Exhibit 10.74
EXECUTION VERSION
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TO THE EXTENT THAT THIS AIRCRAFT LEASE AGREEMENT CONSTITUTES CHATTEL
PAPER (AS DEFINED IN THE UNIFORM COMMERCIAL CODE AS IN EFFECT IN ANY
APPLICABLE JURISDICTION), NO SECURITY INTEREST IN THIS AIRCRAFT
LEASE AGREEMENT MAY BE CREATED THROUGH TRANSFER OR POSSESSION OF ANY
COUNTERPART OTHER THAN THE ORIGINAL COUNTERPART, WHICH SHALL BE
IDENTIFIED AS THE COUNTERPART DESIGNATED AS THE ORIGINAL ON THE
SIGNATURE PAGE OF THIS AGREEMENT BY GE CAPITAL AVIATION SERVICES,
INC.
AIRCRAFT LEASE AGREEMENT
DATED AS OF DECEMBER 14, 2001
BETWEEN
AIRCRAFT 28654 LLC
AS LESSOR
AND
ALOHA AIRLINES, INC.
AS LESSEE
IN RESPECT OF AIRCRAFT: BOEING MODEL 737-700
SERIAL NO: 28654
U.S. REGISTRATION NO.: N316ML (TO BE CHANGED TO N743AL)
INCORPORATING THE PROVISIONS OF A
COMMON TERMS AGREEMENT
DATED AS OF MAY 12, 2000
AIRCRAFT LEASE AGREEMENT
THIS AIRCRAFT LEASE AGREEMENT is made as of December 14, 2001 and is
BETWEEN:
(1) AIRCRAFT 28654 LLC, a limited liability company organized under the
Laws of the State of Delaware having its principal place of business
and chief executive office at 000 Xxxx Xxxxx Xxxx, Xxxxxxxx,
Xxxxxxxxxxx 00000 ("LESSOR"); and
(2) ALOHA AIRLINES, INC., a corporation incorporated under the Laws of
the State of Delaware with its principal place of business at 000
Xxxxx Xxxxxx, Xxxxxxxx, Xxxxxx 00000 and its chief executive office
at 500 Ala Moana Blvd., Two Xxxxxxxxxx Xxxxx, Xxxxx 000, Xxxxxxxx,
Xxxxxx 00000 ("LESSEE").
WHEREAS:
(A) Lessee wishes to lease the Aircraft (as defined below) from Lessor,
and Lessor wishes to lease the Aircraft to Lessee, on the terms and
subject to the conditions provided herein;
(B) General Electric Capital Corporation ("GECC"), an Affiliate of
Lessor, and Lessee have entered into the Common Terms Agreement (as
defined below) in respect of aircraft that may be leased from time
to time by Lessee or one of its Affiliates from GECC or one of its
Affiliates; and
(C) Lessor and Lessee wish to incorporate by reference such Common Terms
Agreement, as well as Schedules A and B attached hereto, into this
Aircraft Lease Agreement for the Aircraft and a true and complete
copy of such Common Terms Agreement is attached hereto as Schedule
C;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby
agree as follows:
1. INTERPRETATION
DEFINITIONS: In this Aircraft Lease Agreement, the following
capitalized words and expressions have the respective meanings set
forth below:
AIRCRAFT means the Airframe and Engines described on Schedule A
hereto.
AIRFRAME STRUCTURAL CHECK, AIRFRAME SUPPLEMENTAL RENT, ANNUAL
SUPPLEMENTAL RENT ADJUSTMENT, and APU SUPPLEMENTAL RENT have the
meaning specified in Schedule B.
ASSUMED RATIO has the meaning specified in Schedule B.
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COMMON TERMS AGREEMENT means the "Aircraft Lease Common Terms
Agreement" dated as of May 12, 2000 executed by GECC and Lessee (as
in effect on the date hereof without, unless Lessor and Lessee
otherwise expressly agree, giving any effect to any subsequent
amendment, supplement, waiver or other modification thereto), and
which forms part of this Aircraft Lease Agreement.
DELIVERY CONDITION REQUIREMENTS means the requirements specified in
Part II of Schedule A.
DELIVERY LOCATION means Xxxxxxxxxx, Xxxxxxx Xxxxxxxx, Xxxxxx or such
other location as Lessor and Lessee mutually agree in order to
minimize any Taxes that may be applicable to the Delivery.
DEPOSIT means all amounts payable pursuant to Section 3.1 hereof.
ENGINE SUPPLEMENTAL RENT AND ENGINE LLP SUPPLEMENTAL RENT have the
meanings specified in Schedule B.
FINAL DELIVERY DATE means the date that is 90 days after the last
day of the Scheduled Delivery Month.
FINANCING DOCUMENTS means the documents, if any, relating to any
indebtedness of Lessor secured, in whole or in part, by Lessor's
interest in the Aircraft and this Aircraft Lease Agreement.
FINANCING DOCUMENTS CONTEST RIGHTS, FINANCING DOCUMENTS INDEMNITY
AMOUNTS and FINANCING DOCUMENTS TAX AMOUNTS are all inapplicable.
FINANCING PARTIES means the Persons, if any, that hold the
indebtedness of Lessor evidenced by the Financing Documents, and
shall include the Financing Parties Representative.
FINANCING PARTIES' REPRESENTATIVE the Person, if any, identified by
Lessor to Lessee in writing as the representative of the Financing
Parties and the beneficiary of the Security Interest in the Aircraft
and this Aircraft Lease Agreement created by the Financing
Documents, and its successors and assigns.
GUARANTOR is inapplicable.
INDEMNITEE means each of Lessor, Owner, GECC, GECAS, the Financing
Parties and their respective successors and permitted assigns, and
each of their respective shareholders,
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subsidiaries, affiliates, partners, contractors, directors,
officers, representatives, agents and employees.
LANDING GEAR SUPPLEMENTAL RENT has the meaning specified in Schedule
B.
MANUFACTURER means the manufacturer of the Airframe or an Engine, as
the case may be, as set forth on Schedule A hereto.
OWNER means Lessor.
PBH PERIOD has the meaning specified in Schedule B.
PBH RATE has the meaning specified in Schedule B.
PRE-APPROVED BANK means (i) First Hawaiian Bank for so long as its
long-term unsecured Dollar denominated debt carries a rating from
S&P of A- or better, and (ii) any bank organized under the laws of
the United States or any State thereof, or the New York branch of a
major international bank for only so long as its long-term Dollar
denominated unsecured debt (or if it does not have long-term
unsecured Dollar denominated debt, its parent corporation's
long-term unsecured Dollar denominated debt) carries a rating from
S&P of A or better.
REDELIVERY LOCATION means any location in the State of Washington,
Oregon or California as Lessor may designate to Lessee or such other
location as may be agreed in writing by Lessor and Lessee.
RENT COMMENCEMENT DATE means the date on which Lessor tenders the
Aircraft under Clause 4.3.(a) of the Common Terms Agreement and the
Lessee Conditions Precedent are met or could reasonably be expected
to be met if the Delivery of the Aircraft had occurred.
SCHEDULED DELIVERY DATE means the date that Aircraft is scheduled to
be delivered by Lessor to Lessee under the Lease, as notified by
Lessor to Lessee pursuant to Section 4.1 of the Common Terms
Agreement, and, notwithstanding any subsequent delays in delivery,
the "Scheduled Delivery Date" shall remain the first such date
notified by Lessor to Lessee pursuant to Section 4.1 of the Common
Terms Agreement.
SCHEDULED DELIVERY MONTH means January, 2002.
SCHEDULED DELIVERY WEEK means the week during which the Scheduled
Delivery Date occurs.
SCHEDULED EXPIRY DATE means the day immediately preceding the
fifteenth (15th) anniversary of the Rent Commencement Date (or in
the event that such date is a day that is
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not a Business Day, the immediately preceding Business Day), which
date shall be specifically set forth in Lease Supplement No. 1;
provided, however, that Lessee shall receive a credit for Rent
actually paid by Lessee to Lessor, on a per diem basis, against
other obligations owed by Lessee to Lessor at the Return Occasion in
respect of any non-Business Days which are truncated from the Term
based on this provision.
STATE OF DESIGN means the United States.
TAX INDEMNITEE means each of Owner, Lessor, and each member of the
consolidated group of which Lessor or Owner is a member for United
States Federal Income Tax purposes, and their successors and
permitted assigns.
1.2 INTERPRETATION: Unless otherwise defined herein, words and
expressions defined in the Common Terms Agreement have the same
respective meanings for the purposes of this Aircraft Lease
Agreement. The construction provisions of Section 1.2 of the Common
Terms Agreement shall apply to this Aircraft Lease Agreement.
2. LEASING
2.1 AGREEMENT TO LEASE: Subject to the terms and conditions of the
Lease, Lessor will lease the Aircraft to Lessee and Lessee will take
delivery of and lease the Aircraft from Lessor in accordance with
the Lease for the duration of the Term.
2.2 TERM: Subject to Sections 4.1 through 4.4 of the Common Terms
Agreement, Delivery of the Aircraft will occur at the Delivery
Location, whereupon Lessee shall accept the Aircraft hereunder and
evidence such Delivery and acceptance by executing and delivering
Lease Supplement No. 1 as provided in Section 4.3 of the Common
Terms Agreement. The Tenn will commence on the Delivery Date, which
Delivery Date is scheduled to occur in the Scheduled Delivery Month,
and will expire on the Scheduled Expiry Date, subject to the
following:
2.2.1 LESSEE'S EARLY TERMINATION OPTION: Lessee may at its sole
option terminate the Lease at the first yearly anniversary
of the Delivery Date by providing written notice of its
election to terminate under this Section 2.2.1 to Lessor not
less than 180 days prior to the first yearly anniversary of
the Delivery Date. Upon such termination, Lessee shall
return the Aircraft to Lessor at the first yearly
anniversary of the Delivery Date in accordance with all of
the requirements of the Lease, including without limitation
those set forth in Part III of Schedule A hereto.
2.2.2 LESSOR'S EARLY TERMINATION OPTION: Lessor may
terminate the Lease at any time at or prior to the first
yearly anniversary of the Delivery Date by providing
written
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notice ("LESSOR'S NOTICE") of its election to terminate under this
Section 2.2.2 to Lessee not less than 60 days prior to the
termination date specified in such notice; provided, however, Lessee
may elect to nullify the early termination of the Lease by Lessor
under this Section 2.2.2 if, within fifteen (15) days following
Lessee's receipt of Lessor's Notice, Lessee delivers to Lessor a
written instrument in form and substance satisfactory to Lessor
("LESSEE'S COMMITMENT AND WAIVER") by which Lessee confirms its
commitment to keep the Aircraft for the full Term and waives forever
Lessee's right to terminate the Lease at the first yearly
anniversary of the Delivery Date under Section 2.2.1 above. Upon
receipt of Lessee's Commitment and Waiver, Lessor's election to
terminate the Lease under this Section 2.2.2 shall be deemed null
and void and the Lease shall continue in full force and effect
(subject, however, to Lessee's waiver of its rights pursuant to
Lessee's Commitment and Waiver) as though Lessor's Notice had never
been delivered. If Lessor delivers a Lessor's Notice and Lessee does
not deliver Lessee's Commitment and Waiver within fifteen (15) days
following Lessee's receipt of Lessor's Notice, then Lessee shall
return the Aircraft to Lessor at the termination date specified in
Lessor's Notice in accordance with all of the requirements of the
Lease, including without limitation those set forth in Part III of
Schedule A hereto.
3. PAYMENTS
3.1 DEPOSIT AND LETTER OF CREDIT: Lessee shall pay to Lessor the Deposit
in cash (to which Deposit Section 5.13 of the Common Terms Agreement
shall apply) in the amount and at the times provided in Schedule B
hereto. Lessee shall be permitted to deliver to Lessor an
irrevocable Letter of Credit in lieu of a portion of the Deposit in
an amount up to the amount provided in Schedule B as the LC Amount,
which Letter of Credit shall comply with the provisions of Section
5.14 of the Common Terms Agreement
3.2 RENT: Lessee shall pay Rent to Lessor on each Rent Date during the
Term in the amount provided in Schedule B hereto and as provided in
Sections 5.2 and 5.3 of the Common Terms Agreement. The first
installment of Rent shall be due and payable on the Rent
Commencement Date as defined herein.
3.3 SUPPLEMENTAL RENT: Lessee shall pay Supplemental Rent to Lessor on
each applicable date during the Term in the amounts provided in
Schedule B hereto and as provided in Section 5.4 of the Common Terms
Agreement.
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3.4 LESSOR'S MAINTENANCE CONTRIBUTION:
3.4.1 Provided that no Default has occurred and is continuing,
Lessor will pay (as a separate and independent obligation
and not as a return of Supplemental Rent) the following
amounts to Lessee by way of contribution to the cost of
maintenance of the Aircraft, UPON RECEIPT BY LESSOR, WITHIN
SIX MONTHS AFTER COMMENCEMENT OF SUCH MAINTENANCE AND
BEFORE THE EXPIRY DATE, of an invoice and supporting
documentation reasonably satisfactory to Lessor evidencing
performance of the following work by the Maintenance
Performer:
(a) AIRFRAME: With respect to the Airframe, the
completion, in accordance with the Lease, of the
Airframe Structural Check, the lesser of (aa) the
amount of that invoice and (bb) an amount equal to
the aggregate amount of the Airframe Supplemental
Rent paid under the Lease at the date such work
starts less the aggregate amount previously paid
by Lessor under this sub-clause;
(b) ENGINE LIFE-LIMITED PARTS: With respect to
life-limited Parts within any Engine, the
performance, in accordance with the Lease, of any
replacement or repair of those Parts ("Engine LLP
Replacement"), the lesser of (x) the amount of
that invoice and (y) an amount equal to the
aggregate amount of the Engine LLP Supplemental
Rent paid in respect of that Engine under the
Lease at the date such work starts less the
aggregate amount previously paid in respect of
that Engine by Lessor under this sub-clause;
(c) ENGINE REFURBISHMENT: With respect to any Engine,
the performance, in accordance with the Lease, of
Engine Refurbishment in respect of that Engine the
lesser of (x) the amount of that invoice and (y)
an amount equal to the aggregate amount of the
Engine Supplemental Rent paid under the Lease in
respect of that Engine at the date such work
starts less the aggregate amount previously paid
in respect of that Engine by Lessor under this
sub-clause;
(d) APU: With respect to the APU, the performance, in
accordance with the Lease, of all shop visits
requiring APU removal and disassembly, the lesser
of (x) the amount of that invoice and (y) an
amount equal to the aggregate amount of the APU
Supplemental Rent paid under the Lease at the date
such work starts less the aggregate amount
previously paid by Lessor under this sub-clause;
and
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(e) LANDING GEAR: With respect to the Landing Gear,
the performance in accordance with the Lease, of
all work on the landing gear in the nature of
overhaul and requiring removal and disassembly,
the lesser of (x) the amount of that invoice and
(y) an amount equal to the aggregate amount of the
Landing Gear Supplemental Rent paid under the
Lease at the date such work starts less the
aggregate amount previously paid by Lessor under
this sub-clause.
PROVIDED THAT Lessor will not pay any such contribution:
3.4.2 in respect of paragraphs (a)-(e) above, for repairs arising
as a result of accidents or incidents (whether or not
eligible for recovery under Lessee's insurance),
operational or maintenance mishandling or airworthiness
directive work; nor
3.4.3 in respect of paragraphs (b) and (c) above, for repairs
arising as a result of foreign object damage, the removal,
installation, maintenance and repair of QEC (Quick Engine
Change Kits) and/or any replacement of parts not required
under the Lessee's Maintenance Program to be replaced as
part of the maintenance described in clause (a) through (e)
above, as the case may be.
3.5 LESSOR'S BANK ACCOUNT: For the purposes of Section 5.5 of the Common
Terms Agreement, Lessor's bank account and wire transfer
particulars, to which all payments to Lessor shall be made, are at
the date hereof: Bankers Trust Company, New York, ABA 021 001 033,
For the account of: Aircraft 28654 LLC., Account Number: 00-000-000.
3.6 MACRS: Lessor has assumed that MACRS Deductions shall be available
in respect of the leasing of the Aircraft and accordingly the
provisions of Section 5.7(d) of the Common Terms Agreement and the
related provisions of Schedule B shall apply under this Agreement.
4. CONDITION OF THE AIRCRAFT AT DELIVERY
4.1 On the Delivery Date, as a condition to Lessee's obligation to
accept delivery thereof, the Aircraft shall be in the condition
provided in Part II of Schedule A hereto.
5. CONDITION OF THE AIRCRAFT AT REDELIVERY
5.1 On the Return Occasion, Lessee shall redeliver the Aircraft to
Lessor at the Redelivery Location and at such redelivery the
Aircraft shall be in the condition provided in Part III of Schedule
A hereto and in the Common Terms Agreement, including Schedule 6 of
the Common Terms Agreement.
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6. ADDRESSES FOR NOTICES
The addresses and facsimile and telephone numbers of Lessor and
Lessee are as follows:
Lessor: Aircraft 28654 LLC
Address: c/o GE Capital Aviation Services
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, XX 00000
Attention: Contracts Leader
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
Lessee: Aloha Airlines, Inc.
Address: 000 Xxxxx Xxxxxx
Xxxxxxxx, Xxxxxx 00000
Attention: Executive Vice President and Chief Financial
Officer
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
7. THE SCHEDULES AND COMMON TERMS AGREEMENT
ALL THE PROVISIONS OF SCHEDULE A HERETO, SCHEDULE B HERETO, AND THE
COMMON TERMS AGREEMENT, ARE INCORPORATED BY REFERENCE HEREIN AND ARE
PART OF THIS AIRCRAFT LEASE AGREEMENT AS IF THEY WERE SET OUT IN
FULL HEREIN. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, BY
ITS SIGNATURE BELOW, THE LESSEE ACKNOWLEDGES AND AGREES THAT THE
LEASE OF THE AIRCRAFT HEREUNDER IS ON AN "AS IS, WHERE IS" BASIS AND
THAT THE DISCLAIMERS, EXCULPATIONS AND LIMITATIONS OF LIABILITY,
INDEMNITIES, THE CHOICE OF NEW YORK LAW AS THE GOVERNING LAW, THE
LESSEE'S SUBMISSION TO PERSONAL JURISDICTION IN NEW YORK, AND THE
WAIVER OF ANY RIGHT TO A TRIAL BY JURY PROVIDED FOR IN THE COMMON
TERMS AGREEMENT ARE INCORPORATED HEREIN BY SUCH REFERENCE AND ARE
PART OF THIS AIRCRAFT LEASE AGREEMENT AS IF THE SAME WERE SET OUT IN
FULL HEREIN.
8. NO AMENDMENT EXCEPT IN WRITING
No provision of this Lease, including any provision of Schedule A,
Schedule B or the Common Terms Agreement, may be amended, rescinded,
changed, waived, discharged, terminated or otherwise modified in any
way whatsoever, except by a writing signed by the party to be
charged. Lessor and Lessee acknowledge their agreement to the
provisions of this Section 8 by their signatures below.
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IN WITNESS WHEREOF, the parties hereto have executed this Aircraft Lease
Agreement, each by their duly authorized representative(s), as of the date
shown at the beginning of this Aircraft Lease Agreement.
LESSOR: LESSEE:
AIRCRAFT 28654 LLC ALOHA AIRLINES, INC.
BY: AFS Investments I, Inc.
Its Member
By: /s/ Xxxxxxx X. Xxxxx By: ____________________________________
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Name: Xxxxxxx X. Xxxxx Name: __________________________________
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Title: Vice President Title: _________________________________
--------------------------
By: ____________________________________
Name: __________________________________
Title: _________________________________
IN WITNESS WHEREOF, the parties hereto have executed this Aircraft Lease
Agreement, each by their duly authorized representative(s), as of the date
shown at the beginning of this Aircraft Lease Agreement.
LESSOR: LESSEE:
AIRCRAFT 28654 LLC ALOHA AIRLINES, INC.
By: ___________________________ By: /s/ Xxxxxx X. Xxxxxxxxx
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Name: _________________________ Name: Xxxxxx X. Xxxxxxxxx
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Title: ________________________ Title: Exec. Vice President & CFO
---------------------------------
By: /s/ Xxxxx X. Xxxx
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Name: XXXXX X. XXXX
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SENIOR VICE PRESIDENT
Title: PLANNING & BUSINESS DEVELOPMENT
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SCHEDULE A
PART I-AIRFRAME AND ENGINES DESCRIPTION
AIRCRAFT
Manufacturer: Boeing
Model: 737-700 ETOPS
Serial Number: 28654
U.S. Registration No. N316ML (To be changed to N743AL)
ENGINES (each of which has 750 or more rated takeoff horsepower or the
equivalent of such horsepower)
Engine Type: CFM56-7B26
Serial Nos: 888639 and 889655
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SCHEDULE A
PART II-DELIVERY CONDITION REQUIREMENTS
Set forth below is a description of the condition in which the Aircraft must
be in order for Lessee to be obligated to accept the Aircraft under the
Lease. It is solely a description of such condition precedent and shall not
be construed as a representation, warranty or agreement of any kind
whatsoever, express or implied, by Lessor with respect to the Aircraft or
its condition, all of which have been disclaimed by Lessor and waived by
Lessee as set forth in the Lease, including in the Common Terms Agreement.
DELIVERY CONDITION REQUIREMENTS:
This "DELIVERY CONDITION REQUIREMENTS" are as follows:
Airframe, Configured in accordance with GECAS Detail
Engines, Specification D6-38808-34 (Revision D) as
Components: modified for the Boeing 737-700 aircraft
bearing manufacturer's serial number
30830 ("Aircraft 30830") pursuant to that
certain Aircraft Lease Agreement dated as
of May 12; 2000 between Lessee and an
affiliate of Lessor, with the following
differences from the configuration of
30830: (i)SATCOM partial provisions are
not installed; (ii) location of cockpit
printer in sidewall; (iii) hand rails to
overhead bin doors are not installed;
(iv)installation of six (rather than
five) attendants seats; (v) dual
aspirated TAT probes not installed; (vi)
airstairs not installed but Lessor will
provide airstairs and data kit free of
charge after Delivery.
For the avoidance of doubt, Lessor and
Lessee acknowledge and agree that,
although the Aircraft 30830 was new from
the Manufacturer at the time of delivery
to Lessee, the Aircraft will undergo
certain modification work, both at the
Manufacturer and at a third party
maintenance facility, in order to bring it
into the configuration specified above,
prior to Delivery to Lessee.
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Livery Painting: Lessee's current livery as in effect on
the date of this Aircraft Lease
Agreement or such other livery as Lessee
may specify in writing to Lessor so long
as Lessee provides to Lessor, reasonably
in advance of the Scheduled Delivery
Month so as to permit Lessor to make all
necessary arrangements for such painting,
all technical specifications necessary
in order to complete the painting of the
Aircraft in such livery
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SCHEDULE A
PART III- PROCEDURES AND OPERATING CONDITION AT REDELIVERY
On the Return Occasion the Aircraft, subject to ordinary wear and
tear of a kind and to an extent consistent with similar aircraft
engaged in commercial airline operations, will be redelivered to
Lessor by Lessee in accordance with the procedures and in any event
in the condition set out below. For the avoidance of doubt, any
damage assessment and/or rectification criteria used in assessing
the redelivery condition shall be as prescribed in the
Manufacturer's structural repair manual ("SRM") and/or the
Manufacturer's Maintenance Planning Document as appropriate. Any
damage outside the scope of the SRM shall require FAA 8110-3
certification.
1.1 FINAL INSPECTION
Immediately prior to the Return Occasion, Lessee will make the
Aircraft available to Lessor and Owner for inspection ("FINAL
INSPECTION") in order to verify that the condition of the Aircraft
complies with the Lease. The Final Inspection will include, and be
long enough to permit Lessor to:
(a) inspect the Aircraft Documents and Records;
(b) inspect the Aircraft (with Lessee to open or remove
panels as reasonably requested by Lessor or Owner based
on essor's or Owner's visual observation of the
Aircraft and/or their respective review of the Aircraft
Documents and Records), uninstalled Parts and the APU
(including a complete video borescope inspection of the
APU);
(c) inspect the Engines, including (i) a complete video
borescope inspection of (A) the low pressure and high
pressure compressors and (B) turbine area and (ii)
power assurance runs (including full take-off power
engine run-up performed in accordance with the
performance test in the Engine Manufacturer's test
specifications, and the Engines shall not exceed
corrected limits for all parameters using temperature
corrected charts); and
(d) observe a two hour demonstration flight at Lessee's
cost (with up to three (to the extent permitted by
FARS) of Lessor's and Owner's representatives as
on-board observers).
Furthermore, Lessee acknowledges that a purchaser or the next
operator of the Aircraft may need to inspect the Aircraft, the
Engines and the Aircraft Documents and Records prior to redelivery
and Lessee hereby agrees to cooperate reasonably at all times
during the Term
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with Lessor, Owner and/or such purchaser or such next operator in
order to coordinate, assist and grant access for the above
inspections and/or sale or subsequent lease as applicable.
Lessor or Owner, as the case may be, is responsible for and will
indemnify Lessee against all Losses arising from the death or
injury to any observer or any employee of Lessor or Owner, as the
case may be, in connection with the inspection of the Aircraft
under this Section 1.1.
1.2 GENERAL CONDITION
The Aircraft will:
(a) be in the same configuration as at Delivery after
giving effect to any post-Delivery modifications to the
Aircraft paid for or otherwise provided by or on behalf
of Lessor (or as permitted by the Lease or as otherwise
mutually agreed), be in as good operating condition and
appearance as when delivered to Lessee (after giving
effect to any such post-Delivery modifications), except
for ordinary wear and tear and alterations and
modifications authorized or required under the Lease
and paid for by Lessee or a Sub-Lessee, and be clean by
major passenger airline standards;
(b) have installed the full complement of equipment, parts,
accessories, furnishings and loose equipment as when
originally delivered to Lessee (subject to Lessee's
rights under Section 8.12 to reverse certain Equipment
Changes, after giving effect to all modifications,
repairs or maintenance performed during the Term,
regardless of whether paid for by Lessee or Lessor) and
the Aircraft (including the Aircraft Documents and
Records) shall be in a condition suitable for immediate
registration with the FAA (assuming that the Owner
qualifies for such registration) and immediate
operations under FAR Part 121 with a new operator,
without waiver, unless the benefit of such waiver is
applicable to the next operator of the Aircraft; and if
any of the engines or parts tendered for redelivery
with the Aircraft is not one of the Engines or Parts
referred to in the Certificate of Technical Acceptance
or a Replacement Engine installed pursuant to Section
8.11(b) following an Engine Event of Loss, Lessor
shall have no obligation to accept such engine or part
unless Lessee furnishes to Lessor all the documents and
evidence in respect of such engine or part in
accordance with Section 8.11(b), as if such engine
were a Replacement Engine or replacement Part, and
otherwise complies with such Section 8.11(b) with
respect thereto;
(c) have in existence a valid and effective certificate of
airworthiness (and if required by Lessor, a valid and
effective export certificate of airworthiness) with
respect to
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the Aircraft issued by the Air Authority (in the case
of an export certificate of airworthiness no earlier
than 30 days prior to the redelivery);
(d) comply with the Manufacturer's original specifications
as at the Delivery, except as modified during the Term
in accordance with the Manufacturer's service bulletins
or letters, Airworthiness Directives, Air Authority
approved data or otherwise as permitted by the Lease;
(e) be fresh out of a "C" Check (or higher check if
applicable) in block format (which shall be the next
sequential "C" Check under Lessee's Maintenance Program
following the last regularly scheduled "C" Check
performed by Lessee prior to the Return Occasion if
Lessee's Maintenance Program is based on the then
current Manufacturer's Maintenance Planning Document in
block format. If Lessee's Maintenance Program is not
based on the Manufacturer's Maintenance Planning
Document in block format, then Lessee shall integrate
the Aircraft Maintenance Program onto the then current
Manufacturer's Maintenance Planning Document Block
Maintenance Program such that all airframe inspections
falling due within the "C" check interval (which shall
not be less than 4,000 Flight Hours) as defined in and
in accordance with the Manufacturer's Maintenance
Planning Document have been accomplished;
(f) have had accomplished all outstanding Airworthiness
Directives affecting that model of Aircraft issued by
the FAA requiring action during the Term or within 180
days after the Return Occasion or the Scheduled Expiry
Date, whichever is later; for this purpose, compliance
shall be by terminating action if:
(i) Lessee has complied by terminating action for
sixty-five percent (65%) of the aircraft of the
same model and series then operated by Lessee; or
(ii) the latest date permitted by such Airworthiness
Directive for required compliance by
terminating action falls within 180 days after
the Return Occasion or the Scheduled Expiry
Date, whichever is later.
(iii) In no event shall there be any non-transferable
time extensions, waivers, deviations or
alternative means of compliance with any
Airworthiness Directions or other Regulations.
(g) have installed all applicable vendor's and
Manufacturer's service bulletin kits received free of
charge by Lessee during the Term that are appropriate
for the Aircraft and to the extent not installed, those
kits will be furnished free of charge to Lessor;
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(h) have the fuselage, empennage, wings painted in Lessee's
livery;
(i) have all signs and decals clean, secure and legible;
(j) [NOT APPLICABLE];
(k) have no open, deferred, continued, carry over or
placarded maintenance items or watch items or placarded
log book items, and all other log book discrepancies
shall be cleared;
(l) all discrepancies discovered during the inspections
described above which exceed the Manufacturer's
maintenance manual allowable limits for in-service
aircraft shall have been repaired in accordance with
FAA-approved procedures;
(m) all repairs of a temporary or interim nature, requiring
repetitive inspections or future upgrading, including
external doublers with blind fasteners, shall be
upgraded to permanent repair in accordance with the
Manufacturer's Maintenance Planning Document or
structural repair manual; and
(n) all systems shall be fully operational for their intended
functions in accordance with the Manufacturer's
Maintenance Planning Document specifications.
1.3 COMPONENTS
(a) If the Aircraft Lease Agreement specifies Minimum
Component Flight Hours and/or Minimum Component Cycles,
each Airframe Flight Hour and Cycle controlled Hard
Time Component (other than the APU) shall have not less
than the Minimum Component Flight Hours and the Minimum
Component Cycles of life remaining to the next
scheduled removal, in accordance with the Lessee's
Maintenance Program and shall be supported by
appropriate certification documentation indicating TSN,
CSN, TSO and CSO such as FAA form 8130-1; for this
purpose "Hard Time Component" means any component
which has a limited on-wing life in accordance with the
Manufacturer's Maintenance Planning Document and which
can have life fully restored through appropriate
maintenance;
(b) If the Aircraft Lease Agreement specifies a Minimum
Component Calendar Life, each calendar-limited
component including safety equipment will have not less
than its Minimum Component Calendar Life remaining to
the next scheduled removal in accordance with the
Lessee's Maintenance Program;
(c) Each "on-condition" and "condition-monitored" component
will be serviceable;
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(d) The installed components as a group will have an average
of total flight time since new of not more than that of
the Airframe;
(e) If the Aircraft Lease Agreement specifies Minimum
Component Flight Hours and/or Minimum Component Cycles,
each Airframe Life-Limited Component will have not less
than the Minimum Component Flight Hours and the Minimum
Component Cycles remaining to next scheduled removal
and will be supported by certification documentation
necessary to demonstrate back-to-birth traceability;
for this purpose "Airframe Life-Limited Component"
means a component with an ultimate life which cannot be
restored through appropriate maintenance.
1.4 ENGINES
Each Engine (or a Replacement Engine as and to the extent permitted
by Section 1.2(b)) will be installed on the Aircraft and comply with
the following:
(a) If the Aircraft Lease Agreement specifies a Minimum
Engine Flight Hours and/or Minimum Engine Cycles, each
Engine will have not less than the Minimum Engine
Flight Hours and Minimum Engine Cycles expected life
remaining to the next expected removal. The expected
life remaining will be determined by third party
mutually acceptable to both Lessor and Lessee (at
Lessor's cost) or by the Engine Manufacturer, in each
case based on the inspection and checks to be performed
at the Return Occasion in accordance with the Lease;
(b) Each Engine shall have just completed at the location
for Lessor's acceptance on the Return Occasion a hot
(including combustion chamber) and cold section video
borescope inspection, which inspection shall be
performed at Lessor's expense, and a power assurance
run performed at Lessee's expense in accordance with
the Lessee's Maintenance Program or Manufacturer's
Maintenance Planning Document and any defects
discovered in such inspections which exceed the Engine
manufacturer's in-service limits shall be corrected at
Lessee's expense. Lessee shall cause such borescope
inspections to be performed and to be recorded on
videotape by an agency selected by Lessor and shall
provide Lessor with a copy of such videotape on the
Return Occasion. No Engine shall be on "watch" for any
reason requiring any special or out of sequence
inspection. Each Engine shall comply with the
operations specification of Lessee without waiver or
exceptions. All items beyond the Engine manufacturer's
in-service limits shall be repaired;
(c) If the Aircraft Lease Agreement specifies Minimum
Component Cycles, each Engine Life-Limited Component
will have not less than the Minimum Component Cycles
remaining per the manufacturer's then current
limitations for the part
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number in question, and will be supported by
certification documentation necessary to demonstrate
back-to-birth traceability; for this purpose "Engine
Life-Limited Component" means a component with an
ultimate life which cannot be restored through
appropriate maintenance; and
1.5 FUSELAGE, WINDOWS AND DOORS
(a) The fuselage will be free of major dents and abrasions
in excess of the limits specified in Manufacturer's
Maintenance Planning Document or structural repair
manual; loose or pulled or missing rivets shall be
replaced;
(b) Windows will be free of delamination, blemishes and
crazing, in excess of the limits specified in the
Manufacturer's Maintenance Planning Document or
structural repair manual and will be properly sealed;
and
(c) Doors will be free moving, correctly rigged and be
fitted with serviceable seals.
1.6 WINGS AND EMPENNAGE
(a) Leading edges will be free from damage in excess of the
limits specified in the Manufacturer's Maintenance
Planning Document or structural repair manual; and
(b) Unpainted surfaces of the wings and empennage will be
polished.
1.7 INTERIOR AND COCKPIT
All soft furnishings, including but not limited to carpets, seat
covers and curtains, will be in good condition, clean and free of
stains and meet FAR fire resistance regulations.
1.8 LANDING GEAR; WHEELS AND BRAKES
(a) The Landing Gear and wheel xxxxx will be clean, free of
leaks and repaired as necessary;
(b) Each installed Landing Gear shall have no more Cycles
accumulated than the Airframe and, if the Aircraft
Lease Agreement specifies Minimum Landing Gear Flight
Hours and/or Minimum Landing Gear Cycles and Minimum
Landing Gear Calendar Time, not less than the Minimum
Landing Gear Flight Hours and the Minimum Landing Gear
Cycles and the Minimum Landing Gear Calendar Time shall
be remaining to the next scheduled overhaul or removal,
as the case may be, of each installed Landing Gear in
accordance with the then current Manufacturer's
Maintenance Planning Document and Lessee's Maintenance
Program; and
(c) The wheels and brakes will have not less than half of
their useful life remaining.
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1.9 RETURN OF AUXILIARY POWER UNIT (APU)
The APU shall have just completed a borescope inspection and shall
meet all air outputs and temperature limitations under load in
accordance with the Lessee's Maintenance Program and the APU
manufacturer's maintenance manual, and any defects discovered in
such inspection, which exceed the APU manufacturer's in-service
limits, shall be corrected at Lessee's expense. If the Aircraft
Lease Agreement specifies a Minimum APU Limit, the APU shall have
not more than the Minimum APU Limit since the last gas path
refurbishment. If the Aircraft Lease Agreement specifies a Minimum
APU LLP Limit, APU Life Limited Parts shall have not less than the
Minimum APU LLP Limit of useful life remaining on average.
1.10 CORROSION
(a) The Aircraft shall be in compliance with the
Manufacturer's corrosion prevention and control program
(CPCP) requirements. All CPCP inspections which would
normally be accomplished while access is provided
during structural inspection in accordance with the
Lessee's Maintenance Program during the Term shall have
been accomplished;
(b) The entire fuselage will be substantially free from
corrosion and will be adequately treated in accordance
with Lessee's corrosion prevention program and the
Manufacturer's Maintenance Planning Document; and
(c) Fuel tanks will be free from contamination and corrosion
and a tank treatment program will be in operation.
1.11 FUEL
If the Aircraft Lease Agreement specifies a Minimum Measurable Fuel
Requirement, at redelivery, the Aircraft fuel tanks shall contain
at least enough fuel to meet the Minimum Measurable Fuel
Requirement.
1.12 MAINTENANCE PROGRAM
(a) Prior to the Return Occasion and upon Lessor's or
Owner's request, Lessee will provide Lessor or Owner or
its agent reasonable access to the Lessee's Maintenance
Program and the Aircraft Documents and Records in order
to facilitate the Aircraft's integration into any
subsequent operator's fleet; and
(b) Lessee will, if requested by Lessor or Owner to do so,
provide sufficient access to Lessee's Maintenance
Program in order to integrate the Aircraft to the next
operator's maintenance program. Lessor and any Person
to whom Lessor grants
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access to Lessee's Maintenance Program shall agree that it
will not disclose the contents of the Lessee's Maintenance
Program to any Person except to the extent necessary to
monitor Lessee's compliance with the Lease and/or to
bridge the maintenance program for the Aircraft from the
Lessee's Maintenance Program to another program after the
Return Occasion.
1.13 AIRCRAFT DOCUMENTS
At redelivery Lessee will deliver to Lessor and Owner all current
and complete historical records required to be maintained relevant
to the Aircraft, including documents, manuals, data, overhaul
records, life limited part traceability to "zero time since new",
log books, original delivery documents serviceable parts tags, FAA
forms, modification records and inspection records, and including
each of the Aircraft Documents and Records.
1.13. ETOPS:
The Aircraft shall be certified by the FAA for 180 minutes ETOPS
operation or shall be in such condition as to be eligible for
certification by the FAA for 180 minutes ETOPS operation.
SCHEDULE B
COMMERCIAL TERMS
Lessor and Lessee hereby agree that the definitions and other commercial
and financial terms set forth in this Schedule B shall apply to the leasing of
the Aircraft under the Lease.
In addition, Lessor and Lessee understand and agree that the commercial and
financial information contained in this Schedule B are considered by Lessor and
Lessee as proprietary and confidential. Lessor and Lessee each hereby agree, and
any of their assignees, upon becoming such shall agree that it will treat this
Schedule B as proprietary and confidential and will not, without the prior
written consent of the other, disclose or cause to be disclosed, the terms
hereof or thereof to any Person, except to its agents, representatives,
advisors, employees, counsel, underwriters, auditors, investors, financing
parties, head lessors and sub-lessees as necessary or appropriate for the
leasing transaction which is the subject hereof, or except (a) as may be
required by applicable Law or pursuant to an order, or a valid and binding
request, issued by any court or other Government Entity having jurisdiction over
Lessor, Lessee or the assignee of either of them, as the case may be, or (b) as
necessary to enable Lessor or its assignee to make transfers, assignments or
other dispositions to potential transferees, assignees or participants of its
interest in and to the Lease.
In connection with any such disclosure or any filing of the information
contained herein or therein pursuant to any such applicable Law, Lessor, Lessee
or the assignee of either of them, as the case may be, shall request and use its
best reasonable efforts to obtain confidential
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treatment of this Schedule B and the other party will cooperate in making and
supporting any such request for confidential treatment.
PART I CASUALTY OCCURRENCE DEFINITIONS
[This provision has been omitted as confidential information, and is
separately filed with the Commission.]
PART II DEPOSIT; DISCOUNT RATE; LC AMOUNT; INTEREST RATE
[This provision has been omitted as confidential information, and is
separately filed with the Commission.]
PART III RENT
[This provision has been omitted as confidential information, and is
separately filed with the Commission.]
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PART IV TAX DEFINITIONS; SPECIAL TAX INDEMNITY
[This provision has been omitted as confidential information, and is
separately filed with the Commission.]
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PART V SUPPLEMENTAL RENT
[This provision has been omitted as confidential information, and is
separately filed with the Commission.]
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PART VI MAINTENANCE AND RETURN CONDITION DEFINITIONS;
AIRWORTHINESS DIRECTIVE SHARING PAYMENTS
[This provision has been omitted as confidential information, and is
separately filed with the Commission.]
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PART VII SUBLEASE FEE
[This provision has been omitted as confidential information, and is
separately filed with the Commission.]
PART VIII UTILIZATION RATIO
[This provision has been omitted as confidential information, and is
separately filed with the Commission.]
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SCHEDULE C
AIRCRAFT LEASE COMMON TERMS AGREEMENT
AND
AMENDMENT TO AIRCRAFT LEASE COMMON TERMS AGREEMENT
SF1 #86850 v9
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EXECUTION VERSION
-----------------
AIRCRAFT LEASE
COMMON TERMS AGREEMENT
DATED AS OF MAY 12,2000
BETWEEN
GENERAL ELECTRIC CAPITAL CORPORATION
And
ALOHA AIRLINES, INC.
CONTENTS
SECTION PAGE
------- ----
1. INTERPRETATION............................................... 1
2. REPRESENTATIONS AND WARRANTIES............................... 2
3. CONDITIONS PRECEDENT......................................... 2
4. COMMENCEMENT................................................. 3
5. PAYMENTS .................................................... 5
6. MANUFACTURER'S WARRANTIES.................................... 19
7. LESSOR'S COVENANTS........................................... 20
8. LESSEE'S COVENANTS........................................... 20
9. INSURANCE.................................................... 38
10. INDEMNITY.................................................... 39
11. EVENTS OF LOSS............................................... 41
12. RETURN OF AIRCRAFT .......................................... 42
13. DEFAULT...................................................... 45
14. TRANSFER..................................................... 52
15. MISCELLANEOUS................................................ 54
16. DISCLAIMERS AND WAIVERS...................................... 58
17. BROKERS AND OTHER THIRD PARTIES.............................. 61
Schedule 1 Definitions
Schedule 2 Representations and Warranties
Schedule 3 Conditions Precedent
Schedule 4 Pre-Delivery Procedures and Delivery Condition
Schedule 5 Certificate of Technical Acceptance
Schedule 6 [NOT APPLICABLE]
Schedule 7 Insurance Requirements
Schedule 8 Form of Lessee's Legal Opinion
Schedule 9 Events of Default
Schedule 10 [NOT APPLICABLE]
Schedule 11 Form of Lease Termination Certificate
Schedule 12 Form of Lease Supplement No. 1
Schedule 13 Form of Letter of Credit
Schedule 14 Maintenance Performers
Schedule 15 Technical Report
COMMON TERMS AGREEMENT
THIS COMMON TERMS AGREEMENT (this "CTA") is made as of May 12, 2000 BETWEEN:
(1) GENERAL ELECTRIC CAPITAL CORPORATION ("GE CAPITAL") and
(2) ALOHA AIRLINES, INC. ("ALOHA")
WHEREAS:
(A) From time to time, Aloha or one of its Affiliates may wish
to lease commercial aircraft from GE Capital or one of its
Affiliates, and GE Capital or one of its Affiliates may
wish to lease commercial aircraft to Aloha or one of its
Affiliates;
(B) Each party hereto wishes to provide in one document for
certain common terms and conditions, as hereinafter provided
in this CTA, that will be applicable, unless otherwise
stated, to each such lease referred to in Recital (A); and
(C) Each such lease transaction will be concluded only on the
terms of an agreement entitled "Aircraft Lease Agreement,"
which together with this CTA (which will be incorporated
into and become part of such Aircraft Lease Agreement), will
constitute the lease for the applicable aircraft as
identified therein;
NOW, THEREFORE, for good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree
as follows:
1. INTERPRETATION
1.1 Definitions
All references herein to "Lease" mean the integrated agreement
consisting of the various documents comprising the Lease as defined
in Schedule 1. In the Lease, capitalized words and expressions have
the meanings set out for them in Schedule 1 and in the Aircraft Lease
Agreement.
1.2 Construction
(a) In the Lease, unless otherwise stated, a reference to:
(i) "Lessor," "Lessee," "GECAS," "Owner" or any other
Person includes any of their successors and
assignees;
(ii) plural concepts shall include the singular and vice
versa;
(iii) any document (except this CTA unless Lessor and
Lessee otherwise expressly agree) shall include any
changes to that document and any replacement for it;
(iv) a Section or a Schedule is a reference to a clause
of or a schedule to this CTA;
(v) any Regulation shall include any changes to that
Regulation and any replacement for it;
(vi) an obligation of a Person refers to any obligation
that Person has under or in relation to the Lease;
and
(vii) "includes," "including", "include" or similar terms
shall not be construed as limiting and shall mean
"including, without limitation."
(b) Headings to Sections and Schedules in the Lease are not
intended to affect their meaning.
2. REPRESENTATIONS AND WARRANTIES
2.1 Lessee's Representations and Warranties
Lessee hereby makes the representations and warranties set out in
Section 1.1 of Schedule 2 as of the date of execution of the Aircraft
Lease Agreement and as of the Delivery Date, and Lessee understands
that these statements must be true, both when the Aircraft Lease
Agreement is executed and on the Delivery Date.
2.2 Lessor's Representations and Warranties
Lessor hereby makes the representations and warranties set out in
Section 1.2 of Schedule 2 as of the date of execution of the Aircraft
Lease Agreement and as of the Delivery Date, and Lessor understands
that these statements must be true, both when the Aircraft Lease
Agreement is executed and on the Delivery Date.
3. CONDITIONS PRECEDENT
3.1 Conditions Precedent
Lessor need not deliver and start the leasing of the Aircraft under the
Lease unless each of the Lessor Conditions Precedent is satisfied or
waived in writing by Lessor. Lessee need not accept and start the
leasing of the Aircraft under the Lease unless each of the Lessee
Conditions Precedent is satisfied or waived in writing by Lessee;
provided, however, in the event that Lessee fails to accept and start
the leasing of the Aircraft under the Lease, any Lessee Condition
Precedent which reasonably could be expected to be met if the Delivery
of the Aircraft had
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occurred shall be deemed to have been satisfied or waived for purposes
of determining Lessee's liability for Rent in respect of the Aircraft
in accordance with Section 4.1(b) below.
3.2 Waiver
If any Lessor Condition Precedent is not satisfied, or waived in
writing by Lessor, on or before the Delivery Date, and Lessor (in its
absolute discretion) nonetheless agrees to deliver the Aircraft to
Lessee and to start the leasing of the Aircraft, Lessee will ensure
that such Lessor Condition Precedent is fulfilled within 15 days after
the Delivery Date, and Lessor may treat as an Event of Default the
failure of Lessee to do so.
4. COMMENCEMENT
4.1 Leasing
(a) Lessor shall notify Lessee of the Scheduled Delivery Week as
soon as possible, but no later than at least thirty (30) days
prior to the Scheduled Delivery Month, and Lessor shall
notify Lessee of the Scheduled Delivery Date as soon as
possible, but no later than at least one (1) week prior to
the Scheduled Delivery Week. Subject to Sections 3.1 and 4.4,
Lessor will lease the Aircraft to Lessee and Lessee will take
the Aircraft on lease for the Term, which shall commence on
the Delivery Date, and which shall be evidenced by Lessee's
execution of Lease Supplement No. 1.
(b) If (i) Lessee is unwilling or unable to accept delivery of
the Aircraft on the date on which Lessor tenders the Aircraft
for Delivery to Lessee under and in accordance with Section
4.3(a), or Lessee fails to fulfil any Lessor Condition
Precedent on or before such date, and (ii) the Lessee
Conditions Precedent are met (or could reasonably be expected
to be met if Delivery had occurred), then the Rent
Commencement Date for the Aircraft shall be deemed to have
occurred on the date on which it is tendered by Lessor for
Delivery in accordance with subclause (ii) of this Section
4.1(b), and Lessee shall be obligated to pay Rent for the
Aircraft on and from such date regardless of whether the
Delivery Date occurs or whether Lessee executes Lease
Supplement No. 1, but Lessor shall have no obligation to
deliver, and Lessee shall have no lease interest in the
Aircraft or other right to possession of the Aircraft, unless
and until Lessee fulfils all Lessor Conditions Precedent as
and when provided in the Lease and Lessee accepts delivery of
the Aircraft as evidenced by its execution of Lease
Supplement No. 1, and so long as no Default has occurred and
is continuing.
(c) Lessee will be responsible for all risks associated with any
loss of or damage to the Aircraft from the Rent Commencement
Date until possession of the Aircraft is returned
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to Lessor on the Return Occasion and Lessor executes and
delivers to Lessee the acknowledgement contemplated by
Section 12.4.
4.2 Procedure before Delivery
Lessor and Lessee will follow the Pre-Delivery Procedure.
4.3 Delivery and Acceptance
(a) After the Pre-Delivery Procedure has been carried out:
(i) Subject to Section 3.1, Lessor will tender delivery
of the Aircraft to Lessee at the Delivery Location.
(ii) Subject to Section 3.1, Lessee will accept the
Aircraft. Upon such acceptance, Lessee must also
provide evidence of its acceptance by signing Lease
Supplement No. 1 and delivering it to Lessor.
(b) Lessee's acceptance of the Aircraft shall be regarded as
absolute, unconditional and irrevocable.
4.4 Delayed Delivery
If Delivery takes place after the Scheduled Delivery Date or does not
happen due to an Unforeseen Event or for any other reason (other than
Lessor's willful misconduct in the performance of its obligation to
deliver the Aircraft under and subject to the conditions in the
Lease):
(a) Lessor will not be responsible for any Losses that Lessee
suffers resulting from the delay or from the non-delivery of
the Aircraft;
(b) Lessee will not, except in the circumstances described in
Section 4.4(c), be entitled to terminate the Lease or to
reject the Aircraft when it is offered for Delivery because
of the delay.
(c) If the Aircraft has not been tendered for Delivery, in
accordance with Section 4.3, by the Final Delivery Date,
either party may terminate the Lease by delivering notice to
the other party within 10 days of such Final Delivery Date
(and if such notice is not delivered within such 10-day
period the Final Delivery Date will be deemed extended for
one additional period of 90 days). Upon the delivery of any
such notice or automatically on the expiration of such
90-day period if no such notice has been delivered, all
obligations of each party under the Lease will end on the
date of such notice or the date of the
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expiration of such period, as the case may be, except that
Lessor will repay to Lessee the Deposit (if any) or return to
Lessee or cancel any Letter of Credit and Lessee will remain
obligated under its indemnity set forth in Section 3 of
Schedule 4.
(d) Lessee hereby agrees that its only right or remedy for a delay
in or failure of delivery of the Aircraft due to an Unforeseen
Event or for any other reason (other than Lessor's willful
misconduct in the performance of its obligation to deliver
the Aircraft under and subject to the conditions in the Lease)
is the remedy set forth in Section 4.4(c) above and Lessee
hereby waives any rights it may have under Section 2A-406 of
the UCC or otherwise for any delay in or failure of delivery.
5. PAYMENTS
5.1 Deposit
Lessee shall pay Lessor any Deposit that is specified in Section 3 of
the Aircraft Lease Agreement.
5.2 Rental Periods
The first Rental Period will start on the Rent Commencement Date and
each subsequent Rental Period will start on the date immediately
following the last day of the previous Rental Period. Each Rental
Period will end on the date immediately before the numerically
corresponding day in the next month, except that:
(a) if there is no numerically corresponding day in that month,
it will end on the last day of that month; and
(b) if a Rental Period would otherwise overrun the Expiry Date,
it will end on the Expiry Date.
5.3 Rent
(a) TIME OF PAYMENT: Lessee will pay to Lessor or its order Rent
in advance on each Rent Date. Lessor must receive value for
the payment on each Rent Date. If a Rental Period begins on a
day which is not a Business Day, the Rent payable in respect
of that Rental Period shall be paid on the Business Day
immediately following that day.
(b) AMOUNT: The Rent payable during the Term shall be calculated
in accordance with Schedule B of the Aircraft Lease Agreement.
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5.4 Supplemental Rent
(a) AMOUNT: If, under the Aircraft Lease Agreement, Lessee is
required to pay Supplemental Rent, Lessee will pay that
Supplemental Rent, at the rates referred to in Section 3 of
the Aircraft Lease Agreement, to Lessor in relation to each
calendar month (or part of a month) of the Term, on the
fifteenth day following the end of that calendar month
(except that the last payment of Supplemental Rent during
the Term shall be paid on the Expiry Date).
(b) ADJUSTMENT: If, under the Aircraft Lease Agreement, Lessee
is required to pay Supplemental Rent, the Supplemental Rent
rates shall be adjusted after the Delivery Date in the manner
provided in the Aircraft Lease Agreement.
(c) LESSOR'S PROPERTY: Lessee acknowledges and agrees that
Supplemental Rent is additional rent for the leasing of the
Aircraft and not cash collateral or other collateral security
for Lessee's maintenance obligations under the Lease. Once
paid all Supplemental Rent is the property of Lessor, it
is not refundable to Lessee under any circumstances
whatsoever and Lessee has no interest therein whatsoever.
5.5 Payments
All payments by Lessee to Lessor under the Lease will be made for
value on the due date in Dollars and in immediately available funds by
wire transfer to the Lessor's Account as specified in the Aircraft
Lease Agreement.
5.6 Withholding and Tax Credit
(a) WITHHOLDING: Lessee must not deduct any amount from any of its
payments under the Lease, for or on account of any Taxes,
unless it is required by law to do so, in which case Lessee
must:
(i) deduct the minimum amount necessary to comply with
the Law;
(ii) pay Lessor an extra amount so that Lessor receives
a net amount on the relevant payment date, that is
equal to the amount that it would have received if
the reduction had not been made (provided that Lessee
shall have no obligation to pay Lessor an extra
amount on account of withholding in relation to any
Taxes with respect to which Lessee is not required to
indemnify Lessor under Section 5.7). The amount of
any such payment to Lessor must take into account the
tax treatment of that payment to Lessor applying the
principles of Section 5.10 such that Lessor shall be
in no worse position than it would have been if the
deduction had not applied in the first place;
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(iii) pay the Tax to the relevant taxing authority according
to the relevant Law; and
(iv) obtain a receipt (if one is available) from the
relevant taxing authority and give it to Lessor.
(b) TAX CREDIT: If Lessor, in good faith, determines that it has
realized a tax benefit (by way of deduction, credit or
otherwise) as a result of any payment for which Lessee is
liable under Section 5.6(a), Section 5.7, Section 5.10,
Section 5.21 or Section 10, Lessor shall pay to Lessee as
soon as practicable after the tax benefit has been realized
(but not before Lessee has made all payments and indemnities
to Lessor required under this Section or Section 5.7), an
amount which will ensure that (after taking account of the
payment itself) Lessor is in no better and no worse position
than it would have been if the Tax giving rise to the payment
hereunder had not been incurred.
Nothing in this Section 5.6(b) shall:
(i) interfere with the right of Lessor to arrange its
tax affairs in whatever manner it thinks fit; or
(ii) oblige Lessor to disclose any information relating
to its Tax affairs or any Tax computations (other
than information reasonably necessary for Lessee to
verify Lessor's determination, which information
may be supplied on a confidential basis to an
independent third party reasonably acceptable to
Lessor and Lessee).
5.7 Tax Indemnity
(a) General:
(i) Except as provided in Section 53(c), Lessee will on
demand pay and indemnify each Tax Indemnitee against
any and all Taxes levied or imposed against or upon
or payable by such Tax Indemnitee or Lessee and
arising from, with respect to or in connection with
the transactions pursuant to the Lease, including all
Taxes relating or attributable to Lessee, the Lease
or the Aircraft, directly or indirectly, in
connection with the importation, exportation,
registration, ownership (but only to the extent
relating to or attributable to or arising as a result
of the possession, operation, use or maintenance of
the Aircraft by Lessee), leasing, sub-leasing,
purchase, delivery, possession, use, operation,
repair, maintenance, overhaul, transportation,
landing, storage, presence or redelivery of the
Aircraft or any part thereof or any rent, receipts,
insurance proceeds, income, indemnification payment
or other amounts arising therefrom, or the making of
any Equipment Change or the permanent replacement of
any Engine.
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(ii) All Taxes indemnified pursuant to this Section
5.7(a) shall be paid by Lessee directly to the
appropriate taxing authority (to the extent
permitted by applicable Law) at or before the time
prescribed by applicable Law. After any payment by
Lessee of any Tax directly to a taxing authority,
Lessee shall furnish to Lessor, on request, a
certified copy of a receipt for Lessee's payment of
such Tax or such other evidence of payment of such
Tax as is reasonably obtainable by Lessee and
reasonably acceptable to Lessor.
(iii) Any amount payable by Lessee to a Tax Indemnitee
pursuant to Section 5.7(a) shall be paid within ten
days after receipt of a written demand therefor from
the relevant Tax Indemnitee accompanied by a written
statement describing in reasonable detail the basis
for such indemnity and the computation of the amount
so payable, provided that if an amount of any
indemnified Tax is being contested in accordance
with Section 5.9 and Lessee shall have duly
performed (and shall continue to perform) all its
obligations under Section 5.9 with respect to such
contest, then payment of the indemnity with respect
to such Tax under Section 5.7(a) shall, at Lessee's
election, be deferred until the date the contest has
been completed.
(b) Sales and Use Taxes:
(i) Without limiting Section 5.7(a) above, Lessee shall
pay to Lessor (or, if permitted by applicable Law
and if requested by Lessor, Lessee shall pay to the
relevant tax authority for the account of Lessor):
(y) all sales, use, excise, rental, value added,
goods and services and similar taxes
("SALES TAXES") required to be paid to
the tax authority of the jurisdiction in
which the Delivery Location is situated or to
the jurisdiction of the Habitual Base or the
State of Incorporation with respect to the
lease of the Aircraft to Lessee pursuant to
the Lease unless Lessee delivers to Lessor on
or prior to the Delivery Date such exemption
certificate or other document as may be
required by applicable law to evidence
Lessor's entitlement to exemption from all
Sales Taxes imposed by each such jurisdiction
with respect to the lease of the Aircraft
pursuant to the Lease; and
(z) all Sales Taxes required to be paid to the
tax authority of any jurisdiction in which
the Aircraft may be used, operated or
otherwise located from time to time unless
Lessee deliver to Lessor such exemption
certificates or other documents as may be
required by applicable law to evidence
Lessee's entitlement to exemption from all
Sales Taxes imposed by each
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such jurisdiction with respect to the lease
of the Aircraft pursuant to the Lease.
(ii) Lessee and Lessor will cooperate with each other in
connection with the preparation and filing of any
exemption application or similar document that is
reasonably necessary or desirable under applicable
Law to avoid the imposition of any Sales Taxes with
respect to the transactions contemplated by the
Lease.
(iii) The specific obligations with respect to sales and
use taxes set forth in this Section 5.7(b) are in
addition to, and are not in substitution for,
Lessee's obligation to indemnify for sales and use
taxes pursuant to Section 5.7(a).
(c) Lessee is not required to indemnify a Tax Indemnitee under
Section 5.7(a) or Section 5.7(b) to the extent that the Tax
arises because of:
(i) the willful misconduct or gross negligence of the Tax
Indemnitee seeking indemnity under Section 5.7;
(ii) a Tax liability a Tax Indemnitee has which would have
arisen even if the Lease had not been entered into;
(iii) a Tax liability charged on or measured by a Tax
Indemnitee's net income, profits or gains by any
Government Entity in the United States; but excluding
any Tax (A) that is a Sales Tax (other than a Sales
Tax that is enacted by a Government Entity as a
substitute for or replacement of a Tax charged on or
measured by net income, profits, or gains, as a
revenue source for that Government Entity (a
"Replacement Sales Tax")) or (B) that is imposed
by any government or taxing authority of any
jurisdiction (other than the United States federal
government) if and to the extent that such Tax
(including a Replacement Sales Tax) results from
(x) the use, operation, presence, registration or
location of the Aircraft, the Airframe, any Engine or
any Part in the jurisdiction imposing the Tax, or (y)
the situs of organization, any place of business or
any activity of Lessee or any other Person having
use, possession or custody of the Aircraft, the
Airframe, any Engine or any Part in the jurisdiction
imposing the Tax;
(iv) a Tax liability charged with respect to the period,
or an event occurring, (x) prior to the Delivery Date
or (y) after the Expiry Date and, in either case,
unrelated to Lessor's dealings with Lessee or to the
transactions contemplated by the Lease;
(v) a Tax liability arising out of any voluntary transfer
or disposition by a Tax Indemnitee of any equitable
or legal interest in the Aircraft or any part thereof
or
-9-
this Agreement to any Person (including a transfer
or disposition by way of security but excluding a
transfer or disposition pursuant to the exercise of
remedies in connection with an Event Default),
provided, however, that Lessor shall in connection
with an Event of Default comply with any request as
Lessee shall make concerning the appropriate
jurisdiction in which such disposition shall be
made unless Lessor reasonably determines (and
advises Lessee) that compliance with such request by
Lessee would generate an adverse consequence or
prejudice Lessor; or
(vi) a Tax liability with respect to a Tax based on or
measured by the value or principal amount of any
loan or promissory note (or security therefor)
entered into by a Tax Indemnitee or anyone claiming
an interest in the Aircraft or any portion thereof
through a Tax Indemnitee; or
(vii) a Tax liability arising out of a Replacement Sales
Tax as described in Section 5.7(c)(iii), but
excluding a Replacement Sales Tax described in
Section 5.7(c)(iii)(B).
(d) Lessee will also indemnify each Tax Indemnitee, on an
After-Tax Basis, as set forth in the Section entitled
"Special Tax Indemnity" in Schedule B of the Aircraft Lease
Agreement, and the provisions of Section 5.9 (TAX CONTEST
AND INFORMATION) shall apply thereto.
5.8 [NOT APPLICABLE]
5.9 Tax Contest and Information
(a) If a Tax Indemnitee receives a notice of an audit or a
written claim for any Tax for which Lessee would be required
to pay an indemnity pursuant to Section 5.6 or Section 5.7,
Lessor or such Tax Indemnitee shall notify Lessee promptly of
such audit or claim, provided that any failure to provide
such notice will not relieve Lessee of any indemnification
obligation pursuant to Section 5.6 or 5.7 except to the
extent that such failure precludes the right to contest such
Taxes. If requested by Lessee in writing promptly after
receipt of notice hereunder, Lessor shall or Lessor shall
cause, to the extent that it has the ability to do so through
relationship or contractual privity, such Tax Indemnitee to,
upon receipt of indemnity satisfactory to it and at the
expense of Lessee (including all costs, expenses, legal and
accountants' fees and disbursements, and penalties, interest
and additions to tax incurred in contesting such claim)
permit Lessee to contest such audit or claim, or, if such
contest (w) relates to an income tax, (x) involves Taxes in
addition to those for which Lessee is responsible hereunder,
(y) may not, under applicable law be conducted by Lessee, or
(z) is one for which Lessee requests in writing
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that Lessor or the Tax Indemnitee conduct such contest,
Lessor shall, or Lessor shall cause, to the extent that it
has the ability to do so through relationship or contractual
privity, the appropriate Tax Indemnitee to in good faith
contest such audit or claim, by (i) resisting payment
thereof if practicable and appropriate, (ii) not paying the
same except under protest if protest is necessary and
proper, or (iii) if payment is made, using reasonable
efforts to obtain a refund of such Taxes, in appropriate
administrative and judicial proceedings. Lessor or the Tax
Indemnitee shall determine the method of any contest
conducted by Lessor or the Tax Indemnitee and (in good faith
consultation with Lessee) control the conduct thereof,
except that with respect to matters described in clause (y)
or in clause (z) above which are not also described in
clause (w) or clause (x) above Lessor shall and Lessor shall
cause, to the extent that it has the ability to do so
through relationship or contractual privity, the Tax
Indemnitee to comply with the reasonable instructions of
Lessee regarding the method of any contest conducted by
Lessor or the Tax Indemnitee and Lessee shall (in good faith
consultation with Lessor) control the conduct thereof.
Lessee shall determine the method of any contest conducted
by Lessee and (in good faith consultation with Lessor or the
Tax Indemnitee) control the conduct thereof. Lessee shall
pay in full all payments of Rent and other amounts payable
pursuant to the Lease, without reduction for or on account
of any Tax (except as provided in Section 5.6), while such
contest is continuing. Lessor shall not be required to
contest, or to continue to contest, a claim for Taxes under
this Section 5.9 if (x) such contest would result in a risk
of criminal penalties or risk of a sale, forfeiture or loss
of, or the imposition of a Security Interest (other than a
Permitted Lien) on, the Aircraft, or (y) Lessee shall not
have furnished, at Lessee's expense, an opinion of
independent tax counsel selected by Lessor and reasonably
satisfactory to Lessee, that a reasonable basis exists for
such contest, or (z) a Default shall be continuing (unless
Lessee shall have provided security reasonably satisfactory
to Lessor securing Lessee's performance of its obligations
under this Section 5.9). If Lessor or any Tax Indemnitee
contests any claim for Taxes by making a payment and seeking
a refund thereof, then Lessee shall advance to Lessor or
such Tax Indemnitee, on an interest-free basis, an amount
equal to the Taxes to be paid by Lessor or such Tax
Indemnitee in connection with the contest and shall
indemnify Lessor or such Tax Indemnitee on an After-Tax
Basis for any adverse tax consequences to Lessor or such Tax
Indemnitee of such interest-free advance. Upon the final
determination of any contest pursuant to this Section 5.9 in
respect of any Taxes for which Lessee shall have made an
advance to Lessor or a Tax Indemnitee in accordance with the
immediately preceding sentence, the amount of Lessee's
obligation shall be determined as if such advance had not
been made; any indeminty obligation of Lessee to Lessor or a
Tax Indemnitee under this Section 5.9 and Lessor's or such
Tax Indemnitee's obligation to repay the advance will be
satisfied first by setoff against each other, and any
difference owing by either party shall be paid within ten
days after such final determination.
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(b) If Lessor or any Tax Indemnitee obtains a refund or
reimbursement of all or any part of any Taxes for which a
full indemnity was paid by Lessee, Lessor shall and Lessor
shall cause such Tax Indemnitee to pay Lessee the amount of
such refund or reimbursement, reduced by any Taxes imposed
on Lessor or such Tax Indemnitee on receipt or accrual of
such refund or reimbursement and increased by any Taxes saved
by Lessor or such Tax Indemnitee by reason of the
deductibility of such payment by Lessor or such Tax
Indemnitee. If, in addition to such refund or reimbursement,
Lessor or such Tax Indemnitee receives an amount of interest
on such refund or reimbursement or a recovery of costs or
attorney's fees with respect thereto that were paid by
Lessee, Lessor or such Tax Indemnitee shall pay to Lessee the
portion of such interest or recovered costs or attorney's
fees which is fairly attributable to such refund, reduced by
any Taxes imposed by Lessor or such Tax Indemnitee on receipt
or accrual of such interest and increased by any Taxes saved
by reason of the deductibility of such payment by Lessor or
such Tax Indemnitee. Neither Lessor nor the Tax Indemnitee
shall be required to make any payment to Lessee pursuant to
this Section 5.9 if, and for so long as, a Default shall have
occurred and be continuing.
(c) Lessor or a Tax Indemnitee in its sole discretion (by written
notice to Lessee) may waive its rights to indemnification
pursuant to Section 5.7 with respect to any claim for any Tax
and may refrain from contesting or continuing the contest of
such claim, in which event Lessee shall have no obligation to
indemnify Lessor for the Taxes that are the subject of such
claim. If Lessor agrees to a settlement of any contest
conducted pursuant to this Section 5.9 without the prior
written consent of Lessee, which consent shall not be
unreasonably withheld, then Lessor shall be deemed to have
waived its rights to the indemnification provided for in
Section 5.7 with respect to the Tax liability accepted in
such settlement or with respect to which Lessee's ability to
avoid or minimize, directly or by instruction to the Lessor
or such Tax Indemnitee regarding how to avoid or minimize,
Taxes has been materially impaired as a result of failure of
the Lessor or such Tax Indemnitee to so contest or continue
to contest.
(d) Information:
(i) If Lessee is required by any applicable Law, or by
any third party, to deliver any report or return in
connection with any Taxes for which Lessee would be
obligated to indemnify Lessor or any other Tax
Indemnitee under the Lease, Lessee will complete the
same and, on request, supply a copy of the report or
return to Lessor.
(ii) If any report, return or statement is required to be
made by Lessor or any other Tax Indemnitee with
respect to any Tax for which there is an indemnity
obligation of Lessee under the Lease, and Lessee
knows of, or reasonably should
-12-
have known of, such return, report or statement,
Lessee will promptly notify Lessor of the
requirement and:
(y) if permitted by applicable Law, make and
timely file such report, return or statement
(except for any report, return or statement
that Lessor has notified Lessee that Lessor
or any other Tax Indemnitee intends to
prepare and file), prepare such return in
such manner as will show Lessor as lessor
of the Aircraft and the ownership of the
Aircraft in Lessor if required or
appropriate, and provide Lessor upon request
a copy of each such report, return or
statement filed by Lessee, or
(z) if Lessee is not permitted by applicable
Law to file any such report, return or
statement, Lessee will prepare and deliver
to Lessor a proposed form of such report,
return or statement within a reasonable
time prior to the time such report, return
or statement is to be filed.
(iii) Lessee will provide such information and documents
as Lessor may reasonably request to enable Lessor or
any other Tax Indemnitee to comply with its tax
filing, audit and litigation obligations. Lessor or
any other Tax Indemnitee will provide such
information or documents, at Lessee's expense, that
Lessee does not otherwise have as Lessee may
reasonably request and which are necessary to enable
Lessee to comply with its obligations under the Lease
(including Sections 5.6 and 5.7 of the CTA and
Schedule B of the Aircraft Lease Agreement) or to
minimize Taxes that are the subject of any filing,
audit, or contest under this Section 5.9.
5.10 Indemnity Payments - After-Tax Basis
The amount of any payment made under Section 5.7 (TAX INDEMNITY)
(including Section 5.7(d)), Section 5.21 (EXPENSES) or Section 10
(INDEMNITY) to or for the benefit of any Indemnitee shall include such
amount as may be necessary to hold such Indemnitee harmless on an
After-Tax Basis from all Taxes required to be paid by such Indemnitee
with respect to such payment or indemnity (including any payments
pursuant to this Section 5.10.
5.11 Lessor Obligations Following Expiry Date
Within 91 days (or such shorter period after the Expiry Date to which
Lessor may agree after Lessee demonstrates to Lessor's reasonable
satisfaction that Lessee has a net worth, determined in accordance
with GAAP, of not less than Five Million Dollars ($5,000,000.00) as of
the Expiry Date) after:
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(a) redelivery of the Aircraft to Lessor in accordance with and
in the condition required by the Lease; or
(b) payment to Lessor of the Agreed Value following an Event of
Loss after the Delivery Date;
and in each case so long as all amounts which may then be due and
payable under the Lease and the Other Agreements shall have been paid
in full and (no other Default has occurred and is continuing:
(i) Lessor will pay to Lessee the balance of the
Deposit (if any);
(ii) Lessor will pay to Lessee the amount of any Rent
received in respect of any period falling after the
date of redelivery of the Aircraft or payment of
the Agreed Value, as the case may be; and
(iii) Lessor will return to Lessee or cancel any Letter
of Credit.
5.12 Net Lease
The Lease is a net lease. The Lessee's obligation to pay Rent and to
perform all of its other obligations under the Lease is absolute and
unconditional no matter what happens and no matter how fundamental or
unforeseen the event, including any of the following: (a) any right of
set-off, counterclaim, recoupment, defense or other right which either
party to the Lease may have against the other (including any right of
reimbursement) or which Lessee may have against the Manufacturer, any
manufacturer or seller of or any Person providing services with
respect to the Aircraft, any Engine or any Part or any other Person,
for any reason whatsoever, (b) any unavailability of the Aircraft for
any reason, including a requisition of the Aircraft or any prohibition
or interruption of or interference with or other restriction against
Lessee's use, operation or possession of the Aircraft (whether or not
the same would, but for this provision, result in the termination of
the Lease by operation of law); (c) any lack or invalidity of title or
any other defect in title, airworthiness, merchantability, fitness for
any purpose, condition, design, or operation of any kind or nature of
the Aircraft for any particular use or trade, or for registration or
documentation under the Laws of any relevant jurisdiction, or any
Event of Loss in respect of or any damage to the Aircraft; (d) any
insolvency, bankruptcy, reorganization, arrangement, readjustment of
debt dissolution, liquidation or similar proceedings by or against
Lessor, Lessee or any other Person; (e) any invalidity or
unenforceability or lack of due authorization of, or other defect in,
the Lease; (f) any Security Interests or Taxes; and/or (g) any other
cause or circumstance which but for this provision would or might
otherwise have the effect of terminating or in any way affecting any
obligation of Lessee under the Lease. Lessee acknowledges and agrees
that it has used its own judgement in selecting the Aircraft, and has
not relied on Lessor or
-14-
on any information supplied by Lessor, that Lessor is not a
manufacturer of or dealer in aircraft and that Lessor has all of the
rights and benefits of a lessor under a lease to which Section 2A-407
of the UCC applies as provided in such Section 2A-407.
Except as expressly set forth elsewhere in the Lease, Lessee hereby
waives, to the extent permitted by applicable Law, any and all right
which it may now have or which at any time hereafter may be conferred
upon it, by statute or otherwise, to terminate, xxxxx, cancel, quit,
reduce, defer, suspend or surrender the Lease or the Aircraft or any
obligation imposed upon Lessee under the Lease (including payment of
Rent or Supplemental Rent).
Each payment of Rent or Supplemental Rent made by Lessee shall be
final. Lessee will not seek to recover all or any part of any payment
of Rent or Supplemental Rent for any reason whatsoever except manifest
error.
If for any reason whatsoever the Lease shall be terminated in whole or
in part by operation of Law, except as specifically provided in the
Lease, Lessee waives all rights (if any) to any termination or
diminution in its Rent or Supplemental Rent obligations hereunder and
nonetheless agrees to pay to Lessor, an amount equal to each Rent and
Supplemental Rent payment at the time such payments would have become
due and payable in accordance with the terms thereof had the Lease not
been terminated in whole or in part and so long as such payments are
made and all other terms and conditions hereof are complied with by
Lessee, Lessor and Lessee will deem the Lease to remain in full force
and effect and Lessee shall continue in possession of the Aircraft
under the terms and conditions of the Lease.
Nothing in this Section 5.12 will be construed to limit Lessee's right
to institute separate legal proceedings against Lessor in the event of
Lessor's breach of the Lease as and to the extent permitted by
Sections 7.1 and 16.3 of this CTA, or to limit Lessee's rights and
remedies against any other Person.
5.13 Further Provisions regarding Deposit
(a) If, under the Lease, Lessee is required to pay a Deposit,
Lessee hereby grants a security interest in the Deposit to
Lessor and the remaining provisions of this Section shall
apply. Lessee agrees that Lessor shall be entitled to
commingle the Deposit with Lessor's general or other funds,
Lessor will have no obligation to pay any interest thereon
and Lessor will not hold any such funds as agent or in trust
for Lessee or in any similar fiduciary capacity. In this
regard, Lessee acknowledges and agrees that it is not located
in the State of
New York within the meaning of Section 7-101
1-c. (b) of the
New York General Obligations Law and,
therefore, the requirements of Section 7-101 of the
New York
General Obligations Law to the effect that Lessor hold the
Deposit in a separate, interest bearing account do not apply.
-15-
(b) If any Event of Default or any Default under clause (g) of
Schedule 9 shall have occurred and be continuing, in addition
to all rights and remedies accorded to Lessor elsewhere in
the Lease or under Law in respect of the Deposit, Lessor may
immediately or at any time thereafter, without prior notice
to Lessee, apply all or part of the Deposit in or towards the
payment or discharge of any matured obligation owed by Lessee
or any affiliate or associate of Lessee under the Lease or
the Other Agreements, in such order as Lessor sees fit,
and/or exercise any of the rights of set-off described in
Section 5.20 against all or part of the Deposit.
(c) If Lessor exercises the rights described in Section 5.13(b)
above, Lessee shall, following a demand in writing from
Lessor, immediately restore the Deposit to the level at
which it stood immediately prior to such exercise.
5.14 Letter of Credit
(a) If, under the Lease, Lessee is required or elects to provide
Lessor with a Letter of Credit, the provisions of this
Section shall apply. Any Letter of Credit provided by Lessee
to Lessor will be issued and payable by a Pre-Approved Bank
or another bank acceptable to Lessor in its sole and absolute
discretion and in substantially the form of Schedule 13, or
in another form and substance acceptable to Lessor in its
sole and absolute discretion, and, if not issued by a
Pre-Approved Bank or by the
New York branch of a major
international bank acceptable to Lessor in its sole and
absolute discretion from time to time, will be confirmed by
and payable at the
New York branch of a major international
bank acceptable to Lessor in its sole and absolute discretion
from time to time, and will be issued as security for all
payment obligations of Lessee or any its Affiliates under the
Lease and each Other Agreement (including any and all Losses
suffered or incurred by Lessor or any of its Affiliates in
respect of which Lessee or any if its Affiliates is obligated
under the Lease or each Other Agreement), which shall remain
in full force and effect until the Required LC Expiry Date
and may be drawn down by Lessor upon demand at any time or
times prior to the Required LC Expiry Date following (i) the
occurrence of an Event of Default or a Default under clause
(g) of Schedule 9, or (ii) the receipt by Lessor of notice of
non-renewal of the Letter of Credit under Section 5.14(b)
below.
(b) The Letter of Credit may have a validity period or periods
ending prior to the Required LC Expiry Date, provided that
(i) the Letter of Credit shall be renewed automatically,
without further act or deed by any party, until such time as
Lessor receives notice of non-renewal of the Letter Credit,
(ii) notice of non-renewal of the Letter of Credit shall be
provided to Lessor no less than 30 Business Days prior to its
then scheduled expiry date, (iii) Lessor shall be entitled to
draw the full amount of the Letter of Credit immediately in
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the event that Lessor receives any notice of non-renewal of
the Letter of Credit; and (iv) a Letter of Credit shall
remain in force at all times up to the Required LC Expiry
Date.
(c) If at any time during the Term, the current issuing or
confirming bank for the Letter of Credit ceases to meet the
requirements set forth in the definition of Pre-Approved
Bank, Lessee shall within five (5) Business Days after the
date of notice from Lessor of such decrease in credit
rating, cause the Letter of Credit to be replaced by a
Letter of Credit issued by another bank that meets the
definition of a Pre-Approved Bank and (if, requested by
Lessor in its sole and absolute discretion) that such
replacement Letter of Credit is confirmed by another bank
that meets the requirement of a Pre-Approved Bank.
(d) If Lessor makes a drawing under the Letter of Credit, Lessee
shall, following a demand in writing by Lessor, immediately
cause the maximum amount available for drawing under the
Letter of Credit to be restored to the level at which it
stood immediately prior to such drawing.
5.15 Guarantee
If, under the Aircraft Lease Agreement, Lessee is required to provide
Lessor with a Guarantee, Lessee will on or prior to the Delivery Date
provide Lessor with the Guarantee.
5.16 Late Payment Interest
If Lessee fails to pay any amount payable under the Lease on the due
date, Lessee will pay on demand from time to time to Lessor interest
(both before and after judgement) on that amount, from the due date to
the date of payment in full by Lessee to Lessor, at the Interest Rate.
All such interest will be compounded monthly and calculated on the
basis of the actual number of days elapsed in the month, assuming a 30
day month and a 360 day year.
5.17 Currency
(a) Except for Losses and expenses suffered or incurred by
Lessor, which shall be payable by Lessee to Lessor in the
currency and in the amount in which such Loss is suffered or
incurred, all amounts payable to Lessor under the Lease shall
be payable in Dollars in
New York and payment in Dollars in
New York is of the essence. Lessee must indemnify Lessor
against any Loss Lessor suffers if:
(i) Lessor receives an amount relating to Lessee's
obligations in a different currency from that in
which payments should be made under the Lease; or
(ii) Lessee pays a judgement or claim in a different
currency from that in which payments should be made
under the Lease.
-17-
(b) Lessee relinquishes any right to pay any amount under the
Lease in a currency which is different from the currency
provided in the Lease. Notwithstanding any such receipt,
judgement or claim described in Section 5.17(a), Lessee
shall have a separate obligation to pay, and Lessor shall
have a separate claim against Lessee for, amounts to be
indemnified by Lessee under this Section 5.17.
5.18 Certificates
Except where expressly provided in the Lease, any certificate or
determination by Lessor as to any rate of interest or as to any other
amount payable under the Lease will, in the absence of manifest
error, be presumed to be correct.
5.19 Appropriation
If any sum paid or recovered by Lessor in respect of the liabilities
of Lessee under the Lease is less than the amount then due, Lessor
may apply that sum to amounts due under the Lease in such proportions
and order and generally in such manner as Lessor may determine in its
sole discretion.
5.20 Set-off
(a) In this sub-clause, references to Lessee will also include
Lessee Affiliates.
(b) Lessor may, without notice, set-off any obligations owed by
Lessee under the Lease or under the Other Agreements against
any obligation Lessor or any of its Affiliates owes Lessee
under the Lease or under the Other Agreements, regardless
of the place of payment or currency. Promptly after making
any such set-off, Lessor shall notify Lessee thereof,
including in such notice such information about the set-off
as may be reasonably required to enable a reasonable person
to identify the claims so set off and to verify the
calculation of the set-off, but neither failure to give such
notice nor any alleged defect in such notice shall affect
the effectiveness of any such set-off.
If the obligations are in different currencies, Lessor may convert
either obligation at the market rate of exchange available in New
York. If the amount of an obligation is unknown, Lessor may estimate
the amount. Any difference between the estimated obligation and the
actual obligation will be paid by either Lessor or Lessee, as
appropriate, when the amount becomes known.
5.21 Expenses
Lessee will pay to Lessor on demand all reasonable expenses
(including all legal fees and expenses and the fees and expenses of
other professional advisers) that the Lessor suffers or incurs:
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(a) to deal with any amendments, extensions, consents or
waivers that are required in connection with the Lease
(but excluding any expenses incurred by Lessor or Owner in
connection with any change in the ownership or financing
of the Aircraft or a change in the Lease that is otherwise
requested by Lessor or Owner, and in each case unrelated
to any consent, waiver or amendment requested by Lessee or
any other act or omission of Lessee) or to deal with any
replacement of any Engine or Part (except for the
replacement of an Engine by or at the request of Lessor
prior to the Delivery Date);
(b) for FAA counsel and otherwise to act upon any advice and
obtain assistance to perfect the Lease in the State of
Registry and the State of Incorporation (and any other
appropriate place); and
(c) in contemplation of, or otherwise in connection with, the
enforcement or preservation of any of Lessor's rights
under the Lease (including under Section 10) or in respect
of the repossession of any Aircraft.
All amounts payable pursuant to this Section 5.21 will be paid in the
currency in which they are incurred by Lessor.
6. MANUFACTURER'S WARRANTIES
(a) So long as no Default has occurred which is continuing,
Lessor shall make available to Lessee during the Term the
benefit of all manufacturer's warranties in relation to
the repair or remedy of any defect in the Aircraft
(including compensation for loss of use of the Aircraft)
to the extent that it is permitted to do so. In
furtherance of the foregoing, Lessor shall take such
actions, at Lessee's cost and expense, as Lessee may
reasonably request to make such warranties available to
Lessee.
(b) If a Default has occurred and is continuing Lessor may
immediately recover from Lessee the proceeds of any
warranty claims previously paid to Lessee to the extent
that such claims relate to any defect in the Aircraft not
fully and completely rectified by Lessee before such
Default and Lessor may:
(i) retain for its own account any such proceeds
previously paid to Lessor which would have been
remitted to Lessee under this Section 6 in the
absence of such Default; and
(ii) cause any proceeds of any pending claims to be paid
to Lessor, rather than Lessee.
-19-
(c) Lessee will take all steps at the end of the Term as may be
reasonably required to ensure that the benefit of any
warranties relating to the Aircraft which have not expired
is vested in Lessor.
7. LESSOR'S COVENANTS
7.1 Quiet Enjoyment
So long as no Default has occurred and is continuing, Lessor will not
interfere with Lessee's right to quiet use and possession of the
Aircraft during the Term. Exercise by Lessor of its rights of
inspection or other rights provided to it under the Lease in the
absence of a Default shall not be considered to be a breach of the
foregoing covenant. Lessee agrees that its only right with respect to
a default by Lessor under the Lease is to make a claim against Lessor
for actual damages resulting directly therefrom and in any event
subject to Section 16.3 hereof, and Lessee hereby waives any and all
other rights or remedies it may have under Section 2A-211 of the UCC
or Sections 2A-508 through 2A-522 of the UCC or otherwise.
7.2 Maintenance Contributions
If, under the Aircraft Lease Agreement for the Aircraft, Lessee is
required to pay Supplemental Rent, then provided no Default has
occurred and is continuing, Lessor will pay such amounts, if any, as
may be specified in the Aircraft Lease Agreement to Lessee by way of
contribution to the cost of maintenance of the Aircraft, which
payments, if any, shall be made in the amounts and in the manner
specified in the Aircraft Lease Agreement.
8. LESSEE'S COVENANTS
8.1 Duration: Lessee shall perform and comply, or cause its Permitted
Sub-Lessee or maintenance contractor to perform and comply, with
its undertakings and covenants in the Lease at all times during the
Term. All such undertakings and covenants shall, except where
expressly otherwise stated, be performed at the expense of Lessee.
8.2 Information
Lessee will:
(a) provide Lessor with a Technical Report for the Aircraft
within 15 days after the end of each calendar month
throughout the Term and otherwise provide Lessor with a
Technical Report for the Aircraft within thirty (30) days
after Lessor's request therefor;
(b) provide Lessor with the Financial Information;
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(c) (i) notify Lessor of any Event of Loss and of any event
which is likely to result in an insurance claim in excess
of the Damage Notification Threshold promptly after the
occurrence of any such event, (ii) consult with Lessor in
the course of, and keep Lessor fully apprised as to the
details of, any negotiations with its insurers or insurance
brokers (and, in the case of repairable damage, with any
applicable repair facility) with respect to any insurance
claim arising out of such event, and (iii) obtain Lessor's
prior approval before agreeing to any disposition of any
insurance claim in excess of the Damage Notification
Threshold;
(d) upon the occurrence of any event which is likely to give
rise to an insurance claim under any of the Insurances
relating to the Aircraft, Lessee shall promptly execute and
deliver all documents and instruments and take all such
other action as may reasonably be required to initiate ate
and process any such claim under the applicable insurance,
and in any event, Lessee shall initiate such claim, execute
such documents or instruments and take such other action
promptly following a written request by Lessor that Lessee
initiate such claim, execute such document or instrument or
take such other action;
(e) provide Lessor, upon request, with evidence that all Taxes
and charges that are due and payable and were incurred by
Lessee in connection with the Aircraft, its location and
its operations, including those invoiced by airports and
air traffic control authorities have been paid in full (or
are being contested in good faith by appropriate
proceedings in respect of which adequate reserves have been
provided by Lessee and non-payment of which does not give
rise to any risk of the Aircraft or any interest therein
being sold, forfeited or otherwise lost or of criminal
liability on the part of Lessor or Owner);
(f) provide Lessor with such other information concerning the
location, condition, use and operation of the Aircraft or
concerning the business or financial affairs of Lessee, as
Lessor may from time to time reasonably request;
(g) [NOT APPLICABLE];
(h) [NOT APPLICABLE);
notify Lessor promptly as to any material modification to
Lessee's Maintenance Program (including, without limitation,
any change from maintenance on a block format to maintenance
on a phase-basis); provided, however, that Lessee shall not
make any modifications to Lessee's Maintenance Program which
may adversely affect the return conditions specified in Part
III of Schedule A to the Aircraft Lease Agreement without
prior consultation with Lessor. For the avoidance of doubt,
changes to Lessee's Maintenance Program extending or
shortening times between scheduled overhaul of Parts
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shall not be deemed to be material modification or to
adversely affect the return conditions;
8.3 Lawful and Safe Operation
Lessee will operate the Aircraft for commercial purposes from the
Delivery Date until the Return Occasion from a base within the State
of Registry or from such other base outside the State of Registry
pursuant to a sub-lease or a wet-lease complying with Section 8.4(a),
provided, always that Lessee must not use or operate the Aircraft or
suffer or, permit the Aircraft to be used or operated:
(a) in violation of any applicable Regulations or in a manner
causing Lessor, Owner, any Financing Party or GECAS to be
in violation of (i) any applicable Regulations of the
United States, (ii) any applicable Regulations of any
jurisdiction of which Lessee is notified in writing by
Lessor as a jurisdiction applicable to Lessor, Owner, GECAS
or any Financing Party, or (iii) any applicable Regulations
of any other jurisdiction into which or over which the
Aircraft is operated; provided, however, that nothing in
Section 8.3(a)(ii) shall be deemed to require Lessee to
comply with any Regulations of any jurisdiction other than
the United States which pertain to the maintenance or
modification of aircraft.
(b) for any purpose for which the Aircraft was not designed or
which is illegal;
(c) to carry cargo which could reasonably be expected to damage
the Aircraft;
(d) in any circumstances or place where the Aircraft is not
covered by the Insurances; or
(e) for purposes of training, qualifying or re-confirming the
status of cockpit personnel except for the benefit of
Lessee's or a Permitted Sub-Lessee's cockpit personnel,
and then only if the use of the Aircraft for such purpose
is not disproportionate to the use for such purpose of
other aircraft of the same type operated by Lessee or such
Permitted Sub Lessee, as the case may be.
8.4 Subleasing
(a) AT NO TIME PRIOR TO THE RETURN OCCASION WILL LESSEE
SUB-LEASE, WET-LEASE OR OTHERWISE GIVE POSSESSION OR
CONTROL OF THE AIRCRAFT OR ANY ENGINE TO, OR OTHERWISE
PERMIT THE AIRCRAFT OR ANY ENGINE TO BE IN THE POSSESSION
OR CONTROL OF, ANY PERSON EXCEPT:
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(i) when the prior written consent of Lessor has been
obtained, which consent shall not be unreasonably
withheld (it being expressly acknowledged by
Lessor and Lessee that the withholding of Lessor's
consent in respect of any sub-lease or wet lease
shall not be deemed to be unreasonable if the
terms of such sub-lease do not comply with the
conditions set out in Section 8.4(b) or the terms
of such wet lease do not comply with Section
8.4(c), as the case may be); or
(ii) where the Aircraft or Engine is delivered to a
manufacturer or Maintenance facility for work to be
done on it as required or permitted under the Lease;
or
(iii) to a sub-lessee of the Aircraft to which Lessor
consents in writing (a "PERMITTED SUB-LESSEE"),
pursuant to a sub-lease to which Lessor consents in
(a "PERMITTED SUB-LEASE"), which complies with the
conditions set out in Section 8.4(b), and provided
that no Default shall have occurred and be
continuing at the commencement of such sub-lease;
(iv) on a wet-lease which complies with Section 8.4(c);
or
(v) with respect to an Engine, as permitted under
Section 8.11.
(b) If Lessor grants its consent to a proposed sub-lessee and a
proposed sub-lease, in addition to any conditions required
by Lessor as part of any such consent of Lessor, each of
the following conditions shall be required to be satisfied
in relation to any Permitted Sub-Lease prior to any
sub-leasing pursuant to this Section:
(i) NOTIFICATION: at least 30 days prior to entering
into any Permitted Sub-Lease, Lessee shall give
Lessor written notice, specifying the identity of
the Permitted Sub-Lessee, the term of the
Permitted Sub-Lease, the delivery date under the
Permitted Sub-Lease and the habitual base of the
Permitted Sub-Lessee;
(ii) TERM: the term of the Permitted Sub-Lease shall
not be capable of extending beyond one month (or
such shorter period as Lessor may agree (which
agreement shall not be unreasonably withheld) in
giving its consent to such Permitted Sub Lease)
before the Scheduled Expiry Date;
(iii) FORM: a Permitted Sub-Lease shall:
(aa) not contain provisions inconsistent with the
provisions of the Lease (but may impose
additional or more stringent obligations on
any Permitted Sub-Lessee than are imposed on
Lessee under the Lease);
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(bb) provide that no further subleases of the
Aircraft by such Permitted Sub-Lessee are
permitted; and
(cc) include provisions substantially identical
to or having substantially the same effect
as Sections 2.1, 5.6, 5.7, 5.10, 5.12,
5.16, 5.17, 5.21, 8, 9, 10, 11, 13, 15.1,
15.8 and 16 and Schedules 2 (Section 1.1),
7 and 9 of the Lease (but the Permitted
Sub-Lease may impose additional or more
stringent obligations on any Permitted
Sub-Lessee than are imposed on Lessee under
the Lease);
(iv) SUBORDINATION AND ASSIGNMENT: the Permitted
Sub-Lease shall provide that (aa) the Permitted
Sub- Lease is subject and subordinate to the
Lease in all respects and the rights of the
Permitted Sub-Lessee under the Permitted
SubLease are subject and subordinate in all
respects to the rights of Lessor under the Lease;
and (bb) prior to delivery of the Aircraft to
the Permitted Sub-Lessee (as a condition
precedent thereof), the Permitted Sub-Lessee
shall provide an acknowledgement to Lessor and
Owner in a form reasonably satisfactory to
Lessor, confirming its agreement to this
provision and confirming that, except to the
extent, if any, that it receives a quiet enjoyment
letter from Lessor pursuant to Section
8A(b)(v) below, its rights to possession of the
Aircraft under the Permitted Sub-Lease will
terminate immediately upon the termination of the
Lease, and that it will redeliver the Aircraft to
Lessor, upon notification from Lessor that an
Event of Default has occurred and that it has, as
a result thereof, terminated Lessee's right to
possession of the Aircraft under the Lease (the
"SUBORDINATION ACKNOWLEDGEMENT"). The Permitted
Sub-Lease shall be assigned, as security, to
Lessor for Lessee's obligations under the Lease,
pursuant to an agreement reasonably acceptable to
Lessor (the "SUB-LEASE ASSIGNMENT") (and, if
applicable, Lessor's interest in such Sub-Lease
Assignment may be reassigned, as security, to,
Owner and/or the Financing Parties'
Representative);
(v) QUIET ENJOYMENT: the Permitted Sub-Lease shall
provide that the Permitted Sub-Lessee shall have
the right to quiet enjoyment of the Aircraft for
so long as no Event of Default has occurred under
the Lease; provided, however, that, upon request
by a Permitted Sub-Lessee, Lessor shall, and shall
cause the Financing Parties Representative (if
applicable) to, execute and deliver to the
Permitted Sub-Lessee a letter of quiet enjoyment
in respect of the Permitted Sub-Lessee's use and
possession of the Aircraft for so long as no event
of default occurs under the Permitted Sub-Lease,
notwithstanding the occurrence of an Event of
Default under the Lease, in a form substantially
similar to Section 7.1 hereof if Lessor is
satisfied in its sole discretion as to (i) the
creditworthiness of the Proposed Sub-
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Lessee at the time of such request, (ii) the
sufficiency of the rentals and other payment
obligations, including indemnities under the
Permitted Sub-Lease to discharge in full the Rent and
the indemnity obligations of Lessee under the Lease,
(iii) the installment frequency of the rent payable
under the Permitted Sub-Lease, (iv) the
acknowledgment of and agreement by the Permitted Sub
Lessee to be bound by the provisions of Section 16
hereof, (v) the acknowledgment by each of the
Permitted Sub-Lessee and the Lessee that Lessor shall
have no greater liability to either Permitted
Sub-Lessee or the Lessee in respect of Lessor's
obligations under Section 7.1 hereof or under such
letter than Lessor would have had under Section 7.1
in the absence of the Permitted Sub-Lease, (vi) the
form and substance of the Subordination
Acknowledgment, and (vii) the terms of the Permitted
Sub-Lease in respect of the matters contemplated by
this Section 8.4(b);
(vi) OBLIGATIONS OF LESSEE: Lessee shall remain
primarily liable under the Lease for the
performance and observance of all its obligations
to the same extent as if no Permitted Sub-Lease
had been entered into. To the extent that the
Permitted Sub-Lessee properly performs an
obligation under the Permitted Sub-Lease, Lessor
agrees that such performance shall also be
regarded as discharging (to such extent) Lessee's
corresponding obligation;
(vii) INSURANCES: all insurance requirements herein
shall be complied with either by Lessee or by the
Permitted Sub-Lessee as if references in the
insurance provisions of the Lease to "Lessee" were
references to "the Permitted Sub Lessee", and
Lessee shall provide or cause the Permitted
Sub-Lessee to provide the insurance certificate
and brokers' letter of undertaking referred to in
Section 9.3(c)(ii) at least five (5) Business Days
prior to the commencement of the Permitted
Sub-Lease;
(viii) REGISTRATION: there shall be no change in the
registration of the Aircraft from its State of
Registry;
(ix) REPOSSESSION OR POLITICAL RISK INSURANCE: if
reasonably required by Lessor or if required of
Lessor by Owner or the Financing Parties'
Representative, repossession or political risk
insurance, as the case may be, shall be obtained
by Lessor at Lessee's cost, provided that
repossession or political risk insurance , as the
case may be, will not be required if the Permitted
Sub-Lessee meets the requirements of Sections
8.7(iv) and (v). If repossession or political risk
insurance is required, the Permitted Sub-Lease
must provide that, if any such repossession or
political risk, as the case may be, insurance
cannot be obtained or renewed, a termination event
will occur upon notice by Lessor to Lessee or the
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Permitted Sub-Lessee of an inability to procure
repossession or political risk, as the case may be,
insurance;
(x) LEGAL OPINIONS: as a condition precedent to the
effectiveness of the Permitted Sub-Lease, Lessee
shall provide to Lessor the following legal
opinions (at Lessee's or Permitted Sub-Lessee's
expense) addressed to Lessor, Owner and the
Financing Parties' Representative from counsel
reasonably acceptable to Lessor;
(aa) a legal opinion in relation to the
Permitted Sub-Lease in form and substance
reasonably satisfactory to, and containing
such other matters set out in Schedule 8
requested by, Lessor and confirming further
that each of the Subordination
Acknowledgement, the Permitted Sub-Lease
and the Sub-Lease Assignment is valid,
binding and (except as limited by any
equitable principles and applicable
bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting
creditors' or lessors' rights generally)
enforceable against Permitted Sub-Lessee
and, in the case of the Sub-Lease
Assignment, properly perfected as against
Lessee;
(bb) if the Habitual Base is not in the United
States, one or more legal opinions in form
and from counsel reasonably acceptable to
Lessor to the effect, inter alia, that
Lessor's, Owner's and Financing Parties'
Representative's interests in the Aircraft
will be recognized under the laws of such
country or countries (it being expressly
understood that there shall be no
requirement that any single legal point or
issue be covered in opinions from more than
one counsel except to the extent, if any,
that the laws of more than one
jurisdiction may be at issue); and
(cc) such opinions as may be required under
the Financing Documents.
Final forms of the foregoing opinion or opinions (x)
shall be forwarded promptly to Lessor at least five
Business Days prior to the effective date of the
Permitted Sub-Lease, and (y) may, if different
opinions are required hereunder, be made by a single
counsel qualified to render opinions in each such
country;
(xi) FILINGS: Lessee shall co-operate with Lessor (at
no cost to Lessor) in connection with the
execution and filing of any documents reasonably
required by Lessor to be executed and filed from
time to time with any registry or authority in the
Habitual Base, the State of Registration and State
of Incorporation (of each of Lessee and the
Permitted Sub-Lessee) in order to protect the
interests of Lessor, Owner and Financing Parties'
Representative in and to the Aircraft, the Lease or
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the Permitted Sub-Lease and/or to ensure the
validity, enforcement or priority thereof;
(xii) EXPENSES: Lessee will pay to Lessor on demand all
reasonable out of pocket expenses (including legal,
survey and other costs) and Taxes payable or
incurred by Lessor, Owner or Financing Parties'
Representative in connection with the review and
approval of the documentation required pursuant to
this Section or otherwise incurred in connection
with any requested sub-lease or the sub-leasing of
the Aircraft thereunder, and will pay any Sublease
Fee specified in the Aircraft Lease Agreement for
such Aircraft;
(xiii) PERMITTED SUB-LEASE: Promptly after its execution,
Lessee shall provide Lessor with a copy of the
signed Permitted Sub-Lease;
(xiv) ACKNOWLEDGEMENT BY GUARANTOR: If a Guarantee is
required under the Aircraft Lease Agreement, Lessee
shall provide to Lessor at least five Business Days
prior to the effective date of the Permitted
Sub-Lease an acknowledgement by Guarantor of the
Permitted Sub-Lease and confirmation that the
Guarantee will remain in full force and effect
during the term of such Permitted Sub-Lease;
(xv) FINANCING RESTRICTIONS AND REQUIREMENTS: If Lessee
requests Lessor's consent to a sub-lease, it will
not be unreasonable for Lessor to decline its
consent to such sub-lease, if such sub-lease would
result in a breach by Lessor of the restrictions
contained in or give rise to any liability or
adversely affect Lessor's rights or obligations or
otherwise result in a detriment under any of the
Financing Documents; and
(xvi) MAINTENANCE PROGRAM: Lessee shall, or shall cause
the Permitted Sub-Lessee to, provide Lessor with
such information as Lessor may reasonably request
with respect to the Maintenance Program of the
Permitted Sub-Lessee, and Lessor shall be
reasonably satisfied with the Maintenance Program
of the Permitted SubLessee.
(c) Notwithstanding Section 8.4 (a), Lessee shall be permitted
to wet lease the Aircraft provided such wet lease
constitutes an arrangement whereby Lessee agrees to furnish
the Aircraft to a third party pursuant to which the
Aircraft (i) shall be operated solely by regular employees
of Lessee possessing all current certificates and licenses
that are required by applicable Regulations, including by
the State of Registry, and shall remain in the operational
control and possession of Lessee, (ii) shall be subject to
insurance coverage as provided for in the Lease, (iii)
shall be used and operated in accordance with the Lease and
shall be maintained or caused to be maintained by Lessee in
accordance
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with Lessee's Maintenance Program and Lessee's normal
maintenance practices, (iv) shall not be subject to any
change in its State of Registry, and (v) shall not be
operated out of a Habitual Base located outside the United
States; and provided always that, such arrangement is
expressly subordinated to the Lease and the rights of Lessor
and Owner thereunder and to the Aircraft, and Lessee provides
Lessor with all opinions, certificates and other documents
requested by Lessor which are required to be provided, and
takes all other action requested by Lessor which is required
of Lessee or Lessor under any Financing Document in
connection with such a wet lease.
8.5 Inspection
(a) Lessee will permit Lessor's, Owner's and the Financing
Parties' Representative representatives to inspect the
Aircraft at any time. Unless a Default has occurred and is
continuing, any such Person will give Lessee reasonable
notice of inspection and will ensure that it does not
result in a disruption to the scheduled operation or
maintenance of the Aircraft. Lessee shall comply with the
reasonable requests of Lessor's, Owner's and the
Financing Parties' Representative representatives during
the course of an inspection, including any request to
travel on the flight deck of the Aircraft as an observer,
subject, to any applicable Regulations and insurance
requirements.
(b) The cost of conducting an inspection shall be borne by
Lessor, Owner or the Financing Parties, as the case may be,
unless, as a result of that inspection, Lessee is found to
be 'in material default of its obligations under the Lease
in which case the cost shall be borne by Lessee.
(c) No liability or obligation will be incurred by Lessor,
Owner, Financing Parties' Representative or the Financing
Parties, as the case may be, by reason of non-exercise by
any of them of the inspection rights referred to in this
Section.
8.6 Ownership; Property Interests; Related Matters
(a) Lessee will:
(i) fix and maintain Nameplates containing the
Nameplate Inscription in a prominent position in
the cockpit or cabin of the Aircraft and on each
Engine;
(ii) in any circumstance where such interests are
relevant, take all reasonable steps to make sure
that all relevant Persons know about the interests
of Owner, Lessor and Financing Parties
Representative in the Aircraft; and
(iii) pay all navigation charges, air traffic control
charges, landing charges or other amounts of any
nature imposed by any Government Entity with respect
to
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Lessee, the Aircraft and/or the Lease except to the
extent that, in the reasonable opinion of Lessor,
such payment is being contested in good faith by
appropriate proceedings in respect of which adequate
reserves have been provided by Lessee and
non-payment of which does not give rise to any
material likelihood of the Aircraft or any interest
therein being sold, forfeited or otherwise lost or
of criminal liability on the part of Lessor or
Owner.
(b) Lessee will not:
(i) represent that it is the owner of the Aircraft or
that it has an economic interest (equivalent to
ownership) in the Aircraft for Tax treatment or
other purposes;
(ii) take any action or fail to take any action, other
than action required under the Lease (including
under Section 7.1) to be taken by Lessor,
Affiliates of Lessor, Owner or a Financing Party,
if such action or omission could result in a
forfeiture or seizure of the Aircraft or otherwise
similarly put Owner's and/or Lessor's and/or
Financing Parties' Representative's rights or
interests at risk;
(iii) represent to others that Owner, Lessor or Financing
Parties' Representative is associated with or
responsible for the business activities and/or
flight operations of Lessee;
(iv) allow the Aircraft or Owner's, Lessor's or
Financing Parties' Representative's interest in it
or the Lease to become or remain subject to any
Security Interest (other than a Permitted Lien); or
(v) allow the name of any Person to be placed on the
Aircraft or any Engine as a designation that could
reasonably be interpreted as a claim of ownership
or, as a Security Interest; provided, that Lessee
may place thereon, or allow a Permitted Sub-Lessee
to place thereon, its customary livery, insignia
and colors.
8.7 General
Lessee will:
(i) maintain its business as a commercial scheduled
airline, will preserve its corporate existence
(other than as permitted in Section 8.7 (vii)
below) and will maintain all rights, privileges,
licenses and franchises material thereto or
material to performing its obligations under the
Lease;
(ii) not operate, maintain, insure or deal with, or
keep records with respect to, the Aircraft in a
manner which discriminates against the Aircraft
adversely insofar as
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Lessor's, Owner's or Financing Parties' interests are
concerned, when compared with the manner in which
Lessee operates, maintains, insures or deals with, or
keep records with respect to, similar aircraft,
engines or parts in Lessee's fleet; provided,
however, in the event that Lessee determines that any
particular expenditure or modification may not be
prudent during the last nine months prior to the
Scheduled Expiry Date, then Lessor and Lessee shall
discuss the issue and negotiate in good faith to
agree on a mutually acceptable solution.
(iii) not change the location of its chief executive office
from that described in the heading of the Aircraft
Lease Agreement or otherwise be located (as defined
in Section 9-103(3)(d) of the UCC) at any place in
the United States other than the location described
the heading of the Aircraft Lease Agreement, except
upon 30 days prior written notice thereof to Lessor;
(iv) remain a Certificated Air Carrier and maintain its
status so as to fall within the purview of Section
1110 of Title 11 of the U.S.C. or any analogous
statute;
(v) remain a "citizen of the United States" as defined
in Section 40102(a)(15)(c) of Title 49 of the
U.S.C.;
(vi) not liquidate or dissolve; and
(vii) not consolidate with or merge into or with any
other corporation or other Person, and not
convey, transfer, lease or otherwise dispose of
all or substantially all of its property and other
assets to, or acquire all or any substantial
part of the property or other assets or
capital stock of (if such acquisition is
analogous in either purpose or effect to a
consolidation or merger), any corporation or
other Person, unless Lessee provides Lessor with
written notice of such transaction promptly
following Lessee's execution of a binding
agreement or commitment to enter into any such
transaction, which notice shall in any event be
provided no later than 30 days prior to the
effectiveness or consummation of any such
transaction and which notice shall describe such
transaction in reasonable detail and contain or
be accompanied by evidence reasonably
satisfactory to Lessor demonstrating that such
transaction will comply with the following
requirements of this Section and unless:
(x) such transaction shall not have any
material adverse effect on the rights of
Lessor, Owner or the Financing Parties'
Representative under or in respect of the
Lease or the Aircraft; and all applicable
requirements of the Financing Documents
shall have been complied with in
connection therewith;
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(y) the Person formed by or surviving such
consolidation or merger or the Person
which acquires by conveyance, transfer,
lease or other disposition all or
substantially all of such property and
other assets or stock (the "SUCCESSOR
ENTITY"): (A) shall be a corporation
organized and existing under the laws of
the United States or any State thereof or
the District of Columbia; (B) immediately
after giving effect to such transaction,
shall be Lessee or shall have acquired or
succeeded to all or substantially all of
the property and other assets of Lessee
(if such assets are being transferred) as
an entirety, and shall have a tangible
net worth (determined in accordance with
GAAP) of not less than Lessee's tangible
net worth (determined in accordance with
GAAP) immediately prior to such
transaction; (C) shall be a "citizen of
the United States" of America as defined
in Section 40102(a)(15)(c) of Title 49 of
the U.S.C. and a Certificated Air
Carrier; and (D) shall execute and
deliver to Lessor such recordations and
filings with any Governmental Entity and
such other documents as Lessor determines
shall be reasonably necessary or
advisable to evidence, or in connection
with, such consolidation, merger, sale,
lease, transfer or other disposition and
an agreement, in form and substance
reasonably satisfactory to Lessor which
is a legal, valid, binding and
enforceable assumption by such Successor
Entity of the due and punctual
performance and observance of each
covenant and condition of the Lease and
the other related documents to which
Lessee is a party, and an officer's
certificate to such effect and to the
effect that the other requirements of
this Section have been satisfied, and a
legal opinion from counsel to such effect
and otherwise in such form and substance
reasonably satisfactory to Lessor; and
(z) no Default shall have occurred and be
continuing or shall occur as a result
thereof.
8.8 Records
Lessee will keep all Aircraft Documents and Records:
(a) in English;
(b) according to good United States airline practice; and
(c) so they meet the requirements of applicable Regulations
(including FAR 91.417) and Lessee's Maintenance Program.
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8.9 Protection
Lessee will:
(a) take all actions requested by Lessor that are within
Lessee's control to keep the Aircraft registered with the
Air Authority in the name of Owner and, if applicable,
subject to the first-priority Security Interest in favor of
Financing Parties' Representative; and
(b) make any and all filings required to be made with the Air
Authority registry that are within its control and take all
other actions within its control that are necessary or
advisable to reflect on the Air Authority registry any
change in the ownership of the Aircraft, or in the
interests of Lessor, Owner or the Financing Parties'
Representative in the Lease or the Aircraft, any
modification to the Aircraft (such as the permanent
replacement of any Engine or Part in accordance with the
Lease) or as a result of any change in applicable
Regulation. Lessor will bear any costs incurred as a
consequence of a transfer by Lessor, Owner or the Financing
Parties' Representative of the interests of Lessor, Owner
or the Financing Parties' Representative in the Lease or
the Aircraft or a change in the identity of Lessor, Owner
or the Financing Parties' Representative (in each case,
unrelated to the replacement of any Engine or Part or a
Default), and Lessee will bear any other costs incurred in
complying with this Section, including in connection with
the replacement of any Engine or Part.
8.10 Maintenance and Repair
Lessee will maintain, overhaul and repair the Aircraft (or arrange for
the Aircraft to be maintained, overhauled and repaired, through the
Maintenance Performer), so that:
(a) the Aircraft is kept in as good operating condition and
repair as the condition of the Aircraft as at Delivery and
after giving effect to any post-Delivery modifications,
repairs or maintenance paid for or otherwise provided by or
on behalf of Lessor, except for ordinary wear and tear;
(b) the Lessee has a current certificate of airworthiness
(issued by the Air Authority in the appropriate public
transport category) for the Aircraft;
(c) the Aircraft complies with (i) all applicable Regulations
including the standard stipulated by FAR Part 121 Subpart L
and any other rules and regulations of the FAA and, subject
to the provisions of ss.8.10(d), in at least the same
manner and with at least the same care, including record
keeping, maintenance scheduling, modification status and
technical condition, as is the case with respect to similar
aircraft owned or otherwise operated by Lessee and as if
Lessee were to retain and continue operating the Aircraft
in its fleet after
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the Expiry Date, including all maintenance to the Airframe,
any Engine or any Part required to maintain all warranties,
performance guaranties or service life policies that are
assigned by Lessor to Lessee n full force and effect; and
(ii) the requirements of all Airworthiness Directives and
all service bulletins designated by the State of Design or
State of Registry as "mandatory," and to be carried out
before the Return Occasion or the Scheduled Expiry Date,
whichever is later, or within a period of 180 days after
the Return Occasion or the Scheduled Expiry Date, whichever
is later; and
(d) all maintenance is carried out according to Lessee's
Maintenance Program in at least the same manner and with at
least the same care, including maintenance scheduling,
modification status and technical condition, as is the case
with respect to similar aircraft owned or otherwise
operated by Lessee; provided, however, in the event that
Lessee determines that any particular expenditure or
modification may not be prudent during the last nine months
prior to the Scheduled Expiry Date, then Lessor and Lessee
shall discuss the issue and negotiate in good faith to
agree on a mutually acceptable solution.
8.11 Removal of Engines and Parts
(a) GENERAL: Lessee must replace, within one hundred and five
(105) days thereof any Engine that has suffered an Engine
Event of Loss in accordance with Section 8.11(b), and any
Part which is permanently removed from the Aircraft must be
replaced in accordance with Section 8.11(b). Any Part which
otherwise is lost, stolen, destroyed, seized, obsolete,
confiscated, damaged beyond repair or permanently rendered
unfit for any reason, must be replaced in accordance with
Section 8.11(b). Any Engine or Part may be installed on
another aircraft Lessee owns or leases in accordance with
Section 8.11(c). Lessee may temporarily install an. engine
or part in accordance with Section 8.11(d). Lessee shall
obtain from any Person to whom possession of an Engine is
given (other than (i) any Maintenance Performer to whom an
Engine is delivered for maintenance, repair or overhaul,
(ii) the Engine Manufacturer, or (iii) any other Person to
whom an Engine is given solely for purpose of transporting
the Engine), and from the lessor of any airframe on which
an Engine is installed and from any holder of a Security
Interest in any airframe on which an Engine is installed,
an agreement in writing (which agreement, in the case of a
lease or Security Interest, may be contained in the
applicable lease or Security Interest agreement covering
such airframe) that such Person will not acquire or claim
any rights, title or interest in such Engine as a result of
such Engine being installed on such other airframe at any
time while such Engine is subject to the Lease. In the
event Lessee shall have received from a lessor of or
secured party holding a Security Interest in any airframe
leased to Lessee or owned by Lessee a written agreement
pursuant to the foregoing sentence and the lease or
Security Interest covering such airframe also covers an
engine or engines owned by the lessor under such lease or
subject to such Security
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Interest in favor of the secured party under such Security
Interest, Lessor hereby agrees for the benefit of such lessor
or secured party that Lessor will not acquire or claim as
against such lessor or secured party, any rights, title or
interest in any such engine as a result of such engine being
installed on the Airframe at any time while such engine is
owned by such lessor and subject to such lease or such
Security Interest in favor of such secured party.
(b) PERMANENT REPLACEMENT: If Lessee permanently replaces an
Engine or Part:
(i) in the case of an Engine, the replacement engine must
be of the same manufacturer and model, or at Lessee's
option an engine of an improved model, and have
equivalent or better remaining useful life and
modification status as the Engine it replaces, and is
otherwise of an equivalent or better value and
utility and suitable for installation and use on the
Airframe without impairing the value or utility of
the Airframe and compatible with the remaining
installed Engine(s);
(ii) in the case of a Part, the replacement part must
be in good operating condition, have a value and
utility the same or better than the Part it is
replacing, be of the same or a more advanced make
and model and be of the same interchangeable
modification status as the Part it is replacing;
(iii) the replacement engine or part must have become
and remain, until replaced in accordance with this
Section, the property of Owner free from Security
Interests (other than Permitted Liens), and
subject to the applicable Financing Documents;
(iv) Lessee must have full details of the source and
maintenance records of the replacement engine or
part and in the case of serialized rotable parts,
also have a complete service history; and
(v) Lessee must comply with the requirements of the
Financing Documents in connection with any such
replacement including to provide such legal
opinions and other documents as may be required
under the Financing Documents.
(c) OTHER AIRCRAFT: An Engine or Part may be installed on an
aircraft which Lessee owns or leases if:
(i) no Event of Default has occurred and is continuing;
(ii) Lessee or a Permitted Sub-Lessee has operational
control over the aircraft;
(iii) Owner keeps the ownership of the Engine or Part
concerned until replaced in accordance with Section
8.11(b);
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(iv) the Engine or Part does not become subject to a
Security Interest and the applicable airframe is
not subject to any Security Interest except a
Permitted Lien or a lease or Security Interest
described in Section 8.11(a) above; and
(y) the Engine or Part is replaced in accordance with
Section 8.11(b) or is removed from the aircraft
as soon as practicable under Lessee's engine
rotation program but not later than the Expiry
Date.
(d) TEMPORARY REPLACEMENT: Lessee may install any engine or part
on the Aircraft as a temporary replacement if:
(i) no Event of Default has occurred and is continuing;
(ii) there is not available an engine or part complying
with the requirements of the Lease for a
replacement Engine or Part;
(iii) it would result in an unreasonable disruption of
the operation of the Aircraft or the business of
Lessee to have the Aircraft grounded until such
time as an engine or part complying with the
requirements of the Lease for a replacement Engine
or Part becomes available for installation;
(iv) as soon as practicable (under Lessee's engine
rotation program in the case of an engine) after
an engine or part is installed on the Aircraft,
but before the earlier of sixty (60) days after
such temporary replacement or the Expiry Date,
Lessee removes that engine or part and replaces
it with the original Engine or Part (or by an
engine or part which is allowed by Section
8.11(b)); and
(v) the Insurances for the Aircraft are not adversely
affected.
(e) POOLING/INTERCHANGE: Lessee shall not subject any Engine
or Part to any pooling, interchange, lease or similar
arrangement unless Lessee obtains Lessor's prior written
consent thereto, which consent shall not be unreasonably
withheld.
(f) ENGINES: Notwithstanding anything to the contrary set
forth in Sections 8.11(c) and (d) above, so long as no
Default shall have occurred and be continuing, any
Engine may remain installed on an aircraft other than
the Aircraft, and any auxiliary power unit may remain
installed on the Aircraft indefinitely during the Term;
provided, however, (i) upon the occurrence of any
Default, Lessee shall promptly, and in any case within
sixty (60) days following the occurrence of such
Default, cause each Engine to be re-installed on the
Aircraft, or, at Lessee's election, cause any of the
Engines to be replaced by a replacement Engine meeting
the requirements of, and in accordance with, Section
8.11(b), and (ii) in any event Lessee shall cause such
Engine to be either re-installed on the Aircraft or
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replaced by a replacement Engine meeting the requirements of,
and in accordance with, Section 8.11(b) on or before the
Expiry Date.
(g) APU: Notwithstanding anything to the contrary set forth in
Sections 8.11(c) and (d) above, so long as no Default shall
have occurred and be continuing, the APU may remain
installed on an aircraft other than the Aircraft, and any
auxiliary power unit may remain installed on the Aircraft
indefinitely during the Term; provided, however, (i) upon
the occurrence of any Default, Lessee shall promptly, and in
any case within sixty (60) days following the occurrence of
such Default, cause the APU to be re-installed on the
Aircraft, or, at Lessee's election, cause the APU to be
replaced by a replacement auxiliary power unit meeting the
requirements of, and in accordance with, Section 8.11(b),
and (ii) in any event Lessee shall cause the APU to be
either re-installed on the Aircraft or replaced by a
Replacement APU meeting the requirements of, and in
accordance with, Section 8.11(b) on or before the Expiry
Date.
8.12 Equipment Changes
Lessee will not make any modification or addition to the
Aircraft (each an "EQUIPMENT CHANGE"), except for an
Equipment Change which:
(i) is expressly permitted or required by the Lease; or
(ii) has (x) a cost (including labor) of less than the
Modification Approval Amount or (y) the prior
written approval of Lessor, and (z) in either case,
does not' diminish the condition, utility,
airworthiness or value of the Aircraft.
So long as no Default has occurred and is continuing, Lessee
may remove or reverse any Equipment Change provided that the
Equipment Change is not required pursuant to the terms of
the Lease or to maintain the Insurances and removal or
reversal does not diminish the value, utility, airworthiness
or condition of the Aircraft assuming that such Equipment
Change was not made and that Aircraft is maintained in
accordance with the Lease. Furthermore, Lessor may require
Lessee to remove or reverse any Equipment Change on the
Expiry Date and to restore the Aircraft to its condition
prior to that Equipment Change. Any Equipment Change not so
removed or reversed becomes the property of Lessor or Owner,
as the case may be, at the Expiry Date.
8.13 Tide on an Equipment Change
Title to any equipment that is installed on the Airframe
shall, except in the case of an engine or an auxiliary power
unit or a temporary replacement of a Part or any In-Flight
Equipment, vest in Owner solely by virtue of its attachment
to the Airframe or an Engine and it shall then be subject
-36-
to the Lease and, if applicable, the Financing Documents, as if it
were attached to the Aircraft at Delivery. In the case of any
replacement of an Engine or the APU pursuant to Section 8.11(b), and
otherwise if so requested by Lessor, Lessee will provide a properly
executed xxxx of sale or similar instrument to evidence the vesting of
good and marketable title, free and clear of Security Interest (except
Lessor Liens), to any such Replacement Engine, Replacement APU or
other equipment in Owner and all documents required under the
Financing Documents. After Lessor has determined that Lessee has
permanently replaced an Engine or the APU in accordance with Section
8.11(b) and this Section 8.13, Lessor will, or will procure that
Owner will, without recourse or warranty (except as to the absence of
Lessor's Liens), transfer to Lessee or will procure that Owner will
transfer to Lessee all of Lessor's or Owner's, as the case may be,
rights to the engine or the auxiliary power unit that has been
replaced, on an AS IS, WHERE IS basis, and will at Lessee's expense
provide or will procure that Owner provides a xxxx of sale or similar
instrument as Lessee may reasonably request to evidence such transfer.
Lessee shall indemnify, on an After-Tax Basis, Lessor, Owner and each
other Tax Indemnitee for all fees, expenses and Taxes incurred by
Lessor, Owner or any other Tax Indemnitee in connection with any such
transfer.
8.14 Inflight Equipment
(a) Notwithstanding any other provision of this Agreement,
Lessor acknowledges that Lessee may at any time during the
Term install a telephone system and/or an inflight
entertainment system for passenger use (collectively, the
Inflight Equipment) on the Aircraft notwithstanding that the
Inflight Equipment may not be owned by Lessee provided that:
(i) Lessee shall give Lessor notice of the installation
of any Might Equipment on the Aircraft and the name
and address of the owner of such Inflight Equipment;
(ii) the documents pursuant to which the owner of the
Might Equipment installs same on the Aircraft shall
provide that such owner shall not have any lien,
security interest, claim or other encumbrance on or
against the Aircraft, and such owner's only right
with respect to the Aircraft shall be to remove the
Inflight Equipment from the Aircraft and, such
documents shall also provide that such owner shall
remove the Inflight Equipment from the Aircraft not
later than the earlier of (A) thirty (30) days
after notice from Lessor of the occurrence of an
Event of Default, and (B) the Expiry Date;
(iii) such right of removal is subject to and conditioned
upon such owner restoring, or causing Lessee to
restore, all alterations made to the Aircraft in
connection with the installation of the Inflight
Equipment to the condition prior to the
installation thereof (ordinary wear and tear
excepted).
(b) Lessor acknowledges that at all times:
(i) the owner of the Inflight Equipment has and will
retain sole and exclusive right and title to and in
the Inflight Equipment;
(ii) the Inflight Equipment shall not constitute a Part
or a part of the Aircraft;
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(iii) title to the Inflight Equipment shall not transfer to
or from Lessor pursuant to Clauses 8.12 and 8.13; and
(iv) the Inflight Equipment shall not become subject to
the Security Interest of any Person to whom Lessor
grants a Security Interest in the Aircraft pursuant
to Clause 14.1.
9. INSURANCE
9.1 Insurance
Lessee will maintain the Insurance in full force during the Term, and
thereafter as expressly required in the Lease, which Insurance shall
be of the type usual and customary in the industry for comparable
operators operating similar equipment in similar circumstances, and
shall be through reputable brokers and insurers of recognized standing
in the commercial aviation insurance industry. The Insurance shall in
any event meet the requirements set forth in Schedule 7.
9.2 [NOT APPLICABLE]
9.3 Insurance Undertakings and Information: Lessee will:
(a) comply with the terms and conditions of each policy of any
Insurance and not do, consent or agree to any act or
omission which:
(i) invalidates or may invalidate any Insurance; or
(ii) renders or may render void or voidable the whole or
any part of any Insurance; or
(iii) brings any particular liability within the scope of
an exclusion or exception to any Insurance;
(b) not take out any insurance or reinsurance in respect of the
Aircraft other than that which is required under the Lease
which adversely affects the Insurance required to be
maintained hereunder; provided, however, Lessee may
purchase a separate "hull total loss" policy with respect
to the Aircraft in such amount as Lessee may desire;
(c) commence renewal procedures at least 30 days prior to expiry
of any of the Insurance and provide to Lessor:
(i) if requested by Lessor in writing, a written status
report of renewal negotiation as of the time of the
request;
(ii) [NOT APPLICABLE];
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(iii) receipt of certificates of insurance (and where
appropriate certificates of reinsurance), and broker's
(and any reinsurance broker's) letter of undertaking
in a form acceptable to Lessor, detailing the coverage
and confirming compliance with the specified insurance
requirements of the Lease and, in the case of the
broker's letter of undertaking, opining that the
Insurance complies with the requirements of the Lease
on or before each renewal date;
(d) on reasonable request, provide to Lessor copies of documents
or other information evidencing the Insurances; and
(e) provide any other insurance and reinsurance related
information, or assistance, in respect of the Insurance as
Lessor may reasonably require.
9.4 Failure to Insure
If Lessee fails to maintain any of the Insurance in compliance with the
Lease:
(a) each of the Indemnitees will be entitled but not bound (without
prejudice to any other rights of Lessor under the Lease) to pay
the premiums due or to effect and maintain insurance
satisfactory to such Indemnitee or otherwise remedy Lessee's
failure in such manner (including, without limitation to effect
and maintain an "owner's interest" policy) as such Indemnitee
considers appropriate. Any sums so expended by any such
Indemnitee will become immediately due and payable by Lessee
on demand by Lessor together with interest thereon at the
Interest Rate, from the date of expenditure by such Indemnitee
up to the date of reimbursement by Lessee; and
(b) Lessor at any time while such failure is continuing may requite
the Aircraft to remain at any airport or to proceed to and
remain at any airport designated by Lessor until the failure is
remedied to Lessor's reasonable satisfaction.
9.5 Continuing Indemnity
Lessee shall effect and maintain product legal liability insurance after
the Expiry Date with respect to its liability under Section 10
(INDEMNITY) for two years, and such insurance shall name each Indemnitee
as an additional insured.
10. INDEMNITY
(a) Except as provided in Section 10(b) below, Lessee agrees to
assume liability for and to indemnify each of the Indemnitees
against and agrees to pay on demand any and all Losses which an
Indemnitee may at any time suffer or incur at any time, whether
directly or indirectly, arising out of, related to or in any
way connected with:
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(i) the ownership, maintenance, overhaul, service,
repair, delivery, possession, transfer of ownership
or possession, import, export, registration, control,
storage, modification, leasing, insurance,
inspection, testing, design, date processing, sub
leasing, use, condition, redelivery or other matters
relating to the Aircraft, any Engine or any Part
(regardless of whether in the air or on the ground,
and regardless of whether such Losses are based on
strict liability in tort, any act or omission,
including the negligence, of any Indemnitee, or
otherwise); or
(ii) any breach by the Lessee of any of its obligations
under the Lease; or
(iii) the design, testing or use of or any article or
material in, the Aircraft, any Engine or any Part or
its use or operation, including any defect in design
and regardless of whether it is discoverable, and any
infringement of patent, copyright, trademark, design
or other proprietary right claimed by any Person or a
breach of any obligation of confidentiality claimed
to be owed to any Person.
For the avoidance of doubt, the reference to
"ownership" in clause (i) shall not require Lessee to
indemnify Lessor in respect of (y) any defect in
Lessor's or Owner's title to the Aircraft or (z) any
decline in residual value of the Aircraft if Lessee
shall have fully complied with its obligations under
the Lease.
(b) Lessee is not required to indemnify any particular Indemnitee
(provided that (i) Lessor and its Subsidiaries and Affiliates
and its and their officers, directors, representatives,
agents, partners, contractors and employees shall be treated
as a single Indemnitee, and (ii) each Financing Party and its
shareholders, subsidiaries, affiliates, partners, contractors,
directors, officers, representatives, agents and employees
shall be treated as a single Indemnitee) under this Section,
to the extent a particular Loss is:
(i) caused solely by the willful misconduct of that
Indemnitee or gross negligence of that Indemnitee,
other than gross negligence imputed to that Indemnitee
by reason of its interest in the Aircraft or the
Lease;
(ii) caused solely by Lessor's breach of the Lease which
does not result from a Default;
(iii) related to any Taxes (but without prejudice to any
Indemnitee's rights under any other provision of this
Lease relating to Taxes);
(iv) caused solely by an event which occurs before the
commencement of the Term (except where the Loss is
suffered during the Term as a result of a pre-Delivery
defect in or such Loss otherwise arises out of or
relates to or is any way
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connected with the manufacture, design, maintenance,
repair, rebuilding, overhaul or modification of the
Aircraft);
(v) caused solely by an event which occurs after the
redelivery of the Aircraft to Lessor in compliance
with the Lease and is not attributable to any act,
omission, event or circumstance occurring prior to
such redelivery;
(vi) caused solely as a result of any sale, assignment,
transfer or other disposition (whether voluntary or
involuntary) by such Indemnitee of the Aircraft or
Engine or any interest therein that is not a
replacement' thereof under the Lease or is otherwise
not contemplated under the Lease, and unless such
sale, transfer or other disposition has resulted from
or occurred following a Default; or
(vii) consists of normal administrative costs and expenses
of such Indemnitee (but excluding any such costs or
expenses resulting from the occurrence of any
Default); or
(viii) consists of costs or expenses for which Lessor has
expressly agreed to be responsible under any other
provision of the Lease.
11. EVENTS OF LOSS
11.1 Events of Loss
(a) If an Event of Loss occurs prior to Delivery of the
Aircraft, the Lease will immediately terminate and
except as expressly stated in the Lease neither party
will have any further obligation other than pursuant
to Section 5.21 and Section 3 of Schedule 4, except
that Lessor will return the Deposit (if any) to Lessee
and return to Lessee or Cancel any Letter of Credit.
(b) If an Event of Loss occurs after Delivery, Lessee will
pay the Agreed Value to Lessor on or prior to the
earlier of (i) sixty (60) days after the Event of Loss
and (ii) the date of receipt of insurance proceeds in
respect of that Event of Loss.
(c) Subject to the rights of any insurers and reinsurers
or other third party, upon irrevocable payment in full
to Lessor of the Agreed Value and all other amounts
which may be or become payable to Lessor under the
Lease, and if Lessee requests such transfer, Lessor
will, or will procure that Owner will, without
recourse or warranty (except as to the absence of
Lessor's Liens) transfer to Lessee or will procure
that Owner transfers to Lessee or to Lessee's designee
legal and beneficial title, subject to no Lessor's
Liens (but otherwise without warranty), to the
Aircraft, on an AS IS, WHERE IS basis, and will at
Lessee's expense, execute and deliver or will procure
that Owner executes and delivers
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such bills of sale and other documents and instruments
as Lessee may reasonably request to evidence (on the
public record or otherwise) such transfer, free and
clear of all rights of Lessor and Owner and Lessor
Liens. Lessee shall indemnify, on an After-Tax Basis,
Lessor, Owner and each other Tax Indemnitee for all
fees, expenses and Taxes incurred A by Lessor, Owner
or any other Tax Indemnitee in connection with any
such transfer.
11.2 Requisition
During any requisition for use or hire of the Aircraft, any Engine or
Part which does not constitute an Event of Loss:
(a) the Rent and other charges payable under the Lease will not
be suspended or abated either in whole or in part, and Lessee
will not be released from any of its other obligations (other
than operational obligations with which Lessee is unable to
comply solely by virtue of the requisition); and
(b) so long as no Default has occurred and is continuing, Lessee
will be entitled to any compensation paid by the
requisitioning authority in respect of such authority's use of
the Aircraft, such Engine or such Part during the Term.
Lessee will, as soon as practicable after the end of any such
requisition, cause the Aircraft to be put into the condition
required by the Lease. Lessor will be entitled to all
compensation payable by the requisitioning authority in
respect of any change in the structure, state or condition of
the Aircraft arising during the period of requisition, and
Lessor will apply such compensation in reimbursing Lessee for
the cost of complying with its obligations under the Lease in
respect of any such change, but, if any Default has occurred
and is continuing, Lessor may apply the compensation in or
towards settlement of any amounts owing by Lessee under the
Lease and/or under any Other Agreement.
12. RETURN OF AIRCRAFT
12.1 Return
On the Expiry Date or redelivery of the Aircraft pursuant to Section
13.2 or termination of the leasing of the Aircraft under the Lease,
Lessee will, unless an Event of Loss has occurred, redeliver the
Aircraft and the Aircraft Documents and Records at Lessee's expense to
Lessor at the Redelivery Location, in accordance with the procedures
and in compliance. with the conditions set forth in the Aircraft Lease
Agreement, free and clear of all Security Interests (other than Lessor
Liens) and in a condition qualifying for and having a valid and fully
effective certification of airworthiness under FAR Part 121. Lessor
shall commence the Final Inspection in accordance with the Aircraft
Lease Agreement promptly upon Lessee making the Aircraft and the
Aircraft Documents and Records available for the Final Inspection
provided that Lessee gives
-42-
Lessor no less than thirty (30) days prior written notice of the
availability of the Aircraft and the Aircraft Documents and Records
for such inspection.
12.2 Non-Compliance
If at the time of Final Inspection Lessee has not fully complied with
any of its obligations under the Lease (including, without limitation,
Part III of Schedule A to the Aircraft Lease Agreement), or Lessee
fails to make the Aircraft available to Lessor on a timely basis for
inspection and redelivery pursuant to Section 12.1 and Part III of
Schedule A to the Aircraft Lease Agreement (whether such failure is
due to any act or omission of Lessee or any other circumstance
whatsoever), the Term shall be extended until the time when the
Aircraft has been redelivered to Lessor in full compliance with the
Lease, for the sole purpose of enabling such non-compliance or failure
to be promptly rectified, and during such extension period:
(a) Lessee shall not use the Aircraft in flight operations except
those related directly to the redelivery of the Aircraft to
Lessor;
(b) all Lessee's obligations and covenants under the Lease will
remain in full force until Lessee so redelivers the Aircraft;
and
(c) Lessee shall pay Rent to Lessor at a rate per month equal to
the amount of Rent payable in respect of the last scheduled
Rental Period plus 50 per cent thereof, calculated on a per
diem basis; provided, however, with respect to the portion of
such extension, if any, attributable solely to a good faith
dispute between Lessor and Lessee as to the meaning of some
particular language in the Lease applicable to the return of
the Aircraft, whether set forth in Part III of Schedule A to
the Aircraft Lease Agreement or elsewhere (but not, for the
avoidance of doubt, in respect of any dispute as to the result
or outcome of any inspection or check required in connection
with the Final Inspection under the Lease), Lessee shall pay
to Lessor Rent, calculated on a per them basis, at 50% of the
rate otherwise applicable, which rate shall be equal to (i)
50% of the rate applicable to the last scheduled Rental
Period, without giving effect to the 50% premium required in
the introductory clause of this paragraph (c), if as of the
Scheduled Expiry Date the Aircraft is in full compliance with
the requirements of the Lease for return to Lessor (other than
the item in dispute), and (ii) 50% of the rate specified in
the introductory clause of this paragraph (c), or 75% of the
rate applicable to the last scheduled Rental Period, if the
rate specified in the introductory clause of this paragraph
(c) becomes applicable as of the Scheduled Expiry Date due to
Lessee's failure to comply with its obligations in respect of
the Final Inspection in a timely manner or the Aircraft
otherwise fails to comply as of the Scheduled Delivery Date
with the requirements of the Lease for return to Lessor in any
respect other than in reference to the disputed language. For
so long as the Aircraft remains non-compliant with any
requirements of the Lease other than those that are the
-43-
subject of the disputed language, Lessee shall pay to Lessor
Rent in the amount specified in the introductory clause of
this paragraph (c), and the Rent rate specified in this
clause (ii) shall become applicable, if at all, only from and
after such time as the Aircraft is brought into compliance
with all requirements of the Lease for return to Lessor
(including, but not limited to, Part III of Schedule A to the
Aircraft Lease Agreement) other than the with respect to the
items that are the subject of the disputed language, such
that the disputed language remains as the sole cause in the
delay in the return of the Aircraft to Lessor.
Any such extension shall not prejudice Lessor's right to treat such
non-compliance or failure as an Event of Default at any time, and to
enforce such rights and remedies as may be available to Lessor in
respect thereof under the terms of the Lease or applicable Law.
Without limiting the generality of the foregoing, Lessee's Rent
obligation under paragraph (c) above shall be without prejudice to
Lessor's rights to terminate the letting of the Aircraft and to
indemnification pursuant to Section 13.3.
Lessor may elect (either on first tender of the Aircraft by Lessee or
at any time during the said extension period) to accept redelivery of
the Aircraft notwithstanding non-compliance with Section 12.1 or Part
III of Schedule A to the Aircraft lease Agreement, in which case
Lessee will indemnify Lessor on an After-Tax Basis, and provide cash
to Lessor (in an amount satisfactory to Lessor) as security for that
indemnity, in respect of the cost to Lessor of putting the Aircraft
into the condition required by the Lease.
12.3 Redelivery
Upon redelivery Lessee will provide to Lessor, upon Lessor's request,
all documents necessary to export the Aircraft from the United States
(including a valid and subsisting export certificate of airworthiness
for the Aircraft) or required in relation to the deregistration of the
Aircraft with the Air Authority.
12.4 Acknowledgement
Provided Lessee has complied with its obligations under Section 12
hereof and Part III of Schedule A to the Aircraft Lease Agreement,
following redelivery of the Aircraft by Lessee to Lessor at the
Redelivery Location, Lessor will deliver to Lessee an acknowledgement
confirming that Lessee has redelivered the Aircraft to Lessor in
accordance with the Lease which acknowledgement shall be without
prejudice to Lessor's accrued and continuing rights under the Lease or
any Other Agreement.
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13. DEFAULT
13.1 Events
The occurrence of any of the Events of Default will constitute a
repudiation (but not a termination) of the Lease by Lessee (whether
the occurrence of any such Event of Default is voluntary or
involuntary or occurs by operation of Law or pursuant to or in
compliance with any judgement, decree or order of any court or any
order, rule or regulation of any Government Entity).
13.2 Rights and Remedies
If an Event of Default occurs, Lessor may at its option (and without
prejudice to any of its other rights under the Lease), at any time
thereafter (without notice to Lessee except as required under
applicable Law):
(a) accept such repudiation and by notice to Lessee and with
immediate effect cancel the leasing of the Aircraft (but
without prejudice to the continuing obligations of Lessee
under the Lease), whereupon all rights of Lessee under the
Lease shall cease; and/or
(b) proceed by appropriate court action or actions to enforce
performance of the Lease including the payment of all Rent
and all other amounts payable to Lessor or any Indemnitee
pursuant to the terms of the Lease; and/or
(c) proceed by appropriate court action or actions to recover
damages for the breach of the Lease which shall include:
(i) all Rent and other amounts which are or become due
and payable hereunder prior to the earlier to occur
of the date Lessor sells or re-leases the Aircraft
or receives payment of the amount calculated
pursuant to clause (ii) below;
(ii) an amount equal to the aggregate Rent for the
remainder of the Term (determined without reference
to any right of Lessor to cancel the leasing of the
Aircraft, whether or not such right is exercised),
discounted periodically (equal to installment
frequency) to present worth at the Discount Rate to
the date of payment by Lessee to Lessor, less the
applicable amount set forth below:
A. in the event that Lessor has re-let the
Aircraft on terms (other than rental
payment terms) which, taken as a whole,
Lessor reasonably regards as being
substantially similar to the material
economic terms of the Lease (taking into
account factors affecting the degree of risk
associated with such re-lease and/or the
residual value of the Aircraft thereunder,
but
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excluding the rental payment terms), an amount
equal to the aggregate basic rental payments
to become due under such re-lease for the
period coinciding with the remainder of the
Term (determined without reference to any
right of Lessor to cancel the leasing of the
Aircraft, whether or not such right is
exercised), discounted periodically (equal to
installment frequency) to present worth at the
Discount Rate to the date of payment by
Lessee; or
B. in the event that Lessor has not re-let the
Aircraft or has sold the Aircraft or
has re-let the Aircraft on terms which,
taken as a whole, Lessor does not reasonably
regard as being substantially similar to the
material economic terms of the Lease (taking
into account factors affecting the degree of
risk associated with such re-lease and/or the
residual value of the Aircraft thereunder, but
excluding the rental payment terms), an amount
equal to the fair market rental value
(determined pursuant to the Appraisal
Procedure) of the Aircraft for the period
commencing with the date that Lessor
reasonably anticipates that the Aircraft could
be re-let at such rental rate and ending with
the date that the Term was scheduled to expire
(determined without reference to any right of
Lessor to cancel the leasing of the Aircraft,
whether or not such right is exercised),
discounted periodically (equal to installment
frequency) to present worth at the Discount
Rate to the date of payment by Lessee.
(iii) all costs and other incidental damages associated
with Lessor's exercise of its remedies
hereunder or otherwise incurred by Lessor as
a result of an Event of. Default, including
repossession costs, legal fees, Aircraft storage,
maintenance and insurance costs, Aircraft re-lease or
sale costs (including, in the case of a re lease, any
costs incurred to transition the Aircraft to the next
operator's maintenance program) and Lessor's internal
costs and expenses (including the cost of personnel
time calculated based upon the compensation paid to
the individuals involved on an annual basis and a
general Lessor overhead allocation), all such costs
and incidental damages being referred to herein
collectively as "Enforcement and Remarketing Costs";
(iv) any loss, premium, penalty or expense which may be
incurred in repaying funds raised to finance the
Aircraft or in unwinding any financial instrument
relating in whole or in part to Lessor's financing of
the Aircraft, all such amounts being referred to
herein collectively as "Unwind Expenses";
(v) any loss, cost, expense or liability, or damage to
Lessor's residual interest in the Aircraft, sustained
by Lessor due to Lessee's failure to maintain the
Aircraft in
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accordance with the terms of this Agreement or
Lessee's failure to redeliver the Aircraft in the
condition required by this Agreement, including any
consequential loss of revenues or profits, all such
amounts being referred to herein collectively as
"Aircraft Condition Damages"; and
(vi) such additional amount, if any, as may be necessary
to place Lessor in the same economic position, on an
After-Tax Basis, as Lessor would have been in if
Lessee had timely performed each of its obligations
under this Agreement; and/or
(d) either:
(i) enter upon the premises where all or any part of the
Aircraft is located and take immediate possession of
and, at Lessor's sole option, remove the same (and/or
any engine which is not an Engine but which is
installed on the Airframe, subject to the rights of
the lessor or secured party thereof), all without
liability accruing to Lessor for or by reason of such
entry or taking of possession whether for the
restoration of damage to property, conversion or
otherwise, caused by such entry or taking, except
damages caused by gross negligence or willful
misconduct; or
(ii) by delivering notice to Lessee, require Lessee to
redeliver the Aircraft to Lessor at Phoenix Sky Harbor
International Airport in Phoenix, Arizona (or such
other location as Lessor may require) on the date
specified in such notice and in all respects in the
condition required by the Lease upon the Return
Occasion (it being understood that Lessee shall not
delay any such return for the purpose of placing the
Aircraft in such condition, but shall nevertheless be
liable to Lessor for the failure of the Aircraft to be
in such condition); and/or
(e) sell at private or public sale, as Lessor may determine, or
hold, use, operate or lease to others the Aircraft as Lessor in
its sole discretion may determine, all free and clear of any
rights of Lessee; and/or
(f) by written notice to Lessee specifying a payment date (which
shall be a date not earlier than five (5) Business Days
following the date of such notice), Lessor may demand that
Lessee pay to Lessor, and Lessee shall pay to Lessor on the
payment date specified in such notice (in lieu of the Rent due
for the period commencing after the date specified for payment
in such notice) the sum of the following amounts:
(i) all Rent and other amounts which are or are expected to become
due and payable hereunder prior to the payment date specified
by Lessor;
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(ii) an amount equaling the aggregate Rent for the
remainder of the Term (determined without reference
to any right of Lessor to cancel the leasing of the
Aircraft, whether or not such right is exercised),
discounted periodically (equal to installment
frequency) to present worth at the Discount Rate to
the payment date specified by Lessee to Lessor, less
the applicable amount set forth below:
A. in the event that Lessor has re-let the
Aircraft on terms (other than rental
payment terms) which, taken as a whole,
Lessor reasonably regards as being
substantially similar to the material
economic terms of the Lease (taking into
account factors affecting the degree of risk
associated with such re-lease and/or the
residual value of the Aircraft thereunder,
but excluding the rental payment terms), an
amount equal to the aggregate basic rental
payments to become due under such re-lease
for the period coinciding with the remainder
of the Term (determined without reference to
any right of Lessor to cancel the leasing of
the Aircraft, whether or not such right is
exercised), discounted periodically (equal
to installment frequency) to present worth
at the Discount Rate to the date of payment
by Lessee; or
B. in the event that Lessor has not re-let the
Aircraft or has sold the Aircraft
or has re-let the Aircraft on terms which,
taken as a whole, Lessor does not reasonably
regard as being substantially similar to the
material economic terms of the Lease (taking
into account factors affecting the degree of
risk associated with such release and/or the
residual value of the Aircraft thereunder,
but excluding the rental payment terms), an
amount equal to the fair market rental value
(determined pursuant to the Appraisal
Procedure) of the Aircraft for the period
commencing with the date that Lessor
reasonably anticipates that the Aircraft
could be re-let at such rental rate and
ending with the date that the Term was
scheduled to expire (determined without
reference to any right of Lessor to cancel
the leasing of the Aircraft, whether or not
such right is exercised), discounted
periodically (equal to installment
frequency) to present worth at the Discount
Rate to the date of payment by Lessee;
(iii) an amount equal to Lessor's reasonably anticipated
Enforcement and Remarketing Costs, Unwind Expenses
and Aircraft Condition Damages; and
(iv) such additional amount, if any, as may be necessary
to place Lessor in the same economic position, on an
After-Tax Basis, as Lessor would have been in if
Lessee had timely performed each of its obligations
under this Agreement;
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(v) it being understood that, to the extent that any of
the foregoing amounts represents an estimate by
Lessor of losses, damages, costs or expenses which
Lessor expects to incur, (y) Lessor shall adjust the
amount thereof as needed to reflect the actual amount
of such losses, damages, costs or expenses incurred
by Lessor when substantially all of such amounts
become known to Lessor, but Lessee shall nevertheless
be obligated to pay the amount demanded by Lessor
(subject to such subsequent adjustment in which (i)
amounts, if any, actually paid by Lessee to Lessor
upon such demand as may exceed the actual amount of
losses, damages, costs or expenses incurred by
Lessor as finally determined by Lessor are refunded
to Lessee or otherwise credited to the account of
Lessee and (ii) additional amounts, if any, as may
be required to cure any shortfall between the
estimated amounts paid by Lessee and the actual
amount of losses, damages, costs or expenses incurred
by Lessor as finally determined by Lessor are paid by
Lessee to Lessor), and (z) notwithstanding the amount
specified in such demand, Lessor shall be entitled to
claim such other (and greater) amount in any action
against Lessee hereunder; and/or
(g) draw upon the Deposit or the Letter of Credit and apply such
amounts to any amounts owing to Lessor hereunder and/or make
demand against any Guarantor for any or all of the foregoing.
In addition to the foregoing, Lessor shall be entitled to exercise
such other rights and remedies as may be available under applicable
Law and Lessee shall be liable on an After-Tax Basis for, and shall
pay Lessor on demand: (i) interest on all unpaid amounts at the
Interest Rate, from the due date until the date of payment in full;
(ii) all reasonable legal fees and other reasonable costs and expenses
incurred by Lessor by reason of the occurrence of any Event of Default
or the exercise of Lessor's remedies with respect thereto; and (iii)
all reasonable expenses, disbursements, costs and fees incurred in (A)
reposessing, storing, preserving, shipping, maintaining, repairing and
refurbishing the Aircraft, the Airframe, any Engine or Part to the
condition required by Section 12 hereof and (B) preparing the
Aircraft, the Airframe, an Engine or Part for sale or lease,
advertising the sale or lease of the Aircraft, the Airframe, an Engine
or Part and selling or releasing the Aircraft, the Airframe, an Engine
or Part.
Lessor is hereby authorized and instructed, but shall have no
obligation, to make any expenditures which Lessor, in its sole
discretion, considers advisable to repair and restore the Aircraft,
the Airframe, an Engine or Part to the condition required by Section
12 hereof (it being understood that Lessee shall be liable for all
such expenditures).
Lessee hereby agrees that, in the event of the return to or
repossession by Lessor of the Aircraft, the Airframe, an Engine or
Part, any rights in any warranty (express or implied) previously
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assigned to Lessee or otherwise held by Lessee shall without further
act, notice or writing be assigned or reassigned to Lessor, if
assignable.
No remedy referred to in this Section 13 is intended to be exclusive,
but, to the extent permissible under the Lease or under applicable
Law, each shall be cumulative and in addition to any other remedy
referred to above or otherwise available to Lessor at Law or in
equity; and the exercise or beginning of exercise by Lessor of any one
or more of such remedies shall not preclude the simultaneous or later
exercise by Lessor of any or all of such other remedies; provided,
however, that nothing in this Section 13 shall be construed to permit
Lessor to obtain a duplicate recovery of any element of damages to
which Lessor is entitled. No express or implied waiver by Lessor of
any Default or Event of Default shall in any way be, or be construed
to be, a waiver of any future or subsequent Default or Event of
Default.
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13.3 Power of Attorney: Lessee hereby appoints Lessor as the
attorney-in-fact of Lessee, with full authority in the place and stead
of Lessee and in the name of Lessee or otherwise, for the purpose of
carrying out the provisions of the Lease and taking any action and
executing any instrument that Lessor may deem necessary or advisable
to accomplish the purposes hereof; provided, however, that Lessor may
only take action or execute instruments under this Section 13 after an
Event of Default has occurred and is continuing. Lessee hereby
declares that the foregoing powers are granted for valuable
consideration, constitute powers granted as security for the
performance of the obligations of Lessee hereunder and are coupled
with an interest and shall be irrevocable. Without limiting the
generality of the foregoing or any other rights of Lessor under the
Lease, upon the occurrence and during the continuation of an Event of
Default, Lessor shall have the sole and exclusive right and power to
(i) settle, compromise, adjust or defend any actions, suits or
proceedings relating to or pertaining to the Aircraft, Airframe or any
Engine, or the Lease and (ii) make proof of loss, appear in and
prosecute any action arising from any policy or policies of insurance
maintained pursuant to the Lease, and settle, adjust or compromise any
claims for loss, damage or destruction under, or take any other action
in respect of, any such policy or policies.
13.4 Sale or Re-Lease
If an Event of Default occurs, Lessor may sell or re-lease or
otherwise deal with the Aircraft at such time and in such manner and
on such terms as Lessor considers appropriate in its absolute
discretion, free and clear of any interest of Lessee, as if the Lease
had never been entered into. Lessor shall have no duty or obligation
to sell the Aircraft, and Lessor shall be obligated to attempt to
re-lease the Aircraft only to the extent, if any, that it is required
to do so under Article 2A of the UCC, and Lessee hereby disclaims any
right to compel Lessor to sell or otherwise re-lease the Aircraft.
13.5 Removal of Lease from FAA Registry
If an Event of Default occurs, Lessee will at the request of Lessor
immediately take all steps necessary to enable the Aircraft to be
redelivered to Lessor in accordance with and free and clear of the
Lease and Lessee hereby irrevocably and by way of security for its
obligations under the Lease appoints (which appointment is coupled
with an interest) Lessor as its attorney-in-fact to execute and
deliver any documentation and to do any act or thing not prohibited by
Law required in connection with the foregoing during the continuance
of an Event of Default. Without limiting the foregoing, Lessor may
file with the FAA the Lease Termination Certificate provided to Lessor
under the Lease.
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14. TRANSFER
14.1 Lessee
LESSEE WILL NOT ASSIGN, DELEGATE OR OTHERWISE TRANSFER (VOLUNTARILY,
INVOLUNTARILY, BY OPERATION OF LAW OR OTHERWISE) ANY OF ITS RIGHTS OR
OBLIGATIONS UNDER THE LEASE (INCLUDING THE AIRCRAFT LEASE AGREEMENT OR
THIS CTA), OR CREATE OR PERMIT TO EXIST ANY SECURITY INTEREST OVER ANY
OF ITS RIGHTS UNDER THE LEASE (INCLUDING THE AIRCRAFT LEASE AGREEMENT
OR THIS CTA), AND ANY ATTEMPT TO DO SO SHALL BE NULL AND VOID. The
foregoing shall not be construed to prohibit a Permitted Sub-Lease.
14.2 Lessor
Lessee acknowledges and agrees that Lessor will, if applicable under
the Financing Documents, assign as security Lessor's interest in the
Lease as described in the Acknowledgement and Agreement referred to in
Schedule 3.
In addition insofar as Lessee is concerned, Lessor may, without the
consent of Lessee, further transfer all or any of its rights or
obligations under the Lease or all or any of its right, title or
interest in and to the Aircraft, including pursuant to:
(a) a sale and leaseback, or
(b) a novation or assignment of the Lease and/or a sale of the
Aircraft (including to a special purpose or securitization or
monetization trust, fund, limited liability company,
corporation, partnership or other vehicle or in connection
with any other direct or indirect raising of capital); or
(c) a secured loan financing.
Lessor will promptly notify Lessee of any transfer and Lessee agrees
promptly to execute and deliver in connection with any transfer such
documents and assurances (including an acknowledgement of the transfer
and a certificate as to the absence of any Default under the Lease)
and to take such further action as Lessor may reasonably request to
establish or protect the rights and remedies created or intended to be
created in favor of the transferee in connection with any transfer.
After any transfer, the transferee shall be entitled to be an
Indemnitee and to such other rights under the Lease as Lessor shall
specify. Upon an assignment or novation described in clause (b), Lessor
shall be released from all obligations and liabilities under the Lease
to the extent such obligations and liabilities are assumed by such
transferee, and the Lease, including this CTA as in effect at that time
and as incorporated in the Aircraft Lease Agreement, shall be
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deemed applicable as between Lessee and the transferee of the Lease and
may be amended, supplemented or otherwise modified without the consent
of the transferor (if this CTA is applicable to the Other Agreements
not so transferred, it shall remain in full force and effect and may be
amended, supplemented or otherwise modified without the consent of the
transferee). Notwithstanding any such assignment or novation, Lessor,
Owner, Financing Parties' Representative and each other Indemnitee
shall continue to be entitled to indemnification under Section 10, and
shall continue to be named as an additional insured under all
Insurances referred to in Section 9 for a period of not less than two
years after such transfer. The agreements, covenants, obligations and
liabilities contained in the Lease, including all obligations to pay
Rent and indemnify each Indemnitee, are made for the benefit of Lessor
(and, in the case of Section 10, each other Indemnitee) and its or
their respective successors and assigns, notwithstanding the
possibility that any such Person was not originally a party to the
Lease or may, at the time such enforcement is sought, not be a party to
the Lease.
14.3 Conditions
In connection with any such transfer by Lessor:
(a) QUIET ENJOYMENT: as a condition precedent to such transfer
becoming effective, Lessor will procure that the transferee
or any new owner of the Aircraft or any new holder of a
Security Interest in the Aircraft or any holder of an interest
in the Aircraft or the Lease (by way of security or
otherwise), as the case may be, shall in the case of a
transferee that is the "Lessor" acknowledge Lessor's
obligation under Section 7.1 or, if not the Lessor, execute
and deliver to Lessee a letter of quiet enjoyment in respect
of Lessee's use and possession of the Aircraft in a form
substantially similar to Section 7.1 hereof;
(b) COSTS: Lessor shall reimburse to Lessee its reasonable
out-of-pocket expenses (including reasonable legal fees
and expenses) actually incurred in connection with
co-operating with Lessor in relation to any such transfer
referred to in this Section 14, provided that such expenses
are substantiated to Lessor's reasonable satisfaction;
(c) RIGHTS OF LESSEE: as a condition precedent to any transfer
becoming effective, such transfer shall not, at the time of
the transfer, materially expand Lessee's obligations under the
Lease or materially reduce Lessee's rights under the Lease,
in each case as compared to what such obligations and rights
would have been in the absence of such transfer; provided,
however, that no transfer to any Person that meets the
requirements of a "citizen of the United States" under 49
U.S.C. Section 40102(a)(15) shall be deemed to materially
expand Lessee's obligations or materially restrict Lessee's
rights under the Lease.
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15. MISCELLANEOUS
15.1 Survival
Lessee's obligations under Section 3 of Schedule 4, under Sections 5.6,
5.7, 5.10, 5.21, 9.5, 10, 12, and 13.2 and under any other provision of
the Lease providing for an obligation on the part of the Lessee to
indemnify Lessor or any other Indemnitee shall survive the expiration
or any termination of the Lease and continue in full force and effect.
15.2 Waivers, Remedies Cumulative
The rights of Lessor under the Lease may be exercised as often as
necessary, are cumulative and not exclusive of its rights under any
Law; and may be waived only in writing and specifically. Delay by
Lessor in exercising, or non-exercise of, any such right will not
constitute a waiver of that right.
15.3 Delegation
Lessor may delegate to any Person all or any of the rights, powers or
discretion vested in it by the Lease, and any such delegation may be
made upon such terms and conditions and subject to such regulations
(including power to sub-delegate) as Lessor in its absolute discretion
thinks fit.
15.4 Severability
If a provision of the Lease is or becomes illegal, invalid or
unenforceable in any jurisdiction, that will not affect:
(a) the legality, validity or enforceability in that jurisdiction
of any other provision of the Lease; or
(b) the legality, validity or enforceability in any other
jurisdiction of that or any other provision of the Lease.
15.5 Remedy
If Lessee fails to comply with any provision of the Lease, Lessor may,
without being in any way obliged to do so or responsible for so doing
and without prejudice to the ability of Lessor to treat such
non-compliance as a Default, effect compliance on behalf of Lessee,
whereupon Lessee shall become liable to pay immediately any sums
expended by Lessor together with all costs and expenses (including
legal fees and expenses) in connection with the non-compliance.
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15.6 Time of Essence
The time stipulated in the Lease for all payments payable by Lessee and
the prompt, punctual performance of Lessee's other obligations under
the Lease are of the essence of the Lease.
15.7 Notices
All notices under, or in connection with, the Lease will, unless
otherwise stated, be given in writing by means of a overnight courier
service or facsimile. Any such notice is deemed effectively to be given
when received by the recipient (or if receipt is refused by the
intended recipient, when so refused).
The addresses and facsimile and telephone numbers of Lessee and Lessor
are as set forth in the Aircraft Lease Agreement.
15.8 Governing Law; Jurisdiction; WAIVER OF JURY TRIAL
(a) PURSUANT TO AND IN ACCORDANCE WITH SECTION 5-1401 OF THE NEW
YORK GENERAL OBLIGATIONS LAW, THE PARTIES HERETO AGREE THAT
THE LEASE IN ALL RESPECTS SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS XX XXX XXXXX XX XXX XXXX, XXXXXX
XXXXXX, AS APPLIED TO CONTRACTS TO BE PERFORMED WHOLLY WITHIN
THE STATE OF NEW YORK (EXCLUSIVE OF SECTION 7-101 OF THE NEW
YORK GENERAL OBLIGATIONS LAW WICH IS INAPPLICABLE TO THE
LEASE). THE PARTIES AGREE THAT THE LEASE WAS EXECUTED AND
DELIVERED IN THE STATE OF NEW YORK.
(b) Pursuant to and in accordance with Section 5-1402 of the
New York General Obligations Law, Lessee and Lessor each agree
that the United States District Court for the Southern
District of New York and any New York state court sitting in
the County of New York, New York, and all related appellate
courts, are to have non-exclusive jurisdiction to settle any
disputes arising out of or relating to the Lease and submits
itself and its property to the non-exclusive jurisdiction of
the foregoing courts with respect to such disputes.
(c) Without prejudice to any other mode of service, Lessee:
(i) appoints CT Corporation System, 0000 Xxxxxxxx,
Xxx Xxxx, Xxx Xxxx 00000, as its agent for service of
process relating to any proceedings before the
New York courts in connection with the Lease and
agrees to maintain the process agent in New York
notified to Lessor,
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(ii) agrees that failure by a process agent to
notify Lessee of the process shall not
invalidate the proceedings concerned;
(iii) consents to the service of process relating
to any such proceedings by prepaid mailing of
a copy of the process to Lessee's agent at
the address identified in paragraph (i) or by
prepaid mailing by air mail, certified or
registered mail of a copy of the process to
Lessee at the address set forth in Section
15.7.
(d) [NOT APPLICABLE.]
(e) Each of Lessor and Lessee:
(i) waives to the fullest extent permitted by Law
any objection which it may now or hereafter
have to the courts referred to in Section
15.8(b) above on grounds of inconvenient
forum or otherwise as regards proceedings in
connection with the Lease;
(ii) waives to the fullest extent permitted by Law
any objection which it may now or hereafter
have to the laying of venue of any suit,
action or proceeding arising out of or
relating to the Lease brought in the courts
referred to in Section 15.8(b); and
(iii) agrees that a judgement or order of any court
referred to in Section 15.8(b) in connection
with the Lease is conclusive and binding on
it and may be enforced against it in the
courts of any other jurisdiction.
(f) Nothing in this Section 15.8 limits the right of
either party to bring proceedings against the other in
connection with the Lease:
(i) in any other court of competent jurisdiction;
or
(ii) concurrently in more than one jurisdiction.
(g) Each of Lessee and Lessor irrevocably and
unconditionally:
(i) agrees that if the other brings legal
proceedings against it or its assets in
relation to the Lease no sovereign or other
immunity from such legal proceedings (which
will be deemed to include suit, court
jurisdiction, attachment prior to judgement,
attachment in aid of execution of a judgement,
other attachment, the obtaining of judgement
execution of a judgement or other enforcement
or legal process or remedy) will be claimed by
or on behalf of itself or with respect to its
assets; and
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(ii) waives any such right of immunity which it or its
assets now has or may in the future acquire and
agrees that the foregoing waiver shall have the
fullest extent permitted under the Foreign Sovereign
Immunities Act of 1976 of the United States and is
intended to be irrevocable for the purposes of such
Act.
(h) EACH OF LESSEE AND LESSOR HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY AND ALL RIGHTS TO A JURY TRIAL IN
RESPECT OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THE LEASE OR ANY DEALINGS BETWEEN THEM
RELATING TO THE SUBJECT MATTER OF THE TRANSACTIONS
CONTEMPLATED THEREBY OR THE LESSOR/LESSEE RELATIONSHIP
BEING ESTABLISHED, including, without limitation, contract
claims, tort claims, breach of duty claims and other common
law and statutory claims. Each of Lessor and Lessee
represents and warrants that each has reviewed and
voluntarily waives its jury trial rights following
consultation with its legal counsel. THIS WAIVER IS
IRREVOCABLE, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THE
LEASE. In the event of litigation, this Section may be filed
as a written consent to a trial by the court.
15.9 Sole and Entire Agreement; True Lease; Section 1110
(a) ENTIRE AGREEMENT: The Lease is the sole and entire agreement
between Lessor and Lessee in relation to the leasing of the
Aircraft, and supersedes all previous agreements in relation
to that leasing. Any amendments to the Lease must be made in
writing and signed on behalf of Lessor and Lessee.
(b) TRUE LEASE: The parties intend and agree that the Lease:
(i) constitutes a "true lease", and not a "security
interest" as defined in Section 1201(37) of the
UCC;
(ii) constitutes a "true lease" for United States Federal
income tax purposes; and
(iii) confers only a leasehold interest on Lessee in and
to the Aircraft on and subject to the terms of the
Lease, and no ownership or other interest with
respect to the Aircraft is provided to Lessee under
the Lease.
Lessee shall not file a tax return that is inconsistent with
the provisions of this Section 15.9(b).
(c) SECTION 1110: Lessee acknowledges that Lessor would not have
entered into the Lease unless it had available to it the
benefits of a lessor under Section 1110 of Title 11 of the
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U.S.C. Lessee covenants and agrees with Lessor that to better
ensure the availability of such benefits, Lessee shall not
oppose any motion, petition or application filed by Lessor
with any bankruptcy court having jurisdiction over Lessee
whereby Lessor seeks recovery of possession of the Aircraft
under said Section 1110, except in a situation in which
Lessee shall have complied with the requirements of said
Section 1110 to be fulfilled in order to entitle Lessee to
continued use and possession of the Aircraft hereunder. In the
event said Section 1110 is amended, or if it is repealed and
another statute is enacted in lieu thereof, Lessor and Lessee
agree to amend the Lease and take such other action not
inconsistent with the Lease as Lessor reasonably requests so
as to afford to Lessor the rights and benefits as such amended
or substituted statute confers upon owners and lessors of
aircraft similarly situated to Lessor.
15.10 Indemnitees
All rights expressed to be granted to each Indemnitee (other than
Lessor) under the Lease are given to Lessor on behalf of that
Indemnitee, and each Indemnitee is an express third party beneficiary
thereof.
15.11 Counterparts
The Lease (including the Aircraft Lease Agreement and this CTA) may be
executed in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument. To the extent, if any, that the 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 the
Lease may be created through the transfer or possession of any
counterpart other than the original counterpart, which shall be
identified as the counterpart designated as the "original" on the
signature page of the Aircraft Lease Agreement by Financing Parties'
Representative, Owner or Lessor, as the case may be.
15.12 Language
All notices to be given under the Lease will be in English. All
documents delivered to Lessor pursuant to the Lease (including any
documents to be delivered pursuant to the Conditions Precedent) will be
in English.
16. DISCLAIMERS AND WAIVERS
LESSOR AND LESSEE AGREE THAT THE DISCLAIMERS, WAIVERS AND CONFIRMATIONS
SET FORTH IN CLAUSES 16.1 TO 16.4 BELOW SHALL APPLY AT ALL TIMES DURING
THE TERM. LESSEE'S ACCEPTANCE OF THE AIRCRAFT IN ACCORDANCE WITH
SECTION 4.3 SHALL BE CONCLUSIVE EVIDENCE THAT
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LESSEE HAS FULLY INSPECTED THE AIRCRAFT AND EVERY PART THEREOF AND THAT
THE AIRCRAFT, THE ENGINES, THE PARTS AND THE AIRCRAFT DOCUMENTS AND
RECORDS ARE TECHNICALLY ACCEPTABLE TO LESSEE AND SATISFY THE DELIVERY
CONDITION REQUIREMENTS AND ARE IN SUITABLE CONDITION FOR DELIVERY TO
AND ACCEPTANCE BY LESSEE.
16.1 Exclusion
THE AIRCRAFT IS LEASED AND DELIVERED UNDER THE LEASE "AS IS, WHERE IS,"
AND LESSEE AGREES AND ACKNOWLEDGES THAT:
(a) LESSOR WILL HAVE NO LIABILITY IN RELATION TO, AND LESSOR HAS
NOT AND WILL NOT BE DEEMED TO HAVE ACCEPTED, MADE OR GIVEN
(WHETHER BY VIRTUE OF HAVING DONE OR FAILED TO DO ANY ACT, OR
HAVING ACQUIRED OR FAILED TO ACQUIRE ANY STATUS UNDER OR IN
RELATION TO THE LEASE OR OTHERWISE), ANY GUARANTEES,
COVENANTS, WARRANTIES OR REPRESENTATIONS, EXPRESS OR IMPLIED,
WITH RESPECT TO, THE AIRCRAFT OR ANY ENGINE OR PART OR ANY
SERVICES PROVIDED BY LESSOR UNDER THE LEASE, INCLUDING (BUT
NOT LIMITED TO) THE TITLE (EXCEPT AS AND TO THE EXTENT
EXPRESSLY PROVIDED IN SECTION 7.1), DESCRIPTION,
AIRWORTHINESS, COMPLIANCE WITH SPECIFICATIONS, OPERATION,
MERCHANTABILITY, QUALITY, FREEDOM FROM INFRINGEMENT OF PATENT,
COPYRIGHT, TRADEMARK OR OTHER PROPRIETARY RIGHTS, FITNESS FOR
ANY PARTICULAR USE OR PURPOSE, VALUE, DURABILITY, DATE
PROCESSING, CONDITION, OR DESIGN, OR AS TO THE QUALITY OF THE
MATERIAL OR WORKMANSHIP, THE ABSENCE OF LATENT OR OTHER
DEFECTS, WHETHER OR NOT DISCOVERABLE, OR AS TO ANY OTHER
MATTER WHATSOEVER, EXPRESS OR IMPLIED (INCLUDING ANY IMPLIED
WARRANTY ARISING FROM A COURSE OF PERFORMANCE OR DEALING OR
USAGE OF TRADE) WITH RESPECT TO THE AIRCRAFT, ANY ENGINE OR
ANY PART OR ANY SERVICES PROVIDED BY LESSOR UNDER THE LEASE;
AND
(b) LESSOR SHALL NOT HAVE ANY OBLIGATION OR LIABILITY WHATSOEVER
TO LESSEE (WHETHER ARISING IN CONTRACT OR IN TORT, AND WHETHER
ARISING BY REFERENCE TO NEGLIGENCE, MISREPRESENTATION OR
STRICT LIABILITY OF LESSOR OR OTHERWISE) FOR:
(i) ANY LIABILITY, LOSS OR DAMAGE CAUSED OR ALLEGED TO BE
CAUSED DIRECTLY OR INDIRECTLY BY THE AIRCRAFT OR ANY
ENGINE OR BY ANY INADEQUACY THEREOF OR DEFICIENCY OR
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DEFECT THEREIN OR BY ANY OTHER CIRCUMSTANCE IN
CONNECTION THEREWITH (EXCEPT FOR DIRECT DAMAGES DUE
TO LESSOR'S BREACH AS AND TO THE EXTENT EXPRESSLY
PROVIDED IN SECTION 4.4 OR 7.1 HEREOF);
(ii) THE USE, OPERATION OR PERFORMANCE OF THE AIRCRAFT OR
ANY RISKS RELATING THERETO;
(iii) ANY INTERRUPTION OF SERVICE, LOSS OF BUSINESS OR
ANTICIPATED PROFITS OR ANY OTHER DIRECT (EXCEPT FOR
DIRECT DAMAGES DUE TO LESSOR'S BREACH AS PROVIDED IN
SECTION 4 4 or 7.1), INDIRECT OR CONSEQUENTIAL LOSS
OR DAMAGE; OR
(iv) THE DELIVERY, OPERATION, SERVICING, MAINTENANCE,
REPAIR, IMPROVEMENT OR REPLACEMENT OF THE AIRCRAFT,
ANY ENGINE OR ANY PART.
16.2 Waiver
LESSEE HEREBY WAIVES, AS BETWEEN ITSELF AND LESSOR, ALL ITS RIGHTS IN
RESPECT OF ANY CONDITION, WARRANTY OR REPRESENTATION, EXPRESS OR
IMPLIED, ON THE PART OF LESSOR AND ALL CLAIMS AGAINST LESSOR HOWSOEVER
AND WHENEVER ARISING AT ANY TIME IN RESPECT OF OR OUT OF ANY OF THE
MATTERS REFERRED TO IN SECTION 16.1.
16.3 Disclaimer Of Consequential Damages
LESSEE AGREES THAT IT SHALL NOT BE ENTITLED TO RECOVER, AND HEREBY
DISCLAIMS AND WAIVES ANY RIGHT THAT IT MAY OTHERWISE HAVE TO RECOVER,
FOR INTERRUPTION OF SERVICE, LOSS OF BUSINESS, LOST PROFITS OR REVENUES
OR CONSEQUENTIAL DAMAGES (AS DEFINED IN SECTION 2A-520 OF THE UCC OR
OTHERWISE) AS A RESULT OF ANY BREACH OR ALLEGED BREACH BY LESSOR OF ANY
OF THE AGREEMENTS, REPRESENTATIONS OR WARRANTIES OF LESSOR CONTAINED IN
THE LEASE (INCLUDING A BREACH BY LESSOR UNDER SECTION 4.4 OR 7.1).
16.4 Confirmation
LESSEE CONFIRMS THAT IT IS FULLY AWARE OF THE PROVISIONS OF THIS SECTION
16 AND ACKNOWLEDGES THAT RENT AND OTHER AMOUNTS PAYABLE UNDER THE LEASE
HAVE BEEN CALCULATED BASED ON ITS PROVISIONS.
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16.5 Limitation
LESSOR HEREBY EXPRESSLY AGREES AND ACKNOWLEDGES THAT NOTHING IN THIS
SECTION 16 SHALL DEROGATE FROM LESSOR'S OBLIGATIONS UNDER, OR OTHERWISE
LIMIT LESSOR'S LIABILITY IN RESPECT OF, SECTIONS 2.2, 4.4(c), 7.1,
7.2, 14.2 or 14.3 HEREOF OR SECTION 2(c) OF SCHEDULE 4 HERETO.
1.7. BROKERS AND OTHER THIRD PARTIES
17.1 No Brokers
Each of the parties hereby represents and warrants to the other that it
has not paid, agreed to pay or caused to be paid directly or indirectly
in any form, any commission, percentage, contingent fee, brokerage or
other similar payments of any kind, in connection with the
establishment or operation of the Lease, to any Person (other than fees
payable to legal advisers or portfolio services).
17.2 Indemnity
Each party agrees to indemnify and hold the other harmless from and
against any and all claims, suits, damages, costs and expenses
(including, reasonable legal fees and expenses) asserted by any agent,
broker or other third party for any commission or compensation of any
nature whatsoever based upon the Lease or the Aircraft, if such claim,
suit, damage, cost or expense arises out of any breach by the
indemnifying party, its employees or agents of Section 17.1.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.
THE SIGNATURE PAGE FOLLOWS.
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IN WITNESS WHEREOF the parties hereto have executed the Common Terms Agreement
on the date shown at the beginning of the document.
GENERAL ELECTRIC CAPITAL CORPORATION
By: /s/ Xxxx Xxx
-----------------------------------
Name: Xxxx Xxx
---------------------------------
Title: Vice President
--------------------------------
ALOHA AIRLINES, INC.
By: __________________________________
Name:_________________________________
Title:________________________________
By: __________________________________
Name:_________________________________
Title:________________________________
IN WITNESS WHEREOF the parties hereto have executed the Common Terms Agreement
on the date shown at the beginning of the document.
GENERAL ELECTRIC CAPITAL CORPORATION
By: __________________________________
Name:_________________________________
Title:________________________________
ALOHA AIRLINES, INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
----------------------------------
Name: Xxxxxx X. Xxxxxxxxx
---------------------------------
Title: Exec. Vice President & CFO
--------------------------------
By: /s/ Xxxxx X. Xxxx
----------------------------------
Name: Xxxxx X. Xxxx
---------------------------------
Title: VP Planning & Development
--------------------------------
SCHEDULE 1
DEFINITIONS
The following words and expressions have the respective meanings set forth
below:
Act means the Federal Aviation Act of 1958, as amended, and as recodified in
Title 49 U.S.C. pursuant to Public Law 103-272, or any similar legislation of
the United States enacted in substitution or replacement thereof.
AFFILIATE means as to any Person, any other Person that, directly or
indirectly, is in control of, is controlled by, or is under common control
with, such Person. For purposes of this definition, "control" of a Person
means the power, directly or indirectly, either to (a) vote 50% or more of the
securities having ordinary voting power for the election of directors (or
persons performing similar functions) of such Person or (b) direct or cause
the direction of the management and policies of such Person, whether by
contract or otherwise.
AFTER-TAX BASIS means in the case of any amount payable on an "After-Tax
Basis" to or for the benefit of any Person (including any amount payable
pursuant to this definition) that he total amount paid shall be such that the
Person actually realizes the amount payable, after deduction from the total
amount paid of the net amount of all Taxes required to be paid by such Person
with respect to the receipt or accrual by it of such amount.
AGREED VALUE has the meaning given in the Aircraft Lease Agreement.
AIR AUTHORITY means the FAA.
AIRCRAFT has the meaning given in the Aircraft Lease Agreement.
AIRCRAFT DOCUMENTS AND RECORDS means the documents, data and records
identified in the list attached to the Certificate of Technical Acceptance,
and any other documents and records Lessee is required to maintain under
Section 8.8, and all additions, renewals, revisions and replacements from time
to time made to any of the foregoing in accordance with the Lease.
AIRCRAFT LEASE AGREEMENT means the specific aircraft lease agreement for the
Aircraft entered or to be entered into between the parties hereto or
Affiliates thereof.
AIRFRAME means the Aircraft, excluding the Engines and Aircraft Documents and
Records.
AIRFRAME STRUCTURAL CHECK has the meaning given in the Aircraft Lease
Agreement.
AIRFRAME SUPPLEMENTAL RENT has the meaning given in the Aircraft Lease
Agreement.
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AIRWORTHINESS DIRECTIVE means an airworthiness directive issued by the State of
Design or the State of Registry.
ANNUAL SUPPLEMENTAL RENT ADJUSTMENT has the meaning given in the Aircraft
Lease Agreement.
APPRAISAL PROCEDURE means the following procedure for determining the "fair
market rental value" of the Aircraft pursuant to Sections 13.2 and 13.4 of the
CTA: (a) Lessor shall select an independent aircraft appraiser in its sole and
absolute discretion who shall make a determination of "fair market rental
value" of the Aircraft; and (b) the fees and expenses of the appraiser shall be
paid by Lessee. "Fair market rental value" shall mean the value determined by
an appraisal completed on an "as-is" and "where-is" basis.
APU means the auxiliary power unit installed on the Aircraft on the Delivery
Date and any replacement auxiliary power unit installed on the Aircraft and
title to which is transferred to Owner in accordance with the Lease.
APU SUPPLEMENTAL RENT has the meaning given in the Aircraft Lease Agreement.
ASSUMED UTILIZATION has the meaning given in the Aircraft Lease Agreement.
ASSUMED RATIO has the meaning given in the Aircraft Lease Agreement.
BUSINESS DAY means any day other than a Saturday, Sunday or other day on which
banking institutions in New York, New York or Honolulu, Hawaii are authorized
or required by Law to be closed.
"C" CHECK means a block "C" check in accordance with Lessee's Maintenance
Program or, if the Lessee's Maintenance Program is not based on the
Manufacturer's Maintenance Planning Document on a block basis, in accordance
with the Manufacturer's Maintenance Planning Document.
CERTIFICATE OF TECHNICAL ACCEPTANCE means a certificate of technical acceptance
in the form of Part I or Part 2, as applicable, of Schedule 5.
CERTIFICATED AIR CARRIER means any Person (except the United States Government)
that is a "citizen of the United States of America" (as defined in Section
40102 of Title 49 of the U.S.C.) and holding a Certificate of Public
Convenience and Necessity issued under Section 41102 of Title 49 of U.S.C. by
the Department of Transportation or any predecessor or successor agency
thereto, and an air carrier operating certificate issued pursuant to Chapter
447 of Title 49 of U.S.C. or, in the event such certificates shall no longer be
applicable, any Person (except the United States Government) that is a citizen
of the United States (as defined in Section 40102 of Title 49 of the U.S.C.)
and legally engaged in the business of transporting for hire passengers or
cargo by air predominantly to, from or between points within the United States
of America, and, in either event, operating commercial jet aircraft capable of
carrying ten or more individuals or 6,000 pounds or more of cargo, which also
is certificated so as to entitle Lessor, as a lessor, to the benefits of
Section 1110 of Title 11 of U.S.C. with respect to the Aircraft.
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CONDITIONS PRECEDENT means Lessee Conditions Precedent and Lessor's
Conditions Precedent, collectively, or any of them, as the context may
require.
CYCLE means one take-off and landing of the Aircraft.
DAMAGE NOTIFICATION THRESHOLD has the meaning given in the Aircraft Lease
Agreement.
DEDUCTIBLE AMOUNT has the meaning given in the Aircraft Lease Agreement.
DEFAULT means any Event of Default or any event or circumstance which, with
the giving of notice and/or lapse of time and/or determination of materiality
and/or fulfillment of any other condition, would constitute an Event of
Default.
DEFECT means any defect or non-conformity with the Delivery Condition
Requirements notified by Lessee to Lessor during the Pre-Delivery Procedure.
DELIVERY means delivery of the Aircraft by Lessor to Lessee under the Lease.
DELIVERY CONDITION REQUIREMENTS has the meaning given in the Aircraft Lease
Agreement.
DELIVERY DATE means the date on which Delivery occurs.
DELIVERY LOCATION has the meaning given in the Aircraft Lease Agreement.
DEPOSIT has the meaning given in the Aircraft Lease Agreement.
DISCOUNT RATE has the meaning given in the Aircraft Lease Agreement.
DOLLARS AND $ means the lawful currency of the United States.
ENGINE means, whether or not installed on the Aircraft:
(a) each engine of the manufacture and model specified in the
Aircraft Lease Agreement for the Aircraft which Lessor
offers to Lessee for delivery with the Airframe on the
Delivery Date, such engines being described as to serial
numbers on the Certificate of Technical Acceptance; and
(b) any Replacement Engine, with effect from the. time when
title thereto has passed to Owner in accordance with the
Lease;
and in each case includes all modules and Parts from time to time belonging
to or installed in that engine but excludes any properly replaced engine
title to which has passed to Lessee pursuant to the Lease.
ENGINE CYCLE means operation of an engine on an aircraft from and including a
take-off to and including the landing of that aircraft.
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ENGINE EVENT OF LOSS means the occurrence, with respect to the Engine only,
whether or not installed on the Airframe, of any of those events described in
the definition of Event of Loss.
ENGINE FLIGHT HOUR means each hour or part thereof an Engine is operated,
elapsing from the moment the wheels of an aircraft on which such Engine is
installed leave the ground until the wheels of such aircraft next touch the
ground.
ENGINE LLP REPLACEMENT has the meaning given in Section 7.2(ii);
ENGINE LLP SUPPLEMENTAL RENT has the meaning given in the Aircraft Lease
Agreement.
ENGINE REFURBISHMENT means all scheduled and unscheduled off the wing Engine
maintenance and repair accomplished for each module in accordance with the
performance restoration or full overhaul sections of the Manufacturer's
workscope planning guide.
ENGINE SUPPLEMENTAL RENT has the meaning given in the Aircraft Lease Agreement.
EQUIPMENT CHANGE has the meaning given in Section 8.12.
ERISA means the Employee Retirement Income Security Act of 1974, as amended.
EVENT OF DEFAULT means any event or condition specified in Schedule 9.
EVENT OF LOSS means with respect to the Aircraft (including for the purposes of
this definition the Airframe):
(a) the actual or constructive, compromised, arranged or
agreed total loss of the Aircraft; or
(b) the Aircraft being destroyed, damaged beyond reasonable
economic repair as determined by Lessor or permanently
rendered unfit for normal use for any reason whatsoever,
or
(c) the Aircraft being condemned, confiscated or
requisitioned for title, or title to the Aircraft
being otherwise compulsorily acquired by the government
of the State of Registry or any other Government Entity;
or
(d) the Aircraft being hijacked, stolen, confiscated,
detained, seized, condemned or requisitioned for use or
hire for the lesser of (i) a period of more than 30 days
(or 60 days in the case of requisition for use or hire by
the government of the State of Registry) or (ii) a period
equal to or exceeding the remaining balance of the Tenn;
or
(e) as a result of any rule, regulation, order or other
action by the FAA the use of the Aircraft by Lessee or
any Permitted Sub Lessee shall have been prohibited for a
period of twelve (12) consecutive months.
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EXPIRY DATE means the Scheduled Expiry Date or, if earlier (i) the date when
Lessor acting in accordance with the provisions of the Lease, terminates the
leasing of the Aircraft to Lessee under the Lease, or (ii) subject to the
provisions of Section 11.1 and 11.2, the date when Lessor receives the Agreed
Value together with any other amounts then due and unpaid under the Lease and
the Other Agreements following an Event of Loss; provided, that if the Term is
extended pursuant to Section 12.2, the Expiry Date shall be extended to the
date to which the Term is extended pursuant to Section 12.2.
FAA means the Federal Aviation Administration of the United States and any
successor thereof.
FAR means the Federal Aviation Regulations set forth in Title 14 of the
United States Code of Federal Regulations, as amended and modified from
time to time.
FINAL DELIVERY DATE has the meaning given in the Aircraft Lease Agreement.
FINAL INSPECTION has the meaning given in Section 1.1 of Part III of Schedule A
to the Aircraft Lease Agreement.
FINANCIAL INDEBTEDNESS means any indebtedness in respect of
(a) moneys borrowed or raised;
(b) any liability under any debenture, bond, note, loan stock,
acceptance, documentary credit or other security;
(c) the acquisition cost of any asset to the extent payable
before or after the time of acquisition or possession
(exclusive of trade payables); or
(d) any guarantee, indemnity or similar assurance against
financial loss of any person in respect of the above.
FINANCIAL INFORMATION means:
(a) as soon as available but not in any event later than 60 days
after the last day of each fiscal quarter of Lessee, the
consolidated financial statements of Aloha Airgroup, Inc.
(consisting of a balance sheet and statements of operations
and of retained earnings and cash flows) prepared for the
most recent previous fiscal quarter certified by a qualified
financial officer of Aloha Airgroup, Inc. as being true and
correct and fairly presenting its financial condition and
results of operation in accordance with GAAP (subject to
year end adjustments); and
(b) as soon as available but not in any event later than 120
days after the last day of each fiscal year of Lessee, the
audited combined financial statements of Aloha Airgroup,
Inc. (consisting of a balance sheet and statements of
operations and of retained earnings and cash flows),
prepared for the fiscal year then most recently ended
certified by the independent auditors of Aloha Airgroup,
Inc. without qualification.
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FINANCING DOCUMENTS (if applicable) has the meaning given in the Aircraft Lease
Agreement.
FINANCING DOCUMENTS CONTEST RIGHTS (if applicable) has the meaning given in the
Aircraft Lease Agreement.
FINANCING DOCUMENTS INDEMNITY AMOUNTS (if applicable) has the meaning given in
the Aircraft Lease Agreement.
FINANCING DOCUMENTS TAX AMOUNTS (if applicable) has the meaning given in the
Aircraft Lease Agreement.
FINANCING PARTIES (if applicable) has the meaning given in the Aircraft Lease
Agreement.
FINANCING PARTIES' REPRESENTATIVE (if applicable) has the meaning given in the
Aircraft Lease Agreement.
FINANCING STATEMENTS means Uniform Commercial Code Financing Statements in
respect of the Lease and the Aircraft and Engines leased thereunder prepared in
a form acceptable for filing with the applicable Government Entities in the
state in which Lessee's chief executive office is located (as the term "chief
executive office" is defined in Article 9 of the Uniform Commercial Code as in
effect in such state) and such other jurisdictions as Lessor shall reasonably
require.
FLIGHT HOUR means each hour or part thereof elapsing from the moment the wheels
of the Aircraft leave the ground on take off until the wheels of the Aircraft
next touch the ground.
GAAP means generally accepted accounting principles in the United States.
GE CAPITAL means General Electric Capital Corporation.
GECAS means either or both of GE Capital Aviation Services, Limited and GE
Capital Aviation Services, Inc.
GOVERNMENT ENTITY means:
(a) national government, political subdivision thereof, or local
jurisdiction therein;
(b) any instrumentality, board, commission, court, or agency of
any of the above, however constituted; and
(c) any association, organization, or institution of which any
of the above is a member or to whose jurisdiction any
thereof is subject or in whose activities any of the above
is a participant.
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GUARANTEE means, if applicable, a guarantee by the Guarantor in form and
substance reasonably acceptable to Lessor and references to the Guarantee
include reference to any replacement or re-issued guarantee.
GUARANTOR (if applicable) has the meaning given in the Aircraft Lease
Agreement.
HABITUAL BASE means the jurisdiction in which the Aircraft's primary aircraft
operations center is located.
INDEMNITEE has the meaning given in the Aircraft Lease Agreement.
INTEREST RATE has the meaning given in the Aircraft Lease Agreement.
INSURANCE means the insurance in respect of the Aircraft in form and
substance satisfactory to Lessor, and includes any insurance and reinsurance
required by Section 9 and Schedule 7.
LANDING GEAR means the landing gear assembly of the Aircraft excluding any
rotable components.
LANDING GEAR SUPPLEMENTAL RENT has the meaning given in the Aircraft Lease
Agreement.
LAW means and includes (a) any statute, decree, constitution, regulation,
order, judgement or other directive of any Government Entity; (b) any treaty,
pact, compact or other agreement to which any Government Entity is a signatory
or party; (c) any judicial or administrative interpretation or application of
any Law described in (a) or (b) above; and (d) any amendment or revision of
any Law described in (a), (b) or (c) above.
LC AMOUNT has the meaning given in the Aircraft Lease Agreement.
LEASE means the Aircraft Lease Agreement for the Aircraft (of which this CTA
forms a part), any schedules or documents executed pursuant to the Schedules
hereto or pursuant to the Aircraft Lease Agreement, any Lease Supplement to
the Lease (including Lease Supplement No. 1), and any side letters related to
the Lease.
LEASE SUPPLEMENT means any Lease Supplement executed and delivered with
respect to the Lease.
LEASE SUPPLEMENT NO. 1 means a Lease Supplement No. 1 substantially in the
form of Schedule 12.
LEASE TERMINATION CERTIFICATE means a Lease Termination Certificate
substantially in the form of Schedule 11 in respect of the Lease.
LESSEE means the Person named as Lessee in the Aircraft Lease Agreement.
LESSEE AFFILIATE means any Subsidiary or other Affiliate for the time being of
Lessee.
LESSEE CONDITIONS PRECEDENT means the conditions specified in Part B of
Schedule 3.
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LESSEE'S MAINTENANCE PROGRAM means the Maintenance Program specifically
approved by the Air Authority for maintenance of the Aircraft by Lessee, or at
any time that a Permitted Sub-Lease approved by Lessor and meeting the
requirements of Section 8.4(b) is in effect, by the Permitted Sub-Lessee under
such Permiitted Sub-Lease.
LESSOR means the Person named as Lessor in the Aircraft Lease Agreement.
LESSOR CONDITIONS PRECEDENT means the conditions specified in Part A of
Schedule 3.
LESSOR LIEN means (i) any Security Interest whatsoever from time to time
created by Lessor or Owner in connection with the financing of the Aircraft,
including the Financing Documents, and (ii) any other Security Interest in the
Aircraft which (a) results from acts of or claims against Lessor or Owner or
any affiliate of Lessor or Owner that do not relate to the transactions
contemplated by the Lease or by any other contract or agreement between Lessee
or any affiliate of Lessee and Lessor or Owner or any affiliate of Lessor or
Owner and (b) is not attributable to Lessee or Lessee's use or possession of
the Aircraft.
LESSOR/OWNER TAX JURISDICTION has the meaning given in the Aircraft Lease
Agreement.
LESSOR TAXES means Taxes for which Lessee is not obligated to indemnify Lessor
and/or Owner and/or a Financing Party as provided in Section 5.7(c).
LETTER OF CREDIT means any letter of credit issued in relation to the Lease
pursuant to Section 5.14 and any replacement or renewal of that letter of
credit.
LOSSES means any and all cost, expense (including any and all reasonable legal
fees and expenses and the fees and expenses of other professional advisers),
claims, proceedings, losses, liabilities, obligations, damages (whether direct,
indirect, special, incidental or consequential), suits, judgements, fees,
penalties or fines (whether criminal or civil) of any kind or nature
whatsoever, including any of the foregoing arising or imposed with or without
any Indemnitee's fault or negligence, whether passive or active or under the
doctrine of strict liability.
MAINTENANCE CONTRIBUTIONS means, as and if applicable, all amounts payable by
Lessor pursuant to Section 7.2.
MAINTENANCE PERFORMER means (i) any of the Persons identified on Schedule 14
hereto (until such time as Lessor delivers written notice to Lessee of the
removal of any such Person from the list of Maintenance Performers), or (ii)
such other mutually acceptable Persons as may be added to Schedule 14 hereto
from time to time (Lessee shall advise- Lessor in writing of any request to add
a Person to Schedule 14 and Lessor shall respond in writing).
MAINTENANCE PROGRAM means an Air Authority approved maintenance program for the
Aircraft and encompassing scheduled maintenance, condition-monitored
maintenance, and/or on-condition
1-8
maintenance of Airframe, Engines and Parts, including servicing, testing,
preventive maintenance, repairs, structural inspections, system checks,
overhauls, approved modifications, engineering orders, airworthiness
directives, corrosion control, inspections and treatments.
MAJOR CHECKS means any C-check, multiple C-check or heavier check (including
structural inspections and CPCP) suggested for commercial aircraft of the same
model as the Aircraft by its manufacturer (however denominated) as set out in
the Lessee's Maintenance Program.
MANUFACTURER has the meaning given in the Aircraft Lease Agreement.
MANUFACTURER'S MAINTENANCE PLANNING DOCUMENT means the recommended maintenance
program for the Aircraft issued by the Manufacturer as in effect at the time
of any applicable determination.
MINIMUM AIRFRAME LIFE LIMITED COMPONENT CYCLES has the meaning given in the
Aircraft Lease Agreement.
MINIMUM AIRFRAME LIFE LIMITED COMPONENT FLIGHT HOURS has the meaning given in
the Aircraft Lease Agreement.
MINIMUM APU LIMIT has the meaning given in the Aircraft Lease Agreement.
MINIMUM APU LLP LIMIT has the meaning given in the Aircraft Lease Agreement.
MINIMUM COMPONENT CALENDAR LIFE has the meaning given in the Aircraft Lease
Agreement.
MINIMUM COMPONENT CYCLES has the meaning given in the Aircraft Lease
Agreement.
MINIMUM COMPONENT FLIGHT HOURS has the meaning given in the Aircraft Lease
Agreement.
MINIMUM ENGINE CYCLES has the meaning given in the Aircraft Lease Agreement.
MINIMUM ENGINE FLIGHT HOURS has the meaning given in the Aircraft Lease
Agreement.
MINIMUM LANDING GEAR CALENDAR TIME has the meaning given in the Aircraft
Lease Agreement.
MINIMUM LANDING GEAR CYCLES has the meaning given in the Aircraft Lease
Agreement.
MINIMUM LANDING GEAR FLIGHT HOURS has the meaning given in the Aircraft
Lease Agreement.
MINIMUM LIABILITY COVERAGE has the meaning given in the Aircraft Lease
Agreement.
MINIMUM MEASURABLE FUEL REQUIREMENT has the meaning given in the Aircraft
Lease Agreement.
NAMEPLATE INSCRIPTION means the inscription to be included on the
Nameplates as reasonably requested by Lessor from time to time.
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NAMEPLATES means the fireproof plates to be installed on the Aircraft in
accordance with Section 8.6(a).
OTHER AGREEMENTS means any aircraft, engine or spare parts related lease
or financing agreement (including an aircraft, engine or spare parts
related loan, hire purchase, conditional sale, credit sale or security
agreement) from time to time entered into between Lessor (or any
Subsidiary or Affiliate of Lessor), on the one hand, and Lessee (or any
Subsidiary or Affiliate of Lessee), on the other hand.
OWNER has the meaning given in the Aircraft Lease Agreement.
PART means, whether or not installed on the Aircraft:
(a) any component, furnishing or equipment (other than a
complete Engine or engine) incorporated or installed in
or attached to or furnished with the Aircraft on the
Delivery Date or thereafter if paid for or otherwise
provided by or on behalf of Lessor; and
(b) any other component, furnishing or equipment (other than
a complete Engine or engine), with effect from the time
when title thereto has passed to Owner pursuant to the
Lease;
(c) but excludes any such items title to which has passed to
Lessee pursuant to the Lease.
PART 36 OR FAR PART 36 means Part 36 of the FAR, as amended or modified from
time to time.
PART 121 OR FAR PART 121 means Part 121 of the FAR, as amended or modified
from time to time.
PERMITTED LIEN means:
(a) any lien for Taxes not assessed or, if assessed, not yet
due and payable, or being diligently contested in good
faith by appropriate proceedings;
(b) any lien of a repairer, mechanic, hangar-keeper or other
similar lien arising in the ordinary course of business
by operation of Law in respect of obligations which are
not overdue or are being diligently contested in good
faith by appropriate proceedings;
(c) any Lessor Lien; and
(d) rights of others under any sub-lease or other arrangements
to the extent expressly permitted under Section 8.4;
but only if (in the case of both (a) and (b)) (i) adequate reserves have been
provided by Lessee for the payment of such Taxes or obligations; and (ii) such
proceedings, or the continued existence of the lien, do not give rise to any
risk of the sale, forfeiture or other loss of the Aircraft or any interest
therein or of criminal liability on the part of Lessor or Owner.
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PERMITTED SUB-LEASE means any sub-lease of the Aircraft to a Permitted
Sub-Lessee to which Lessor has consented as provided for in Section 8.4(a).
PERMITTED SUB-LESSEE means any sub-lessee of the Aircraft to which Lessor has
consented as provided in Section 8.4(a).
PERSON means any individual person, any form of corporate or business
association, trust, Government Entity, or organization or association of which
any of the above is a member or a participant.
PRE-APPROVED BANK has the meaning given in the Aircraft Lease Agreement.
PRE-DELIVERY PROCEDURE means the procedure leading to Delivery as specified in
Schedule 4.
REDELIVERY LOCATION has the meaning given in the Aircraft Lease Agreement.
REGULATIONS means any Law or regulation, official directive or recommendation,
mandatory requirement, or contractual undertaking, or airworthiness
requirements or limitations, which applies to Lessee or the Aircraft and any
Law or regulation, official directive or recommendation or mandatory
requirement which applies to Lessor, Owner, Financing Parties' Representative
or GECAS.
RENT means the basic monthly "Rent", as defined in Schedule B of the Aircraft
Lease Agreement, and payable pursuant to Section 5.3.
RENT COMMENCEMENT DATE has the meaning given in the Aircraft Lease Agreement.
RENTAL PERIOD means each period ascertained in accordance with Section 5.2.
RENT DATE means the first day of each Rental Period.
REPLACEMENT APU means an "APU" that has duly replaced the APU in accordance
with the requirements of Section 8.11(b).
REPLACEMENT ENGINE means an "Engine" that has duly replaced an "Engine" in
accordance with the requirements of Section 8.11(b).
REQUIRED LC EXPIRY DATE means the date being 91 days after the Expiry Date.
RETURN OCCASION means the date on which the Aircraft is redelivered to Lessor
in accordance with Section 12.
SCHEDULED DELIVERY DATE has the meaning given in the Aircraft Lease
Agreement.
SCHEDULED DELIVERY MONTH has the meaning given in the Aircraft Lease
Agreement.
SCHEDULED DELIVERY WEEK has the meaning given in the Aircraft Lease
Agreement.
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SCHEDULED EXPIRY DATE has the meaning given in the Aircraft Lease Agreement.
SECURITY INTEREST means any mortgage, chattel mortgage, security interest,
charge, pledge, lien, conditional sale agreement, title retention agreement,
equipment trust agreement, encumbrance, assignment, hypothecation, right of
detention, right of set-off or any other agreement or arrangement having the
effect of conferring security.
STATE OF DESIGN has the meaning specified in the Aircraft Lease Agreement.
STATE OF INCORPORATION means the United States and the state of
organization of the applicable Person as identified in the heading of the
Aircraft Lease Agreement.
STATE OF REGISTRY means the United States.
SUBSIDIARY means:
(a) in relation to any reference to financial statements, any
Person whose financial statements are consolidated with the
accounts of Lessee in accordance with GAAP; and
(b) for any other purpose, an entity from time to time of
which another has direct or indirect control or owns
directly or indirectly more than 50 percent of the voting
share capital or similar equity interests.
SUPPLEMENTAL RENT means, as and if applicable, all amounts payable under the
Lease in respect of each of Airframe Supplemental Rent, Engine Supplemental
Rent, Engine LLP Supplemental Rent, APU Supplemental Rent and Landing Gear
Supplemental Rent.
TAXES means any and all present and future taxes, duties, withholdings,
levies, assessments, imposts, fees and other governmental charges of all kinds
(including any value added or similar tax and any stamp, documentary, license,
registration or similar fees or tax) imposed by a Government Entity, together
with any penalties, fines, surcharges and interest thereon and any additions
thereto.
TAX INDEMNITEE has the meaning given in the Aircraft Lease Agreement.
TECHNICAL REPORT means a monthly report of the Flight Hours, Cycles, Engine
Flight Hours and Engine Cycles operated by the Airframe and Engines in respect
of each calendar month substantially in the form attached as Schedule 15.
TERM means the period commencing on the Delivery Date and ending on the Expiry
Date.
UCC means the Uniform Commercial Code as in effect in the State of New York.
UNFORESEEN EVENT means:
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(a) civil disturbance or act of any Government Entity;
(b) natural disaster or any other act of God;
(c) Law of, or any allocation or other action by, a Government
Entity or any unexpected shortage of labor, materials or
facilities affecting the Aircraft;
(d) any damage or Defect;
(e) labor disputes;
(f) breach of contract by any Person (other than Lessor), or
other failure to deliver or redeliver the Aircraft by any
Person (whether or not a breach) with possession or control
of the Aircraft (other than by Lessor, if it has possession
and control of the Aircraft), including any failure to
deliver or delay in-delivery by any prior lessee, any seller
of the Aircraft or any Person performing modifications or
maintenance to the Aircraft and any breach by any prior
lessee, seller or modification or maintenance performer or
failure to cooperate by any prior lessee, seller or
modification or maintenance performer, or any "excusable" or
"inexcusable" delay under any previous lease, purchase or
modification or maintenance agreement for the Aircraft, or
any purchase or modification or maintenance agreement for the
Aircraft terminating prior to Delivery (including due to
Lessor or an Affiliate of Lessor voluntarily terminating such
agreement);
(g) delays in obtaining the Aircraft or any equipment or
services for the Aircraft;
(h) any delay due to Air Authority certifications; or
(i) any other cause beyond the control of Lessor or not
occasioned by Lessor's gross negligence or willful
misconduct.
UNITED STATES means the United States of America.
U.S.C. means the United States Code.
1-13
SCHEDULE 2
REPRESENTATIONS AND WARRANTIES
1.1 LESSEE'S REPRESENTATIONS AND WARRANTIES
Lessee's representations and warranties to Lessor as of the date of execution
of the Lease and the Delivery Date are as follows:
(a) STATUS: It is duly organized, validly existing and in good
standing in its State of Incorporation.
(b) NON-CONFLICT: Execution, delivery and performance of
the Lease do not contravene or breach any Regulation
applicable to Lessee.
(c) POWER AND AUTHORITY: It has all corporate and other power and
authority to execute, deliver and perform the Lease, and the
Lease has been duly authorized, executed and delivered by
Lessee.
(d) LEGAL VALIDITY: The Lease is its legal, valid and
binding obligation, enforceable against Lessee in
accordance with its terms.
(e) NO EVENT OF DEFAULT: No Event of Default has occurred and is
continuing or would occur because of Delivery.
(f) LITIGATION: It is not involved in any litigation or other
dispute which could materially and adversely affect its
financial condition or its ability to perform its obligations
under the Lease.
(g) FINANCIAL INFORMATION: Its audited financial statements most
recently delivered to Lessor:
(i) have been prepared in accordance with GAAP; and
(ii) are true and correct and present fairly the financial
condition and results of operations of Lessee as at
the date thereof and for the period then ending.
(h) FULL DISCLOSURE: Neither the audited financial statements
referred to in paragraph (g) nor any other financial,
operational or credit related information provided to
Lessor by Lessee for the purposes of the Lease contains as
of the date thereof any untrue statement of a material
fact or omits to state any material fact necessary in
order to make the statements therein not misleading in the
light of the circumstances under which they were made.
2-1
(i) LOCATION: Lessee's chief executive office (as that term is
defined in Article 9 of the UCC) is located at the address
set forth in the heading of the Aircraft Lease Agreement;
and the records of the Lessee concerning the Aircraft are
maintained at such chief executive office or at the
Habitual Base of the Aircraft.
(j) CERTIFICATED AIR CARRIER: Lessee is a Certificated Air
Carrier and Lessor, as lessor of the Aircraft to Lessee,
is entitled to the benefits of Section 1110 of Title 11
of the U.S.C. with respect to the Aircraft.
(k) CITIZEN OF THE UNITED STATES: Lessee is a "citizen of the
United States" as defined in Section 40102 of Title 49
of the U.S.C.
(1) ERISA: Lessee is not engaged in any transaction in
connection with which it could be subjected to either a
civil penalty assessed pursuant to Section 502 of ERISA or
any tax imposed by Section 4975 of the Internal Revenue
Code; no material liability to the Pension Benefit
Guaranty Corporation has been or is expected by Lessee to
be incurred with respect to any employee pension benefit
plan (as defined in Section 3 of ERISA) maintained by
Lessee or. by any trade or business (whether or not
incorporated) which together with Lessee would be treated
as a single employer under Section 4001 of ERISA and
Section 414 of the Internal Revenue Code; there has been
no reportable event (as defined in Section 4043(b) of
ERISA) with respect to any such employee pension benefit
plan; no notice of intent to terminate any such employee
pension benefit plan has been filed or is expected to be
filed, nor has any such employee pension benefit been
terminated; no circumstance exists or is anticipated that
constitutes or would constitute grounds under Section 4042
of ERISA for the Pension Benefit Guaranty Corporation to
institute proceedings to terminate, or to appoint a
trustee to manage the administration of, such an employee
pension benefit plan; and no accumulated funding
deficiency (as defined in Section 302 of ERISA or Section
412 of the Internal Revenue Code), whether or not waived,
exists with respect to any such employee pension benefit
plan.
(m) MATERIAL ADVERSE CHANGE: there has been no material adverse
change in the financial condition or operations of Lessee
and Lessee Affiliates or in the ability of Lessee to
comply with its obligations under the Lease since the date
of the financial statements most recently provided to
Lessor on or prior to the date of the Aircraft Lease
Agreement.
1.2 LESSOR'S REPRESENTATIONS AND WARRANTIES
Lessor's representations and warranties to Lessee as of the date of execution
of the Lease and the Delivery Date are as follows:
(a) STATUS: It is duly organized, validly existing and in good standing
in its State of Incorporation.
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(b) NON-CONFLICT: Execution, delivery and performance of the
Lease do not contravene or breach any Regulation
applicable to Lessor.
(c) POWER AND AUTHORITY: It has all corporate and other power and
authority to execute, deliver and perform the Lease, and the
Lease has been duly authorized, executed and delivered by
Lessor.
(d) LEGAL VALIDITY: The Lease is its legal, valid and
binding obligation, enforceable against Lessor in
accordance with its terms.
(e) CITIZEN OF THE UNITED STATES: Lessor is a "citizen of the
United States" as defined in Section 40102 of Title 49 of
the U.S.C. and the FAR.
2-3
SCHEDULE 3
CONDITIONS PRECEDENT
PART A - LESSOR CONDITIONS PRECEDENT
The conditions precedent to Lessor's obligation to deliver and to commence the
leasing of the Aircraft are as follows. All documents delivered to Lessor
pursuant to this Schedule 3 will be in English:
1.1 PRELIMINARY CONDITIONS
Lessor will receive from Lessee, not later than two Business Days prior to the
Scheduled Delivery Date, each of the following, satisfactory in form and
substance to Lessor:
(a) OPINIONS(S): forms of the opinion(s) substantially in the
form of Schedule 8 that will be issued on the Delivery
Date by legal counsel(s) reasonably acceptable to Lessor
with respect to the laws of the State of New York, the
state of the location of Lessee's chief executive offices
and the general corporate laws of the State of
Incorporation;
(b) APPROVALS: evidence of the issue of each approval, license
and consent, if any, which is required in relation to, or
in connection with the performance by Lessee of any of its
obligations under the Lease;
(c) IMPORT: evidence that any required license, and all
customs formalities; relating to the import of the
Aircraft into the Habitual Base have been obtained or
complied with, and that the import of the Aircraft into
the Habitual Base is exempt from Taxes;
(d) PROCESS AGENT: a letter from the process agent appointed by
Lessee in the Lease accepting that appointment;
(e) LICENSES: copies of Lessee's air transport license, air
carrier operating certificate, air operator's
certificates, including authority to operate the Aircraft
under FAR Part 121, and a Certificate of Public
Convenience and Necessity issued under Section 40102 of
Title 49 of U.S.C.;
(f) UCC: Financing Statements with respect to the Lease and
the Aircraft in a form reasonably acceptable to Lessor
shall have been executed and delivered by Lessee to Lessor
and duly filed in each jurisdiction reasonably requested
by Lessor;
(g) Letter of Credit (if applicable): the form of the Letter of
Credit;
(h) General: such other documents as Lessor may reasonably
request.
3-1
1.2 FINAL CONDITIONS
(a) Final Documents: Lessor shall receive on or before the
Delivery Date each of the following:
(i) CERTIFICATE OF TECHNICAL ACCEPTANCE AND LEASE
SUPPLEMENT NO. 1: each of the Certificate of
Technical Acceptance and Lease Supplement No. 1,
dated and fully completed, and executed by Lessee,
and, in the case of Lease Supplement No. 1, filed
for recording at the FAA (together with the CTA);
(ii) OPINIONS: a signed original (or facsimile
transmission thereof) of each of the opinions
referred to in Section 1.1(a) of this Schedule,
dated the Delivery Date;
(iii) PAYMENTS: all sums due to Lessor under the Lease on
or before the Delivery Date, including the first
payment of Rent and, if applicable, the balance of
the Deposit;
(iv) INSURANCE: certificates of insurance, an opinion and
undertaking from Lessee's insurance broker and other
evidence reasonably satisfactory to Lessor that
Lessee is taking the required steps to ensure due
compliance with the provisions of the Agreement as to
Insurance with effect on and after the Delivery Date;
(v) FINANCIAL INFORMATION: the latest Financial
Information of Lessee requested by Lessor;
(vi) LETTER OF CREDIT (if applicable): the Letter of
Credit;
(vii) GUARANTEE (if applicable): the Guarantee, duly
executed and delivered by the Guarantor, and an
opinion of legal counsel acceptable to Lessor in
respect of the Guarantee in form and substance
acceptable to Lessor and its legal counsel;
(viii) LESSEE'S MAINTENANCE PROGRAM: such information and
documents relating to the Lessee's Maintenance
Program as Lessor may reasonably require;
(ix) FILINGS: evidence that on the Delivery Date all
filings, registrations, recordings and other actions
have been or will be taken which are necessary or
advisable to ensure the validity, effectiveness and
enforceability of the Lease and to protect the
interests of Owner and, if applicable, the Financing
Parties in the Aircraft, any Engine or any Part and
in the Lease;
(x) FAA OPINION: evidence that there will be issued an
opinion of or other counsel reasonably acceptable
to Lessor who are recognized specialists with
regard to FAA registration matters in a form
reasonably acceptable to Lessor as
3-2
to the due filing for recordation of the Lease
and, if applicable, the Financing Documents,
(the costs for which shall be paid by Lessee);
(xi) CERTIFICATE OF LEASE TERMINATION: a certificate of
lease termination executed by .a duly authorized
officer of Lessee substantially in the form of
Schedule 11 acknowledging that the Lease is no
longer in effect with respect to the Aircraft and
Engines, which certificate Lessor will hold in
escrow to be filed at the FAA upon the expiration
or other termination of the Lease;
(xii) ACKNOWLEDGEMENT AND AGREEMENT RE ASSIGNMENT (if
applicable): an acknowledgement of and certain
agreements with respect to the assignment by Lessor
of this Lease to Owner and Financing Parties'
Representative in the form previously provided to
Lessee or as Owner or Financing Parties'
Representative may otherwise reasonably request; and
(xiii) GENERAL: such other documents as Lessor may
reasonably request;
(c) REPRESENTATIONS/WARRANTIES: the representations and
warranties of Lessee in Schedule 2 shall be true and
correct in all material respects, and would be true and
correct in all material respects if repeated on Delivery;
and
(d) NO DEFAULT: no Default shall have occurred and be
continuing on Delivery or could reasonably be expected to
result from the leasing of the Aircraft to Lessee under
the Lease.
PART B - LESSEE CONDITIONS PRECEDENT
The conditions precedent to Lessee's obligation to accept and to commence the
leasing of the Aircraft are as follows. All documents delivered to Lessee
pursuant to this Schedule 3 will be in English.
(a) FINAL DOCUMENTS: Lessee shall receive on or before the
Delivery Date for the Aircraft each of the following:
(i) LEASE SUPPLEMENT NO. 1: Lease Supplement No. 1,
dated and executed by Lessor and filed for
recording at the FAA (together with the CTA); and
(ii) ACKNOWLEDGEMENT RE QUIET ENJOYMENT: if Lessee is
required to deliver an acknowledgement of or
agreement with respect to the assignment by
Lessor of the Lease to Owner or Financing
Parties' Representative, an agreement by each
such Person (Owner, Financing Parties'
Representative or both, as the case may be) as to
itself to the effect set forth in Section 7.1;
3-3
(iii) REPRESENTATIONS/WARRANTIES: the representations and
warranties of Lessor in Schedule 2 shall be true and
correct in all material respects, and would be true
and correct in all material respects if repeated on
Delivery; and
(iv) DELIVERY CONDITION REQUIREMENTS: tender by Lessor
of delivery of the Aircraft in compliance with the
Delivery Condition Requirements.
3-4
SCHEDULE 4
PRE-DELIVERY PROCEDURES AND DELIVERY CONDITION
REQUIREMENTS - PART 1 (NEW AIRCRAFT)
1. LICENSES
(a) It is the responsibility of Lessee to obtain all licenses,
permits or approvals necessary to export or transport the
Aircraft from the Delivery Location.
(b) Lessor will provide Lessee with any required data and
information for the purposes of obtaining any such licenses,
permits or approvals.
2. INSPECTION
Except as otherwise provided in the Aircraft Lease Agreement:
(a) Subject to any applicable purchase agreement, Lessee may
inspect the Aircraft (including such rights as Lessor has
to be present and inspect, on an ongoing basis, the
manufacture of the Aircraft and including a demonstration
flight at no expense to Lessee with up to two (2)
representatives of Lessee on the Aircraft as observers) to
ensure that the Aircraft fulfils the Delivery Condition
Requirements.
(b) If Lessee's inspection of the Aircraft shows that the
Aircraft does not fulfil the Delivery Condition
Requirements, Lessor will correct any defects and make the
Aircraft available for re-inspection by Lessee provided
that, in Lessor's reasonable opinion, it is not
impracticable or prohibitively expensive to correct the
defect.
(c) If Lessor notifies Lessee that it does not intend to
correct the defect, either party may terminate the Lease,
and upon such termination neither party shall have any
further liability to any party under this Lease, except
that Lessor shall promptly return to Lessee the Deposit
and/or the Letter of Credit, if any, to Lessor.
3. INDEMNITY
Lessee is responsible for and will indemnify each Indemnitee against
all Losses arising from death or injury to any observer or any
employee of Lessee in connection with the inspection of the Aircraft.
4-1
SCHEDULE 4
PRE-DELIVERY PROCEDURES AND DELIVERY CONDITION
REQUIREMENTS - PART 2 (USED AIRCRAFT)
1. LICENSES
(a) It is the responsibility of Lessee to obtain all licenses,
permits or approvals necessary to export or transport the
Aircraft from the Delivery Location.
(b) Lessor will provide Lessee with my required data and
information for the purposes of obtaining any such
licenses, permits or approvals.
2. INSPECTION
Except as otherwise provided in the Aircraft Lease Agreement:
(a) Subject to any applicable purchase agreement or prior
lease, Lessee may inspect the Aircraft (including a
demonstration flight at no expense to Lessee with up to
two (2) representatives of Lessee on the Aircraft as
observers) to ensure that the Aircraft fulfils the
Delivery Condition Requirements.
(b) If Lessee's inspection of the Aircraft shows that the
Aircraft does not fulfil the Delivery Condition
Requirements, Lessor will correct any defects and make the
Aircraft available for re-inspection by Lessee provided
that, in Lessor's reasonable opinion, it is not
impracticable or prohibitively expensive to correct the
defect.
(c) If Lessor notifies Lessee that it does not intend to
correct the defect, either party may terminate the Lease,
and upon such termination neither party shall have any
further liability to any party under this Lease, except
that Lessor shall promptly return to Lessee the Deposit
and/or the Letter of Credit, if any, to Lessor.
3. INDEMNITY
Lessee is responsible for and will indemnify each Indemnitee against
all Losses arising from death or injury to any observer or any
employee of Lessee in connection with the inspection of the Aircraft.
4-2
SCHEDULE 5
CERTIFICATE OF TECHNICAL ACCEPTANCE - PART 1 (NEW AIRCRAFT)
This Certificate of Technical Acceptance is delivered, on the date set out
below by _____________ ("Lessee") to ______________ ("Lessor") pursuant to the
Aircraft Lease Agreement dated ______________ between Lessor and Lessee (the
"Lease"). The capitalized terms used in this Certificate shall have the
meaning given to such terms in the Lease.
DETAILS OF ACCEPTANCE
Lessee hereby confirm to Lessor that Lessee has at [ ] o'clock on this
____ day of ____________, at technically accepted the following, in accordance
with the provisions of the Lease:
_________ Aircraft, Manufacturer's Serial Number _________;
_________ Engines:
Engine Number Manufacturer's Serial Number _________
[To be completed at Delivery]
(each of which has 750 or more rated take off horsepower or the equivalent of
such horsepower)
Fuel Status: Kilos/lbs _________; and
Loose Equipment Check List: in accordance with the list signed by Lessor and
Lessee and attached hereto.
Aircraft Documents and Records: in accordance with the list signed by Lessor
and Lessee and attached hereto.
LOPA drawing attached.
HOURS AND CYCLES DATA (AS OF DELIVERY DATE)
Airframe:
Time Since New: _________ Cycles Since New: _________
Landing Gear (Main and Nose)
Time Since New: [, Center] Cycles Since New: _________
Engines
Position: Time Since New: ___________
Cycles Since New: _________
________________________
Auxiliary Power Unit:
Number of Flight Hours/APU Hours
(as applicable) since New: _________
5-1
ACCEPTANCE:
Lessee hereby confirms that the Aircraft, Engines, Parts and Aircraft
Documents and Records are technically acceptable to it, satisfy all of the
Delivery Condition Requirements and are in the condition for delivery and
acceptance as required under the Lease.
IN WITNESS WHEREOF, Lessee and Lessor have, by their duly authorized
representative, executed this Certificate of Technical Acceptance on the date
in paragraph 1 above.
LESSEE:___________________________
By:_______________________________
Title:____________________________
LESSOR:___________________________
By:_______________________________
Title:____________________________
5-2
SCHEDULE 5
CERTIFICATE OF TECHNICAL ACCEPTANCE - PART 2 (USED AIRCRAFT)
This Certificate of Technical Acceptance is delivered, on the date set out
below by _____________ ("Lessee") to ______________ ("Lessor") pursuant to the
Aircraft Lease Agreement dated ______________ between Lessor and Lessee (the
"Lease"). The capitalized terms used in this Certificate shall have the
meaning given to such terms in the Lease.
DETAILS OF ACCEPTANCE
Lessee hereby confirm to Lessor that Lessee has at [ ] o'clock on this ____
day of ____________, at ____________ technically accepted the following, in
accordance with the provisions of the Lease:
_________ Aircraft, Manufacturer's Serial Number _________;
_________ Engines:
Engine Number Manufacturer's Serial Number _________
[To be completed at Delivery]
(each of which has 750 or more rated take off horsepower or the equivalent of
such horsepower)
Fuel Status: Kilos/lbs _________; and
Loose Equipment Check List: in accordance with the list signed by Lessor and
Lessee and attached hereto.
Aircraft Documents and Records: in accordance with the list signed by Lessor
and Lessee and attached hereto.
HOURS AND CYCLES DATA (as of Delivery Date)
Airframe:
Number of Hours since last Airframe Structural Check: ______ hours
"C" Check (or Equivalent)
Interval:_________________________
Time Since:_______________________
Landing Gear Overhaul:
Number of Cycles Since Last Overhaul:
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[____] Gear __________ cycles
Interval:______________________________
Engines:
Number of Hours Since Last Engine Refurbishment:
S/N__________:__________ hours
Hot Section Inspection:
Interval:______________________________
Time Since (S/N__________):____________
Time Remaining to First Restriction:
Engine SIN:
Hours:___________ Restrictions:__________
Cycles:__________ Restrictions:__________
Average Cycles in Life Limited Parts (see attached Schedule):__________
Auxiliary Power Unit:
Number of APU Hours since Last Heavy Shop Visit:
__________ hours Date accomplished____________________
Hot Section Inspection:
Interval:______________________________
Time Since:____________________________
Interior Equipment:
LOPA - attached________________________
Emergency drawing - attached____________________
Galley Equipment_______________________
5-4
ACCEPTANCE:
Lessee hereby confirms that the Aircraft, Engines, Parts and Aircraft
Documents and Records are technically acceptable to it, satisfy all of the
Delivery Condition Requirements and are in the condition for delivery and
acceptance as required under the Lease.
IN WITNESS WHEREOF, Lessee and Lessor have, by their duly authorized
representative, executed this Certificate of Technical Acceptance on the date
in paragraph 1 above.
LESSEE:
By:_______________________________
Title:____________________________
LESSOR:
By:_______________________________
Title:____________________________
By:_______________________________
Title:____________________________
5-5
SCHEDULE 6
[NOT APPLICABLE]
6-1
SCHEDULE 7
INSURANCE REQUIREMENTS
1.1 TYPES OF INSURANCE
The Insurances required to be maintained are as follows:
(a) HULL ALL RISKS of loss or damage while flying, taxiing and
on the ground with respect to the Aircraft on an agreed
value basis for not less than the Agreed Value and not more
than 110% of the Agreed Value and with a deductible not
exceeding the Deductible Amount;
(b) HULL WAR AND ALLIED PERILS, being such risks excluded from
the Hull All Risks Policy, to the fullest extent available
from the leading international insurance markets for the
Agreed Value; provided that, when the Aircraft is being
operated in or over the United States or Canada, coverage
may be limited to such coverage as is usual and customary
for comparable airlines, operating similar equipment in
similar circumstances, namely subject to the North American
buy-back;
(c) ALL RISKS (including War and Allied Risk except when on the
ground or in transit other than by air) property insurance
on all Engines and Parts when not installed on the Aircraft
for like kind and quality value and including engine test
and running risks; and
(d) COMPREHENSIVE AIRCRAFT THIRD PARTY, PROPERTY DAMAGE,
PASSENGER, BAGGAGE, CARGO AND MAIL AND AIRLINE GENERAL THIRD
PARTY (INCLUDING PRODUCTS) LEGAL LIABILITY for a combined
single limit (bodily injury/property damage) of an amount
not less than the Minimum Liability Coverage for the time
being for any one occurrence (but in respect of products and
personal injury liability, this limit may be an aggregate
limit for any and all losses occurring during the currency
of the policy). War and Allied Risks are also to be covered
under the policy in line with prudent market practice for
comparable airlines, operating rating similar equipment in
similar circumstances.
1.2 TERMS OF HULL AND SPARES INSURANCE
All required hull and spares insurance, so far as it relates to the Aircraft,
will:
(a) LOSS PAYEE: name Lessor, as loss payee (without imposing on
Lessor any obligation imposed on the insured, including the
liability to pay any calls, commissions or premiums);
(b) PAYMENT OF LOSSES: Losses will be payable in Dollars to
Lessor for all amounts up to the Agreed Value and to Lessee
for any excess above the Agreed Value (which excess shall
not exceed 10% of the Agreed Value), except where the
insurance payment does not
7-1
exceed the Damage Notification Threshold, and no Default is
in existence, in which case the loss will be settled with
and paid to Lessee;
(c) 50/50 PROVISION: if separate Hull "all risks" and "war
risks" insurances are arranged, include a 50/50 provision
in accordance with market practice (AVS. 103 is the
current London market language); and
(d) NO OPTION TO REPLACE: confirm that the insurers are not
entitled to replace the Aircraft in the event of an insured
Event of Loss and are not entitled to replace any Engine in
the event of an Engine Event of Loss with respect to such
Engine.
1.3 TERMS OF LIABILITY INSURANCE
All required liability insurances will:
(a) ADDITIONAL INSUREDS: include each Indemnitee, as additional
insureds for its respective rights and interests, warranted,
each as to itself only, no operational interest (without
imposing on any such Person any obligation imposed on the
insured, including the liability to pay any calls,
commissions or premiums);
(b) SEVERABILITY: include a Severability of interests clause
which provides that the insurance, except for the limit of
liability, will operate to give each insured the same
protection as if there were a separate policy issued to each
insured; and
(c) PRIMARY POLICY: contain a provision confirming that the
policy is primary without right of contribution and the
liability of the insurers will not be affected by any other
insurance of which Lessor, any Indemnitee or Lessee has the
benefit so as to reduce the amount payable to the additional
insureds under such policies.
1.4 TERMS OF ALL INSURANCES
All Insurances will:
(a) INDUSTRY PRACTICE: be in accordance with standard industry
practice for airlines operating similar aircraft in similar
circumstances;
(b) DOLLARS: provide cover denominated in Dollars;
(c) WORLDWIDE: operate on a worldwide basis subject to such
limitations and exclusions as are in line with industry
practice obtained by prudent United States-based
international air carriers;
(d) BREACH OF WARRANTY: provide that, in relation to the
interests of each of the additional assureds, the Insurances
will not be invalidated by any act or omission by Lessee, or
any other Person other than the respective additional
assured seeking protection and shall
7-2
insure the interests of each of the additional assureds
regardless of any breach or violation by Lessee, or any
other Person other than the respective additional assured
seeking protection of any warranty, declaration or
condition, contained in such Insurances;
(e) SUBROGATION: provide that the insurers will hold harmless
and waive any rights of recourse or subrogation against the
additional insureds to tile extent Lessee has waived its
rights against the additional insureds in the Lease;
(f) PREMIUMS: provide that the additional insureds will have no
obligation or responsibility for the payment of any premiums
due (but reserve the right to pay the same should any of
them elect so to do) and that the insurers will not exercise
any right of set-off, counter claim or other deduction, by
attachment or otherwise, in respect of any premium due
against the respective interests of the additional insureds
other than outstanding premiums relating to the Aircraft,
any Engine or Part the subject of the relevant claim;
(g) CANCELLATION/CHANGE: provide that the Insurances will
continue unaltered for the benefit of the additional insured
for at least 30 days after written notice by registered mail
or telex of any cancellation, change, event of non-payment
of premium or installment thereof has been sent by
insurer(s) to Lessor, or where an insurance broker is
appointed to the insurance broker who shall promptly send on
such notice to Lessor, except in the case of war risks for
which 7 days (or such lesser period as is or may be
customarily available in respect of war risks or allied
perils) will be given, or in the case of war between the 5
great powers or nuclear peril for which termination is
automatic; and
(h) [NOT APPLICABLE]
(i) [INTENTIONALLY OMITTED.]
(j) INDEMNITIES: accept and insure the indemnity provisions
of the Lease to the extent of the risks covered by the
policies.
1.5 DEDUCTIBLES
Lessee shall be responsible for any and all deductibles under the Insurances.
1.6 APPLICATION OF INSURANCE PROCEEDS
The Insurances will be endorsed to provide for payment of proceeds as follows:
(a) EVENT OF LOSS: all insurance payments up to the Agreed Value
received as the result of an Event of Loss occurring during
the Term will be paid to Lessor as loss payee and any amount
in excess of the Agreed Value (which excess shall not exceed
10% of the Agreed Value) shall be paid to Lessee;
7-3
(b) EXCEEDING DAMAGE NOTIFICATION THRESHOLD: all insurance
proceeds of any damage or loss to the Aircraft, any Engine
or any Part occurring during the Term not constituting an
Event of Loss and in excess of the Damage Notification
Threshold will be paid to the appropriate repair facility,
and applied in payment (or paid to Lessee and/or Lessor as
reimbursement) for repairs or replacement property upon
Lessor being satisfied that the repairs or replacement have
been effected in accordance with the Lease.
(c) BELOW DAMAGE NOTIFICATION THRESHOLD: insurance proceeds in
amounts below the Damage Notification Threshold shall be
paid by the insurer directly to Lessee;
(d) LIABILITY PROCEEDS: all insurance proceeds in respect of
third party liability will be paid by the insurers to the
relevant third party in satisfaction of the relevant
liability or to Owner, Lessor, Financing Partners'
Representative or Lessee, as the case may be, in
reimbursement of any payment so made;
(e) DEFAULT: notwithstanding any of the foregoing paragraphs, if
at the time of the payment of any such insurance proceeds a
Default has occurred and is continuing, all such proceeds
will be paid to Lessor, Owner or Financing Parties'
Representative, as the case may be, or retained to be
applied toward payment of any amounts which may be or become
payable by Lessee in such order as Lessor or Owner, as the
case may be, may elect until such time as no Default is
continuing and then applied as described above; and to. the
extent that insurance proceeds are paid to Lessee, Lessee
agrees to hold such proceeds in trust and comply with the
foregoing provisions and apply or pay over such proceeds as
so required.
1.7 UNITED STATES GOVERNMENTAL INDEMNITY
Notwithstanding any of the foregoing paragraphs, in the event of a Permitted
Sub-Lease to, or a requisition of use by, the United States or any
Governmental Entity whose obligations have the full faith and credit of the
federal Government of the United States, Lessor agrees to accept in lieu of
insurance required hereunder indemnification or insurance from the United
States or such a Governmental Entity in a form reasonably acceptable to
Lessor and Owner and against such risks and in such amounts and on such terms
such that when added to the Insurance maintained by Lessee, Lessee is in full
compliance with the requirements of Section 9 and this Schedule.
7-4
SCHEDULE 8
FORM OF LESSEE'S AND GUARANTOR'S LEGAL OPINION
[Lessor]
[Owner]
[Financing Parties' Representative]
Ladies and Gentlemen:
1. You have asked us to render an opinion in connection with the
transaction governed by or subject to, inter alia, the following
documents.
(a) the Lease as defined below;
(b) the [Articles/Certificate of Incorporation and By-laws]* of Lessee;
and
[*Counsel should amend this reference as necessary to describe the
actual constitutional documents of Lessee].
(c) all other documents, approvals and consents of whatever nature and
wherever kept which, it was, in our judgement and to our knowledge,
necessary or appropriate to examine to enable us to give the
opinion expressed below.
Words and expressions used and not otherwise defined herein will bear
the same meanings as defined in an Aircraft Lease Agreement dated
__________, _____ between __________ ("Lessor") and __________
("Lessee") in respect of one __________ aircraft with manufacturer's
serial number __________ together with the __________ installed
__________ engines (the "Aircraft"). As used herein the term "Lease"
means and includes the Aircraft Lease Agreement which incorporates the
Common Terms Agreement (as defined therein) and Lease Supplement
No.__________. Also, for the purposes of this opinion, the term
"Lease" includes the Acknowledgment and Agreement dated as of the
date hereof executed by Lessee in favor of Owner and Financing Parties'
Representative.
2. Having considered the documents listed in paragraph 1 above, and having
regard to the relevant laws of __________ we are pleased to advise that
in our opinion:
(a) Lessee is a company duly incorporated and in good standing under
the laws of ____________ and is qualified to do business as a foreign
corporation in each jurisdiction where failure to so qualify would
have a materially adverse effect on Lessee's business or its
ability to perform its obligations under the Lease;
(b) Lessee has the corporate power to enter into and perform, and has
taken all necessary corporate action to authorize the entry into,
and the execution, delivery and performance by it of, the Lease and
the transactions contemplated by the Lease;
8-1
(c) the entry into and performance by Lessee of, and the transactions
contemplated by, the Lease do not and will not (x) conflict with
any laws binding on Lessee, (y) conflict with the
[Articles/Certificate of Incorporation or By-laws] of Lessee; or
(z) conflict with or result in default under any agreement or
instrument which is binding upon Lessee or any of its assets or
result in the creation of any Security Interest on any of its
assets;
(d) no authorizations, consents, licenses, approvals and registrations
(other than those which have been obtained and of which copies are
attached hereto) are necessary or desirable to be obtained from any
governmental or other regulatory authorities in the United States
or any other jurisdiction having jurisdiction over Lessee, its
operations or its properties to enable Lessee (x) to enter into and
perform the transactions contemplated by the Lease, (y) to operate
the Aircraft in the United States and on international flights for
the transport of fare-paying passengers, or (z) to make the
payments provided for in the Lease;
(e) except for the filing and recordation of [a xxxx of sale in favor of
the Owner,] the Financing Documents and the Lease with the FAA
(which filing has been duly made on or before this date) and the
filing of Financing Statements in it is not necessary or desirable,
to ensure the priority, validity and enforceability of all the
obligations of Lessee under the Lease, as against Lessee and all
third parties, or to perfect the interests of Lessor, Owner or
Financing Parties' Representative in and to the Aircraft or the
Lease, that the Lease be filed, registered, recorded or notarized
in any public office or elsewhere or that any other instrument be
signed, delivered, filed, registered or recorded, that any tax or
duty be paid or that any other action whatsoever be taken;
(f) the Lease has been duly executed and delivered on behalf of
Lessee and constitutes the legal, valid and binding obligation
of Lessee, enforceable against Lessee in accordance with its terms;
(g) [NOT APPLICABLE];
(h) there is no applicable usury or interest limitation law in
________________ applicable to payments in accordance with the
Lease;
(i) there are no registration, stamp or other taxes or duties of any
kind payable in ________________ connection with the execution,
performance or enforcement by legal proceedings of the Lease or the
Guaranty;
(j) the choice of New York law to govern the Lease will be upheld as a
valid choice of law in any action in the courts of ______________;
(k) the consent to the jurisdiction by Lessee contained in the Lease is
valid and binding on Lessee;
8-2
(l) Lessee is a Certificated Air Carrier;
(m) Lessee is a "citizen of the United States" as defined in 49 U.S.C.
Section 40102(a)(15);
(n) Lessee's "chief executive office" (as referenced in the Uniform
Commercial Code adopted in the State of _________________) is
_______________________;
(o) Lessor will not violate any law or regulation of the States of
_______________ or New York or any federal laws or regulations of
the United States of America and Lessor will not become liable to
income tax in the State of solely by reason of Lessor entering into
the Lease with Lessee or performing its obligations thereunder or
enforcement of its rights thereunder;
(p) It is not necessary for Lessor to establish a place of business or
be licensed or qualified to do business in the State of
___________________ or New York in order for Lessor to enforce any
provisions of the Lease; and
(q) Lessor is entitled to the benefits of Section 1110 of Title 11 of
the U.S.C. with respect to the Aircraft and the Lease.
Very truly yours,
[If there is a Guarantor/Guarantee the opinion must also include paragraphs
(a), (b), (c), (d), (e), (f), (g), (h), (i), (j), (k), (o) and (p) revised to
be applicable to the Guarantor/Guarantee]
8-3
SCHEDULE 9
EVENTS OF DEFAULT
Each of the following events or conditions constitutes an Event of Default:
(a) NON-PAYMENT: Lessee fails to make any payment of Rent, Supplemental
Rent or any other amount payable under the Lease on the due date
and such failure continues for three (3) Business Days or more; or
(b) INSURANCE: Lessee fails to comply with any provision of Section 9
(other than the requirement to provide Lessor with evidence of
renewal of any policy on or before the renewal date where the
policy has actually been renewed on or prior to such date) or
Schedule 7, or any insurance required to be maintained under the
Lease is cancelled or terminated, or a notice of cancellation is
given in respect of any such insurance; or
(c) BREACH: (i) Lessee fails to provide Lessor with evidence of renewal
of any insurance policy on or before the renewal date for that
policy where the policy has actually been renewed on or prior to
such date and such failure continues for 24 hours after notice from
Lessor to Lessee of such failure to comply; or (ii) Lessee fails to
comply with any other provision of the Lease not referenced in this
Schedule 9 and, if such failure is in the opinion of Lessor capable
of remedy, such failure continues for 30 days after notice from
Lessor to Lessee; or
(d) REPRESENTATION: any representation or warranty made (or deemed to
be repeated) by Lessee in or pursuant to the Lease or in any
document executed by Lessee in connection with or pursuant to the
Lease or in any document or in any certificate is or proves to have
been incorrect in any material respect when made or deemed to be
repeated; or
(e) CROSS-DEFAULT:
(i) any amount in respect of Financial Indebtedness of Lessee or
any Lessee Affiliate having a principal amount in excess of
Five Hundred Thousand Dollars ($500,000) is not paid when due;
(ii) any such Financial Indebtedness becomes due or capable of
being declared due prior to the date when it would otherwise
have become due; or becomes due as a result of an event of
default or termination event, howsoever described, on the
part of Lessee or any other Person prior to the date when it
would otherwise have become due; or
(iii) the security for any such Financial Indebtedness becomes
enforceable; or
9-1
(iv) any event of default or termination event, howsoever
described, occurs under any Other Agreement, or any other
lease, hire purchase, conditional sale or credit sale
agreement of Lessee or any Lessee Affiliate; or
(f) APPROVALS: any consent, authorization, license, certificate or
approval of or registration with or declaration to any Government
Entity required to be obtained or maintained by Lessee in
connection with the Lease and/or the operation of the Aircraft
(including any airline license or air transport license including
authority to operate the Aircraft under Part 121 of the FARs, a
Certificate of Convenience and Necessity issued under the Act and
any air carrier operating certificate issued under the Act) is
modified in a materially prejudicial manner oris withheld, or is
revoked, suspended, cancelled, withdrawn, terminated or not
renewed, or otherwise ceases to be in full force; or
(g) BANKRUPTCY, ETC:
(i) Lessee or any Lessee Affiliate consents to the appointment of
a custodian, receiver, trustee or liquidator of itself or all
or a material part of its property or its consolidated
property, or Lessee or any Lessee Affiliate admits in writing
its inability to, or is unable to, or does not, pay its debts
generally as they come due, or makes a general assignment for
the benefit of creditors, or Lessee or any Lessee Affiliate
files a voluntary, petition in bankruptcy or voluntary
petition seeking reorganization in a proceeding under any
bankruptcy or insolvency laws (as now or hereafter in
effect), or an answer admitting the material allegations of a
petition filed against Lessee in any such proceeding, or
Lessee or any Lessee Affiliate by voluntary petition, answer
or consent seeks relief under the provisions of any other
bankruptcy, insolvency or other similar law providing for the
reorganization or winding-up of debtors, or provides for an
agreement, composition, extension or adjustment with its
creditors, or any board of directors or shareholder action is
taken by Lessee or any Lessee Affiliate in furtherance of any
of the foregoing, whether or not the same is fully-effected
or accomplished; or
(ii) An order, judgement or decree is entered by any court
appointing, without the consent of Lessee or any Lessee
Affiliate,' a custodian, receiver, trustee or liquidator of
or sequestering any of Lessee's or any Lessee Affiliate's
property, and any such order, judgement or decree of
appointment or sequestration remains in effect, undismissed,
unstayed or unvacated for a period of 30 days after the date
of entry thereof or at any time an order for relief is
granted; or
(iii) An involuntary petition against Lessee or any Lessee
Affiliate or other proceeding under the United States Federal
Bankruptcy laws or other insolvency laws (as now or hereafter
in effect) is filed and is not withdrawn or dismissed
9-2
within 30 days thereafter or at any time an order for relief
is granted in such proceeding, or if, under the provisions of
any law providing for reorganization or winding-up of debtors
which may apply to Lessee or any Lessee Affiliate, any court
of competent jurisdiction assumes jurisdiction over, or
custody or control of, Lessee or any Lessee Affiliate or of
all or any material part of Lessee's or Lessee Affiliates'
property, and such jurisdiction, custody or control remains
in effect, unrelinquished, unstayed or unterminated for a
period of 30 days or at any time an order for relief is
granted in such proceeding; or
(h) SUSPENSION OF BUSINESS: Lessee suspends or ceases or takes
substantive steps to suspend or cease to carry on all or a material
part of its business as a Certificated Air Carrier (other than as a
result of a labor dispute with Lessee's employees); or
(i) RIGHTS AND REMEDIES: Lessee or any other Person claiming by or
through Lessee challenges the existence, validity, enforceability
or priority of the Lease or the rights of Lessor as lessor or of
Owner as owner in respect of the Aircraft or Financing Parties'
Representative as holder of a first priority Security Interest in
the Aircraft and the Lease; or
(j) CHANGE OF CONTROL: any single person or group of persons
acquire control of Lessee or Guarantor without the previous
consent in writing of Lessor; or
(k) DELIVERY: Lessee fails to comply with its obligation under Section
4 to accept delivery of the Aircraft or Lessee fails to comply with
its obligations under Section 2 of Part III of Schedule A to the
Aircraft Lease Agreement; or
(l) ADVERSE CHANGE: any event or series of events occurs which, in the
reasonable opinion of Lessor, could be expected to have a material
adverse effect on the financial condition or operations of Lessee
or Guarantor or on the ability of Lessee to comply with its
obligations under the Lease or on the ability of Guarantor to
comply with its obligations under the Guarantee; or
(m) Letter of Credit:
(i) the issuer of the Letter of Credit (if any) fails to make
any payment under that Letter of Credit when due; or
(ii) any such Letter of Credit is not in full force or, for any
reason ceases to constitute the legal; valid and binding
obligation of the issuer; or
(iii) any of the events listed in paragraph (g) above applies to
such issuer (references in those sub-paragraphs to Lessee
being deemed to be to the issuer); or
9-3
(iv) where applicable, any Letter of Credit is not renewed,
extended or reissued within the time, or replaced when,
required by Section 5.14; or
(v) any consent, authorization, license, certificate or approval
of or registration with or declaration to any Governmental
Entity required to be obtained or maintained by the issuer of
the Letter of Credit in connection with the Letter of Credit
is modified in a materially prejudicial manner or is
withheld, revoked, suspended, cancelled, withdrawn,
terminated or not renewed, or otherwise ceases to be in full
force; or
(vi) and each reference in this paragraph (in) to "the issuer"
shall include a reference to any confirming bank for the
Letter of Credit
(n) REDELIVERY: Lessee fails to return the Aircraft to Lessor on the
Expiry Date in accordance with Section 12; or
(o) LITIGATION: a judgement for the payment of money not covered by
insurance in excess of Six Hundred Fifty Thousand Dollars
($650,000) (or the equivalent thereof in other currencies) shall be
rendered against Lessee or any Lessee Affiliate and the same shall
remain undischarged for a period of 30 days, unless during such
period, execution of such judgement shall have been effectively
stayed by agreement of the parties involved or by court order or
such judgement shall have been adequately bonded; or
(p) GUARANTEE:
(i) any representation or warranty made by Guarantor is or proves
to have been incorrect in any material respect when made or
deemed to be repeated or Guarantor fails to make any payment
or comply with any other obligation under the Guarantee when
due; or
(ii) the Guarantor repudiates, revokes or claims that it has no
further obligations under the Guarantee or the Guarantee
ceases to be in full force or, for any reason, ceases to be
the legal, valid and binding obligation of Guarantor; or
(iii) any of the events listed in paragraph (f)(i) or (g) above
occurs in respect of Guarantor (and for purposes of this
paragraph(s), references in those paragraphs to Lessee shall
be deemed to be references to Guarantor); or
(q) UNLAWFUL: it becomes unlawful for Lessee to perform any of its
obligations under the Lease or the Lease becomes wholly or partly
invalid or unenforceable; or
(r) TRANSFER/LESSEE REQUIREMENTS: Lessee makes or permits any
assignment or transfer of the Lease, or any interest herein, or of
the right to possession of the Aircraft, the
9-4
Airframe, or any Engine, or any obligations under the Lease, or
Lessee subleases the Aircraft, in any case except as expressly
permitted in the Lease; or Lessee breaches any provision of Section
8.7; or
(s) ENGINE LOSS: Lessee fails to timely comply with its obligations
under Sections 8.11 (a) and 8.11 (b) with respect to an Engine
Event of Loss.
(t) OTHER: Such other events, if any, as may be specified in the
Aircraft Lease Agreement.
9-5
SCHEDULE 10
[NOT APPLICABLE]
10-1
SCHEDULE 11
FORM OF LEASE TERMINATION CERTIFICATE
The undersigned hereby certify that the Aircraft Lease Agreement dated as
of__________, ______ between the undersigned Lessor and undersigned Lessee,
and as further described in the Appendix attached hereto, has terminated
(except as described in Section 15.1 of the Common Terms Agreement
incorporated therein) and the aircraft and aircraft engines covered thereby
are no longer subject to the terms thereof. This certificate may be executed
in one or more counterparts each of which when taken together shall
constitute one and the same instrument.
DATED this___________ day of___________________, ________
LESSOR LESSEE
[INSERT LESSOR'S NAME] [INSERT LESSEE'S NAME]
-------------------- --------------------
By:_______________________ By:_______________________
Title:____________________ Title:____________________
11-1
SCHEDULE 12
FORM OF LEASE SUPPLEMENT NO. 1
LEASE SUPPLEMENT NO. 1, dated__________, ______
between_________________,
[a corporation organized under the laws of________________________]
[,not in its individual capacity, but solely as owner trustee] ("Lessor"),
and a ________________, corporation organized under the laws of the
___________________ ("Lessee").
Lessor and Lessee have previously entered into that certain Aircraft
Lease Agreement dated as of_________________, including the Common Terms
Agreement as defined therein (collectively, herein referred to as the
"Agreement" and the defined terms therein being hereinafter used with the
same meaning). The Agreement provides for the execution and delivery from
time to time of a Lease Supplement substantially in the form hereof for the
purpose of leasing the aircraft described below under the Agreement as and
when delivered by Lessor to Lessee in accordance with the terms thereof.
The Agreement and this Lease Supplement relate to the Aircraft, Engines
and Parts as more precisely described below and in the Certificate of
Technical Acceptance. A counterpart of the Agreement is attached hereto and
this Lease Supplement and the Agreement shall form one document.
In consideration of the premises and other good and sufficient
consideration, Lessor and Lessee hereby agree as follows:
1. Lessor hereby delivers and leases to Lessee under and pursuant to the
Agreement and Lessee hereby accepts, acknowledges receipt of possession and
leases from Lessor under and pursuant to the Agreement, that
certain__________ aircraft, and the____________ (___) ____________ Engines
(each of which Engines has 750 or more rated takeoff horsepower or the
equivalent of such horsepower) described in Schedule 1 hereto, together with
the Aircraft. Documents and Records described in the Agreement (the
"Delivered Aircraft").
2. The Delivery Date of the Delivered Aircraft is the date of this Lease
Supplement set forth in the opening paragraph hereof.
3. The Term for the Delivered Aircraft shall commence on the Delivery Date
and shall end on the Expiry Date, with respect to which the Scheduled Expiry
Date shall be [insert date].
4. The amount of Rent for the Delivered Aircraft is set forth in Schedule B
to the Agreement.
12-1
5. Lessee hereby confirms to Lessor that (i) the Delivered Aircraft and each
delivered Engine have been duly marked in accordance with the terms of
Section 8.6(a) of the Agreement, (ii) the Aircraft is insured as required by
the Agreement, (iii) the representations and warranties of Lessee referred to
in Section 2.1 of the Agreement are hereby repeated with effect as of the
date first above written, (iv) having inspected the Delivered Aircraft,
Lessee acknowledges that the Delivered Aircraft satisfies all conditions
required for Lessee's acceptance of delivery as set forth in the Agreement,
and (v) the execution and delivery of this Lease Supplement signifies
absolute and irrevocable acceptance by Lessee of the Delivered Aircraft for
all purposes hereof and of the Agreement.
6. All of the terms and provisions of the Agreement are hereby incorporated
by reference in this Lease Supplement to the same extent as if fully set
forth herein.
7. This Lease Supplement may be executed in any number of counterparts; each
of such counterparts, shall for all purposes be deemed to be an original; and
all such counterparts shall together constitute but one and the same Lease
Supplement.
IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease
Supplement No. 1 to be duly executed as of the day and year first above
written.
LESSOR, LESSEE,
[INSERT LESSOR'S NAME] [INSERT LESSEE'S NAME]
-------------------- --------------------
By:_______________________ By:_______________________
Name:_____________________ Name:_____________________
Title:____________________ Title:____________________
12-2
SCHEDULE 13
FORM OF LETTER OF CREDIT
IRREVOCABLE STANDBY LETTER OF CREDIT
BENEFICIARY:
Aviation Financial Services, Inc.
Attention:___________________
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, XX 00000
Gentlemen:
We hereby establish our irrevocable Standby Letter of Credit
No. S/B_________ dated February___, 2000 (this "Letter of Credit"), in your
favor in connection with the leasing of one Boeing 737-700 aircraft by
Aviation Financial Services Inc. ("Beneficiary') to Aloha Airlines, Inc.
("Customer"). All bank charges relating to this Letter of Credit are for the
account of Customer.
At the request of Customer for account of same, we hereby establish this
Irrevocable Standby Letter of Credit No. S/B_________ (this "Letter of
Credit") to authorise you to draw on First Hawaiian Bank, Honolulu, Hawaii an
amount or amounts not exceeding in aggregate US$_________ (_________ United
States Dollars) upon receipt by us of the following demand certificate from
Beneficiary, accompanied by a copy of this Letter of Crediot (which
certificate and copy may be presented to us by telecopy at telecopy
no._________):
"The undersigned are two authorised signatories of Aviation Financial
Services Inc ("Beneficiary"). Beneficiary hereby draws upon the
Irrevocable Standby Letter of Credit No. S/B_________ of first Hawaiian
Bank, Honolulu, Hawaii dated________________. Beneficiary hereby instructs
you to transfer US$___________ (_______United States Dollars) to Bankers
Trust Company, New York, ABA 021 001 033, For the account of: Aviation
Financial Services Inc., Account Number: 00-000-000, immediately, with
telex confirmation to us of such payment."
We hereby agree with you that drawings drawn under and in compliance
with the terms of this Letter of Credit received on or prior to the first
anniversary of the date of this Letter of Credit (as the same may be extended
pursuant to the terms hereof, the "Expiration Date") will be duly honoured
upon receipt by us of such a demand certificate. Partial drawings are
permitted. This Letter of Credit shall be automatically renewed for
successive one year periods until at least unless at least thirty (30)________,
business days prior to the then current Expiration Date, we notify you in
writing by certified mail, return receipt requested, at the address set forth
above or such other address as Beneficiary may have notified to us in
writing, of our election not to renew this Letter of Credit beyond the then
current Expiration Date. In the event of such non-
13-1
renewal, the full amount of this Letter of Credit may be drawn down upon
presentation of a demand certificate as provided above.
If a drawing by you hereunder does not, in any instance, conform to the
provisions of this Letter of Credit, we shall give you prompt notice that the
purported drawing was not effected in accordance with such provisions, stating
the reasons therefor, and that we are holding any documents presented in
connection therewith at your disposal or are returning the same to you, as we
may elect.
This Letter of Credit is transferable and constitutes an obligation to
make payment against documents. Except to the extent the express provisions
hereof conflict, this Letter of Credit is issued subject to the uniform
Customs and Practice for Documentary Credits (1993 Revision) international
Chamber of Commerce Publication No. 500 ("Uniform Customs").
Sincerely,
FIRST HAWAIIAN BANK
------------------------- -------------------------
Authorised Signature Authorised Signature
00-0
XXXXXXXX 00
XXXXXXXXXXX XXXXXXXXXX
Xxx Xxx Xxxxxxx Limited
Repair Station #ANZZ188C
Christchurch
Aviation Management Systems
Repair Station #ZM7R567Y
Sky Harbor Int'l Airport
Aviation Management Systems
Repair Station #D8LR566Y
Goodyear, AZ
BFGoodrich Aerospace MR0
Repair Xxxxxxx #XX0X000X
Xxxxxxx, XX
Conair Aviation Ltd.
Repair Station #AMO 10-75
Abbotsford, B.C.
Spar Aerospace Limited
Repair Station #AMO 03-57
Canada
14-1
SCHEDULE 15
FORM OF TECHNICAL REPORT
AIRCRAFT SPECIFICATIONS
WORKSHEET
GENERAL WEIGHTS
Registration: Max. Taxi Weight:
Manufacturer: Max. Take Off Weight:
Aircraft Type: Max. Landing Weight:
Serial Number: Max. Zero Fuel Weight:
Line Number: Operating Empty Weight:
Date of Manufacture: Fuel Capacity:
Aircraft IT:
Aircraft TC: UTILIZATION
Data as of: Hours:
Cycles:
INSPECTIONS
----------------------------------------------------------------------------
TYPE OF CHECK LAST ACCOMPLISHED TIME
DATE TIME CYCLE INTERVAL REMAINING
----------------------------------------------------------------------------
C
----------------------------------------------------------------------------
_____Any major checks coming due in the next 3 months.
--------------
ENGINES MFG:
--------------
--------------
TYPE:
--------------
---------------------------------------------------
POSITION S/N TT XX XXX TCO
---------------------------------------------------
---------------------------------------------------
---------------------------------------------------
15-1
AIRCRAFT SPECIFICATIONS
WORKSHEET
REGISTRATION:___________________
AUXILIARY POWER UNIT
--------------
MFG:
--------------
--------------
TYPE:
--------------
---------------------------------------------------------------
S/N TT XX XXX
---------------------------------------------------------------
---------------------------------------------------------------
LANDING GEAR
OVERHAUL INTERVAL
--------------
MAIN:
--------------
--------------
NOSE:
--------------
------------------------------------------------------------------------
S/N TT XX XXX CSO TIME CYCLES
REMAINING REMAINING
TO O/H TO LIFE
------------------------------------------------------------------------
NLG
------------------------------------------------------------------------
LMG
------------------------------------------------------------------------
RMG
------------------------------------------------------------------------
INTERIOR EQUIPMENT
QTY LOCATION & TYPE
-------------------------------------------
Galleys:
-------------------------------------------
Lavatories:
-------------------------------------------
Air Stairs:
-------------------------------------------
Psgr. Seats:
-------------------------------------------
15-2
