any sublessee to comply with Section 12.04(a)(i) hereof.
Section 12.04. Condition of Aircraft. (a) Required Condition. The
Aircraft when returned to the Lessor shall, at the Lessee's own cost and
expense, meet the following requirements:
(i) it shall, unless otherwise requested by the Lessor not less than
90 days prior to the end of the Term to retain the then-existing
registration of the Aircraft, be duly registered in the name of the Lessor
or its designee pursuant to the Transportation Code;
(ii) it shall be clean by airline and cargo handling operating
standards;
(iii) the Airframe shall be returned with the Engines, or any
replacements thereto as herein authorized, provided that the Airframe shall
have an aggregate of two Engines or engines (as herein authorized under
Section 12.02 hereof), both of the same make and model, installed thereon,
together with the equipment, accessories or parts installed thereon on the
Delivery Date or replacements therefor (as herein authorized) and
alterations, modifications and additions thereto made in accordance with
the provisions of this Lease;
(iv) it shall be in the condition required by Section 12.04(b) hereof
and in as good operating condition as when delivered to the Lessor on the
Delivery Date, ordinary wear and tear excepted;
(v) it shall have a currently effective airworthiness certificate
issued by the Aeronautics Authority;
(vi) it shall comply with any then applicable rules and regulations
imposed by the Aeronautics Authority and, without limitation of the
foregoing, terminate all airworthiness directives of, and mandatory
modifications required by, the Aeronautics Authority (or any government or
governmental authority, domestic or foreign, having jurisdiction over the
Aircraft) to be terminated during the Term of the Lease and the Airframe
and each Engine (including any Replacement Engine) shall be serviceable in
accordance with the Lessee's FAA-approved maintenance program;
(vii) it shall be free and clear of all Liens and rights of others
(other than Lessor's Liens) including, without limitation, rights of third
parties under pooling, interchange, overhaul, repair and other similar
agreements or arrangements referred to in Section 7.02(a) hereof; and
(viii) it shall be in a standard cargo configuration.
(b) Remaining Time. If, at the time of return of the Aircraft, the
Airframe is not being maintained under a continuous maintenance program, then
the Airframe shall have remaining until the next scheduled "C" check at least
25% of the allowable hours between "C" checks permitted under the Lessee's
FAA-approved maintenance program (or other permitted maintenance program).
If, at the time of return of the Aircraft, the Engines or engines are not
being maintained under an on-condition maintenance program, then the average
number of hours of operation on such Engines or engines remaining until the
next scheduled engine heavy maintenance visit under the Lessee's FAA-approved
maintenance program (or other permitted maintenance program) shall be at least
25% of the allowable hours between engine heavy maintenance visits. With
respect to maintenance under the Lessee's FAA-approved maintenance program,
the Lessee shall have treated the Aircraft in a nondiscriminatory manner with
other Airbus A300-600 series aircraft in the Lessee's fleet, and the Aircraft
shall be free and clear of all Liens and rights of others other than Lessor's
Liens and shall be in compliance in every material respect with the Lessee's
FAA-approved maintenance program as if the Term were not ending.
Section 12.05. [Reserved].
Section 12.06. Storage. Upon any expiration or termination of this
Lease, at the written request of the Lessor given at least 45 days prior to
such expiration or termination, the Lessee will arrange, or will cause to be
arranged, at no charge to the Lessor (subject, however, to the last sentence
of this Section 12.06), storage at a ramp storage facility for the Aircraft at
the Lessee's principal maintenance facilities in Memphis, Tennessee or one of
the Lessee's other maintenance facilities or at a location selected by the
Lessee used as a location for the parking or storage of aircraft for a period
of up to 30 days; provided that if storage is available at no additional cost
or expense to the Lessee at the location at which the Lessor has specified
pursuant to Section 12.01 hereof that return of the Aircraft shall take place,
the Lessee shall provide storage at such location. At the end of such 30 day
period, if the Lessor so requests within 10 days of before the end of such
period, the Lessee will continue to provide such ramp storage facility at such
facility or location for an additional 30 days at the Lessor's expense. If
the Lessee is required to move the Aircraft from one storage facility to
another, such move shall be at the risk and expense of the Lessor. The
maintenance and risk of loss of, and responsibility for obtaining insurance
on, the Aircraft shall be the responsibility of the Lessor during any period
of storage; provided, however, the Lessee will, upon written request of the
Lessor and at the Lessor's expense, not to exceed the Lessee's incremental
cost of such service, obtain insurance for such property (including, if
possible, coverage through its fleet policy).
Section 12.07. Special Markings. If requested by the Lessor, the
Lessee shall, at the Lessee's cost, remove or paint over all insignias and
other distinctive markings of the Lessee or any sublessee on the Aircraft and
repaint the stripped down areas in a workmanlike manner to match exterior
colors.
Section 12.08. Lessor's Option to Purchase Parts. At any time
after the Lessee has advised the Lessor that it has determined not to renew
this Lease or purchase the Aircraft, or the Aircraft is otherwise to be
returned to the Lessor, the Lessee shall advise the Lessor of any Part
which the Lessee intends, and is permitted, to remove as provided in
Section 9.02(b) above, and the Lessor may, at its option, upon 30 days'
notice to the Lessee, purchase any or all of such Parts from the Lessee
upon the expiration of the Term at their then Fair Market Value (taking
into account the provisions of this Lease) determined in accordance with
the provisions of Section 4.03 hereof. Upon any return of the Aircraft
pursuant to this Article 12, if the Lessor does not elect to exercise its
option under this Section 12.08, the Lessee will, at its own cost and
expense, remove such Parts described in subparagraph (i), (ii) or (iii) of
Section 9.02(b) hereof as the Lessor may request.
ARTICLE 13
INSURANCE
Section 13.01. Comprehensive Airline Liability and Property Damage
Liability Insurance. (a) Comprehensive Airline Liability and Property Damage
Liability Insurance. The Lessee, at its own cost and expense, will maintain
or cause to be maintained with respect to the Aircraft, (i) comprehensive
airline liability insurance including, without limitation, passenger legal and
bodily injury liability and property damage liability insurance and cargo
legal liability in such amounts, against such risks (including, without
limitation, contractual liability and allied perils liability but excluding
war risk insurance (except as required under the second sentence of this
Section 13.01(a)), with such retentions (subject to the limitations set forth
in Section 13.06 hereof) and on such terms and conditions (including coverage
for cost of claims) as the Lessee customarily maintains with respect to
aircraft and engines of the same type and model which comprise the fleet of
the Lessee, and (ii) such insurance against such other risks as is usually
carried by similar corporations engaged in the same or similar business and
similarly situated as the Lessee and owning or operating aircraft and engines
similar to the Aircraft and Engines; provided that in no event shall the
limits of liability for all such insurance be less than the amount, per
occurrence, as set forth on the insurance certificate delivered on the
Delivery Date unless and only so long as the Aircraft is not operated and all
risk-ground insurance for the Aircraft on the ground is maintained in the same
manner and covering the same risks as is from time to time applicable to other
aircraft owned or operated by the Lessee of the same type and model on the
ground and not in operation. The Lessee will be required to maintain war risk
insurance only if the Aircraft is operated in a war zone or a recognized area
of armed hostilities. All insurance required by this Section 13.01(a) shall
be maintained with insurers of recognized reputation and responsibility.
(b) Government Indemnification. Notwithstanding Section 13.01(a)
hereof, in the event of the requisition for use by the Government of the
Airframe or the Airframe and the Engines or engines then installed on the
Airframe, the Lessee shall maintain throughout the period of such requisition
such insurance as would otherwise be required under this Section 13.01;
provided that the Lessor shall accept, in lieu of such insurance coverage,
written indemnification or insurance from the Government which is
substantially the same as otherwise required under this Article 13.
(c) Policy Terms. Any policy of insurance carried and maintained
in accordance with this Section 13.01, and any policy taken out in
substitution or replacement for any such policy subject to the terms,
conditions and limitations thereof, shall:
(i) name or be amended to name the Lessor in its individual capacity
and as owner of the Aircraft, the Indenture Trustee in its individual
capacity and as trustee/mortgagee of the Aircraft and the Owner
Participant, each Liquidity Provider and each of their respective officers
and directors in their respective capacities as such as additional insureds
(hereinafter in this paragraph (c) sometimes referred to as "Additional
Insured");
(ii) provide that, in respect of the interest of any Additional
Insured in such policies, the insurance shall not be invalidated by any
action or inaction of the Lessee or any Additional Insured as defined under
the policy of insurance required under this Section 13.01 (other than any
action or inaction of such Additional Insured) and shall insure each
Additional Insured regardless of any breach or violation of any warranty,
declaration or condition contained in such policies by the Lessee or any
other Additional Insured (other than any breach or violation of any
warranty, declaration or condition by such Additional Insured) as defined
under the policy of insurance required under this Section 13.01;
(iii) provide that if such insurance is cancelled for any reason, or
any substantial change is made in the policies which adversely affect the
scope of the coverage required herein, or if such insurance is allowed to
lapse for nonpayment of premium, such cancellation, change or lapse shall
not be effective as to any Additional Insured for thirty (30) days (except
in the case of war risk coverage in which event the applicable period shall
be seven (7) days or such other period as may be customary) after receipt
by each such Additional Insured of written notice from such insurers or
such insurers' broker of such cancellation, change or lapse;
(iv) provide that the insurers shall waive any rights of subrogation
against each Additional Insured, to the extent that the Lessee has waived
its rights under this Lease and the Participation Agreement; provided that
the exercise by insurers of rights of subrogation derived from rights
retained by the Lessee shall not, in any way, delay payment of any claim
that would otherwise be payable by such insurers but for the existence of
rights of subrogation derived from rights retained by the Lessee;
(v) provide that all of the provisions of such policy shall operate
in the same manner as if there were a separate policy covering each
Additional Insured; provided, that such policies shall not operate to
increase any insurer's limit of liability;
(vi) be primary, without right of contribution from any other
insurance which is carried by the Lessee or any sublessee or any Additional
Insured with respect to its interest in the Aircraft;
(vii) provide that no Additional Insured shall have any obligation or
liability for premiums or other payments, if any, in connection with such
insurance; and
(viii) provide that such insurer shall waive the right of such
insurer to any set-off or counterclaim or any other deduction, whether by
attachment or otherwise, in respect of any liability of any Additional
Insured.
Section 13.02. Insurance Against Loss or Damage to Aircraft and
Engines. (a) Hull Insurance. The Lessee, at its own cost and expense, shall
maintain or cause to be maintained in effect, with insurers of recognized
reputation and responsibility, all-risk ground and flight aircraft hull
insurance covering the Aircraft and all-risk coverage with respect to any
Engines and Parts while removed from the Aircraft and not replaced by similar
Engines or Parts, including in each case war-risk and allied perils, hijacking
(air piracy) and governmental confiscation and expropriation insurance (except
with respect to the country of registry) with such retentions (subject to the
limitations set forth in Section 13.06 hereof) and in such form, and upon such
terms and conditions (including coverage for cost of claims), and in amounts
as the Lessee customarily maintains with respect to the aircraft in the
Lessee's fleet of the same type and model and operated on the same routes as
the Aircraft (except that the Lessee shall be required to maintain (i) allied
perils, hijacking (air piracy) and governmental confiscation and expropriation
insurance (except with respect to the country of registry) if the Aircraft is
operated on routes where the custom is for major international Air Carriers
flying comparable routes to carry such insurance and (ii) war risk insurance
only if the Aircraft is operated in a war zone or a recognized area of armed
hostilities), provided that such insurance shall at all times while the
Aircraft is subject to this Lease and the Lien of the Indenture be on an
agreed-value basis for an amount not less than an amount equal to the
Stipulated Loss Value for the Aircraft from time to time.
(b) Policy Terms. Any policies carried and maintained in accordance
with this Section 13.02 and any policies taken out in substitution or
replacement for any such policies subject to the terms, conditions and
limitations thereof shall:
(i) name or be amended to name the Lessor in its individual capacity
and as owner of the Aircraft (or, so long as the Indenture shall not have
been discharged, the Indenture Trustee) as an additional insured and as the
sole loss payee (hereinafter in this paragraph (b) sometimes referred to as
"Loss Payee");
(ii) provide with respect to coverage provided under this Section
13.02, (except as otherwise provided under Section 13.03 hereof when an
Event of Loss or a Payment Default, Bankruptcy Default or Event of Default
has occurred and is continuing), that (i) in the event of a loss involving
proceeds in the aggregate in excess of $6,000,000, the proceeds in respect
of such loss up to an amount equal to the Stipulated Loss Value for the
Aircraft shall be payable to the Lessor (or, so long as the Indenture shall
not have been discharged, the Indenture Trustee), it being understood and
agreed that in the case of any payment to the Lessor (or the Indenture
Trustee) otherwise than in respect of an Event of Loss, the Lessor (or the
Indenture Trustee) shall in the aggregate upon receipt of evidence
satisfactory to it that the damage giving rise to such payment shall have
been repaired or that such payment shall then be required to pay for
repairs then being made, pay the amount of such payment to the Lessee or
its order, and (ii) the entire amount of any loss involving proceeds in the
aggregate of $6,000,000 or less or the amount of any proceeds of any loss
in excess of the Stipulated Loss Value for the Aircraft shall be paid to
the Lessee or its order to pay for repairs or replacement property;
(iii) provide that if such insurance is cancelled for any reason or
any substantial change is made in the policies which adversely affect the
scope of the coverage required herein, or if such insurance is allowed to
lapse for nonpayment of premium, such cancellation, change or lapse shall
not be effective as to the Loss Payee for thirty days (except in the case
of war-risk coverage in which event the applicable period shall be seven
(7) days or such other period as may be customary) after receipt by the
Loss Payee of written notice from such insurer of such cancellation, change
or lapse;
(iv) provide that, in respect of the interest of the Lessor (in its
individual capacity and as the Owner Trustee), the Owner Participant or the
Indenture Trustee (in their respective capacities as such) in such
policies, the insurance shall not be invalidated by any action or inaction
of the Lessee or the Loss Payee (other than any action or inaction of such
Loss Payee) and shall insure the Lessor (in its individual capacity and as
Owner Trustee), the Owner Participant and the Indenture Trustee regardless
of any breach or violation of any warranty, declaration or condition
contained in such policies by the Lessee or the Loss Payee (other than any
breach or violation of any warranty, declaration or condition by the Loss
Payee) as defined under the policy of insurance required under this Section
13.02;
(v) provide that the insurers shall waive any rights of subrogation
against the Lessor (in its individual capacity and as Owner Trustee), the
Owner Participant and the Indenture Trustee to the extent that the Lessee
has waived its rights under this Lease or the Participation Agreement;
provided that the exercise by insurers of rights of subrogation derived
from rights retained by the Lessee shall not, in any way, delay payment of
any claim that would otherwise be payable by such insurers but for the
existence of rights of subrogation derived from rights retained by the
Lessee;
(vi) be primary and without rights of contribution from any other
insurance which is carried by the Loss Payee with respect to its interest
in the Aircraft;
(vii) provide that (except in the case of insurance with respect to
Engines and spare parts that have been removed from the Aircraft and
replaced with other Engines or engines, or spare parts, as the case may be)
such insurer shall waive any right of such insurer to any set-off or
counterclaim or any other deduction, whether by attachment or otherwise, in
respect of any liability of the Loss Payee;
(viii) provide that (except in the case of insurance with respect to
Engines and spare parts that have been removed from the Aircraft and
replaced with other Engines or engines or spare parts, as the case may be)
no Loss Payee shall have any obligation or liability for premiums or other
payments, if any, in connection with such insurance; and
(ix) in the event that separate policies are maintained to cover
all-risk ground and flight aircraft, hull and war risks and allied perils
insurance, include a 50/50 provisional claims settlement clause as
contained in the policies of insurance maintained by the Lessee with
respect to all other aircraft in the Lessee's fleet, and a copy of the
50/50 provisional claims settlement clause in effect on the Delivery Date
shall be attached to the insurance certificate issued on the Delivery Date.
Section 13.03. Application of Insurance Proceeds. (a) Generally.
All insurance proceeds (other than proceeds from policies carried by the
Lessor, the Indenture Trustee or the Owner Participant) received under
policies described in Section 13.02 hereof as the result of the occurrence of
an Event of Loss with respect to the Airframe or an Engine will be applied as
follows:
(i) if such proceeds are received with respect to the Airframe or
with respect to the Airframe and the Engines or engines then installed
on the Airframe and the Lessee has elected or is deemed to have elected
the alternative set forth in Section 11.02 hereof, so much of such
proceeds as shall not exceed the amounts required to be paid by the
Lessee pursuant to said Section 11.02 hereof shall be applied in
reduction of the Lessee's obligation to pay such amounts if not already
paid by the Lessee, or if already paid by the Lessee, shall be applied
to reimburse the Lessee for its payment of such amounts; or
(ii) if such proceeds are received with respect to the Airframe or
the Airframe and the Engines or engines then installed on the Airframe
and the Lessee has elected the alternative set forth in Section 11.03
hereof, or if such proceeds are received with respect to an Engine not
then installed on the Airframe and not replaced by an Engine or engine
under the circumstances contemplated by Section 11.04 hereof, all such
proceeds shall be paid to the Indenture Trustee (unless the Indenture
has been discharged in which case paid to the Lessor) for disbursement
to the order of the Lessee, after the Lessee shall have fully performed
the terms of Section 11.03 or 11.04 hereof, as applicable, with respect
to the Event of Loss for which such proceeds are paid.
(b) Payment if no Event of Loss. The insurance proceeds of any
property damage loss not constituting an Event of Loss with respect to the
Airframe or an Engine will be applied in payment (or to reimburse the Lessee)
for repairs or for replacement property in accordance with Articles 7 and 8
hereof, if not already paid for by the Lessee, and any balance remaining after
compliance with said Articles 7 and 8 hereof with respect to such loss shall
be paid to the order of the Lessee.
(c) Application of Payments During Existence of Certain Defaults.
Any amount referred to in this Article 13 which is payable to or retainable
by the Lessee shall not be paid to or retained by the Lessee if at the time
of such payment or retention a Payment Default, Bankruptcy Default or Event
of Default shall have occurred and be continuing, but shall be held by or
paid over to the Indenture Trustee (unless the Indenture has been
discharged in which case such amount shall be paid to the Lessor) to be
held in accordance with Article 23 hereof, as security for the obligations
of the Lessee under this Lease and, if an Event of Default shall have
occurred and be continuing, applied against the Lessee's obligations
hereunder as and when due. At such time as there shall not be continuing
any such Payment Default, Bankruptcy Default or Event of Default, such
amount shall be paid to the Lessee to the extent not previously applied in
accordance with the preceding sentence.
(d) Information. If any Additional Insured becomes subject to any
claim covered by any insurance policy maintained pursuant to this Article 13,
the Lessee shall make available any information required by such Additional
Insured in connection with such claim.
Section 13.04. Reports. On or before the Delivery Date and
thereafter annually on or before the scheduled expiration date for such policy
during the Term, the Lessee will cause its aviation insurance broker to
furnish to the Lessor and the Indenture Trustee a signed report, stating the
types of coverage and limits carried and maintained on the Aircraft and
certifying that such insurance complies with the terms and conditions of this
Lease. The Lessee will cause such aviation insurance broker to advise the
Lessor, the Owner Participant and the Indenture Trustee in writing promptly
of any default in the payment of any premium and of any other act or omission
on the part of the Lessee of which it has knowledge and which might
invalidate, cause cancellation of or render unenforceable all or any part of
any insurance carried by the Lessee with respect to the Aircraft. The Lessee
will cause such insurance broker to agree to advise the Lessor, the Indenture
Trustee and the Owner Participant in writing if and when it becomes evident to
such broker that any insurance policy carried and maintained on the Aircraft
pursuant to this Article 13 will not be renewed at the scheduled expiration
date for such policy. If the Lessee shall fail to maintain insurance as
required, the Lessor may, at its option, provide such insurance, and in such
event, the Lessee shall, upon demand, reimburse the Lessor, as Supplemental
Rent, for the cost of such insurance; provided, however, that no exercise of
said option shall affect the provisions of this Lease, including the
provisions that failure by the Lessee to maintain the prescribed insurance
shall constitute an Event of Default or otherwise constitute a waiver of any
other rights the Lessor may have against the Lessee.
Section 13.05. Lessor's Insurance. The Lessor, the Indenture
Trustee or the Owner Participant may insure the Airframe or any Engine at its
own cost and expense, including insuring the Aircraft for amounts in excess of
the Stipulated Loss Value of the Aircraft, provided that any insurance so
maintained by the Lessor, the Indenture Trustee or the Owner Participant shall
not result in a reduction of coverage or amounts payable under insurance
required or permitted to be maintained by the Lessee under this Article 13 or
increase the cost to the Lessee of maintaining such insurance; provided
further, that any insurance policies of the Lessor, the Indenture Trustee or
the Owner Participant insuring the Airframe or any Engine shall provide for a
release to the Lessee of any and all salvage rights in and to the Airframe or
any Engine.
Section 13.06. Self-Insurance. The Lessee may self-insure the risks
required to be insured against by Sections 13.01 and 13.02 hereof in such
manner and in such reasonable amounts as are then generally applicable to
other aircraft or engines of the Lessee of the same type and model as the
Aircraft, but in no case shall such self-insurance with respect to all
aircraft (whether owned or leased) in the Lessee's fleet in aggregate exceed
for any 12-month policy year an amount equal to the lesser of (i) 50% of the
highest insured value of any single aircraft in the Lessee's fleet and (ii)
1.5% of the average aggregate insured value from time to time of the Lessee's
entire aircraft fleet provided that a standard deductible per occurrence per
aircraft (and/or retentions) not in excess of the amount imposed by the
aircraft hull or liability insurer shall be permitted in addition to the
above-mentioned self-insurance. The foregoing shall not permit the Lessee to
discriminate as between insurance coverage on the Aircraft and insurance which
the Lessee maintains with respect to similar aircraft owned or operated by the
Lessee operating on similar routes in similar locations.
ARTICLE 14
INSPECTION
Section 14.01. Right of Inspection. At reasonable times, and upon
at least ten (10) Business Days' prior written notice to the Lessee, the
Lessor, the Indenture Trustee or the Owner Participant, or their respective
authorized representatives, may inspect the Aircraft and upon at least ten
(10) Business Days' prior written notice, all Aeronautics Authority required
books and records of the Lessee or any sublessee relating to the maintenance
of the Aircraft and such Persons shall keep any information obtained thereby
confidential and shall not disclose the same to any Person, except to a Person
described in Section 18.01 of the Participation Agreement. Any such
inspection of the Aircraft shall be a visual, walk-around inspection of the
interior and exterior of the Aircraft and shall not include opening any panel,
bays or the like without the express consent of the Lessee (except to the
extent any such inspection takes place when any such panel, bays or the like
are open). Notwithstanding the first sentence of this Section 14.01, unless a
material Default relating to maintenance or an Event of Default shall have
occurred and be continuing, the Lessor, the Indenture Trustee, the Owner
Participant or their respective authorized representatives shall each be
entitled to inspect the Aircraft only one time during any consecutive
twelve-month period. The Lessee shall make any permitted sublease or transfer
permitted under Section 7.02 hereof expressly subject to inspection rights
consistent with this Article 14.
Section 14.02. No Obligation to Inspect. None of the Lessor, the
Indenture Trustee or the Owner Participant shall have any duty to make any
inspection pursuant to Section 14.01 hereof and no such party shall incur any
liability or obligation by reason of making or not making any such inspection.
ARTICLE 15
ASSIGNMENT
Section 15.01. Lessee's Right to Assign. The Lessee shall not, and
shall have no authority or power to assign, convey or sublease any of its
rights under this Lease without the prior written consent of the Lessor except
(i) as expressly provided in Section 7.02 hereof, or (ii) to a wholly-owned
domestic subsidiary of the Lessee which shall be a certificated U.S. Air
Carrier. Any such assignment, conveyance or sublease shall in no way relieve
the Lessee from any obligation hereunder or under any other Operative
Agreement or any written agreement of the Lessee entered into in connection
with the transactions contemplated by the Operative Agreements, which shall be
and remain primary obligations of the Lessee. The Lessor agrees that it will
not assign or convey its right, title and interest in and to this Lease or the
Aircraft except as contemplated by or provided in this Lease, the Trust
Agreement, the Indenture or the Participation Agreement. The terms and
provisions of this Lease shall be binding upon and inure to the benefit of the
Lessor and the Lessee and their respective successors and permitted assigns,
and shall inure, to the extent expressly provided herein and therein, to the
direct benefit of, and in accordance with the provisions of the Indenture and
the Participation Agreement shall be enforceable by, the Indenture Trustee,
the Lessor and their respective successors and permitted assigns.
Section 15.02. Citizenship. The Lessee will at all times be a duly
certificated U.S. Air Carrier under the Transportation Code.
ARTICLE 16
EVENTS OF DEFAULT
Section 16.01. Events of Default. After the Delivery Date, each of
the following events shall constitute an Event of Default, whether any such
event shall be voluntary or involuntary or come about or be effected by
operation of law or pursuant to or in compliance with any judgment, decree or
order of any court or any order, rule or regulation of any administrative or
governmental body:
(a) the Lessee shall fail to make any payment of Basic Rent, Renewal
Rent, Stipulated Loss Value or Termination Value, as the case may be, or
any payment pursuant to Section 17.02 of the Participation Agreement,
within ten Business Days after the date when due (except that with respect
to any failure to pay Excepted Payments, such failure shall constitute an
Event of Default at the discretion of the Owner Participant); or
(b) the Lessee shall fail to make any payment of Supplemental Rent
(other than amounts described in clause (a) above) within 30 days after the
Lessee has received written notice from the Person entitled to receive such
payment stating that such payment is due (except that with respect to any
failure to pay Excepted Payments for such period, such failure shall
constitute an Event of Default at the discretion of the Owner Participant);
or
(c) (i) the Lessee shall fail to procure, carry and maintain
insurance on or in respect of the Aircraft at any time in accordance with
the provisions of Article 13 or such insurance lapses or is cancelled,
provided that, in the case of insurance with respect to which cancellation
or lapse for nonpayment is not effective as to the Lessor, the Indenture
Trustee, the Holders or the Owner Participant for 30 days (seven days, in
the case of any aircraft war risk coverage) no such lapse or cancellation
shall constitute an Event of Default until the earlier of (A) 30 days (or
seven days or such shorter time as may be standard in the industry with
respect to war risk coverage) after receipt by any Additional Insured of
written notice of such lapse or cancellation and (B) the date that such
lapse or cancellation is effective as to any Additional Insured and
provided further that such failure shall not constitute an Event of Default
as long as the Aircraft is insured as required while on the ground and not
operated, or (ii) the Aircraft shall be operated at any time when
comprehensive airline liability insurance required under Section 13.01
hereof shall not be in effect (it being understood that the Lessee is not
required to maintain such insurance under Section 13.01 hereof while the
indemnification or insurance referred to in the proviso to Section 13.01(b)
hereof is in effect); or
(d) the Lessee shall fail to perform or observe any other covenant,
condition or agreement to be performed or observed by it under any
Operative Agreement (excluding the Tax Indemnity Agreement) or any other
written agreement of the Lessee entered into in connection with the
transactions contemplated by the Operative Agreements and such failure
shall continue unremedied for a period of thirty (30) days after the Lessee
shall have received written notice from the Lessor or the Owner Participant
of such failure, provided, that in the event such failure is curable and so
long as (but for no longer than 150 days after such 30-day period) the
Lessee shall have promptly undertaken such cure after the Lessee receives
notice thereof which undertaking shall be diligently and continuously
pursued using the Lessee's reasonable best efforts, such failure shall not
constitute an Event of Default; provided, further, that failure of the
Lessee to maintain the registration of the Aircraft under the
Transportation Code pursuant to the Lessee's covenants and agreement in
Section 6.03(b) of the Participation Agreement and in Section 7.01(a) of
this Lease, when the lapse of such registration is solely because the Owner
Participant or the Lessor has ceased to be a Citizen of the United States,
shall not constitute a Default or an Event of Default; or
(e) an order for relief shall be entered in respect of the Lessee by
a court having jurisdiction in the premises in an involuntary case under
the federal bankruptcy laws as now or hereafter in effect; or the Lessee
shall consent to the appointment of a custodian, receiver, trustee or
liquidator of itself or of a substantial part of its property; or the
Lessee is not paying, or shall admit in writing its inability to pay, its
debts generally as they come due or shall make a general assignment for the
benefit of creditors; or the Lessee shall file, or the Board of Directors
of the Lessee shall authorize the filing of, or grant one or more persons
authority (at their discretion) to make a filing for, a voluntary petition
in bankruptcy or a voluntary petition or an answer seeking reorganization
in a proceeding under any bankruptcy laws (as now or hereafter in effect)
or an answer admitting the material allegations of a petition filed against
the Lessee in any such proceeding; or the Lessee shall file, or the Board
of Directors of the Lessee shall authorize the Lessee to, or grant one or
more persons authority (at their discretion) to, seek relief by voluntary
petition, answer or consent, under the provisions of any other or future
bankruptcy or other similar law providing for the reorganization or
winding-up of corporations, or providing for an agreement, composition,
extension or adjustment with its creditors; or
(f) an order, judgment or decree shall be entered by any court of
competent jurisdiction appointing, without the consent of the Lessee, a
custodian, receiver, trustee, or liquidator of the Lessee or of any
substantial part of its property, or sequestering any substantial part of
the property of the Lessee, or granting any other relief in respect of the
Lessee under the federal bankruptcy laws or other insolvency laws, and any
such order, judgment or decree of appointment or sequestration shall remain
in force undismissed or unvacated for a period of 60 days after the date of
its entry; or
(g) a petition against the Lessee in a proceeding under the
federal bankruptcy law or other insolvency laws (as now or hereafter in
effect) shall be filed and shall not be withdrawn or dismissed within 60
days, or under the provisions of any law providing for reorganization or
winding-up of corporations which may apply to the Lessee, any court of
competent jurisdiction shall assume jurisdiction, custody or control of
the Lessee or of any substantial part of its property and such
jurisdiction, custody or control shall remain in force unrelinquished or
unterminated for 60 days; or
(h) any representation or warranty made by the Lessee in this Lease
or in the Participation Agreement or in any document or certificate
furnished by the Lessee in connection with or pursuant to this Lease or the
Participation Agreement (except for the Tax Indemnity Agreement) shall at
any time prove to have been incorrect at the time made in any respect
material to the transactions contemplated by this Lease and, if originally
made by the Lessee in good faith, shall remain material and unremedied for
a period of 120 days after the Lessee shall have received written notice of
such misstatement.
ARTICLE 17
REMEDIES
Section 17.01. Remedies Upon Lessee's Default. (a) Remedies
Generally. Upon the occurrence of any Event of Default and at any time after
such occurrence so long as the same shall be continuing, the Lessor may, at
its option, declare this Lease to be in default (except that no such
declaration shall be required in the case of an Event of Default pursuant to
paragraph (e), (f) or (g) of Section 16.01 hereof and this Lease shall be
deemed declared in default without any further act or notice), and at any time
thereafter the Lessor may do, and the Lessee shall comply with, one or more
of the following with respect to all or any part of the Airframe and the
Engines, as the Lessor in its sole discretion shall elect, to the extent
permitted by, and subject to compliance with, any mandatory requirements of
applicable law then in effect:
(i) Demand in writing that the Lessee shall, and upon such written
demand the Lessee shall, at the Lessee's own cost and expense, return
promptly to the Lessor all or such part of the Airframe and the Engines as
the Lessor may demand in the manner and condition required by, and
otherwise in accordance with all of the provisions of this Lease (provided
that, unless the Lessor shall require otherwise, the Aircraft shall be
returned within the continental United States), or the Lessor, at its
option, may enter upon the premises where such Airframe or Engines are
located or believed to be located and take immediate possession of and
remove such Airframe and Engines (together with any engine which is not an
Engine but is installed on the Airframe, subject to all of the rights of
the owner, lessor, Lien holder or secured party of such engine) without the
necessity for first instituting proceedings, or by summary proceedings or
otherwise, all without liability of the Lessor to the Lessee for or by
reason of such entry or taking of possession, whether for the restoration
of damage to property caused by such action or otherwise;
(ii) With or without taking possession thereof, sell or otherwise
dispose of the Airframe or any Engine, at public or private sale and
with or without advertisement or notice to the Lessee, as the Lessor may
determine, and the Lessor may hold the Lessee liable for any installment
of Basic Rent and Renewal Rent due on or before the date of such sale
(and, if Basic Rent or Renewal Rent is payable in arrears, the pro rata
portion of the installment of Basic Rent or Renewal Rent due on the next
succeeding Rent Payment Date in respect of any period commencing on the
immediately preceding Rent Payment Date to the date of such sale), or
hold, use, operate, lease to others or keep idle all or any part of the
Airframe or any Engine as the Lessor, in its sole discretion, may
determine, in any such case free and clear of any rights of the Lessee
except as otherwise set forth in this Article 17, and without any duty
to account to the Lessee with respect to such action or inaction or for
any proceeds except to the extent required by Section 17.01(a)(iv)
hereof; in the event the Lessor elects to exercise its rights under said
Section, and in connection with any sale of the Aircraft or any part
thereof pursuant to this Article 17, the Lessor, the Indenture Trustee,
the Owner Participant or any Holder may bid for and purchase such
property;
(iii) Whether or not the Lessor shall have exercised or shall later
at any time exercise any of its rights under Section 17.01(a)(i) or
17.01(a)(ii) hereof, the Lessor, by written notice to the Lessee specifying
a payment date not earlier than 10 days from the date of such notice, may
demand that the Lessee pay to the Lessor, and the Lessee shall pay to the
Lessor on the payment date specified in such notice, as liquidated damages
for loss of a bargain and not as a penalty (in lieu of the Basic Rent or
Renewal Rent due on Rent Payment Dates occurring after the payment date
specified in such notice), any installment of Basic Rent, Renewal Rent and
any Supplemental Rent due on or before such payment date (and, to the
extent Basic Rent or Renewal Rent is payable in arrears, the pro rata
portion of the installment of Basic Rent or Renewal Rent due on the next
succeeding Rent Payment Date in respect of the period commencing on the
Stipulated Loss Value Determination Date referred to below and ending on
the date of such payment), plus an amount equal to the excess, if any, of
the Stipulated Loss Value for the Aircraft, computed as of the Stipulated
Loss Value Determination Date on or next preceding the payment date
specified in such notice over the Fair Market Value of the Aircraft,
computed as of such Stipulated Loss Value Determination Date, together with
(A), if Basic Rent is payable in advance, interest, to the extent permitted
by applicable law, at the Debt Rate on the amount of such Stipulated Loss
Value from such Stipulated Loss Value Determination Date to the date for
payment set forth in such notice from the Lessor and (B) in all cases,
interest, to the extent permitted by applicable law at the Past Due Rate on
the excess of such Stipulated Loss Value over such Fair Market Value, from
the date as of which such Stipulated Loss Value is payable to the date of
actual payment of such amount; provided, however, that if (and in any event
prior to the time for payment hereunder) the Lessor is unable within a
reasonable period of time to recover possession of the Aircraft, or any
portion thereof, pursuant to clause (i) above unencumbered by this Lease
and free and clear of all Liens (other than Lessor's Liens), the Fair
Market Value of the Aircraft or such portion shall, at the option of the
Lessor to the extent legally enforceable, be zero and, if the Fair Market
Value of the Aircraft is deemed to be zero, after payment in full by the
Lessee of the amount specified above and all other amounts due from the
Lessee under this Lease and the other Operative Agreements, the Lessor
shall promptly transfer (without recourse or warranty other than as to the
absence of the Lessor's Liens) all of its right, title and interest in the
Aircraft or such portion, to the Lessee;
(iv) In the event the Lessor, pursuant to Section 17.01(a)(ii)
hereof, shall have sold the Airframe and/or any Engine, the Lessor, in lieu
of exercising its rights under Section 17.01(a)(iii) hereof, may, if it
shall so elect, demand that the Lessee pay the Lessor, and the Lessee shall
pay to the Lessor, on the date of such sale, as liquidated damages for loss
of a bargain and not as a penalty (in lieu of the Basic Rent or Renewal
Rent due after the date on which such sale occurs) any unpaid Basic Rent or
Renewal Rent due on or before the date on which such sale occurs (and, to
the extent Basic Rent or Renewal Rent is payable in arrears, the pro rata
portion of the installment of Basic Rent or Renewal Rent due on the next
succeeding Rent Payment Date in respect of any period commencing on the
Stipulated Loss Value Determination Date referred to below and ending on
the date of such sale), and any Supplemental Rent due on or before the date
on which such sale occurs, plus an amount equal to the excess, if any, of
(A) the Stipulated Loss Value for the Aircraft, computed as of the
Stipulated Loss Value Determination Date next preceding the sale date, over
(B) the net proceeds of such sale (after deduction of all of the Lessor's
costs and expenses of such sale, including, without limitation, sales or
transfer taxes, costs of storage, overhaul, maintenance, preparation and
transportation of the Aircraft and brokers' and attorneys' fees) together
with (x), if Basic Rent is payable in advance, interest, to the extent
permitted by applicable law, at the Debt Rate on such Stipulated Loss Value
from such Stipulated Loss Value Determination Date to the date of such sale
and (y) in all cases, interest to the extent permitted by applicable law at
the Past Due Rate, on the amount of such excess from the date of such sale
to the date of actual payment by the Lessee;
(v) Proceed by appropriate court action to enforce the terms of this
Lease or to recover damages for its breach;
(vi) Terminate or rescind this Lease as to the Airframe or any or all
of the Engines; or
(vii) Exercise any other right or remedy which may be available to
the Lessor under applicable law.
(b) Cost of Exercise of Remedies. In addition, the Lessee shall be
liable, except as otherwise provided above, for any and all unpaid Rent due
before, after or during the exercise of any of the Lessor's remedies, for all
amounts payable by the Lessee under the Participation Agreement before or
after any termination hereof, and for all reasonable legal fees and other
costs and expenses incurred by the Lessor, the Indenture Trustee or the Owner
Participant by reason of the occurrence of any Event of Default or the
exercise of the Lessor's remedies, including, without limitation, all costs
and expenses incurred in connection with the return of the Airframe or any
Engine in accordance with the terms of Article 12 hereof or in placing the
Airframe or Engines in the condition and state of airworthiness required by
such Article or in connection with any inspection, use, operation,
maintenance, insurance, storage, or leasing carried out as part of such
exercise.
Section 17.02. Cumulative Remedies. Except as otherwise
provided, no remedy referred to in this Article 17 is intended to be
exclusive, but each shall be cumulative and in addition to any other remedy
referred to above or otherwise available to the Lessor at law or in equity;
and the exercise or beginning of exercise by the Lessor of any one or more
of such remedies shall not preclude the simultaneous or later exercise by
the Lessor of any or all of such other remedies.
Section 17.03. Waiver. No express or implied waiver by the Lessor
of any Event of Default shall in any way be, or be construed to be, a waiver
of any future or subsequent Event of Default. To the extent permitted by
applicable law, the Lessee waives any rights now or in the future conferred by
statute or otherwise which may require the Lessor to sell, lease or otherwise
use the Airframe or any Engine in mitigation of the Lessor's damages or which
may otherwise limit or modify any of the Lessor's rights or remedies under
this Article 17. The Lessor's access to the Aircraft is of the essence and
shall not be impaired.
Section 17.04. Lessor's Right to Perform for Lessee. If the Lessee
fails to make any required payment of Rent or fails to perform or comply with
any of its agreements contained in this Lease, whether or not such failure
shall constitute an Event of Default hereunder, the Lessor may (but shall not
be obligated to) make such payments or perform or comply with such agreement,
and the amount of such payment and the amount of the reasonable costs and
expenses of the Lessor incurred in connection with such payment or the
performance of or compliance with such agreement, together with interest (to
the extent permitted by applicable law) at the Past Due Rate from the date of
the making of such payment or the incurring of such costs and expenses by the
Lessor to the date of payment of such Rent or other amount by the Lessee,
shall be deemed Supplemental Rent payable by the Lessee upon demand. No such
payment or performance by the Lessor shall be deemed to waive any Default or
Event of Default or relieve the Lessee of its obligations hereunder.
ARTICLE 18
COVENANT OF QUIET ENJOYMENT
Section 18.01. Quiet Enjoyment. So long as no Event of Default
shall have occurred and be continuing, the Lessor covenants that neither it
nor any other Person lawfully claiming through it (other than the holder of a
Lien which the Lessee is obligated to discharge pursuant to Article 6 hereof,
and it being understood that the Lessor shall not be liable for any act or
omission of the Indenture Trustee or any other Person claiming through the
Indenture Trustee) shall interfere with the Lessee's right to quietly enjoy
the Aircraft without hindrance or disturbance by it or any such other Person.
ARTICLE 19
FURTHER ASSURANCES
Section 19.01. Further Assurances. Promptly upon the execution
and delivery of the Lease Supplement and the Indenture and Security
Agreement Supplement, the Lessee will cause each of them and this Lease,
the Trust Agreement and the Indenture, to be duly filed for recordation in
accordance with the Transportation Code and will maintain the recordation
of the Indenture until the Lien of the Indenture shall have been discharged
pursuant to the terms of the Indenture. In addition, the Lessee will, at
the Lessee's own cost and expense, promptly and duly execute and deliver to
the Lessor, the Owner Participant and the Indenture Trustee such further
documents and assurances to carry out the intent and purpose of this Lease
and the Indenture and to establish and protect the rights and remedies
created or intended to be created in favor of the Lessor under this Lease,
and of the Owner Participant under the Trust Agreement, and of the
Indenture Trustee under the Indenture, including, without limitation, the
execution and filing of Uniform Commercial Code financing and continuation
statements, the execution and delivery of supplements and amendments to
this Lease and the Indenture, in recordable form, subjecting to this Lease
and the Indenture any Replacement Airframe and/or Replacement Engines
delivered by the Lessee pursuant to Section 11.03 hereof and any
Replacement Engine delivered by the Lessee pursuant to Section 11.04 hereof
and the recording and filing of counterparts of this Lease and the
Indenture in accordance with the laws of such jurisdictions as the Lessor
or the Indenture Trustee may from time to time deem advisable. The
foregoing does not impose upon the Lessor any additional liabilities not
otherwise contemplated by this Lease.
ARTICLE 20
NET LEASE
Section 20.01. Nature of Lease. (a) This Lease is a net lease, it
being the intention of the parties hereto that the obligations of the Lessee
to pay all costs and expenses of every character, whether seen or unforeseen,
ordinary or extraordinary, or structural or nonstructural, in connection with
the use, operation, maintenance, repair and reconstruction of the Airframe and
each Engine by the Lessee, including, without limitation, the costs and
expenses particularly set forth in this Lease (unless expressly excluded from
the terms hereof, the costs and expenses of the Lessor and the Owner
Participant shall include the reasonable fees and expenses of their respective
outside counsel), shall be absolute and unconditional, shall be separate and
independent covenants and agreements, and shall continue unaffected unless and
until the covenants have been terminated pursuant to an express provision of
this Lease. The obligation to pay Rent and all amounts payable by the Lessee
under this Lease or the Participation Agreement shall be absolute and
unconditional and (except as otherwise expressly provided with respect to
Supplemental Rent) shall be paid without notice or demand and such obligation
shall not be affected by any circumstance, including, without limitation:
(i) any set-off, counterclaim, recoupment, defense or other right
which the Lessee may have against the Lessor, the Owner Participant, any
Holder, the Indenture Trustee or anyone else for any reason (including,
without limitation, any breach by the Lessor or the Owner Participant or
the Indenture Trustee or any Holder of their respective representations,
warranties, agreements or covenants contained in any of the Operative
Agreements);
(ii) any defect in the title, airworthiness, registration,
eligibility for registration under the Transportation Code (and the
regulations thereunder) or under any of the laws or regulations of any
other country of registry of the Aircraft, condition, design, operation,
merchantability or fitness for use of, suitability for a particular purpose
of, or any damage to or loss or destruction of, the Aircraft or any portion
thereof, or any interruption or cessation in the use or possession of the
Aircraft by the Lessee or any sublessee for any reason including, without
limitation, by reason of governmental action or any doctrine of force
majeure or impossibility of performance;
(iii) any insolvency, bankruptcy, reorganization or similar case or
proceedings by or against the Lessor, the Lessee, the Indenture Trustee or
the Owner Participant or any other Person;
(iv) any Liens, encumbrances or rights of any other Person with
respect to the Aircraft, the invalidity or unenforceability or lack of due
authorization or other infirmity of this Lease or any other Operative
Agreement or document or instrument executed pursuant hereto or thereto, or
any lack of right, power or authority of the Lessor or the Lessee or any
sublessee or any other party to any other Operative Agreement to enter into
this Lease or any other Operative Agreement or any such document or
instrument; or
(v) any other circumstance, happening or event whatsoever, whether or
not unforeseen, or similar to any of the foregoing.
(b) To the extent permitted by applicable law, the Lessee waives any
and all rights which it may now have or which at any time it may have
conferred upon it, by statute or otherwise, to suspend performance under,
terminate, cancel, quit, rescind or surrender this Lease, the Airframe, or any
Engine or part thereof, other than in accordance with the terms hereof.
(c) Each payment of Rent made by the Lessee shall be final as to the
Lessor and the Lessee, and the Lessee will not seek to return nor to recover,
xxxxx, suspend, defer or reduce all or any part of any such payment of Rent
from the Lessor or from the Indenture Trustee for any reason.
ARTICLE 21
SUCCESSOR LESSOR
Section 21.01. Successor Lessor. The Lessee agrees that in the case
of the appointment of any successor trustee for the Lessor pursuant to the
terms of the Participation Agreement, such successor trustee shall, upon
written notice by such successor to the Lessee, succeed to all the rights,
powers and title of the Lessor under this Lease and shall be deemed to be the
Lessor and the owner of the Aircraft for all purposes of this Lease without
the necessity of any consent or approval by the Lessee and without in any way
altering the terms of this Lease or the Lessee's obligations. One such
appointment and designation of a successor trustee shall not exhaust the right
to appoint and designate a further successor trustee pursuant to the
Participation Agreement, but such right may be exercised repeatedly so long as
this Lease shall be in effect.
ARTICLE 22
SECURITY FOR LESSOR'S OBLIGATIONS
Section 22.01. Security for Lessor's Obligations to Holders. In
order to secure the indebtedness evidenced by the Certificates, the Indenture
provides among other things, for the assignment by the Lessor to the Indenture
Trustee of this Lease and the Lease Supplement and for the creation of a first
mortgage and security interest in favor of the Indenture Trustee on the
Aircraft. The Lessee consents to and acknowledges such assignment (subject to
the reservations and conditions therein set forth) and the receipt of a copy
of the Indenture.
Section 22.02. [Reserved].
Section 22.03. Consent of Lessee to Assignment of Lease as Security.
The Lessee hereby acknowledges and consents to the Indenture Trustee's rights
pursuant to the terms of the Indenture to receive payments (other than
Excepted Payments not constituting Basic Rent) due under this Lease, to
transfer or assign title to the Aircraft subject to this Lease, to make
(jointly with the Lessor where provided in the Indenture) all waivers and
agreements except as otherwise provided in the Indenture (including Section
8.01 thereof), to give all notices, consents and releases and to take all
action upon the happening of a Default or Event of Default under this Lease
(except as otherwise specifically provided in the Indenture, including Section
8.01 thereof), or to do any and all other things whatsoever which the Lessor
is or may become entitled to do under this Lease (except as otherwise provided
in the Indenture, including Section 8.01 thereof); all or any of which rights,
obligations, benefits and interests may, pursuant to the terms of the
Indenture, be reassigned or retransferred by the Indenture Trustee at any time
and from time to time (except as otherwise provided in the Indenture);
provided, however, that the Lessor, except to the extent, and for such time
as, it is unable to do so by virtue of the Indenture, shall remain liable for
the performance of all the terms, conditions, covenants and provisions for
which it is obligated under this Lease notwithstanding such assignment.
ARTICLE 23
SECURITY FUNDS
Section 23.01. Investment of Security Funds. (a) Any amounts
otherwise payable to the Lessee in accordance with the terms hereof shall
instead be held by the Lessor as security for, and may be applied by the
Lessor against, the obligations of the Lessee under this Lease during such
time as there shall have occurred and be continuing a Payment Default,
Bankruptcy Default or Event of Default, and, at such times as there shall not
be continuing a Payment Default, Bankruptcy Default or Event of Default, such
amounts, net of any amounts which have been applied by the Lessor against the
Lessee's obligations hereunder, shall be paid to the Lessee as provided in
this Lease. Any amounts which are held by the Lessor pending payment to the
Lessee shall, until paid to the Lessee or applied against the Lessee's
obligations hereunder, be invested by the Lessor, as directed from time to
time, in writing (and in the absence of a written direction by the Lessee, the
Lessor shall invest such monies in direct obligations of the United States of
America), by the Lessee and at the expense and risk of the Lessee, in the
following securities (which in the case of securities referred to in
subparagraphs (i) through (iv) of this Section 23.01(a) hereof shall mature
within ninety (90) days of the date of purchase):
(i) direct obligations of the United States of America; or
(ii) obligations fully guaranteed by the United States of America; or
(iii) certificates of deposit issued by, or bankers' acceptances of,
or time deposits or a deposit account with, any bank, trust company or
national banking association incorporated or doing business under the laws
of the United States of America or one of its States (which may include the
Owner Trustee or the Indenture Trustee in their respective individual
capacities or any Affiliate thereof), having a combined capital and surplus
of at least $500,000,000 and having a rating of "A" or better from Xxxxx'x
or S&P; or
(iv) commercial paper rated A-1/P-1 by S&P or Xxxxx'x, respectively
(or if neither such organization shall rate such commercial paper at any
time, a rating by any nationally recognized statistical rating organization
in the United States of America equal to the highest rating assigned by
such rating organization) (which may include commercial paper issued by the
Owner Trustee or the Indenture Trustee in their respective individual
capacities or any Affiliate thereof).
(b) At any time any invested funds are distributed to the Lessee,
there shall be promptly remitted to the Lessee any gain (including interest
received) realized as the result of any investment pursuant to Section
23.01(a) hereof (net of any fees, commissions and other costs, Taxes and
expenses, if any, incurred by the Lessor or the Owner Participant in
connection with such investment), unless a Payment Default, Bankruptcy Default
or Event of Default shall have occurred and be continuing in which case such
funds shall be applied in the same manner as the principal so invested. The
Lessee shall be responsible for and will promptly pay to the Indenture Trustee
or the Lessor, as the case may be, on demand, the amount of any loss realized
as the result of any such investment (together with any fees, commissions and
other costs, Taxes and expenses, if any, incurred by the Indenture Trustee or
the Lessor or the Owner Participant in connection with such investment), such
amount to be disposed of in accordance with the terms of the Indenture or the
Lease, as the case may be.
ARTICLE 24
CONCERNING THE LESSOR
Section 24.01. Lessor's Entry Into Lease. Except as expressly
provided herein, the Lessor and the Lessee agree that this Lease is executed
by SSB not individually but solely as Owner Trustee under the Trust Agreement
in the exercise of the power and authority conferred and vested in it as such
Owner Trustee, that each and all of the representations, undertakings and
agreements by the Lessor herein are for the purpose and with the intention of
binding only the Lessor's Estate, and that in no case whatsoever shall SSB be
personally liable for any loss in respect of such representations,
undertakings and agreements, that actions to be taken by the Lessor pursuant
to its obligations hereunder may, in certain instances, be taken by the Lessor
only upon specific authority of the Owner Participant and the Indenture
Trustee, that nothing herein contained shall be construed as creating any
liability on SSB, individually or personally, to perform any covenant, either
express or implied, herein, all such liability, if any, being expressly waived
by the Lessee and by each and every Person now or hereafter claiming by,
through or under the Lessee except with respect to the gross negligence or
willful misconduct of SSB, and that so far as SSB, individually or personally
is concerned, the Lessee and any Person claiming by, through or under the
Lessee shall look solely to the Lessor's Estate for the performance by the
Lessor of any of its obligations under this Lease; provided, that nothing in
this Section 24.01 shall be construed to limit in scope or substance those
representations and warranties of SSB in its individual capacity set forth in
the Participation Agreement and the Trust Agreement. The term "Lessor" as
used in this Lease shall include any trustee succeeding SSB as Owner Trustee
under the Trust Agreement. Any obligation of the Lessor hereunder may be
performed by the Owner Participant, and any such performance shall not be
construed as revocation of the trust created by the Trust Agreement. Nothing
contained in this Lease shall restrict the operation of the provisions of the
Trust Agreement with respect to its revocation of the resignation or removal
of the Owner Trustee hereunder.
ARTICLE 25
NOTICES
Section 25.01. Notices. All notices, demands, declarations and
other communications required by this Lease shall be in writing and shall
be deemed received (a) if given by telecopier, when transmitted and the
appropriate telephonic confirmation received if transmitted on a Business
Day and during normal business hours of the recipient, and otherwise on the
next Business Day following transmission, (b) if given by certified mail,
return receipt requested, postage prepaid, five Business Days after being
deposited in the United States mail and (c) if given by FedEx service (or,
if a Default or Event of Default shall have occurred and be continuing, by
other comparable courier service), when received or personally delivered,
addressed:
(a) If to the Lessee, to its office at 0000 Xxxxxxxxx Xxxxxx,
Xxxxxxx, Xxxxxxxxx 00000, Attention: Senior Vice President and Chief
Financial Officer with a copy to Senior Vice President and General Counsel;
telephone (000) 000-0000, facsimile (000) 000-0000; or at such other
address as the Lessee shall from time to time designate in writing to the
Lessor, the Indenture Trustee and the Owner Participant;
(b) If to the Lessor or Owner Trustee, to it x/x Xxxxx Xxxxxx Xxxx
and Trust Company, Xxx Xxxxxxxxxxxxx Xxxxx, 0xx Xxxxx, Xxxxxx,
Xxxxxxxxxxxxx 00000, Attention: Corporate Trust Department; telephone
(000) 000-0000, facsimile (000) 000-0000; or to such other address as the
Lessor shall from time to time designate in writing to the Lessee and the
Indenture Trustee, with a copy to Owner Participant at the Owner
Participant's address as provided in subsection (c) below;
(c) If to the Owner Participant, in accordance with the
Participation Agreement; and
(d) If to the Indenture Trustee, to its office at 00 Xxxxx Xxxx
Xxxxxx, Xxxx Xxxx Xxxx, Xxxx 00000, Attention: Corporate Trust Department,
telephone (000) 000-0000, facsimile (000) 000-0000; or to such other
address as the Indenture Trustee shall from time to time designate in
writing to the Lessor, the Lessee and the Owner Participant.
ARTICLE 26
MISCELLANEOUS
Section 26.01. Section Heading and Captions. All article and
section headings and captions used in this Lease are purely for convenience
and shall not affect the interpretation of this Lease.
Section 26.02. References. Any reference to a specific article or
section number shall be interpreted as a reference to that article or section
of this Lease unless otherwise expressly provided.
Section 26.03. APPLICABLE LAW. THIS LEASE SHALL IN ALL RESPECTS BE
GOVERNED BY, AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW
YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE BUT
WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS, AND IS BEING
DELIVERED IN NEW YORK.
Section 26.04. Severability. Any provision of this Lease which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
Section 26.05. No Oral Modification. The terms and provisions of
this Lease may not be changed, waived, discharged or terminated orally, but
only by an instrument in writing signed by the party against which enforcement
of the change, waiver, discharge or termination is sought. Any such change,
waiver, discharge or termination is also subject to the provisions of Section
8.01 and Article XIII of the Indenture.
Section 26.06. Agreement as Chattel Paper. To the extent that this
Lease constitutes chattel paper (as such term is defined in the Uniform
Commercial Code as in effect in any applicable jurisdiction), no security
interest in this Lease may be created through the transfer or possession of
any counterpart other than the original chattel-paper counterpart, which shall
be the counterpart containing the receipt executed by the Indenture Trustee on
its signature page.
Section 26.07. Counterparts. This Lease may be executed in any
number of counterparts, each of which shall be an original (except that only
the counterpart bearing the receipt executed by the Indenture Trustee shall be
the original for purposes of perfecting a security interest therein as chattel
paper under the Uniform Commercial Code), but all of which taken together
shall constitute one and the same instrument and any of the parties hereto may
execute this Lease by signing any such counterpart.
Section 26.08. Public Release of Information. Provided no Event of
Default shall have occurred and be continuing, each party shall in each
instance obtain the prior written approval of each party concerning the exact
text and timing of news releases, articles and other informational releases to
the public media concerning this Lease.
ARTICLE 27
TRUE LEASE
Section 27.01. Intent of the Parties. It is the intent of the
parties to this Lease that for all purposes (including, without limitation,
U.S. Federal income tax purposes) this Lease will be a true lease, and that
this Lease conveys to the Lessee no right, title or interest in the Aircraft
except as a lessee.
Section 27.02. Section 1110 Compliance. Notwithstanding any
provision herein or elsewhere contained to the contrary, it is understood and
agreed among the parties hereto that the transactions contemplated by this
Lease and the other Operative Agreements are expressly intended to be, shall
be and should be construed so as to be, entitled to the full benefits of
Section 1110 of the Bankruptcy Code and any successor provision thereof.
Section 27.03. Finance Lease. This Lease is a "finance lease"
within the meaning of Section 2-A--103(g) of the Uniform Commercial Code.
IN WITNESS WHEREOF, the Lessor and the Lessee have each caused this
Lease to be duly executed as of the date first above written.
LESSOR: STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION,
not in its individual capacity,
but solely as Owner Trustee
By: ______________________________________________
Name: Xxxx X. Xxxxx
Title: Vice President
LESSEE: FEDERAL EXPRESS CORPORATION
By: _______________________________________________
Name: Xxxxxx X. Xxxxxxx
Title: Assistant Treasurer and
Managing Director - Structured Finance
Receipt of this original counterpart of the Lease is hereby
acknowledged on this __ day of May 1997.
Indenture Trustee: FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not in its individual capacity,
but solely as Indenture Trustee
By: _____________________________________________
Name: Xxxx X. Xxxxxx
Title: Vice President
SCHEDULE I
DEFINITIONS
(FEDERAL EXPRESS CORPORATION TRUST NO. N672FE)
GENERAL PROVISIONS
The following terms shall have the following meanings for all
purposes of the Operative Agreements (other than the Pass Through Agreement,
the Series Supplements, the Intercreditor Agreement and the Liquidity
Facilities) referred to below, unless otherwise defined in an Operative
Agreement or the context thereof shall otherwise require. In the case of any
conflict between the provisions of this Schedule and the provisions of any
Operative Agreement, the provisions of such Operative Agreement shall control
the construction of such Operative Agreement.
Unless the context otherwise requires, (i) references to agreements
shall be deemed to mean and include such agreements as amended and
supplemented from time to time, and (ii) references to parties to agreements
shall be deemed to include the successors and permitted assigns of such
parties.
DEFINED TERMS:
Additional Insured. As defined in Article 13 of the Lease.
Aeronautics Authority. As appropriate, the Federal Aviation
Administration and/or the Administrator of the Federal Aviation
Administration, any successor to the former United States Civil Aeronautics
Board, or any Person, governmental department, bureau, commission or agency
located in the United States succeeding to the functions of any of the
foregoing.
Affidavits. The affidavits of citizenship of the Owner Trustee and
the Owner Participant.
Affiliate. With respect to any Person, any other Person directly or
indirectly controlling, controlled by or under common control with such
Person. For the purposes of this definition, "control" (including "controlled
by" and "under common control with") shall mean the power, directly or
indirectly, to direct or cause the direction of the management and policies of
such Person whether through the ownership of voting securities or by contract
or otherwise. In no event shall the Owner Trustee or the Lessor be deemed an
Affiliate of the Owner Participant.
After-Tax Basis. A basis such that any payment to be received by a
Person shall be supplemented by a further payment to such Person so that the
sum of the two payments, after deduction of all Taxes resulting from the
receipt or accrual of such payments, shall be equal to the payment to be
received. In the case of amounts payable to the Lessor, the Owner Participant,
or any corporate Affiliate of the Owner Participant, it shall be presumed that
such Person is at all times subject to Federal income tax at the maximum
marginal rate generally applicable to corporations from time to time and
actual state, local and foreign income taxes.
Air Carrier. Any U.S. Air Carrier and any "foreign air carrier" (as
defined in the Transportation Code) as to which there is in force a permit
granted under Section 41302 of the Transportation Code.
Airbus Guaranty. The Guaranty to be dated the Delivery Date executed
by the Manufacturer and guaranteeing AVSA's Warranty Xxxx of Sale.
Aircraft. The Airframe to be sold by AVSA to the Owner Trustee as
provided in the Participation Agreement and to be leased under the Lease (or
any permitted substitute airframe thereunder) together with two Engines
(whether either is an initial Engine or a Replacement Engine) whether or not
any of such initial or Replacement Engines may from time to time be installed
on such Airframe or may be installed on any other airframe or on any other
aircraft, including any aircraft substituted pursuant to Section 11.03 of the
Lease. Prior to delivery of the initial Lease Supplement, references in the
Operative Agreements (including Section 3.05 of the Participation Agreement)
to Aircraft shall mean the Airbus A300F4-605R airframe bearing FAA
Registration Number N672FE and Manufacturer's serial number 779, together with
two General Electric CF6-80C2-A5F engines.
Airframe. The Airbus A300F4-605R aircraft (excluding the Engines or
engines from time to time installed thereon) to be leased by the Lessor to the
Lessee pursuant to the Lease and the initial Lease Supplement and having the
United States FAA Registration Number initially and manufacturer's serial
number specified in the initial Lease Supplement, including (i) all Parts in
respect thereof and (ii) any Replacement Airframe which may be substituted
pursuant to Section 11.03 of the Lease.
Ancillary Agreement. Any written agreement of the Lessee to which the
Lessor is a party or to which the Lessor has consented in writing entered into
on or prior to the Delivery Date or any date thereafter in connection with the
transactions contemplated by the Operative Agreements, as such agreement may
be amended and supplemented from time to time with the consent of the Lessor
and delivered to the Owner Trustee, the Indenture Trustee, the Pass Through
Trustee, the Subordination Agent, each Liquidity Provider and the Owner
Participant.
Ancillary Agreement I. The Ancillary Agreement I (Federal Express
Corporation Trust No. N672FE), dated the Certificate Closing Date, among the
Lessee, the Owner Trustee, not in its individual capacity, but solely as Owner
Trustee, the Owner Participant and the Indenture Trustee not in its individual
capacity, but solely as Indenture Trustee, as originally executed or as
amended, modified or supplemented with the consent of all the parties thereto.
Ancillary Agreement II. The Ancillary Agreement II (Federal Express
Corporation Trust No. N672FE), dated the Certificate Closing Date, among the
Lessee, the Owner Trustee, not in its individual capacity, but solely as Owner
Trustee, the Owner Participant and the Indenture Trustee not in its individual
capacity, but solely as Indenture Trustee, as originally executed or as
amended, modified or supplemented with the consent of all the parties thereto.
Application. The application for registration of the Aircraft with
the FAA in the name of the Owner Trustee.
Appraisal. The report prepared by BK Associates, Inc. and to be
delivered to the Owner Participant (with an abbreviated report to the Lessee)
on the Delivery Date pursuant to Section 4.02(h) of the Participation
Agreement.
Assignment and Assumption Agreement. Any agreement delivered in
compliance with Section 7.03(d) of the Participation Agreement.
Average Life Date. For any Certificate, the date which follows the
prepayment date by a period equal to the Remaining Weighted Average Life of
such Certificate.
AVSA. AVSA S.A.R.L., a societe a responsabilite limitee, organized
and existing under the laws of France.
AVSA Consent and Agreement. The Consent and Agreement dated as of
May 1, 1997, executed by AVSA.
AVSA's FAA Xxxx of Sale. The xxxx of sale for the Airframe on AC
Form 8050-2, or such other form as may be approved by the Aeronautics
Authority, executed by AVSA in favor of the Owner Trustee and to be dated the
Delivery Date.
AVSA's Warranty Xxxx of Sale. The full warranty xxxx of sale
covering the Aircraft (and specifically referring to each Engine) executed by
AVSA as owner of the Aircraft in favor of the Owner Trustee and to be dated
the Delivery Date.
Bankruptcy Code. The Federal Bankruptcy Code of 1978, as amended, and
any successor thereto.
Bankruptcy Default. An event specified in Section 16.01(e), (f) or
(g) of the Lease which either does or, with the giving of notice or lapse of
time or both, would constitute an Event of Default.
Basic Rent. The aggregate periodic rent payable for the Aircraft
throughout the Basic Term pursuant to Section 3.02 of the Lease, adjusted
pursuant to Article 3 of the Lease.
Basic Term. The period commencing at the beginning of the day on the
Delivery Date and ending at the end of the day on November 19, 2020, or such
earlier date on which the Lease shall be terminated as provided therein.
Beneficial Interest. The interest of the Owner Participant under the
Trust Agreement.
Business Day. Any day on which commercial banks are not authorized or
required to close in New York, New York, Memphis, Tennessee and the city in the
United States in which the office or agency is maintained by the Pass Through
Trustee for the payment of the Pass Through Certificates, and after the Lien
of the Indenture is discharged, Boston, Massachusetts.
Certificate Closing Date. The date of the closing with respect to the
purchase of Certificates by the Pass Through Trustee contemplated by Section
2.01(b) of the Participation Agreement.
Certificates. The Equipment Trust Certificates (Federal Express
Corporation Trust No. N672FE), issued by the Owner Trustee pursuant to the
Indenture and any certificate issued in exchange therefor or replacement
thereof pursuant to the Indenture.
Change in Tax Law. Any change to the Code or the Treasury regulations
promulgated thereunder or the publication of any revenue ruling, revenue
procedure or any informational release by the Internal Revenue Service or the
Department of Treasury either of which would change or would allow a change in
the tax assumptions or structure upon which the lease economics were based,
provided that the Owner Participant or the Lessee has notified the other party
of such change in writing prior to the Delivery Date.
Change in Tax Rate. Any amendment, modification, deletion, addition,
or change to the Code which is enacted into law after the Delivery Date which
changes the highest marginal statutory rate of Federal income tax applicable
to the Owner Participant (other than a change which is in the nature of a
minimum tax).
Citizen of the United States. A citizen of the United States as
defined in Section 40102(a)(15) of the Transportation Code, or any analogous
part of any successor or substituted legislation or regulation at the time in
effect.
Class A Liquidity Provider. Has the meaning specified in Section
1.01 of the Intercreditor Agreement.
Class B Liquidity Provider. Has the meaning specified in Section
1.01 of the Intercreditor Agreement.
Closings. The closing with respect to the acquisition of the Pass
Through Certificates by the Underwriters and the closing with respect to the
acquisition of Certificates by the Pass Through Trustee.
Code. Except as otherwise provided, the Internal Revenue Code of
1986, as amended from time to time.
Collateral Account. The deposit account established and maintained
pursuant to Section 2.13 of the Indenture.
Collateral Account Control Agreement. The Collateral Account Control
Agreement dated as of May 1, 1997 among State Street Bank and Trust Company,
the Indenture Trustee and the Owner Trustee.
Commitment. The amount of the Owner Participant's participation in
the Purchase Price required to be made available or paid as provided in
Section 3.02 of the Participation Agreement.
Consent and Agreement. The Consent and Agreement dated as of May 1,
1997 executed by the Manufacturer.
Consent and Guaranty. The Consent and Guaranty of the Manufacturer
attached to the Purchase Agreement.
Corporate Trust Administration. The Corporate Trust Administration
office of the Owner Trustee located at 000 Xxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxxx
00000, Attention: Corporation Trust Administration, or such other office at
which the Owner Trustee's corporate trust business shall be administered which
the Owner Trustee shall have specified by notice in writing to the Lessee, the
Owner Participant and the Indenture Trustee.
Corporate Trust Department. The Corporate Trust Department office of
the Indenture Trustee located at 00 Xxxxx Xxxx Xxxxxx, Xxxx Xxxx Xxxx, Xxxx
00000, Attention: Corporate Trust Department, or such other office at which
the Indenture Trustee's corporate trust business shall be administered which
the Indenture Trustee shall have specified by notice in writing to the Lessee,
the Owner Participant and the Owner Trustee.
CRAF Program. Has the meaning specified in Section 7.01(f) of the
Lease.
Cut-Off Date. November 17, 1997.
Debt Portion. The amount specified as such on Schedule IV to the
Participation Agreement.
Debt Rate. The weighted average (based on Outstanding principal
amount) rate of interest on the Certificates issued pursuant to the Indenture.
Default. Any event or condition which, with the lapse of time or the
giving of notice, or both, would constitute an Event of Default.
Delivery Date. The date on which the Aircraft is delivered and sold
by AVSA to the Lessor and leased by the Lessor to the Lessee under the Lease,
which date shall also be the date of the initial Lease Supplement.
Delivery Notice. Notice of the Aircraft's Delivery Date, given by
the Lessee as provided in Section 3.01 of the Participation Agreement and
including any notice with respect to a postponed Delivery Date given by the
Lessee pursuant to Section 3.05(c) of the Participation Agreement.
Eligible Deposit Account. Either (a) a segregated account with an
Eligible Institution or (b) a segregated trust account with the corporate
trust department of a depository institution with corporate trust powers
organized under the laws of the United States or any state thereof, or the
District of Columbia, and whose deposits are insured by the Federal Deposit
Insurance Corporation, provided that such institution also has a combined
capital and surplus of at least $100,000,000 and a rating of A or better from
the Thomson Bank Watch.
Eligible Institution. A depository institution organized under the
laws of the United States or any one of the states thereof, or the District of
Columbia, or any domestic branch of a foreign bank, which in any such case at
all times (a) has either (x) a long-term unsecured debt rating of at least Aa2
by Moody's or (y) a short-term certificate of deposit rating of P-1 by
Moody's, (b) has either (x) a long-term unsecured debt rating of a least AA by
S&P or (y) a short-term certificate of deposit rating of A-1+ by S&P and (c)
is a member of the Federal Deposit Insurance Corporation.
Engine. Each of the two General Electric CF6-80C2-A5F engines listed
by its manufacturer's serial number in the initial Lease Supplement and leased
pursuant to the Lease, whether or not from time to time installed on the
Airframe or installed on any other airframe or on any other aircraft, and any
Replacement Engine which may from time to time be substituted for an Engine
pursuant to Section 7.02(a)(vii), 10.02(c), 10.03, 11.03, 11.04 or 12.02 of
the Lease, together with all Parts related thereto. Except as otherwise
provided, at such time as a Replacement Engine shall be so substituted and the
Engine for which the substitution is made shall be released from the Lien of
the Indenture, such replaced Engine shall cease to be an "Engine" under the
Lease. The term "Engines" means, as of any date of determination, both Engines
then leased to the Lessee pursuant to the Lease.
Engine Consent. The Engine Consent dated as of May 1, 1997, executed
by the Engine Manufacturer.
Engine Manufacturer. General Electric Company, a New York
corporation.
Engine Warranty Assignment. The Engine Warranty Assignment (Federal
Express Corporation Trust No. N672FE), dated as of May 1, 1997 between the
Lessor and the Lessee.
ERISA. The Employee Retirement Income Security Act of 1974, as
amended.
ERISA Plan. As defined in Section 8.01(b)(xii) of the Participation
Agreement.
Estimated Expense Amount. Has the meaning specified in Section
10.01(a) of the Participation Agreement.
Event of Default. Each of the events specified in Article 16 of the
Lease.
Event of Loss. Any of the following events with respect to the
Aircraft, the Airframe or any Engine: (i) loss of such property or its use (A)
for a period in excess of 60 days due to theft or disappearance or such longer
period, not to exceed 180 days from the end of such initial 60-day period, if
and so long as the location of such property is known to the Lessee and the
Lessee is diligently pursuing recovery of such property, or to the end of the
Term, if less (unless such theft or disappearance constitutes an Event of Loss
pursuant to (i)(B) or (ii) hereof) or (B) for a period in excess of 60 days
due to the destruction, damage beyond economic repair or rendition of such
property permanently unfit for normal use by Lessee for any reason whatsoever;
(ii) any damage to such property which results in an insurance settlement with
respect to such property on the basis of a total loss, or constructive or
compromised total loss; (iii) (1) condemnation, confiscation or seizure of, or
requisition of title to such property by the Government, any foreign
government or purported government or any agency or instrumentality thereof,
or (2) condemnation, confiscation, or seizure of, or requisition or taking of,
use of such property (A) by a foreign government or instrumentality or agency
of any such foreign government, for a period in excess of 180 days (or such
shorter period ending on the earlier of the expiration of the Term or on the
date on which an insurance settlement with respect to such property on the
basis of a total loss or constructive or compromised total loss shall occur)
or (B) by the Government for a period extending beyond the Term; and (iv) as a
result of any law, rule, regulation, order or other action by the Aeronautics
Authority or other governmental body having jurisdiction, the use of the
Aircraft or Airframe in the normal course of air transportation of cargo shall
have been prohibited by virtue of a condition affecting all Airbus A300-600
series aircraft equipped with engines of the same make and model as the
Engines for a period of twelve (12) consecutive months, unless the Lessee,
prior to the expiration of such twelve (12) month period, shall be diligently
carrying forward all steps which are necessary or desirable to permit the
normal use of the Aircraft or Airframe or, in any event, if such use of the
Aircraft or the Airframe shall have been prohibited for a period of
twenty-four (24) consecutive months or until the end of the Term, if earlier.
The date of such Event of Loss shall be (s) the 61st day or the 241st day, as
the case may be, following loss of such property or its use due to theft or
disappearance (or the end of the Term or the Lessee's abandonment of diligent
efforts to recover such property, if earlier); (t) the 61st day following the
date of any destruction, damage beyond economic repair or rendition of such
property permanently unfit for normal use; (u) the date of any insurance
settlement on the basis of a total loss or constructive or compromised total
loss; (v) the date of any condemnation, confiscation, seizure or requisition
of title of such property; (w) the 181st day following condemnation,
confiscation, seizure or requisition for use of such property by a foreign
government referred to in clause (iii)(2)(A) above (or the end of the Term or
the date of any insurance settlement described therein, if earlier than such
181st day); (x) the last day of the Term in the case of requisition for use of
such property by the Government; (y) the last day of the 12 month or 24 month
period, referred to in clause (iv) above (or if earlier, the end of the Term
or abandonment of the Lessee's efforts to restore the normal use of the
Aircraft). An Event of Loss with respect to the Aircraft shall be deemed to
have occurred if any Event of Loss occurs with respect to the Airframe.
Excepted Payments. Collectively, (i) indemnity, expense,
reimbursement or other payments paid or payable by the Lessee in respect of
the Owner Participant, the Owner Trustee in its individual capacity or any of
their respective successors, permitted assigns, directors, officers,
employees, servants and agents or Affiliates, pursuant to the Participation
Agreement or any other Operative Agreement or any indemnity hereafter granted
to the Owner Participant or the Owner Trustee in its individual capacity
pursuant to the Lease or the Participation Agreement, (ii) proceeds of public
liability insurance (or government indemnities in lieu thereof) in respect of
the Aircraft payable as a result of insurance claims paid for the benefit of,
or losses suffered by, the Owner Trustee or the Indenture Trustee in their
respective individual capacities or by the Owner Participant, or their
respective successors, permitted assigns or Affiliates, (iii) proceeds of
insurance maintained with respect to the Aircraft by the Owner Participant
(whether directly or through the Owner Trustee) maintained in accordance with
Section 13.05 of the Lease but not required under Article 13 of the Lease,
(iv) payments of Supplemental Rent by the Lessee in respect of any amounts
payable under the Tax Indemnity Agreement, (v) any purchase price paid to the
Owner Participant for its interest in the Trust Estate pursuant to Section
7.03(d) of the Participation Agreement, (vi) subject to Section 3.05 of the
Lease, payments constituting increases in Basic Rent attributable to payments
arising pursuant to Section 5 of the Tax Indemnity Agreement, (vii) any
payments in respect of interest to the extent attributable to payments
referred to in clauses (i) through (vi) above and (viii) any right to demand,
collect or otherwise receive and enforce the payment of any amount described
in clauses (i) through (v) and (vii) above (except with respect to interest
attributable to payments referred to in clause (vi) above).
Expense; Expenses. Have the meaning specified in Section 9.01(a) of
the Participation Agreement.
Fair Market Renewal Term. A term with respect to which the Lessee has
exercised its option to renew the Lease pursuant to the second paragraph of
Section 4.01(a) thereof and with respect to which the conditions set forth in
such Section 4.01(a) are met.
Fair Market Rental. An amount determined on the basis of, and equal
in amount to, the rental which would be obtained in an arm's-length
transaction between an informed and willing lessee and an informed and willing
lessor unaffiliated with such lessee, neither being under any compulsion to
lease. In such determination, it shall be assumed that the Aircraft is in the
condition required under the Lease in the case of return of the Aircraft
pursuant to Article 12 of the Lease and Fair Market Rental shall be determined
in accordance with the provisions of Section 4.03 of the Lease.
Fair Market Value. An amount determined on the basis of, and equal in
amount to, the value which would be obtained in an arm's-length transaction
between an informed and willing purchaser under no compulsion to buy and an
informed and willing seller unaffiliated with such purchaser and under no
compulsion to sell, assuming the Aircraft (or other property) is unencumbered
by the Lease. In such determination, except for purposes of Section 17.01 of
the Lease (when it shall be determined based upon the actual condition and
location of the Aircraft), it shall be assumed that the Aircraft is in the
condition required under the Lease in the case of return of the Aircraft
pursuant to Article 12 of the Lease and Fair Market Value shall be determined
in accordance with the provisions of Section 4.03 of the Lease.
Federal Aviation Administration; FAA. The United States Federal
Aviation Administration and any successor agency or agencies thereto.
Final Drawing. Has the meaning specified in Section 1.01 of the
Intercreditor Agreement.
Fixed Renewal Rent. Semi-annual payments of rent during the Fixed
Renewal Term equal to the lesser of (i) Fair Market Rental as determined as of
the commencement of such Fixed Renewal Term and (ii) 50% of the average actual
semi-annual Basic Rent payable during the Basic Term.
Fixed Renewal Term. The term with respect to which the Lessee has
exercised its option to renew the Lease pursuant to the first paragraph of
Section 4.01(a) thereof and with respect to which the conditions set forth in
such Section 4.01(a) are met.
FPO Price. Has the meaning set forth in Section 4.02(a)(F) of the
Lease.
French Pledge Agreement. The French Pledge Agreement dated as of May
1, 1997 between the Owner Trustee and the Indenture Trustee.
FSB. First Security Bank, National Association, a national banking
association.
Government. The United States of America or an agency or
instrumentality thereof the obligations of which bear the full faith and
credit of the United States of America.
GTA. The General Terms Agreement dated as of July 3, 1991 between the
Engine Manufacturer and the Lessee related to the purchase by the Lessee of the
Engines as originally executed or as modified, amended or supplemented in
accordance with the terms thereof, but only insofar as the General Terms
Agreement relates to the Engines, to the extent assigned to the Owner Trustee
pursuant to the Engine Warranty Assignment.
Holder of a Certificate; Certificate Holder; Holder. As of any
particular time, the Person in whose name a Certificate shall be registered
(but not including the holder of any Pass Through Certificate).
Indemnitee. Each of SSB, in its individual capacity and as Owner
Trustee and Lessor, the Subordination Agent, in its individual capacity and in
its capacity as Subordination Agent, each Liquidity Provider, the Owner
Participant, the Indenture Trustee, in its individual capacity and as trustee,
the Owner Participant Guarantor and any successor (including any trustee which
may succeed to the Lessor's interest under the Lease), Affiliate, assign,
officer, director, employee, agent and servant of any of the foregoing, the
Lessor's Estate and the Trust Indenture Estate. Neither the Pass Through
Trustee nor any holder of a Pass Through Certificate shall be deemed to be an
Indemnitee.
Indenture. The Trust Indenture and Security Agreement (Federal
Express Corporation Trust No. N672FE), dated as of May 1, 1997, between the
Lessor and the Indenture Trustee, as supplemented by the Indenture and
Security Agreement Supplement.
Indenture and Security Agreement Supplement. The Indenture and
Security Agreement Supplement No. 1 (Federal Express Corporation Trust No.
N672FE) to be dated the Delivery Date, substantially in the form of Exhibit A
to the Indenture.
Indenture Default. Any event or condition which, with the lapse of
time or the giving of notice, or both, would constitute an Indenture Event of
Default.
Indenture Documents. Has the meaning specified in the Granting
Clause of the Indenture.
Indenture Event of Default. Each of the events specified in Section
7.01 of the Indenture.
Indenture Trustee. First Security Bank, National Association, a
national banking association, not in its individual capacity but solely as
Indenture Trustee under the Indenture.
Indenture Trustee's Liens. Any Lien against, on or with respect to
the Aircraft, the Lessor's Estate or the Trust Indenture Estate or any part
thereof resulting from (i) claims against the Indenture Trustee not related to
the administration of the Trust Indenture Estate or any transactions pursuant
to the Indenture or any document included in the Trust Indenture Estate, (ii)
any act or omission of the Indenture Trustee which is not related to the
transactions contemplated by the Operative Agreements or is in violation of
any of the terms of the Operative Agreements or (iii) Taxes imposed against
the Indenture Trustee in its individual capacity in respect of which the Lessee
has not indemnified (and is not obligated to indemnify) the Indenture Trustee
in such capacity.
Independent Appraisal. An appraisal conducted pursuant to Section
4.03 of the Lease.
Independent Investment Banker. An independent investment banking
institution of national standing appointed by the Lessee that is independent
in fact, does not have any direct financial interests, or any material
indirect financial interest, in the Lessee or any Affiliate of the Lessee, and
is not connected with the Lessee or any Affiliate of the Lessee, as an
officer, employee, promoter, underwriter, trustee, partner, director or Person
performing similar functions; provided, that if the Indenture Trustee shall
not have received written notice of such an appointment at least 10 days prior
to the Prepayment Date, "Independent Investment Banker" shall mean such an
institution appointed by the Indenture Trustee.
Intercreditor Agreement. The Intercreditor Agreement dated as of May
1, 1997, among the Pass Through Trustee, the Class A Liquidity Provider, the
Class B Liquidity Provider and the Subordination Agent.
Interest Drawing. Has the meaning specified in Section 1.01 of the
Intercreditor Agreement.
Invoice. The invoice for the Aircraft given by AVSA to the Lessor.
Lease. The Lease Agreement (Federal Express Corporation Trust No.
N672FE) dated as of May 1, 1997, entered into by the Lessor and the Lessee
concurrently with the execution and delivery of the Indenture, including,
without limitation, supplementation by one or more Lease Supplements entered
into pursuant to the applicable provisions of the Lease.
Lease Supplement. The Lease Supplement No. 1 (Federal Express
Corporation Trust No. N672FE) to be dated the Delivery Date, substantially in
the form of Exhibit A to the Lease.
Lease Term. The period commencing on the Delivery Date and ending at
the end of the Basic Term.
Lessee. Federal Express Corporation, a Delaware corporation.
Lessee Documents. Has the meaning set forth in Section 6.01(b) of the
Participation Agreement.
Lessor. State Street Bank and Trust Company of Connecticut, National
Association, a national banking association, not in its individual capacity
but solely as Owner Trustee under the Trust Agreement.
Lessor's Estate. All estate, right, title and interest of the Owner
Trustee in and to the Collateral Account, the Liquid Collateral, the Aircraft,
the Lease, any Lease Supplement, the Participation Agreement, AVSA's FAA Xxxx
of Sale, AVSA's Warranty Xxxx of Sale, the Airbus Guaranty, the Purchase
Agreement, the Purchase Agreement Assignment, the Consent and Agreement, the
AVSA Consent and Agreement, the Consent and Guaranty (to the extent assigned
by the Purchase Agreement Assignment), any Ancillary Agreement, the GTA, the
Engine Warranty Assignment, the Engine Consent, any warranty with respect to
the Airframe and the Engines, all amounts of Basic Rent and Supplemental Rent,
including without limitation, insurance proceeds (other than insurance
proceeds payable to or for the benefit of the Owner Trustee in its individual
capacity or the Owner Participant) and requisition, indemnity or other
payments of any kind for or with respect to the Aircraft (except amounts owing
to the Owner Participant, to the Indenture Trustee, to the Owner Trustee in its
individual capacity, or to any of their respective directors, officers,
employees and agents pursuant to Articles 8 and 9 of the Participation
Agreement), and all other property of the Owner Trustee purportedly subjected
to the Lien of the Indenture by the Granting Clause thereof; provided that in
no event shall "Lessor's Estate" include any Excepted Payment.
Lessor's Liens. Liens against, on or with respect to the Aircraft,
the Lessor's Estate or the Trust Indenture Estate or any part thereof, title
thereto or any interest therein arising as a result of (i) claims against the
Lessor, in its individual capacity or as Owner Trustee, or the Owner
Participant, in each case not related to the transactions contemplated by the
Operative Agreements, (ii) acts or omissions of the Lessor in its individual
capacity or as Owner Trustee, and, in the case of the Lessor in its individual
capacity, arising from its gross negligence or willful misconduct or expressly
prohibited under the Operative Agreements and any act or omission of the Owner
Participant which is in violation of any of the terms of the Operative
Agreements, (iii) Taxes or Expenses imposed against the Lessor, in its
individual capacity or as Owner Trustee, Owner Participant, Lessor's Estate or
the trust created by the Trust Agreement which are not required to be
indemnified against by the Lessee pursuant to the Participation Agreement by
reason of Section 8.01(b) or 9.01(b) thereof and which are not required to be
indemnified against by the Lessee pursuant to the Tax Indemnity Agreement, or
(iv) claims against the Lessor or the Owner Participant arising from the
voluntary transfer by the Lessor or the Owner Participant of its interests in
the Aircraft other than a transfer of the Aircraft pursuant to Section 4.02(a)
or Article 10 or 11 of the Lease and other than a transfer pursuant to the
exercise of the remedies set forth in Article 17 of the Lease.
Lien. Any mortgage, pledge, lien, charge, encumbrance, lease or
security interest or other similar interest.
Liquid Collateral. All amounts and securities deposited from time to
time in the Collateral Account and all the products, investments, earnings and
proceeds of the foregoing, including, but not limited to, all proceeds of the
investment or conversion thereof, voluntary or involuntary, into cash,
Specified Investments or other property, all rights to payment of any and
every kind, and other forms of obligations, and instruments and other property
which at any time constitute all or part or are included in the proceeds of
any of the foregoing.
Liquidity Facility. Has the meaning specified in Section 1.01 of the
Intercreditor Agreement.
Liquidity Provider. Has the meaning specified in Section 1.01 of the
Intercreditor Agreement.
Losses. Has the meaning specified in Section 17.02(a) of the
Participation Agreement.
Loss Payee. Has the meaning specified in Section 13.02(b)(i) of the
Lease.
Majority in Interest of Certificate Holders. As of a particular date
of determination, the Holders of more than 50% of the aggregate unpaid
principal amount of all Certificates outstanding as of such date excluding for
purposes of this definition any Certificates held by (i) the Owner Trustee or
the Owner Participant or any interests of the Owner Participant unless all
Certificates then outstanding shall be held by the Owner Participant, (ii) the
Lessee or (iii) any Affiliate of any thereof.
Make-Whole Premium. An amount determined as of the day before the
applicable Prepayment Date (or date of purchase, as the case may be) which an
Independent Investment Banker determines to be equal to the excess, if any, of
(i) the present value of the remaining scheduled payments of such principal
amount or portion thereof and interest thereon (excluding interest accrued
from the immediately preceding Payment Date to such Prepayment Date or date of
purchase, as the case may be) to the Maturity of such Certificate in
accordance with generally accepted financial practices assuming a 360-day year
consisting of twelve 30-day months at a discount rate equal to the Treasury
Yield, all as determined by the Independent Investment Banker over (ii) the
outstanding principal amount of such Certificate plus accrued interest.
Manufacturer. Airbus Industrie G.I.E., a groupement d'interet
economique formed under the laws of France.
Maturity. With respect to any Certificate, the date on which the
final principal amount of such Certificate is scheduled to be due and payable.
Moody's. Xxxxx'x Investors Service, Inc.
Net Present Value of Rents. The net present value, as of the
Delivery Date, of Basic Rent set forth in Schedule II of the Lease, discounted
at a rate equal to the Debt Rate per annum compounded semi-annually.
Non-U.S. Person. Any Person other than a U.S. Person.
Obsolete Parts. Parts which are severable from the Aircraft in
accordance with clauses (ii) and (iii) of the proviso to Section 9.02(b) of
the Lease and the Lessee in good faith determines to be obsolete or no longer
suitable or appropriate for use on the Airframe or any Engine.
Officer's Certificate. When delivered pursuant to the Indenture, a
certificate signed by a Responsible Officer of the Lessee or the Owner
Trustee, as the case may be, and delivered to the Indenture Trustee. Each
such certificate shall include the statements provided for in Section 15.07 of
the Indenture.
Operative Agreements. The Participation Agreement, the Trust
Agreement, AVSA's FAA Xxxx of Sale, AVSA's Warranty Xxxx of Sale, the Airbus
Guaranty, the Purchase Agreement, the Purchase Agreement Assignment, the GTA,
the Engine Warranty Assignment, the French Pledge Agreement, the Lease, the
Lease Supplement, the Owner Participant Guaranty, the Owner Trustee Guaranty,
if any, any Ancillary Agreement entered into by or with the written consent of
the Indenture Trustee, which by its terms is an Operative Agreement, the
Certificates outstanding at the time of reference, the Indenture, the
Indenture and Security Agreement Supplement, the Consent and Agreement, the
AVSA Consent and Agreement, the Consent and Guaranty (to the extent assigned
by the Purchase Agreement Assignment), the Engine Consent, the Tax Indemnity
Agreement, each Liquidity Facility, the Intercreditor Agreement, the
Collateral Account Control Agreement and any Assignment and Assumption
Agreement.
Opinion of Counsel. When delivered pursuant to the Indenture, a
written opinion of legal counsel, who in the case of counsel (a) for the
Lessee may be (i) an attorney employed by the Lessee who is generally
empowered to deliver such written opinions, (ii) Xxxxx Xxxx & Xxxxxxxx or a
successor firm or (iii) other counsel designated by the Lessee and reasonably
satisfactory to the Indenture Trustee and (b) for the Owner Trustee or the
Indenture Trustee, an attorney selected by such Person and, in the case of the
Owner Trustee, reasonably satisfactory to the Indenture Trustee.
Outstanding. When used with respect to Certificates, as of the date
of determination and subject to the provisions of Section 10.04 of the
Indenture, all Certificates theretofore executed and delivered under the
Indenture, with the exception of the following:
(i) Certificates theretofore cancelled by the Indenture Trustee or
delivered to the Indenture Trustee for cancellation pursuant to
Section 2.08 of the Indenture or otherwise;
(ii) Certificates for which prepayment money in the necessary amount
has been theretofore deposited with the Indenture Trustee in trust
for the Holders of such Certificates pursuant to Section 14.01 of the
Indenture; provided, that if such Certificates are to be prepaid,
notice of such prepayment has been duly given pursuant to the
Indenture or provision therefor satisfactory to the Indenture Trustee
has been made; and
(iii) Certificates in exchange for or in lieu of which other
Certificates have been executed and delivered pursuant to Article II
of the Indenture.
Owner Participant. The trustor originally named in the Trust
Agreement and any successor thereto, and any Person to which the Owner
Participant transfers, in accordance with the Trust Agreement, its right,
title and interest in and to the Operative Agreements and the Lessor's Estate.
Owner Participant Guarantor. Xxxxxx Xxxxxx Capital Corporation, a
Delaware corporation, and any other provider of an Owner Participant Guaranty.
Owner Participant Guaranty. The Owner Participant Guaranty dated the
Certificate Closing Date by the Owner Participant Guarantor in favor of the
Lessee, the Owner Trustee, the Indenture Trustee and the Pass Through Trustee,
and any guaranty delivered in compliance with Section 7.03(d) of the
Participation Agreement.
Owner Trustee. SSB, not in its individual capacity except as
otherwise expressly stated, but solely as Owner Trustee under the Trust
Agreement.
Owner Trustee Guarantor. The provider of an Owner Trustee Guaranty.
Owner Trustee Guaranty. Any guaranty delivered in compliance with
Section 11.01(b)(ii) of the Participation Agreement.
Owner's Economic Return. The Owner Participant's anticipated net
after-tax book yield and aggregate after-tax cash during the Basic Term
utilizing the multiple investment sinking fund method of analysis, computed on
the basis of the same methodology and assumptions as were utilized by the
Owner Participant in determining Basic Rent, Stipulated Loss Value and
Termination Value percentages, as the case may be, as such assumptions may be
adjusted for events which have been the basis of adjustments to Rent pursuant
to Section 3.04 of the Lease.
Participation Agreement. The Participation Agreement (Federal Express
Corporation Trust No. N672FE), dated as of May 1, 1997, among the Lessee, the
Owner Trustee not in its individual capacity except as otherwise expressly
provided therein, but solely as owner trustee, the Owner Participant, the
Indenture Trustee not in its individual capacity except as otherwise expressly
provided therein, but solely as indenture trustee, the Pass Through Trustee
not in its individual capacity except as otherwise expressly provided therein,
but solely as pass through trustee and the Subordination Agent not in its
individual capacity except as otherwise expressly provided therein, but solely
as subordination agent.
Parts. All appliances, parts, components, instruments, appurtenances,
accessories, furnishings and other equipment of whatever nature (other than
complete Engines or engines) which may from time to time be incorporated or
installed in or attached to the Airframe or any Engine or title to which
remains vested in the Lessor pursuant to Article 8 of the Lease.
Pass Through Agreement. The Pass Through Trust Agreement dated as of
May 1, 1997 between the Lessee and the Pass Through Trustee.
Pass Through Certificates. Any of the Pass Through Certificates,
1997-1-A, the Pass Through Certificates, 1997-1-B or the Pass Through
Certificates, 1997-1-C, in each case as issued by the related Pass Through
Trust; and "Pass Through Certificates" means all of the Pass Through
Certificates issued by each of the Pass Through Trusts.
Pass Through Closing Date. The Business Day on which the sale of the
Pass Through Certificates to the Underwriters pursuant to the Underwriting
Agreement takes place.
Pass Through Trust. The Federal Express Corporation 1997-1 Pass
Through Trust Class A, Federal Express Corporation 1997-1 Pass Through Trust
Class B and Federal Express Corporation 1997-1 Pass Through Trust Class C, in
each case formed pursuant to the related Series Supplement in accordance with
the Pass Through Agreement; and "Pass Through Trusts" means all of such Pass
Through Trusts.
Pass Through Trustee. First Security Bank, National Association, a
national banking association, in its capacity as Pass Through Trustee under
the Pass Through Agreement and each Pass Through Trust.
Past Due Rate. In respect of (A) any amount payable to the Owner
Participant or the Owner Trustee a rate per annum during the period from and
including the due date to but excluding the date on which such amount is paid
in full equal to 2% plus the Debt Rate and (B) any principal of or interest on
any Certificate or any other amount payable under the Indenture, any
Certificate or any other Operative Agreement that is not paid when due
(whether at Maturity, by