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EXHIBIT 4.21
THE RIGHTS OF LESSOR UNDER THIS SECOND AMENDED AND RESTATED AIRCRAFT LEASE
AGREEMENT [GPA 1989 BN-10] AND IN THE AIRCRAFT COVERED HEREBY WILL BE OR HAVE
BEEN ASSIGNED TO, AND ARE OR WILL BE SUBJECT TO A SECURITY INTEREST IN FAVOR OF,
THE CHASE MANHATTAN BANK, AS SUCCESSOR IN INTEREST TO MANUFACTURERS HANOVER
TRUST COMPANY, AS INDENTURE TRUSTEE UNDER A SECOND AMENDED AND RESTATED TRUST
INDENTURE AND SECURITY AGREEMENT [GPA 1989 BN-10] DATED AS OF DECEMBER 19, 1989,
AMENDED AND RESTATED AS OF OCTOBER 1, 1991, AND FURTHER AMENDED AND RESTATED AS
OF NOVEMBER __, 1996. AS PROVIDED IN SECTION 21(e) HEREOF, TO THE EXTENT, IF
ANY, THAT THIS SECOND AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT CONSTITUTES
CHATTEL PAPER (AS SUCH TERM IS DEFINED IN THE UNIFORM COMMERCIAL CODE AS IN
EFFECT IN ANY APPLICABLE JURISDICTION), NO SECURITY INTEREST IN THIS AMENDED AND
RESTATED AIRCRAFT LEASE AGREEMENT MAY BE CREATED THROUGH THE TRANSFER OF
POSSESSION OF ANY COUNTERPART OTHER THAN THE ORIGINAL COUNTERPART, WHICH SHALL
BE IDENTIFIED AS THE COUNTERPART CONTAINING THE RECEIPT THEREFOR EXECUTED BY THE
CHASE MANHATTAN BANK, AS SUCCESSOR IN INTEREST TO MANUFACTURERS HANOVER TRUST
COMPANY, AS INDENTURE TRUSTEE, ON THE SIGNATURE PAGE THEREOF.
SECOND AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT
[GPA 1989 BN-10]
Dated as of December 19, 1989
Amended and Restated as of October 1, 1991
And Further Amended and Restated as of November __, 1996
between
WILMINGTON TRUST COMPANY,
not in its individual capacity except
as otherwise expressly provided herein,
but solely as Owner Trustee under a
Trust Agreement [GPA 1989 BN-10] dated
as of December 19, 1989, as amended
Lessor
and
AMERICA WEST AIRLINES, INC.
Lessee
One Airbus A320-231 Aircraft
Manufacturer's Serial No. 77
U.S. Registration No. N631AW
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TABLE OF CONTENTS
Page
Section 1. Definitions............................................... 1
Section 2. Agreement to Lease........................................ 21
Section 3. Delivery and Acceptance; Term; Rental Period.............. 21
(a) Time of Delivery............................................. 21
(b) Place of Delivery and Acceptance............................. 21
(c) Acceptance of Aircraft....................................... 21
(d) Term of Lease................................................ 22
(e) Rental Period................................................ 22
Section 4. Rent; Minimum Payments.................................... 22
(a) Rent ........................................................ 22
(b) Minimum Payments............................................. 22
(c) Date, Place and Method of Payment............................ 23
(d) Prohibition Against Setoff, Counterclaim, Etc................ 23
Section 5. Representations, Warranties and Covenants................. 25
(a) Warranties and Disclaimer of Warranties...................... 25
(b) Representations and Warranties of Lessor..................... 27
(c) No Amendments to Financing Documents......................... 27
(d) Suppliers' Warranties........................................ 27
Section 6. Possession and Use........................................ 28
(a) Possession................................................... 28
(b) Reciprocal Recognition of Rights............................. 34
(c) Lawful Insured Operations.................................... 34
(d) Maintenance.................................................. 35
(e) Registration and Insignia.................................... 37
Section 7. Inspection................................................ 38
Section 8. Additional Covenants of Lessee............................ 38
(a) Financial Information........................................ 38
(b) Maintenance of Corporate Existence........................... 41
(c) Maintenance of Status........................................ 41
(d) Payment of Taxes............................................. 42
(e) Consolidation, Merger, Etc................................... 42
(f) Information.................................................. 43
(g) Place of Business............................................ 44
(h) Certain Limitations on Use................................... 44
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Page
(i) Section 1110................................................. 44
(j) Permits and Licenses......................................... 45
(k) Security Opinion; Annual Certificate......................... 45
(m) ERISA........................................................ 48
Section 9. Replacement of Parts; Alterations,
Modifications and Additions .............................. 48
(a) Replacement of Parts......................................... 48
(b) Alterations, Modifications and Additions..................... 49
(c) Pooling...................................................... 52
Section 10. General Tax Indemnity.................................... 53
(a) Indemnity................................................... 53
(b) Exclusions.................................................. 55
(c) Covered Income Tax.......................................... 56
(d) Reports and Returns......................................... 57
(e) After-Tax Basis............................................. 58
(f) Tax Benefit................................................. 58
(g) Payment..................................................... 58
(h) Contest..................................................... 59
(i) Refund...................................................... 61
(j) Diligence................................................... 61
(k) Affiliated Group............................................ 61
Section 11. Loss, Damage and Requisition............................. 62
(a) Event of Loss with Respect to the Airframe................... 62
(b) Event of Loss with Respect to an Engine...................... 64
(c) Conveyance of Replacement Airframe........................... 65
(d) Application of Proceeds and Payments......................... 67
(e) Requisition for Use by Government with
Respect to the Aircraft................................ 68
(f) Application in Default....................................... 69
Section 12. Insurance................................................ 69
(a) Public Liability and Property Damage Insurance. ............. 69
(b) Insurance Against Loss or Damage............................. 71
(c) Application of Insurance Proceeds for an
Event of Loss.......................................... 74
(d) Application of Insurance Proceeds for Other
than an Event of Loss.................................. 74
(e) Application in Default....................................... 75
(f) Certificates................................................. 76
(g) Reinsurance.................................................. 76
(h) Storage...................................................... 77
(i) Amounts Held................................................. 77
(j) After the Term............................................... 77
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Page
(k) Governmental Indemnity....................................... 78
Section 13. General Indemnity........................................ 78
Section 14. Liens.................................................... 83
Section 15. Protection of Title and Further Assurances............... 85
Section 16. Return of Aircraft and Records........................... 86
(a) Return....................................................... 86
(b) Status Upon Return........................................... 87
(c) Engines...................................................... 88
(d) Records and Documents........................................ 88
(e) Condition of Aircraft........................................ 90
(f) Final Inspection............................................. 90
(g) Aircraft Records and Documents............................... 91
(h) Corrections and Subsequent Corrections....................... 91
(i) Functional Flight Check...................................... 92
(j) Export Certificate of Airworthiness.......................... 92
(k) Service Bulletin and Modification Kits....................... 92
(l) Storage Upon Return.......................................... 93
(m) Resale/Release Cooperation................................... 93
Section 17. Events of Default........................................ 93
Section 18. Remedies................................................. 96
Section 19. Alienation...............................................101
(a) Lessor Assignments...........................................101
(b) Security for Obligations.....................................101
Section 20. Renewal Option...........................................103
Section 21. Miscellaneous............................................104
(a) Severability, Amendment, and Construction....................104
(b) GOVERNING LAW................................................104
(c) Notices......................................................105
(d) Lessor's Right to Perform for Lessee.........................105
(e) Counterparts.................................................105
(f) Quiet Enjoyment..............................................105
(g) Brokers......................................................106
(h) Investment of Funds..........................................106
(i) Entire Agreement; Amendment..................................106
(j) Expenses.....................................................107
(k) Federal Bankruptcy Code......................................107
(l) U.S. Registration Number.....................................107
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Page
(m) Submission to Jurisdiction; Service of
Process; Waiver of Forum Non Conveniens;
Waiver of Jury Trial...................................107
(n) Limitation on Recourse..................................109
(o) Successor Trustee.......................................109
(p) Article 2-A of the UCC..................................109
ANNEXES
Annex I - Original Head Lease Description
EXHIBITS
Exhibit A - Stipulated Loss Values
Exhibit B - Aircraft Records and Documents
Exhibit C - Definitions and Values
Exhibit D-1 - Lease Supplement No. 3
Exhibit D-2 - Letter of Credit
Exhibit E - Return Condition Requirements
Exhibit F-1 - Foreign Air Carriers
Exhibit F-2 - Schedule of Domiciles of Permitted Sublessees
Exhibit G - Opinion of Lessee's Special Counsel
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SECOND AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT
THIS SECOND AMENDED AND RESTATED AIRCRAFT LEASE
AGREEMENT dated as of December 19, 1989, as amended and restated as of October
1, 1991, and as further amended and restated as of November __, 1996 is entered
into between WILMINGTON TRUST COMPANY, not in its individual capacity except as
otherwise expressly provided herein, but solely as Owner Trustee under a Trust
Agreement [GPA 1989 BN-10] dated as of December 19, 1989, as amended, and with
its principal place of business at Xxxxxx Xxxxxx Xxxxx, Xxxxxxxxxx, Xxxxxxxx
00000 (together with its successors and permitted assigns, "Lessor"), and
AMERICA WEST AIRLINES, INC., a Delaware corporation, with its chief executive
office at 0000 Xxxx Xxx Xxxxxx Xxxxxxxxx, Xxxxxxx, Xxxxxxx 00000 (together with
its successors and permitted assigns, "Lessee").
W I T N E S E T H:
WHEREAS, Lessor and Lessee desire to amend and, solely for
the convenience of the parties, restate in its entirety the Original Head Lease
(as hereinafter defined) as of the Restatement Date (as hereinafter defined) as
hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual promises
herein contained, Lessor and Lessee agree as follows:
Section 1. Definitions.
The following terms shall have the following respective
meanings for all purposes of this Lease (including the Recitals) and shall be
equally applicable to both the singular and the plural forms of the terms
defined herein:
As used herein, the terms "Equipment Notes", "Excepted
Payments", "Indenture Supplement", "Note Holder", "Pass Through Trust", "Pass
Through Trust Agreement", "Pass Through Trustee", "Past Due Rate", "Principal
Amount", "Refinancing Transaction", "Refunding Agreement", "Restatement Date",
"Trust Company" and "Trust Indenture Estate" shall have the meanings specified
in the Indenture and the terms "Intercreditor Agreement", "Liquidity Facility ",
"Liquidity Provider" and "Subordination Agent" shall have the meanings specified
in the Intercreditor Agreement (as defined in the Pass Through Trust Agreement).
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"Affiliate" shall mean, with respect to any specified
Person, any other Person which, directly or indirectly, owns or controls, is
controlled by or is under common control with such specified Person. Control
will be deemed to exist based on (i) ownership of 25% or more of the voting
securities of a Person or (ii) the power to direct or cause the direction of the
management and policies of a Person whether by contract or otherwise.
"Airbus Industrie" shall mean Airbus Industrie G.I.E., a
groupement d'interet economique formed under the laws of the French Republic,
and its successors and assigns.
"Aircraft" shall mean the Airframe leased
hereunder and described in Lease Supplement No. 1 (or any airframe from time to
time substituted for such Airframe pursuant to Section 11(a)(i) hereof) together
with the (i) two IAE Model V2500 Engines described in Lease Supplement No. 1 (or
any Engine substituted therefor hereunder) with respect to such Airframe,
whether or not any such initial or substituted Engines may from time to time no
longer be installed on the Airframe or may be installed on any other airframe,
(ii) Parts or components thereof, (iii) spare parts or ancillary equipment or
devices furnished therewith under this Lease (including any separate equipment
described on one or more Lease Supplements hereto), (iv) the Aircraft Records
and Documents and all other logs, manuals and records with respect to such
Aircraft, and (v) all substitutions, replacements and renewals of any and all
thereof.
"Aircraft Records and Documents" shall mean the items
identified in Exhibit B hereto, all of which shall be maintained in the English
language.
"Airframe" shall mean (a) the Airbus Industrie model
A320-231 aircraft (except Engines or engines from time to time installed
thereon) described in Lease Supplement No. 1 and leased by Lessor to Lessee
hereunder, and any such model aircraft (except Engines or engines from time to
time installed thereon) which may from time to time be substituted for such
aircraft (except Engines or engines from time to time installed thereon)
pursuant to Section 11(a)(i); and (b) any and all Parts so long as the same
shall be incorporated or installed on or attached to the Airframe, or so long as
title thereto shall remain vested in Lessor in accordance with the terms of
Section 9 hereof after removal from the Airframe; provided, however, that at
such time as an aircraft (except Engines or engines from time to time
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installed thereon) shall be deemed part of the property leased hereunder in
substitution for the Airframe pursuant to the applicable provisions hereof and
the replacement Airframe shall have been subjected to the Lien of the Indenture
(if the Lien of the Indenture has not been discharged), the replaced Airframe
shall cease to be the Airframe hereunder.
"Appraisal Procedure" shall mean the following procedure
for determining the "fair market sales value" or "fair market rental value" of
the Aircraft, Airframe, an Engine or a Part. Except as provided in Section 18,
"fair market sales value" or "fair market rental value" shall mean the value
that would be obtained in an arm's-length transaction between an informed and
willing seller or lessor, as the case may be, and an informed and willing buyer
or lessee, as the case may be, both under no compulsion to sell and purchase or
to lease (and other than a lessee in possession or a used equipment scrap
dealer), as the case may be, as such value is determined by an appraisal which
assumes: (i) that such Aircraft, such Airframe, such Engine or such Part is
unencumbered by this Lease (or any sublease) or any of the other Operative
Documents or any of the Financing Documents and the terms thereof; (ii) that
such Aircraft, Airframe, Engine or Part has been maintained in all respects in
accordance with the terms of this Lease (whether or not in fact in such
condition), (iii) that such Aircraft, Airframe, Engine or Part meets the return
conditions specified in Section 16 and Exhibit E (whether or not in fact meeting
such conditions) and (iv) that Lessee has removed the Removable Parts entitled
to be removed under Section 9(b) (it being agreed that no such removal is
permitted in connection with an appraisal pursuant to Section 18) and replaced
any part which was removed from the Aircraft as a result of such Removable Part
being installed; provided, however, that costs of removal from the location of
current use and costs of sale shall not be a consideration in determining such
value except in connection with any determination of "fair market sales value"
or "fair market rental value" pursuant to Section 18; and provided, further,
that any determination of "fair market sales value" or "fair market rental
value" pursuant to Section 18 shall be on an "as is, where is" basis in its
actual condition and location subject to this Lease and any sublease and any and
all Liens thereon (other than a Lessor's Lien, Head Lessor's Lien or Lenders'
Lien). Lessor and Lessee shall, except for any appraisal pursuant to Section 18
in which case only Lessor shall select such appraiser (which appraiser does not
have to be acceptable to Lessee), select an independent
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nationally-recognized aircraft appraiser, mutually acceptable to each of them,
who shall make the determination as to the "fair market sales value" or "fair
market rental value" of such Aircraft, Airframe, Engine or Part for which such
appraisal is to be conducted. If Lessor and Lessee fail to agree upon a mutually
acceptable appraiser within ten (10) days, then each of Lessor and Lessee shall
select an appraiser and such determination shall be made by such appraisers (if
either party shall fail to appoint an appraiser within ten (10) days after
notice from the other party of the selection of its appraiser, then the
appraisal made by the other party's appraiser shall be determinative). If the
two appraisers chosen pursuant to the preceding sentence fail to agree upon a
determination of the "fair market sales value" or "fair market rental value" of
such Aircraft, Airframe, Engine or Part within twenty (20) days after their
appointment, then such appraisers shall mutually choose a third appraiser within
ten (10) days thereafter, provided that if such appraisers fail to mutually
choose a third appraiser within said 10-day period, such appointment shall be
made by the American Arbitration Association (or any successor) in New York, New
York, and the three appraisers so chosen shall each make such determination. The
appraisal determined by each of the three appraisers chosen pursuant to the
preceding sentence shall be averaged and the appraisal furthest from the average
of the three appraisals shall be disregarded. The appraisal determined by each
of the two remaining appraisers shall be averaged and such average shall be the
appraised "fair market sales value" or "fair market rental value" of such
Aircraft, Airframe, Engine or Part. Lessee shall bear all the fees and expenses
of the Appraisal Procedure.
"Approved Broker" shall mean any reputable insurance
broker of recognized responsibility and standing experienced in aircraft
insurance.
"Approved Insurers" shall mean any reputable and
creditworthy insurance company of recognized responsibility and standing
experienced in aircraft insurance.
"Basic Rent" for the Aircraft shall mean the Basic Rent
specified in Exhibit C and payable throughout the Basic Term for the Aircraft
pursuant to Section 4(a)(i).
"Basic Rent Payment Date" shall mean each day determined
in accordance with Exhibit C upon which a payment of Basic Rent becomes payable.
If a Basic Rent Payment Date shall fall on a day which is not a Business Day,
any payment
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due on such Basic Rent Payment Date shall be made on the next succeeding
Business Day.
"Basic Term" shall mean the period specified in Lease
Supplement No. 3.
"Business Day" shall mean any day other than a Saturday,
Sunday or other day on which banking institutions in New York, New York are
authorized or required by Law to be closed.
"Buyer Furnished Equipment" shall mean the equipment which
was to be furnished by Xxxxxxx, Inc. or, if applicable, Original Head Lessee and
installed on the Aircraft pursuant to Clause 18 of the Purchase Agreement, and
any similar equipment furnished to Lessee.
"Certificated Air Carrier" shall mean any corporation
(except the United States Government) domiciled in the United States of America
and holding a Certificate of Convenience and Necessity issued under Section
41102(a) of the Federal Aviation Act by the Department of Transportation or any
predecessor or successor agency thereto, or, in the event such Certificates
shall no longer be issued, any corporation (except the United States Government)
domiciled in the United States of America and legally engaged in the business of
transporting for hire passengers or cargo by air predominantly to, from or
between points within the United States of America, and, in either event,
operating commercial jet aircraft, which also is a citizen of the United States
(as defined in Section 40102 of the Federal Aviation Act) holding an air carrier
operating certificate issued by the Secretary of Transportation pursuant to
chapter 447 of the Federal Aviation Act for aircraft capable of carrying 10 or
more individuals or 6,000 pounds or more of cargo so as to fall within the
purview of 11 U.S.C. Section1110 or any analogous statute.
"Civil Reserve Air Fleet Program" shall mean the Civil
Reserve Air Fleet Program administered by the United States Government and
authorized under 10 U.S.C. Section9511, et seq., as amended, or any
substantially similar or substitute program of the United States Government.
"Claims" shall have the meaning specified in Section 13.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
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"Commonly Controlled Person" shall mean an entity, whether
or not incorporated, which is under common control with Lessee within the
meaning of Section 414(b) or (c) of the Code.
"Consent and Guaranty" shall mean the Amended and Restated
Consent and Guaranty of Airbus Industrie, dated as of May 1, 1985, as amended
and restated as of December 30, 1988, in the form attached to the Purchase
Agreement.
"Default" shall mean an event or condition which would
constitute an Event of Default with the lapse of time or the giving of notice or
both.
"Delivery Date" shall mean December 22, 1989, being the
date the Aircraft was delivered to and accepted by the Original Head Lessee as
Lessee hereunder for all purposes of this Lease.
"Delivery Location" shall mean the location for the
delivery of the Aircraft specified in Exhibit C.
"$" and "dollars" shall mean the lawful currency of the
United States of America.
"Engine" shall mean (i) each of the two IAE Model V2500
engines listed by manufacturer's serial number in Lease Supplement No. 1 and
initially installed on the Airframe covered by such Lease Supplement, whether or
not from time to time thereafter no longer installed on the Airframe or
installed on any other aircraft or airframe, and (ii) any replacement engine
which may from time to time be substituted, pursuant to Section 6(a), 11(a),
11(b) or 16(c), for any Engine leased hereunder; together in each case with any
and all Parts incorporated or installed in or attached thereto or any and all
Parts removed therefrom so long as title thereto after removal from such Engine
shall remain vested in Lessor in accordance with the terms of Section 9 hereof.
Except as otherwise set forth herein, at such time as a replacement engine shall
be so substituted and leased hereunder and the replacement Engine shall have
been subjected to the Lien of the Indenture (if the Lien of the Indenture has
not been discharged), such replaced Engine shall cease to be an Engine
hereunder. The term "Engines" means, as of any date of determination, both
Engines then leased hereunder.
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"ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended, as from time to time in effect.
"Event of Default" shall have the meaning specified in any
one or more clauses in Section 17.
"Event of Loss" shall mean any of the following events
with respect to the Aircraft, Airframe or either Engine: (a) the actual or
constructive total loss of such property or the use thereof due to theft or
disappearance for a period in excess of sixty (60) consecutive days; (b)
destruction or damage of such property that renders repair uneconomic or such
property permanently unfit for normal use by Lessee (or, if a Permitted Sublease
is in effect, the Permitted Sublessee) for any reason whatsoever; (c) any loss
or disappearance of or damage to or destruction of such property which results
in an insurance settlement with respect to such property on the basis of an
actual or constructive total loss; (d) the condemnation, confiscation,
appropriation, seizure or requisition of title to any such property by any
Governmental Entity which results in the loss of title by Lessor for ten (10)
days or more but excluding requisition for use or hire which does not involve
requisition of title; (e) the condemnation, confiscation, appropriation, seizure
or requisition of the use of any such property by any Governmental Entity (other
than a requisition for use by the federal government of the United States or any
instrumentality or agency thereof bearing the full faith and credit of the
United States of America), which in any such case shall have resulted in the
loss of possession thereof by Lessee for a period in excess of the earlier of
ninety (90) consecutive days or the last day of the Term (or for such shorter
period ending on the date which is the next Business Day after the date of
receipt of an insurance settlement with respect to such property on the basis of
a total loss); (f) the requisition for use of such property by the federal
government of the United States or any agency or instrumentality thereof bearing
the full faith and credit of the United States of America, which purports to or
does continue beyond the Term; (g) as a result of any rule, regulation, order or
other action by the FAA, the Department of Transportation or any other
Governmental Entity having jurisdiction, the use of such Aircraft, Airframe or
Engine in the normal course of Lessee's (or, if a Permitted Sublease is in
effect, the Permitted Sublessee's) business of air transportation of passengers
shall have been prohibited for a period of six (6) consecutive months, unless
Lessee (or the Permitted Sublessee),
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prior to the expiration of such six-month period, shall have undertaken and
shall be diligently carrying forward all steps which are necessary or desirable
to permit such normal use of such item of equipment by Lessee (or the Permitted
Sublessee), or, in any event, if such normal use shall have been so prohibited
by any such Governmental Entity for a period of twelve (12) consecutive months
or is continuing on the last day of the Term; or (h) as otherwise provided
herein. An Event of Loss with respect to the Aircraft shall be deemed to have
occurred if an Event of Loss occurs with respect to the Airframe which is a part
of such Aircraft. An Event of Loss with respect to an Engine shall not, absent
an Event of Loss with respect to the Airframe, be deemed an Event of Loss with
respect to the Airframe.
"Excluded Property" shall have the meaning set forth in
Section 9(b) hereto.
"Expiration Date" shall mean the date specified in Lease
Supplement No. 3, on which date the Basic Term of this Lease shall expire.
"FAA" shall mean the Federal Aviation Administra- tion of
the United States Department of Transportation or any successor agency.
"FAA Bills of Sale" shall mean, collectively, (i) the Xxxx
of Sale for the Aircraft on AC Form 8050-2, dated the Delivery Date, from
Manufacturer's Subsidiary to the Original Head Lessee, and (ii) the Xxxx of Sale
for the Aircraft on AC Form 8050-2, dated the Delivery Date, from the Original
Head Lessee to Lessor.
"Federal Aviation Act" shall mean the sections of Title 49
of the United States Code relating to aviation, as amended and in effect from
time to time, or any similar legislation of the United States of America enacted
in substitution or replacement thereof.
"Financials" shall mean Lessee's most recent fiscal
year-end audited consolidated balance sheet and statements of income and cash
flow for the period then ending, copies of which for the fiscal year ending
December 31, 1995, have been provided to Lessor prior to the date hereof.
"Financing Documents" shall mean the Lease Agreement, each
Lease Supplement, the Trust Agreement, each Trust Supplement, the Indenture,
each Indenture Supplement,
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the Refunding Agreement, the Equipment Notes issued under the Indenture, the
Intercreditor Agreement, each Liquidity Facility, each Pass-Through Trust
Agreement and each supplement thereto and any other agreement, document or
certificate delivered or entered into in accordance with the foregoing, as
amended, supplemented or otherwise modified.
"Foreign Air Carrier" shall mean any air carrier listed in
Exhibit F-1, as amended, supplemented or otherwise modified from time to time,
whose principal place of business and legal domicile at the time of entering
into the applicable sublease is located in a country listed on Exhibit F-2, as
amended, supplemented or otherwise modified from time to time, and not
prohibited by the terms of the insurance then in effect, with which the United
States has diplomatic or, such as in the case of Taiwan, similar relations, in
each case which is obligated under the applicable sublease to perform all
maintenance required by applicable foreign governmental standards made mandatory
to the Aircraft by such jurisdiction and, to the extent not inconsistent
therewith, all FAA-airworthiness directives and other requirements made
mandatory to the Aircraft by the FAA.
"GAAP" shall mean United States generally accepted
accounting principles and practices consistently applied as in effect from time
to time, which shall include the official interpretations thereof by the
Financial Accounting Standards Board. All accounting terms not otherwise defined
herein shall have the meanings assigned to such terms in accordance with GAAP.
"Governmental Entity" shall mean and include (i) any
national government, political subdivision thereof, or local jurisdiction
therein; (ii) any board, commission, department, division, organ,
instrumentality, court, or agency of any thereof, however constituted; and (iii)
any association, organization, or institution of which any entity described in
(i) or (ii) above is a member or to whose jurisdiction any such entity is
subject or in whose activities any such entity is a participant but only to the
extent that any entity described in clause (i), (ii) or (iii) has jurisdiction
over Lessor, Lessee, Indenture Trustee, Note Holders, the Aircraft or its
operations.
"Head Lessor's Lien" shall mean a Lessor's Lien under and
as defined in the Original Head Lease.
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"IAE" shall mean IAE International Aero Engines AG, a
company organized and existing under the laws of Switzerland.
"Indemnitee" shall mean Lessor (in its individual capacity
and as trustee under the Trust Agreement), the Trust Estate, Owner Participant,
the Trust Indenture Estate, Indenture Trustee (in its individual capacity and as
trustee under the Indenture), each Pass-Through Trust, each Pass- Through
Trustee (in its individual capacity and as trustee under the Pass-Through
Trusts), the Subordination Agent and each Liquidity Provider, and their
respective successors and permitted assigns, and any combination thereof and
their respective officers, directors, agents, servants, subcontractors,
employees, subsidiaries, Affiliates, shareholders and partners.
"Indenture" shall mean the Second Amended and Restated
Trust Indenture and Security Agreement [GPA 1989 BN-10] dated as of December 19,
1989, amended and restated as of October 1, 1991, and further amended and
restated as of November __, 1996, as the same may be further amended,
supplemented or modified from time to time, between Indenture Trustee and
Lessor. The term "Indenture" shall also include the Indenture Supplements
entered into pursuant to the terms of the Indenture.
"Indenture Trustee" shall mean the bank or trust company
serving as Indenture Trustee under the Indenture, and its successors and
assigns.
"Interest Rate" shall mean (i) with respect to the portion
of any payment of Rent that may be required by the Indenture to be paid to the
holders of any outstanding Equipment Notes issued thereunder, a per annum rate
of interest equal to the Past Due Rate applicable thereto under and as defined
in the Indenture, computed on the basis of a year of 360 days and twelve 30-day
months and (ii) with respect to any other amount, a per annum rate of interest
equal to the sum of the rate of interest publicly announced by Citibank, N.A.,
at its principal office in New York City, as its prime or similar base rate from
time to time in effect from the date the amount becomes due to the date it is
paid in full, plus 2%, computed on the basis of a year of 365 or 366 days, as
the case may be, and actual number of days elapsed.
"Law" shall mean and include (i) any statute, rule,
decree, constitution, regulation, order, judgment or
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16
other directive of any Governmental Entity; (ii) any treaty, pact, compact or
other agreement to which any Governmental Entity is a signatory or party; (iii)
any judicial or administrative interpretations of the application of any Law
described in (i) or (ii) above; and (iv) except where expressly excluded herein,
any amendment or revision of any Law described in (i), (ii), or (iii) above.
"Lease Agreement," "this Lease Agreement," "this Lease,"
"this Agreement," "herein," "hereunder," "hereby," "hereof" or other like words
shall mean this Lease as originally executed and as amended, supplemented or
otherwise modified from time to time, including, without limitation, by one or
more Lease Supplements, as a whole and not to any particular Section or other
subdivision, and any reference to a "Section" or an "Exhibit" shall refer to a
Section or Exhibit of this Lease, as so amended, supplemented or modified,
unless expressly provided to the contrary.
"Lease Identification" shall have the meaning set forth in
Section 6(e) hereto.
"Lease Supplement" shall mean Lease Supplement No. 1,
Lease Supplement No. 2, Lease Supplement No. 3 and each subsequent Lease
Supplement entered into hereunder.
"Lease Supplement No. 1" shall mean Lease Supplement [GPA
1989 BN-10] No. 1 dated December 22, 1989 between Lessor and Original Head
Lessee, as Lessee.
"Lease Supplement No. 2" shall mean Lease Supplement [GPA
1989 BN-10] No. 2 dated October 24, 1991 between Lessor and Original Head
Lessee, as Lessee.
"Lease Supplement No. 3" shall mean Lease Supplement [GPA
1989 BN-10] No. 3, substantially in the form of Exhibit D-1 hereto, entered into
between Lessor and Lessee on the Restatement Date for the purpose of confirming
the leasing of the Aircraft hereunder.
"Lenders' Lien" shall mean any Lien or disposition of
title attributable to Indenture Trustee in its individual capacity (and not as
Indenture Trustee) on or in respect of (as the case may be) the Aircraft or any
other portion of the Trust Estate or the Trust Indenture Estate arising as a
result of (i) Claims (as defined herein) against Indenture Trustee in its
individual capacity (and not as Indenture Trustee) not related to its interest
in the Aircraft or the
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administration of the Trust Estate or the Trust Indenture Estate pursuant to the
Indenture, whether under Section 9- 207(2)(e) of the Uniform Commercial Code or
otherwise, (ii) acts or omissions of Indenture Trustee in its individual
capacity (and not as Indenture Trustee) not contemplated hereunder or under the
other Operative Documents, or acts or omissions of Indenture Trustee in its
individual capacity (and not as Indenture Trustee) which are in violation of any
of the Operative Documents, or (iii) Taxes imposed on or Claims against
Indenture Trustee in its individual capacity (and not as Indenture Trustee)
which are excluded from indemnification by Lessee, or (iv) Claims against
Indenture Trustee in its individual capacity (and not as Indenture Trustee)
arising out of the voluntary or involuntary transfer by Indenture Trustee in its
individual capacity (and not as Indenture Trustee) of all or any portion of its
interest in the Aircraft, the Airframe, any Engine, the Trust Estate, the Trust
Indenture Estate or the Operative Documents (except a Claim resulting from the
exercise of remedies under and in accordance with the Indenture or for a
transfer provided for in the Operative Documents).
"Lessee" shall have the meaning set forth in the Recitals
hereto.
"Lessor" shall have the meaning set forth in the Recitals
hereto.
"Lessor's Lien" shall mean any Lien or disposition of
title affecting the Aircraft, the Airframe, any Engine or any Part arising as a
result of (i) any claim against Lessor, Owner Participant, Trust Company or any
of their Affiliates not related to the transactions contemplated by this Lease
or the other Operative Documents, the Financing Documents or the Purchase
Documents; (ii) any affirmative act of Lessor, Owner Participant, Trust Company
or any of their Affiliates not expressly contemplated by this Lease or the other
Operative Documents, the Financing Documents or the Purchase Documents or not
permitted without consent (which consent has not been granted) by any party
hereto or thereto or that is in violation of any term of this Lease or the other
Operative Documents, the Financing Documents or the Purchase Documents; (iii)
Taxes imposed against the Trust Estate, Trust Company, Lessor or Owner
Participant or any of their Affiliates or the consolidated group of taxpayers of
which any of them is a member which are not to be indemnified against by Lessee
under the Operative Documents, the Purchase Documents or the Financing
Documents; (iv) claims against the Trust Estate, Trust
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Company, Owner Participant or Lessor or any of their Affiliates arising out of
the transfer of all or any part of their respective interest in the Aircraft,
the Airframe, either Engine, the Trust Estate or the Operative Documents other
than any transfers or dispositions pursuant to Sections 2, 6, 9, 11, 16, 18 or
19 (except Liens resulting from a transfer not permitted by such Section) of
this Lease or pursuant to Sections 10 and 11 of the Refunding Agreement;
provided, however, that there shall be excluded from this definition and Lessor
shall not be required to remove any Lien which would otherwise constitute a
Lessor's Lien, if it is being diligently contested in good faith so long as
neither such proceedings nor Lien involves a material danger of the sale,
forfeiture or loss of the Aircraft or adversely affects Lessee's rights under
Section 21(f); and provided, further, that Lessor's Liens shall not include the
Lien of the Indenture or Lenders' Liens.
"Lien" shall mean any mortgage, chattel mortgage, pledge,
lien, charge, encumbrance, lease, exercise of rights, security interest, lease
in the nature of a security interest, statutory right in rem, or claim of any
kind, including any thereof arising under any conditional sale agreement,
equipment trust agreement or title retention agreement.
"Lien of the Indenture" shall mean the Lien created by the
Indenture on the Trust Indenture Estate.
"Maintenance Program" shall mean (i) the America West
Maintenance Program approved by the FAA for America West Airbus model A320-231
aircraft in effect on the date hereof or as modified with the approval of the
FAA without affecting, or any other FAA approved maintenance program which does
not affect, the return condition standards set forth in Section 16 and Exhibit E
or (ii) if the Aircraft is subject to a Permitted Sublease to a Foreign Air
Carrier, any other maintenance program for the Aircraft which is approved by the
aviation authority of the country of registry and complies with the requirements
applicable to maintenance of the Aircraft contained in the definition of Foreign
Air Carrier. The Maintenance Program shall encompass scheduled maintenance,
condition monitored maintenance, and on-condition maintenance of the Airframe,
Engines, and components of the Aircraft, including, but not limited to,
servicing, testing, preventive maintenance, repairs, structural inspections,
structure life improvements, system checks, overhauls, approved modifications,
service bulletins, engineering orders,
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airworthiness directives, and corrosion control inspections and treatments. All
modifications and supplements to the Maintenance Program shall be provided to
Lessor upon its reasonable request and Lessor shall be given reasonable access
to the Maintenance Program upon its request.
"Manufacturer" shall mean, collectively, Manufacturer's
Subsidiary, IAE, Airbus Industrie or, as the case may be, any one or more
thereof as may be applicable in any given circumstance, together in each case
with any subcontractor or supplier thereof.
"Manufacturer's Subsidiary" shall mean AVSA, S.A.R.L., a
French societe a responsabilite limitee, which as of the date hereof is owned by
Airbus Industrie.
"Mortgage Convention" shall mean the Convention for the
International Recognition of Rights in Aircraft, signed (ad referendum) at
Geneva, Switzerland, on June 19, 1948, and amended from time to time, but
excluding the terms of any adhesion thereto or ratification thereof containing
reservations to which the United States of America does not accede.
"Net Worth" shall mean, with respect to any Person, such
Person's stockholders' equity minus any intangible assets.
"Operative Documents" shall mean this Lease, each Lease
Supplement, the Tax Indemnification Agreement, the Financing Documents, and any
other agreement, document or certificate delivered or entered into pursuant to
the foregoing, as amended, supplemented or otherwise modified.
"Original Head Lease" shall mean this Aircraft Lease
Agreement [GPA 1989 BN-10], with respect to the Aircraft, dated as of December
19, 1989, between Lessor, as lessor, and the Original Head Lessee, as lessee, as
amended, supplemented or otherwise modified and as in effect immediately prior
to the Restatement Date, as more particularly described in Annex I attached
hereto.
"Original Head Lease Tax Indemnification Agreement" shall
mean the Head Lease Tax Indemnification Agreement [GPA 1989 BN-10], dated as of
December 19, 1989, and amended and restated as of October 1, 1991, and amended
and restated as of the Restatement Date, between the Original Head Lessee and
Owner Participant, as the same may
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be amended, supplemented or otherwise modified from time to time.
"Original Head Lessee" shall mean GPA Leasing USA Sub I,
Inc., a Connecticut corporation.
"Owner Participant" shall mean , a Delaware corporation,
as Owner Participant under the Trust Agreement, and its successors and permitted
assigns.
"Owner Trustee" shall mean Wilmington Trust Company, as
Owner Trustee under the Trust Agreement, and its successors and assigns.
"Parent" shall mean GPA Group plc, a public limited
company organized and existing under the laws of Ireland.
"Partial Assignment" shall mean the A320 Partial
Assignment, Assumption, Release and Amendment Agreement, dated as of December
30, 1988, among Parent, Xxxxxxx, Inc., and Manufacturer's Subsidiary, as
amended, supplemented or otherwise modified.
"Participation Agreement" shall mean the Participation
Agreement [GPA 1989 BN-10], dated as of December 19, 1989 and amended as of
October 1, 1991, among Original Head Lessee, Parent, Owner Participant, Owner
Trustee, Indenture Trustee and the Lenders named therein, as amended,
supplemented or otherwise modified from time to time and as in effect
immediately prior to the Restatement Date.
"Parts" shall mean all appliances, components, parts,
instruments, appurtenances, accessories, furnishings and other equipment of
whatever nature (excluding complete Engines or engines), including Buyer
Furnished Equipment, which may now or from time to time be incorporated or
installed in or attached to or were provided by the Manufacturer with the
Airframe or any Engine or so long as title thereto shall remain vested in Lessor
in accordance with the terms of Section 9 hereof after removal from such
Airframe or Engine. Except as otherwise set forth herein, at such time as a
replacement part shall be substituted for a Part in accordance with Section 9
hereof, the Part so replaced shall cease to be a Part hereunder.
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"Payment Location" shall have the meaning set forth in
Exhibit C, as the same may be changed from time to time by Lessor as provided in
Section 4(c).
"Permitted Lien" shall mean any Lien referred to in
clauses (i) through (vii) of the first sentence of Section 14 hereof.
"Permitted Sublease" shall have the meaning specified in
Section 6(a)(iii)(1).
"Permitted Sublessee" shall mean a Certificated Air
Carrier or, after the Restricted Use Period, (a) any Foreign Air Carrier, (b)
the United States Government or an agency or instrumentality thereof which bears
the full faith and credit of the United States of America which has agreed (in
form and substance satisfactory to Lessor) that all of its indemnity obligations
which by the terms of this Lease are permitted in lieu of insurance shall be
enforceable by and payable to Lessor directly or (c) any other Person approved
in writing by the Owner Participant and the Indenture Trustee, which approval
shall not be unreasonably withheld.
"Person" shall mean and include any individual person,
corporation, partnership, firm, joint stock company, joint venture, trust,
estate, unincorporated organization, association, Governmental Entity, or
organization or association of which any of the above is a member or a
participant.
"Purchase Agreement" shall mean the Amended and Restated
Airbus A310/A320 Purchase Agreement, dated as of May 1, 1985, as amended and
restated as of December 30, 1988 (insofar as the same relates to Model A320
Aircraft), between Manufacturer's Subsidiary and Xxxxxxx, Inc., including the
Consent and Guaranty, together with Letter Agreements, Exhibits and Appendices
thereto, as partially assigned to Parent pursuant to the Partial Assignment, to
which Airbus Industrie, as guarantor, has consented, and as the same may from
time to time be further amended, supplemented or otherwise modified to the
extent permitted by the terms thereof.
"Purchase Documents" shall mean the Purchase Agreement,
the Partial Assignment and any other agreement, document or certificate
delivered or entered into pursuant to the foregoing, as amended, supplemented or
otherwise modified.
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"Removable Part" shall have the meaning set forth in
Section 9(b).
"Renewal Rent" shall mean the rent payable pursuant to
Section 20.
"Renewal Rent Payment Date" shall mean each day determined
in accordance with Exhibit C upon which a payment of Renewal Rent becomes
payable.
"Renewal Term" shall mean the period described in Section
20 following the end of the Basic Term if Lessee shall have exercised its
renewal option in accordance with Section 20.
"Rent" shall mean Basic Rent or Renewal Rent, as the case
may be, and Supplemental Rent, collectively.
"Replacement Airframe" and "Replacement Engine" shall have
the meanings specified in accordance with their description in Section 11.
"Replacement Period" shall have the meaning specified in
Section 11.
"Responsible Officer" shall mean, with respect to Lessee,
any of the Chief Executive Officer, Chief Financial Officer, Chief Operating
Officer or Controller.
"Restricted Use Period" shall have the meaning specified
in Exhibit C.
"Return Occasion" shall mean the event that occurs when
possession of the Aircraft is to be returned from Lessee to Lessor at the end of
the Term of this Lease or upon Lessor taking possession pursuant to Section 18
or for any other reason.
"Specified Investments" shall mean (i) direct obligations
of the United States Government, the obligations of which bear the full faith
and credit of the United States; (ii) obligations fully guaranteed by the United
States; (iii) certificates of deposit issued by any commercial bank incorporated
under the laws of the United States or one of the States thereof (but not
exceeding $10,000,000 in principal amount or deposits at any given time for any
one bank) having a combined capital surplus and undivided income of at least
$750,000,000 and having a rating of "B" or better from Xxxxxxxx BankWatch, Inc.;
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23
(iv) repurchase agreements (but not exceeding $10,000,000 in principal amount or
deposits at any given time for any one bank) with any financial institution
having combined capital and fully collateralized by an obligation of the type
described in clauses (i) through (iii) as collateral pursuant to which an entity
referred to in clause (iii) above or another financial institution having a net
worth of at least $750,000,000 and having a rating of "B" or better from
Xxxxxxxx BankWatch, Inc. is obligated to repurchase any such obligation not
later than ninety (90) days after the purchase of any such obligation; and (v)
money market funds which invest solely in obligations described in clause (i);
provided that if all of the above investments are unavailable, the entire
amounts to be invested may be used to purchase Federal funds from an entity
described in clause (iii) above; and provided further that no investment shall
be eligible as a "Specified Investment" unless the final maturity or date of
return of such investment is on or before the date which is ninety (90) days
from the date of purchase thereof.
"Stipulated Loss Value" shall mean as of the applicable
date during the Basic Term the amount set forth on Exhibit A hereto and,
thereafter, the amount described in Section 20 (ii) (it being understood and
agreed that the amounts set forth in Exhibit A take into account fully the
amount and application of each installment of Basic Rent or Renewal Rent on each
Stipulated Loss Value Date (other than a Stipulated Loss Value Date that is a
Basic Rent Payment Date or Renewal Rent Payment Date) so that no additional
credit of such Basic Rent or Renewal Rent is to be made in respect thereof
except as expressly provided herein on a Basic Rent Payment Date or a Renewal
Rent Payment Date). In the event that it is necessary to determine a separate
Stipulated Loss Value for the Airframe or an Engine, such Stipulated Loss Value
shall be based on the ratio that the original cost to Lessor of the Airframe or
such Engine bears to Lessor's Cost (as set forth in the Original Head Lease) for
the Aircraft.
"Stipulated Loss Value Date" shall mean each monthly date
listed, or with respect to any Renewal Term determined as set forth on, Exhibit
A hereto.
"Supplemental Rent" shall mean any and all amounts,
liabilities and obligations other than Basic Rent and Renewal Rent which Lessee
assumes or agrees to pay to Lessor or any other Indemnitee hereunder or under
any other Operative Document, including, without limitation, (i) any
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24
payment of Stipulated Loss Value and any payment provided for in Section 11 or
18; (ii) any payment of indemnity required by Section 10 or 13 hereof; (iii) any
payment of an amount equal to average daily Basic Rent or Renewal Rent in
connection with an extension of the Term of this Lease as a result of the need
to correct any failure of the Aircraft to satisfy the requirements of Section 16
hereof; (iv) [Intentionally Left Blank]; (v) an amount equal to any payment due
to Owner Trustee in respect of fees or expenses as provided in Section 21(j)
hereof; (vi) an amount equal to any payment due to Indenture Trustee in respect
of fees or expenses as provided in [the Indenture and/or] the Refunding
Agreement and/or Section 21(j) hereof; (vii) Lessor's pro rata share of any
payment due to any Pass-Through Trustee in respect of fees or expenses pursuant
to the Pass-Through Trust Agreement and/or the Refunding Agreement; (viii)
Lessor's pro rata share of any payment due to the Subordination Agent in respect
of fees, compensation, costs or expenses pursuant to the Intercreditor Agreement
and/or the Refunding Agreement; (ix) an amount equal to the amount payable by
Owner Trustee pursuant to Section 2.02 of the Indenture in respect of the amount
referred to as Net Interest and Related Charges (as defined therein) referred to
therein; and (x) to the extent permitted by applicable Law, interest at the
Interest Rate (all computations of interest under this Lease to be made on the
basis of a 360-day year, as applicable, and twelve 30-day months) calculated:
(1) on any part of any installment of Basic Rent or Renewal Rent, as the case
may be, not paid on the due date thereof for the period for which the same shall
be overdue and (2) on any Supplemental Rent not paid when due hereunder from and
including the due date until the same shall be paid. As used herein, "Lessor's
pro rata share" means as of any date of determination a fraction the numerator
of which is the aggregate Principal Amount then outstanding of the Equipment
Notes issued under the Indenture and the denominator of which is the aggregate
principal balance then outstanding of all Equipment Notes issued under the
Indentures (as defined in the Intercreditor Agreement).
"Tax Indemnification Agreement" shall mean the Amended and
Restated Sublease Tax Indemnification Agreement [GPA 1989 BN-10], dated as of
December 19, 1989, as amended and restated as of October 1, 1991, and as amended
and restated as of the Restatement Date, between Original Head Lessee and
Lessee, as the same may be amended, supplemented or otherwise modified from time
to time.
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"Taxes" shall mean any and all fees (including, without
limitation, license and registration fees), taxes (including, without
limitation, sales, personal property (tangible and intangible), transfer, fuel,
leasing, use, occupational, value added, excess profits, excise, gross receipts,
franchise, stamp, and income taxes), levies, imposts, withholdings, assessments,
or other taxes, duties or charges of any nature whatsoever, together with any
penalties, fines, additions to tax charges or interest thereon or computed with
reference thereto.
"Term" shall mean, collectively, the Basic Term specified
in Lease Supplement No. 3 and, if Lessee extends the Term in accordance with
Section 20, the Renewal Term, for which the Aircraft is leased hereunder
pursuant to Section 2.
"Trust Agreement" shall mean the Trust Agreement [GPA 1989
BN-10] dated as of December 19, 1989 as amended by Trust Supplement No. 1, as
further amended by Trust Supplement No. 2 and as further amended by Trust
Supplement No. 3, between Lessor, in its individual capacity, and Owner
Participant, as beneficiary, as the same may be amended, supplemented or
otherwise modified from time to time. The term "Trust Agreement" shall also
include the Trust Supplements.
"Trust Estate" shall have the meaning specified in the
Trust Agreement.
"Trust Supplement" shall mean Trust Supplement Xx. 0,
Xxxxx Xxxxxxxxxx Xx. 0, Trust Supplement No. 3 and each subsequent Trust
Supplement entered into thereunder and any further supplement to the Trust
Agreement.
"Trust Supplement No. 1" shall mean Trust Agreement
Supplement [GPA 1989 BN-10] No. 1 dated the Delivery Date between Lessor and
Owner Participant for the purpose of bringing the Aircraft and the Original Head
Lease into the Trust Estate.
"Trust Supplement No. 2" shall mean Trust Agreement
Supplement [GPA 1989 BN-10] No. 2 dated October 24, 1991 between Lessor and
Owner Participant.
"Trust Supplement No. 3" shall mean Trust Agreement
Supplement [GPA 1989 BN-10] No. 3 dated the Restatement Date between Lessor and
Owner Participant conforming the references therein to this Agreement.
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"United States Government" shall mean the federal
government of the United States of America and any board, commission,
department, division, organ, instrumentality, court or agency thereof.
"Wet Lease" shall mean any arrangement whereby Lessee
agrees to furnish the Aircraft or the Airframe and Engine or engines installed
thereon at that time to a third party pursuant to which such Aircraft or the
Airframe and Engine or engines (i) shall be operated solely by regular employees
of Lessee (or any Permitted Sublessee) possessing all current certificates and
licenses required under the Federal Aviation Act or, if the Aircraft is not
registered under the Federal Aviation Act, all certificates and licenses
required by the laws of the jurisdiction of registry (it is understood that
cabin attendants need not be regular employees of Lessee (or any Permitted
Sublessee)) and Lessee (or any Permitted Sublessee) otherwise maintains
operational control and possession thereof, and (ii) shall be maintained by
Lessee (or any Permitted Sublessee) in accordance with its normal maintenance
practices and this Lease, and otherwise the insurance required hereunder shall
be maintained and the Aircraft shall be used and operated in accordance with
this Lease.
Section 2. Agreement to Lease. Lessor hereby agrees to
lease the Aircraft to Lessee, and Lessee hereby agrees to lease the Aircraft
from Lessor, on the terms and subject to the conditions set forth in this Lease.
Section 3. Delivery and Acceptance; Term; Rental Period.
(a) Time of Delivery. The Aircraft was delivered to
Lessee, and Lessee accepted delivery of the Aircraft, on December 22, 1989.
(b) Place of Delivery and Acceptance. The Aircraft was
delivered to and accepted by Lessee at the Delivery Location.
(c) Acceptance of Aircraft. The Aircraft leased hereunder
was delivered to Lessee "AS IS," "WHERE IS" and SUBJECT TO EACH AND EVERY
DISCLAIMER OF WARRANTY AND REPRESENTATION AS SET FORTH IN SECTIONS 5(a) AND (b)
HEREOF.
Lessee hereby agrees that it has accepted the Aircraft for
all purposes of this Lease and Lessee's acceptance of the Aircraft was
conclusive evidence that, as
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between Lessor and Lessee, the Aircraft was in all respects satisfactory to
Lessee and was in compliance with this Lease.
(d) Term of Lease. The Basic Term of this Lease shall
commence on the Delivery Date and shall continue until the Expiration Date;
provided, however, that the Term of this Lease may be earlier terminated
pursuant to the provisions hereof.
(e) Rental Period. Lessor and Lessee agree that the period
between each Basic Rent Payment Date shall constitute a rental period for
purposes of Section 467 of the Code.
Section 4. Rent; Minimum Payments.
(a) Rent. Lessee covenants and agrees to pay the following
as Rent hereunder:
(i) Basic Rent. The Basic Rent, as set forth in
Exhibit C throughout the Basic Term hereof, in consecutive installments, in
advance and allocable to the rental period beginning on such date, as set forth
on Schedule I to Exhibit C, due and payable on each Basic Rent Payment Date; and
(ii) Supplemental Rent. Any and all Supplemental Rent,
which shall be due and payable within fifteen (15) days after demand unless
otherwise specifically provided. In the event of any failure on the part of
Lessee to pay any Supplemental Rent when due, Lessor shall have all rights,
powers and remedies provided for herein or by law or equity or otherwise in the
case of nonpayment of Basic Rent or Renewal Rent.
(b) Minimum Payments. Notwithstanding any provision in
this Lease or in any other Operative Document to the contrary, under all
circumstances and in any event, (i) the Stipulated Loss Value, together with the
payment of Supplemental Rent and all other Rent then due hereunder, as of any
time and as of the date of any payment thereof shall (both before and after
giving effect to any reductions therefrom) be in an amount at least sufficient
to pay in full as of such time or date the aggregate unpaid principal amount of
the Equipment Notes then outstanding and all accrued and unpaid interest
(assuming interest has been timely paid) thereon and (ii) Basic Rent payable on
any Basic Rent Payment Date shall at least equal the aggregate
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amount of principal and interest due and payable on the Equipment Notes on such
Basic Rent Payment Date. It is agreed, however, that no installment of Basic
Rent or Stipulated Loss Value shall be increased or adjusted by reason of (A)
any attachment or diversion of Rent on account of any Lessor's Lien or Head
Lessor's Lien or any Lenders' Lien, (B) any modification of the terms of the
Equipment Notes or the other Financing Documents made without the prior written
consent of Lessee or (C) the acceleration of any Equipment Note due to the
occurrence of any "Indenture Event of Default" (as defined in the Indenture)
which does not constitute an Event of Default hereunder. It is further agreed
that nothing in this Lease or any other Operative Document shall be deemed to
constitute a guaranty of the value, utility or useful life of the Aircraft or a
guaranty in respect of interest, principal or any other amounts payable in
respect of or under the Equipment Notes.
(c) Date, Place and Method of Payment. If any date on
which a payment of Rent becomes due and payable is not a Business Day, the Rent
otherwise due on such date shall be due and payable on the next succeeding
Business Day. All Basic Rent, Renewal Rent and Supplemental Rent payable under
this Lease shall be paid by wire transfer in immediately available currency of
the United States of America, no later than 12:00 p.m. (noon), New York City
time, on the date payable hereunder, and, so long as the Lien of the Indenture
shall not have been discharged, to Indenture Trustee in accordance with the
payment instructions set forth in Exhibit C hereto or at such other address in
The City of New York as Indenture Trustee may direct by thirty (30) days prior
written notice to Lessee, except that all Excepted Payments, and upon discharge
of the Lien of the Indenture, all payments of Rent thereafter made hereunder,
shall be paid in such immediately available funds no later than 12:00 p.m.
(noon), New York City time, on the date payable hereunder, to Lessor or to Owner
Participant, as appropriate, in accordance with the payment instructions set
forth in Exhibit C or at such other address in The City of New York as Lessor
may direct by thirty (30) days prior written notice to Lessee.
(d) Prohibition Against Setoff, Counterclaim, Etc. This
Lease is a net lease. Lessee's obligations to pay all Rent and to perform all
other obligations hereunder are absolute and unconditional and shall not be
affected or reduced by any circumstances, including, without limitation, (i) any
setoff, counterclaim, recoupment, defense, or other right which Lessee may have
against Lessor, Original Head
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Lessee, Owner Participant, Indenture Trustee, any Note Holder, any Manufacturer,
any Person providing services with respect to the Aircraft, or any other Person,
for any reason whatsoever (whether in connection with the transactions
contemplated hereby or otherwise), including, without limitation, any breach by
Lessor of its representations, warranties or covenants contained herein or in
the other Operative Documents; (ii) any defect in the title, airworthiness,
eligibility for registration under the Federal Aviation Act, condition, design,
operation, or fitness for use of, or any damage to or loss or destruction of,
the Aircraft (subject to the provisions of Section 11(a)(ii) hereof), any
interruption or cessation in the use of or possession thereof by or availability
to Lessee for any reason whatsoever, whether arising out of or related to an act
or omission of Lessee, Lessor, Original Head Lessee, Owner Participant,
Indenture Trustee, any Note Holder, any Manufacturer, any Person providing
services with respect to the Aircraft or any other Person; (iii) any Liens with
respect to the Aircraft; (iv) the invalidity or unenforceability or lack of due
authorization or other infirmity of this Lease or any absence of right, power or
authority of Lessor, Original Head Lessee, Lessee or Indenture Trustee to enter
into this Lease or the Indenture, as the case may be; (v) any insolvency,
bankruptcy, reorganization, or similar proceedings by or against Lessor,
Original Head Lessee, Lessee, any Permitted Sublessee, Indenture Trustee or any
Note Holder; (vi) any Taxes or (vii) any other circumstance or happening of any
nature whatsoever, whether or not similar to any of the foregoing; it being the
expressed intention of Lessor and Lessee that all Rent payable hereunder shall
be payable in all events, unless the obligation to pay the same shall be
terminated pursuant to the express provisions of this Agreement.
Except as expressly set forth elsewhere in this Agreement,
Lessee hereby waives, to the extent permitted by applicable Law, any and all
rights which it may now have or which at any time hereafter may be conferred
upon it, by statute or otherwise, to terminate, xxxxx, cancel, quit, reduce,
defer, suspend or surrender this Lease or the Aircraft or any obligation imposed
upon Lessee hereunder or under the other Operative Documents (including, without
limitation, payment of Rent), except in accordance with the terms hereof.
Each payment of Rent made by Lessee shall be final. Lessee
will not seek to recover all or any part of
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any payment of Rent for any reason whatsoever except manifest error.
If for any reason whatsoever this Lease shall be
terminated in whole or in part by operation of Law, except as specifically
provided herein, Lessee waives all rights (if any) to any diminution in its Rent
obligations hereunder and nonetheless agrees to pay to Indenture Trustee or
Lessor as provided in Section 4(c) hereof an amount equal to each Basic Rent or
Renewal Rent, as the case may be, payment and any Supplemental Rent payment at
the time such payments would have become due and payable in accordance with the
terms hereof had this Lease not been terminated in whole or in part, and so long
as such payments are made and all other terms and conditions hereof are complied
with by Lessee, Lessor and Lessee will deem this Lease to remain in full force
and effect.
The foregoing shall not, however, be construed as a waiver
of Lessee's other rights to seek damages, specific performance, other remedies
at law or equity or any combination thereof, as against the Original Head
Lessee, Lessor, Indenture Trustee or any other Person having an interest herein
through the Original Head Lessee, Lessor, Indenture Trustee or any other Person
as shall be liable therefor, on account of any failure of the Original Head
Lessee, Lessor, Indenture Trustee or any other such Person to perform its
express obligations under this Lease and the other Operative Documents, or to
enforce any judgment obtained therefor.
Section 5. Representations, Warranties and Covenants.
(a) Warranties and Disclaimer of Warranties. THE AIRCRAFT
WAS DELIVERED AND IS BEING LEASED BY LESSOR TO LESSEE "AS IS" AND "WHERE IS".
LESSEE EXPRESSLY AGREES THAT IT TOOK THE AIRCRAFT ON SUCH BASIS. LESSOR HAS NOT
AND SHALL NOT BE DEEMED TO HAVE MADE, BY VIRTUE OF HAVING LEASED THE AIRCRAFT
UNDER THIS LEASE OR BY ONE OF ITS AFFILIATES HAVING ACQUIRED THE AIRCRAFT OR
DONE OR FAILED TO DO ANY ACT OR ACQUIRED OR FAILED TO ACQUIRE ANY STATUS UNDER
OR IN RELATION TO THIS LEASE, AND LESSOR HEREBY SPECIFICALLY DISCLAIMS, ANY
GUARANTY, REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE
(EXCEPT AS HEREINBELOW PROVIDED), AIRWORTHINESS, VALUE, CONDITION, DESIGN,
OPERATION, MERCHANTABILITY, OR FITNESS FOR USE FOR A PARTICULAR OR ANY PURPOSE
OF THE AIRCRAFT, OR AS TO THE QUALITY OF THE MATERIAL OR WORKMANSHIP OF THE
AIRCRAFT, THE
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ABSENCE THEREFROM OF LATENT OR OTHER DEFECTS WHETHER OR NOT DISCOVERABLE, THE
ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR COPYRIGHT OR AS TO ANY
OTHER GUARANTY, REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, WITH
RESPECT TO THE AIRCRAFT, INCLUDING WITHOUT LIMITATION ANY LIABILITY IN TORT,
OBLIGATION OR LIABILITY ARISING FROM NEGLIGENCE, STRICT LIABILITY, ANY IMPLIED
WARRANTY ARISING FROM COURSE OF PERFORMANCE OR DEALING OR USAGE OR TRADE, OR
LOSS OR INTERRUPTION OF USE, PROFIT, OR BUSINESS, OR OTHER CONSEQUENTIAL
DAMAGES; AND LESSEE HEREBY WAIVES, RELEASES, RENOUNCES AND DISCLAIMS EXPECTATION
OF OR RELIANCE UPON ANY SUCH GUARANTY, REPRESENTATION OR WARRANTIES. NEITHER
LESSOR NOR ANY OTHER INDEMNITEE SHALL HAVE ANY RESPONSIBILITY OR LIABILITY TO
LESSEE OR ANY OTHER PERSON, REGARDLESS OF ANY NEGLIGENCE (OTHER THAN ITS OWN
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT WHICH IS NOT ATTRIBUTABLE TO ITS INTEREST
IN THE AIRCRAFT) OF LESSOR OR ANY OTHER INDEMNITEE, AND LESSEE HEREBY WAIVES,
RELEASES, RENOUNCES AND DISCLAIMS ANY RIGHTS OR REMEDIES, WITH RESPECT TO (i)
ANY LIABILITY, LOSS OR DAMAGE CAUSED OR ALLEGED TO BE CAUSED DIRECTLY OR
INDIRECTLY BY THE AIRCRAFT OR BY ANY INADEQUACY THEREOF OR DEFICIENCY OR DEFECT
THEREIN OR BY ANY OTHER CIRCUMSTANCE IN CONNECTION THEREWITH, (ii) THE USE,
OPERATION OR PERFORMANCE OF THE AIRCRAFT OR ANY RISKS RELATING THERETO, (iii)
ANY INTERRUPTION OF SERVICE, LOSS OF BUSINESS OR ANTICIPATED PROFITS OR DIRECT,
INCIDENTAL OR CONSEQUENTIAL DAMAGES OR (iv) THE DELIVERY, OPERATION, SERVICING,
MAINTENANCE, REPAIR, IMPROVEMENT OR REPLACEMENT OF THE AIRCRAFT. THE WARRANTIES
AND REPRESENTATIONS SET FORTH IN THIS SECTION 5(a) ARE EXCLUSIVE AND IN LIEU OF
ALL OTHER REPRESENTATIONS OR WARRANTIES WHATSOEVER WITH RESPECT TO THE AIRCRAFT,
EXPRESS OR IMPLIED, AND LESSOR SHALL NOT BE DEEMED TO HAVE MADE ANY OTHER
IMPLIED WARRANTIES, OR GUARANTEES, INCLUDING BUT NOT LIMITED TO ANY IMPLIED
WARRANTY OF MERCHANTABILITY, ANY IMPLIED WARRANTY ARISING FROM COURSE OF
PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE, OR ANY IMPLIED WARRANTY OF
FITNESS FOR A PARTICULAR OR ANY USE, EXCEPT THAT: Lessor represents and warrants
that (x) on the Delivery Date Lessor had, and on the Restatement Date Lessor
has, the right to lease the Aircraft hereunder, (y) on the Delivery Date the
Aircraft was, and on the Restatement Date the Aircraft is, free of Lessor's
Liens and Head Lessor's Liens, and (z) on the Restatement Date Lessor has such
title to the Aircraft as was transferred to it on the Delivery Date and (B)
Lessor covenants that it shall maintain such title to the Aircraft as was
transferred to it on the Delivery Date and shall not create, incur, assume or
suffer to exist any Lessor's Lien or Head Lessor's Lien on the Aircraft.
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(b) Representations and Warranties of Lessor. Lessor
hereby represents and warrants, as of the Delivery Date and as of the
Restatement Date that its representations and warranties set forth in Section
9(b) of the Refunding Agreement were true when made and continue to be true and
correct.
(c) No Amendments to Financing Documents. Lessor covenants
and agrees that Lessor will not, without the prior written consent of Lessee,
amend, modify, supplement or waive any provision of any Financing Document in
such a way as to materially increase Lessee's obligations hereunder or
materially reduce Lessee's rights hereunder.
The representations, warranties and covenants of Lessor
under Sections 5(a) and 5(b) and this Section 5(c) shall survive the execution
and delivery of this Lease and the delivery of the Aircraft and the Restatement
Date.
(d) Suppliers' Warranties. So long as a Default or an
Event of Default has not occurred and is continuing and provided that the
Aircraft continues to be maintained, modified and repaired as required
hereunder, Lessor hereby assigns or, if by their terms not assignable, agrees
otherwise to make available to Lessee the right to exercise in Lessee's name
such rights as Lessor may have or may subsequently obtain (but without
representation or warranty by or recourse to Lessor) with respect to any product
warranty, service life policy, trademark, patent or copyright infringement
indemnity, or airframe or propulsion system performance guaranty, of Airbus
Industrie, the Manufacturer's Subsidiary, IAE or any subcontractor or vendor
with respect thereto under the Purchase Agreement (except those which were given
directly to Parent, the Original Head Lessee or any of their Affiliates and are
not directly related to the operator's use of the Aircraft), to the extent that
the same may be assigned or otherwise made available to Lessee, and Lessor
agrees to exert its reasonable efforts, at Lessee's expense and upon its
request, to enforce such rights as Lessor may have with respect thereto for the
benefit of Lessee; provided, however, that upon and during the continuance of a
Default or an Event of Default, such assignment or other rights which are
otherwise made available to Lessee shall immediately and automatically without
further action be deemed cancelled and, to the extent of any remaining interest
held by Lessee, deemed reassigned to Lessor and all such rights shall revert to
Lessor automatically including all claims thereunder whether or not perfected
and all
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amounts payable shall be paid to and held by Lessor. In no event, however, shall
Lessee have any right to amend, supplement or otherwise modify the Purchase
Agreement (by change order or otherwise). In connection with the foregoing,
Lessee agrees to be bound by and comply with all applicable terms, conditions
and limitations of the provisions of the Purchase Agreement.
Section 6. Possession and Use.
(a) Possession.
(i) Lease, Assignment and Transfer. LESSEE
WILL NOT ASSIGN THIS LEASE OR ANY RIGHTS OR OBLIGATIONS HEREUNDER OR INTEREST
HEREIN (EXCEPT AS PROVIDED IN SECTION 8(e) BELOW) OR SUBLEASE, WET LEASE OR
OTHERWISE IN ANY MANNER TRANSFER, DELIVER OR RELINQUISH POSSESSION OR USE OF THE
AIRCRAFT, AIRFRAME OR ANY ENGINE OR INSTALL ANY ENGINE OR PERMIT ANY ENGINE TO
BE INSTALLED ON ANY AIRFRAME OTHER THAN THE AIRFRAME; provided, that, so long as
no Event of Default or Default shall have occurred and be continuing or would
result therefrom and so long as the action to be taken shall not adversely
affect Lessor's title to or other interest in, or the Lien of the Indenture on,
the Aircraft, the Airframe or either of the Engines or this Lease or the
insurance required to be maintained hereunder and Lessee is otherwise in full
compliance with Section 12, and so long as all necessary approvals of the FAA
and any other Governmental Entity having jurisdiction have been obtained, then
Lessee, without the prior written consent of Lessor, may, only to the extent
provided below and subject to the limitations of Sections 6(a)(ii) and 6(a)(iii)
below:
(1) subject any Engine to a normal interchange,
maintenance, servicing or pooling agreement or similar arrangement
with a Permitted Sublessee, in each case customary in the airline
industry of which Lessee is a part and entered into in the
ordinary course of its business; provided that no transfer of the
registration of any Engine shall be effected in connection
therewith; and provided, further, that (A) no such agreement or
arrangement contemplates, results in or requires the transfer of
title to any Engine, and (B) if Lessor's title to any Engine shall
be divested under any such agreement or arrangement, such
divestiture shall be deemed to be an Event of Loss with respect to
such Engine and not an Event of Default and Lessee shall comply
with Section 11(b) hereof in respect thereof;
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(2) deliver possession of the Aircraft, the Airframe or
any Engine to the manufacturer thereof, or in accordance with the
Maintenance Program to an FAA certified repair station, for
testing, service, storage, repair, maintenance, inspection or
overhaul work on such Aircraft, Airframe or Engine or any part
thereof or for alterations or modifications in or additions to
such Aircraft, Airframe or Engine to the extent required or
permitted by the terms of Section 9 hereof;
(3) transfer possession of the Aircraft or the
Airframe to the United States of America or any
instrumentality or agency thereof pursuant to a
sublease;
(4) (i) subject the Airframe to the Civil Reserve Air
Fleet Program and transfer possession of the Airframe or any
Engine to the United States Government pursuant to the Civil
Reserve Air Fleet Program, so long as Lessee shall promptly notify
Lessor upon transferring possession of the Airframe or any Engine
to the United States Government pursuant to the Civil Reserve Air
Fleet Program and provide Lessor with the name and address of the
Contracting Office Representative for the Military Airlift Command
of the United States Air Force to whom notices must be given; or
(ii) subject the Airframe to (a) a service contract with
the United States Government, a copy of which shall be provided to
Lessor, providing for possession to be held by the United States
Government for a period not extending beyond the end of the Term,
or (b) a requisition for use by the United States Government not
constituting an Event of Loss;
(5) install an Engine on an airframe (other than the
Airframe) owned by Lessee free and clear of all Liens except (A)
Permitted Liens and Liens which apply only to engines (other than
the Engines), appliances, parts, instruments, appurtenances,
accessories, furnishings and other equipment (other than Parts)
installed on such airframe (but not to the airframe as an
entirety) and (B) the rights of participants under normal
interchange agreements which are customary in the airline industry
and do not contemplate, permit, result in or require the transfer
of title to the airframe or engines installed thereon;
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(6) install an Engine on an airframe leased to Lessee or
owned by Lessee subject to a conditional sale or other security
agreement; provided that: (A) such airframe is free and clear of
all Liens except the rights of the parties to the lease or
conditional sale or other security agreement covering such
airframe and except Liens of the type permitted by clauses (A) and
(B) of Section 6(a)(i)(5) and the Lien of any mortgage which
provides that each Engine leased to Lessee hereby shall not become
subject to the lien thereof or to any rights of any party
thereunder other than Lessee (with respect to Lessee's rights
expressly granted hereunder), notwithstanding the installation of
such Engine on any airframe subject to the Lien of such mortgage,
unless and until Lessee shall become the owner of such Engine and
Lessor shall have no further interest therein, all pursuant to the
express terms of this Lease; and (B) there shall be in effect a
written agreement of the lessor or secured party of such airframe
(which may be contained in the lease or conditional sale or other
security agreement covering such airframe) substantially similar
in effect to the agreement of Lessor in Section 6(b) below whereby
such lessor or secured party effectively and expressly agrees that
neither it nor its successors or assigns will acquire or claim any
right, title or interest in any Engine by reason of such Engine
being installed on such airframe at any time while such Engine is
subject to this Lease or is owned by Lessor, and a copy of such
agreement shall be provided to Lessor upon written request;
(7) install an Engine on an airframe owned by Lessee,
leased to Lessee or purchased by Lessee subject to a conditional
sale or other security agreement under circumstances where neither
Section 6(a)(i)(5) or Section 6(a)(i)(6) is applicable; provided
that such installation shall be deemed an Event of Loss with
respect to such Engine and Lessee shall comply with Section 11(b)
hereof in respect thereof, Lessor not intending hereby to waive
any right or interest it may have to or in such Engine under
applicable law until compliance by Lessee with such Section 11(b);
(8) enter into a Wet Lease for the Aircraft or the
Airframe and engines installed thereon in the ordinary course of
Lessee's business for a period not extending beyond the Term;
provided that if Lessee (or any Permitted Sublessee) shall enter
into any Wet Lease for
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a period of more than one year (including renewal options) Lessee
shall provide to Lessor written notice of such Wet Lease (such
notice to be given prior to entering into such Wet Lease, if
practicable, but in any event promptly after entering into such
Wet Lease); or
(9) sublease the Aircraft or the Airframe to any
Permitted Sublessee on the terms and conditions set
forth in Section 6(a)(iii) below.
(ii) Certain Limitations on Transfers. With respect to any
transfer pursuant to Section 6(a)(i):
(1) the rights of any transferee that receives possession
by reason of a transfer permitted by Section 6(a) hereof (other
than the transfer of an Engine which is deemed to have been an
Event of Loss) shall be expressly subject and subordinate to all
the terms of this Lease and the Lien of the Indenture (if it has
not been discharged);
(2) Lessee's obligations hereunder shall continue in full
force and effect and Lessee shall remain primarily liable
hereunder for the performance of all of the terms of this Lease to
the same extent as if such transfer had not occurred and no
provision of this Lease shall be deemed a waiver of Lessor's
rights hereunder or under the other Operative Documents nor
discharge or diminish any of Lessee's obligations hereunder or
under the other Operative Documents;
(3) During the Restricted Use Period, no Wet Lease,
Permitted Sublease or other relinquishment of possession of the
Aircraft, the Airframe or any Engine pursuant to the terms of this
Section 6(a) shall be permitted if such Wet Lease, Permitted
Sublease or other relinquishment of possession would cause the
Aircraft, the Airframe or such Engine to be "tax-exempt use
property" within the meaning of Section 168(h) of the Code or
cease to be "Section 38 property" within the meaning of Section
48(a) of the Code (as determined after the application of Section
47(a)(7) of the Code);
(4) The term of any transfer, Wet Lease, Permitted
Sublease or other relinquishment of possession shall not extend
beyond the Basic Term or the Renewal Term (if Lessee shall have
exercised its option to renew this Lease in accordance with the
terms hereof); and
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(5) No transfer, Wet Lease, Permitted Sublease or other
relinquishment of possession of the Aircraft, the Airframe or any
Engine shall in any way discharge or diminish any of Lessee's
obligations to Lessor or any other Lessor hereunder for which
obligations Lessee shall remain primarily liable.
(iii) Permitted Subleases. With respect to
any sublease pursuant to Sections 6(a)(i)(3) or (4) (to the extent permitted by
Law) or Section 6(a)(i)(9) above:
(1) Lessee may sublease the Aircraft or the Airframe to a
Permitted Sublessee (each of which shall constitute a "Permitted
Sublease") if (A) in any such case, the Permitted Sublessee under
such sublease is not subject to a proceeding or final order under
applicable bankruptcy, insolvency or reorganization laws on the
date such sublease is entered into, (B) in the event that the
Permitted Sublessee under such sublease is a Foreign Air Carrier
(other than a Foreign Air Carrier principally based in Taiwan),
the United States maintains diplomatic relations with the country
in which such proposed Permitted Sublessee is principally based at
the time such sublease is entered into (or, in the case of a
sublease to a proposed Permitted Sublessee principally based in
Taiwan, maintains diplomatic relations at least as good as those
in effect on the Restatement Date) and (C) in the event that the
Permitted Sublessee under such sublease is a Foreign Air Carrier,
Lessor and the Indenture Trustee shall have received an opinion of
counsel to Lessee, in form and substance reasonably satisfactory
to Owner Participant and the Indenture Trustee, to the effect that
(I) the terms of the proposed sublease will be legal, valid,
binding and (subject to customary exceptions in foreign opinions
generally) enforceable against the proposed Permitted Sublessee in
the country in which the Permitted Sublessee is principally based,
(II) there exist no possessory rights in favor of the Permitted
Sublessee under such sublease under the laws of such Permitted
Sublessee's country of domicile that would, upon bankruptcy or
insolvency of or other default by Lessee, prevent the return or
repossession of the Aircraft in accordance with the terms of this
Lease, (III) (unless Lessee shall have agreed or is required to
provide insurance covering the risk of requisition of use of the
Aircraft by the government of the country of such Permitted
Sublessee's country of domicile) the laws of such Permitted
Sublessee's
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country of domicile require fair compensation by the government of
such jurisdiction payable in currency freely convertible into
dollars for the loss of use of the Aircraft in the event of the
requisition by such government of such use, (IV) the Permitted
Sublessee is either not entitled to sovereign immunity, or has
effectively waived such sovereign immunity, with respect to its
rights and obligations under the proposed sublease; (V) the laws
of such Permitted Sublessee's country of domicile would give
recognition to Lessor's title to the Aircraft, to the registry of
the Aircraft in the name of the Lessor (or Lessee, as "lessee", or
the proposed Permitted Sublessee, as "sublessee", as appropriate)
and to the Lien of the Indenture; (VI) it is not necessary under
the laws of such Permitted Sublessee's country of domicile, solely
as a consequence of such subleasing and without giving effect to
any other activity of Owner Participant, Owner Trustee or
Indenture Trustee or any Affiliate thereof, as the case may be,
for the Owner Trustee, the Owner Participant or the Indenture
Trustee to qualify to do business in such jurisdiction; and (VII)
if the Owner Participant so requests, (x) under the laws of such
Permitted Sublessee's country of domicile there is no tort
liability of the owner of an aircraft not in possession thereof
(it being agreed that in the event this opinion cannot be given in
a form reasonably satisfactory to Owner Participant, such opinion
shall be waived if insurance reasonably satisfactory to Owner
Participant is provided to cover such risk), and (y) such other
matters as the Owner Participant reasonably requests, provided,
however, that no sublease shall extend beyond the expiration of
the Basic Term or any Renewal Term then in effect.
The rights of any Permitted Sublessee shall be expressly
subject and subordinate to all the terms of this Lease and to the Lien of the
Indenture (if it has not been discharged), including, without limitation, the
covenants contained in Sections 6(c), 6(d) and 6(e) hereof and Lessor's rights
to repossession pursuant to Section 18 hereof and to avoid or terminate such
Permitted Sublease upon such repossession, and Lessee shall remain primarily
liable hereunder for the performance of all of the terms of this Lease to the
same extent as if such Permitted Sublease had not occurred. No Permitted
Sublease shall in any way discharge or diminish any of Lessee's obligations to
Lessor hereunder or constitute a waiver of Lessor's rights or remedies
hereunder. Any Permitted Sublease shall expressly
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prohibit any further sub-sublease by the Permitted Sublessee. Lessee shall
provide to the Owner Participant and the Indenture Trustee (i) written notice of
any Permitted Sublease hereunder (such notice to be given not later than ten
Business Days prior to entering into any Permitted Sublease with a Foreign Air
Carrier and, if practicable, not later than five days prior to entering into any
Permitted Sublease with any other proposed Permitted Sublessee, but, in the case
of a Permitted Sublease with a Permitted Sublessee other than a Foreign Air
Carrier, in any event promptly after entering to any such Permitted Sublease)
and (ii) a copy of each Permitted Sublease which has a term of more than three
months.
(b) Reciprocal Recognition of Rights. In the event the
lessor or secured party of any airframe leased to Lessee (or a Permitted
Sublessee) or owned by Lessee (or a Permitted Sublessee) is subject to a
conditional sale or other security agreement in accordance with Section
6(a)(i)(6) hereof, and the lease or conditional sale or other security agreement
covering such airframe also covers an engine or engines owned by the lessor
under such lease or subject to a security interest in favor of the secured party
under such conditional sale or other security agreement, Lessor hereby agrees
for the benefit of such lessor or secured party that Lessor will not acquire or
claim, as against such lessor or secured party, any right, title or interest in
any such engine as the result of such engine being installed on the Airframe at
any time while such engine is subject to such lease or conditional sale or other
security agreement and owned by such lessor or subject to a security interest in
favor of such secured party. Lessor also hereby agrees for the benefit of the
mortgagee under any mortgage complying with Section 6(a)(i)(6) hereof, relating
to installation of an Engine on an airframe leased to Lessee (or a Permitted
Sublessee), that Lessor will not acquire or claim, as against such mortgagee,
any right, title or interest in any engine subject to the lien of such mortgage
as the result of such engine being installed on the Airframe at any time while
such engine is subject to the lien of such mortgage.
(c) Lawful Insured Operations. Lessee will not permit the
Aircraft, the Airframe or any Engine to be serviced, repaired, maintained, used
or operated in violation of any Law of any Governmental Entity having
jurisdiction, or contrary to the Manufacturers' operating manuals or
instructions, or in violation of any airworthiness certificate or limitation,
license or registration
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issued by any such authority or any manufacturer's specifications, service
bulletins or other requirements, including, without limitation, such of any
manufacturer's requirements as may be applicable to keep in full force and
effect each material warranty, product or performance guaranty, service life
policy or the like, in each case, to the extent made mandatory for Part 121
operators similarly situated to Lessee or the Permitted Sublessee if the
Aircraft is registered with the FAA, or the applicable laws of any other
jurisdiction in which the Aircraft may then be registered in accordance with
Section 11 of the Refunding Agreement, unless the validity thereof is being
contested in good faith and by appropriate proceedings, but only so long as such
proceedings do not involve any danger of sale, forfeiture or loss of the
Aircraft or impair the interest of Lessor therein or impair the validity or
priority of the Lien of the Indenture or result in a risk of criminal liability
of Lessor or Indenture Trustee and are not inconsistent with any insurance
required to be maintained by Lessee hereunder. In the event that such Law or
other requirement requires alteration of the Aircraft during the Basic Term or
then-current Renewal Term, Lessee shall comply therewith at its sole expense and
shall maintain the same in proper condition for operation under such Laws and
other requirements. Lessee shall not operate in any manner or locate in any
place the Aircraft, or suffer or permit the Aircraft to be operated by a
Permitted Sublessee or otherwise in any manner or located by a Permitted
Sublessee or otherwise in any place (i) unless the Aircraft is covered by
insurance or United States Government indemnity as required by the provisions
hereof or (ii) contrary to the terms of such insurance or United States
Government indemnity. Lessee also agrees not to operate or locate the Aircraft
or suffer or permit the Aircraft to be operated or located in any area excluded
from coverage by any insurance policy issued pursuant to the requirements of
this Lease or in any war zone unless insured or indemnified by the United States
of America therefor, except in the case of operation pursuant to a sublease or
contract with, or as a result of a requisition (not constituting an Event of
Loss) by, the United States of America, and then only if Lessee has obtained
insurance or an indemnity (in lieu of such insurance) from the United States of
America covering such risks, in the amounts and otherwise as required by this
Lease.
(d) Maintenance. Lessee, at its own cost and expense,
shall (i) perform or cause to be performed all service, repair, maintenance,
overhaul, inspections,
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alterations, modifications, and testing (A) in accordance with good airline
industry practice and in such manner to provide complete data and documentation
necessary to substantiate certification, (B) as may be necessary and required
under, and in compliance with, applicable Law, including, without limitation,
FAA rules, regulations and other requirements, the Maintenance Program,
airworthiness directives having a compliance date during the Term, and the
service bulletins and other requirements of any manufacturer, including, without
limitation, such requirements as may be applicable to keep in full force and
effect any and all material warranties, product and performance guaranties,
service life policies, indemnities or the like, (C) except during any period
that a Permitted Sublease is in effect, in the same manner and with the same
care, including regard for the status and technical condition of the Aircraft,
as shall be the case with respect to similar aircraft and engines owned by
Lessee without discrimination and as if Lessee owned the Aircraft and was going
to use the Aircraft in continued regular customer service after the expiration
of the Term, and consistent with good industry practice, and during any period
in which a Permitted Sublease is in effect, in the same manner and with the same
care, including regard for the status and technical condition of the Aircraft,
as shall be the case with respect to similar aircraft and engines owned by such
Permitted Sublessee without discrimination and as if the Permitted Sublessee
owned the Aircraft and was going to use the Aircraft in continued regular
customer service after the expiration of the Permitted Sublease, and consistent
with good industry practice, provided, however, that in all circumstances the
Aircraft shall be maintained by Lessee (or any Permitted Sublessee) in
accordance with maintenance standards required by, or substantially equivalent
to those required by, the central civil aviation authority of the country of
registry and, to the extent not inconsistent therewith, the FAA and (D) so as to
keep the Aircraft in as good a condition as when delivered to Lessee, ordinary
wear and tear excepted, and in good operating condition; (ii) keep the Aircraft
or cause the Aircraft to be kept in such condition as is necessary to enable the
airworthiness certification of such Aircraft to be maintained in good standing
at all times under the Federal Aviation Act, or the applicable laws of any other
jurisdiction in which the Aircraft may be registered in accordance with Section
11 of the Refunding Agreement (provided that if any grounding is fleetwide in
nature and so long as Lessee or a Permitted Sublessee is contesting in good
faith such grounding, Lessee shall not be deemed in violation of this
maintenance covenant); and (iii)
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maintain in English all records, logs and other materials required by, and in a
manner acceptable to, the FAA or any other Governmental Entity having
jurisdiction and as provided under the Maintenance Program and Lessee's
recordkeeping policies.
(e) Registration and Insignia. Lessee shall cause the
Aircraft at all times, at its expense, to be duly registered during the
Restricted Use Period and, subject to Section 11 of the Refunding Agreement,
thereafter under the Federal Aviation Act in the name of Lessor or any successor
or assignee, so long as (i) while the Aircraft is registered under the Federal
Aviation Act, each of the Lessor or its successors or assigns is a "citizen of
the United States" as defined in Section 40102(a)(15) of the Federal Aviation
Act and (ii) the applicable parties to the Refunding Agreement cooperate with
Lessee with respect thereto as reasonably requested by Lessee. Lessee shall not
register the Aircraft or permit the Aircraft to be registered under any laws
other than the Federal Aviation Act at any time except as provided in Section 11
of the Refunding Agreement and shall cause the Indenture to be duly recorded and
maintained of record as a duly perfected mortgage on the Aircraft and this Lease
at all times. At any time after the Restricted Use Period, Lessor, upon
compliance with all of the terms of Section 11 of the Refunding Agreement,
shall, at the request and sole expense of Lessee, cooperate with Lessee to take
all actions reasonably required to change the registration of the Aircraft to
another country.
Lessee agrees at its expense to place such appropriate
insignia, plates and other identification ("Lease Identification") in the
cockpit of the Aircraft and on each Engine showing title thereto and the Lien of
the Indenture as designated by Lessor and as Lessor may from time to time
reasonably request. Unless otherwise requested, upon delivery of the Aircraft,
Lessee shall fasten or cause to be fastened in the cockpit of the Airframe in a
location reasonably adjacent to and not less prominent than the airworthiness
certificate for the Aircraft, and on each Engine (if not prohibited by
applicable Law), a Lease Identification in the form set forth in Exhibit C
hereto or with any other appropriate information in any other form subsequently
designated by Lessor to Lessee. Except as provided herein, Lessee will not allow
the name of any Person to be placed on the Aircraft or either Engine as a
designation that would be reasonably interpreted as a claim of ownership or
Lien; provided, however, that Lessee may cause the Airframe and
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Engines to have placed thereon the customary colors and insignia of Lessee or
any Permitted Sublessee under a Permitted Sublease.
Section 7. Inspection.
During the Term of this Lease, Lessee shall furnish to
Lessor, Owner Participant and Indenture Trustee such information concerning the
location, condition, use and operation of the Aircraft as Lessor, Owner
Participant or Indenture Trustee may reasonably request. Lessee shall permit, or
cause its Permitted Sublessee to permit, any person designated by Lessor, Owner
Participant or Indenture Trustee on reasonable prior notice at reasonable times
to visit, inspect and survey the Aircraft (including, without limitation, going
on board the Aircraft, and inspecting the Aircraft during maintenance checks
when panels and bays are open and subject to view), its condition, use, and
operation, and the records maintained in connection therewith, and to visit and
inspect the properties and to discuss the affairs, finances and accounts of
Lessee with the principal officers of Lessee, provided, that so long as Lessor
does not believe a Default or Event of Default has occurred hereunder
inspections shall be performed during regularly scheduled maintenance checks of
the Aircraft. Each such inspection or survey shall be conducted so as to not
unreasonably interfere with the business of Lessee or the maintenance or
operation of the Aircraft. Upon Lessor's, Owner Participant's or Indenture
Trustee's request, Lessee will notify such Person of the next scheduled
maintenance check for the Airframe or any Engine. Lessor, Owner Participant and
Indenture Trustee shall have no duty to make any such inspection and shall not
incur any liability or obligation by reason of not making any such inspection.
Lessor's, Owner Participant's or Indenture Trustee's failure to object to any
condition or procedure observed or observable in the course of an inspection
hereunder shall not be deemed to waive or modify any of the terms of this Lease
with respect to such condition or procedure.
Section 8. Additional Covenants of Lessee.
Lessee covenants and agrees that:
(a) Financial Information. Lessee agrees to furnish
Lessor, until the expiration or other termination of the Term of this Lease, the
following:
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(i) within sixty (60) days following the end of each
quarter of Lessee's fiscal year, except the last such quarter of such year,
commencing after the Restatement Date, a copy of Lessee's Quarterly Report on
Form 10-Q as filed with the Securities and Exchange Commission or, if Lessee no
longer files such report, an unaudited consolidated balance sheet of Lessee and
its consolidated subsidiaries prepared by it as of the close of the period
ended, together with the related statements of income and cash flows for such
period, and in each case certified by a Responsible Officer of Lessee as having
been prepared in accordance with GAAP and as fairly presenting the financial
condition and results of operations and changes in financial position for such
period then ended in accordance with such principles and practices (subject to
normal year-end audit adjustments);
(ii) within one hundred five (105) days after the close of
each fiscal year of Lessee, a copy of Lessee's Annual Report on Form 10-K as
filed with the Securities and Exchange Commission or, if Lessee no longer files
such reports, an audited consolidated balance sheet, income statement, and cash
flow statement of Lessee and its consolidated subsidiaries, as of the close of
such fiscal year, and in each case as certified by independent public
accountants, including their certificate and accompanying comments, as having
been prepared in accordance with GAAP and as fairly presenting the financial
condition and results of operations and changes in financial position for such
period then ended in accordance with such principles and practices, without
qualification as to the scope of the audit or non-conformity with GAAP;
(iii) promptly upon their becoming available, copies of
all reports on Form 8-K filed by Lessee under the Securities Exchange Act of
1934, as amended, and each other statement, report or circular (other than the
exhibits thereto and any registration statements on Form S-8 or its equivalent)
generally distributed to creditors or shareholders;
(iv) prior to the expiration date of each policy of
insurance required to be maintained hereunder, a certificate signed by the
Approved Broker of Lessee as to the due compliance with the insurance provisions
of Section 12 hereof with respect to the Aircraft, together with certificates of
insurance evidencing such insurance and the opinion provided for in Section
12(f);
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(v) within fifteen (15) days following the end of each
calendar month throughout the Term, an Airframe and Engine status report,
substantially in the form of Exhibit K hereto, including, without limitation,
(A) a summation of hours and cycles accumulated on the Airframe and Engines by
individual serial number during such preceding calendar month and (B) the
identity of the airframe (including the "N" number and, at Lessor's request,
ownership and lien interests in respect thereof) on which each Engine was
installed as of the end of each such calendar month, and, if Lessor so requests,
the location of any such airframe. The foregoing shall not be deemed to require
reports regarding hours or cycles on any Parts;
(vi) together with each set of financial statements
referred to in clauses (i) and (ii), a certificate signed by a Responsible
Officer of Lessee, to the effect that such officer has reviewed the relevant
terms of this Lease and has made, or caused to be made under his or her
supervision, a review of the transactions and condition of Lessee during the
accounting period covered by such financial statements, and that such review has
not disclosed the existence during such accounting period, nor does such officer
have any knowledge of the existence, as at the date of such certificate, of any
condition or event which constitutes a Default or an Event of Default, or, if
such condition or event which constitutes a Default or an Event of Default
existed or exists, specifying the nature and period of existence thereof and
what action Lessee has taken or is taking or proposes to take with respect
thereto;
(vii) as soon as practicable after becoming aware thereof,
notice of damage or destruction to the Aircraft, either Engine or any Part with
a repair or replacement cost (including labor charges) in excess of $1,000,000
or any incident required to be reported to the FAA or other Government Entity;
(viii) immediately after Lessee knows or should know of
the occurrence thereof, notice of a Default; and
(ix) promptly after Lessor's written request therefor,
notice of the time and location of upcoming C Checks, major Engine checks, major
Airframe structural checks and a description of modification of the Aircraft
required by an FAA airworthiness directive, a mandatory manufacturer service
bulletin or any other modification with a materials and labor cost in excess of
$1,000,000;
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(x) together with each delivery of financial statements
pursuant to Section 8(a)(ii) above, a certificate signed by Lessee's auditors
thereon (i) briefly setting forth the scope of their examination (which shall
include a review of this Section, (ii) stating whether or not their examination
has disclosed the existence, during the fiscal year covered by such financial
statements, of any Default or Event of Default and, if their examination has
disclosed such a Default or Event of Default, specifying the nature and period
of existence thereof, and (iii) stating that they have examined the officer's
certificate delivered therewith pursuant to Section 8(a)(vi) above;
(xi) As soon as possible and in any event within thirty
(30) days after Lessee knows or has reason to know thereof, a certificate of a
Responsible Officer specifying:
(X) the occurrence or expected occurrence of any
Reportable Event with respect to any Plan; or
(Y) the institution of proceedings or the taking
or expected taking of other action by PBGC or Lessee or any Commonly Controlled
Person to terminate, withdraw or partially withdraw from any Plan and with
respect to a multi-employer Plan, the reorganization or insolvency of the Plan
and in addition to such notice, deliver to Lessor whichever of the following may
be applicable: (A) a certificate of a Responsible Officer setting forth details
as to such Reportable Event of the action that Lessee or Commonly Controlled
Person proposes to take with respect thereto, together with a copy of any notice
of such Reportable Event that may be required to be filed with PBGC, or (B) any
notice delivered by PBGC evidencing its intent to institute such proceedings or
any notice to PBGC that such plan is to be terminated, as the case may be; and
(xii) from time to time such other information as Lessor
may reasonably request.
(b) Maintenance of Corporate Existence. Except as provided
in Section 8(e) below, during the term of this Lease, Lessee will preserve and
maintain its corporate existence and its rights, privileges, licenses and
franchises material to Lessee's ability to perform its obligations hereunder in
each applicable jurisdiction.
(c) Maintenance of Status. Lessee is, and shall remain so
long as it shall be the Lessee under this Lease, a "citizen of the United
States" as defined in Section
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40102(a)(15) of the Federal Aviation Act, and Lessee is and shall maintain its
status at all times as a Certificated Air Carrier, including, without
limitation, its status so as to fall within the purview of 11 U.S.C. Section1110
or any analogous statute.
(d) Payment of Taxes. Lessee will pay or cause to be paid
all Taxes imposed upon it, or upon its income or profits, or upon any property
belonging to it, on or prior to the due date thereof, including any extensions
which have been duly obtained or granted; provided, however, that Lessee shall
not be required to pay any such Taxes, the payment of which is being diligently
contested in good faith and by appropriate proceedings with appropriate reserves
so long as there is no material possibility that either failure to pay such
Taxes or such contest may result in any loss, sale, confiscation, forfeiture or
seizure of the Aircraft, the Airframe or either Engine or any criminal liability
on the part of Lessor, Indenture Trustee or any Note Holder.
(e) Consolidation, Merger, Etc. Lessee shall not liquidate
or dissolve; and Lessee shall not consolidate with or merge into or with any
other corporation or other Person, and Lessee shall not convey, transfer, lease
or otherwise dispose of all or substantially all of its property and other
assets to or, without the prior consent of Owner Participant, acquire all or any
substantial part of the property or other assets or capital stock (if such
acquisition is analogous in purpose or effect to a consolidation or merger) of
any corporation or other Person, unless:
(i) the Person formed by or surviving such
consolidation or merger or the Person which acquires by conveyance, transfer,
lease or other disposition all or substantially all of such property and other
assets or stock (the "Successor Entity"): (A) shall be a corporation organized
and existing under the laws of the United States of America or any State thereof
or the District of Columbia; (B) immediately after giving effect to such
transaction, shall be Lessee or shall have acquired or succeeded to all or
substantially all of such property and other assets (including, without
limitation, all or substantially all of Lessee's property and other assets) as
an entirety and, unless the Owner Participant otherwise agrees, shall have a Net
Worth of not less than Lessee's Net Worth immediately prior to such transaction;
(C) shall be a "citizen of the United States" of America as defined in Section
40102(a)(15) of the Federal Aviation Act and a Certificated Air Carrier;
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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 (including, without limitation, to preserve
and protect the interests of the Lessor and the priority of the Lien of the
Indenture (if it has not been discharged)) to evidence, or in connection with,
such consolidation, merger, sale, lease, transfer or other disposition and an
agreement, in form and substance reasonably satisfactory to Lessor, which is a
legal, valid, binding and enforceable assumption by such Successor Entity of the
due and punctual performance and observance of each covenant and condition of
this Lease and the other Operative Documents to which Lessee is a party and
agreement to be bound thereby, and an officer's certificate to such effect, and
to the effect that the other requirements of this paragraph have been satisfied,
and a legal opinion from counsel to such effect and otherwise in such form and
substance reasonably satisfactory to Lessor; and
(ii) prior to and immediately after giving
effect to such transaction, no Default or Event of Default shall have occurred
and be continuing.
No such permitted disposition to a Successor Entity shall relieve or release
Lessee of or from any obligations hereunder or under the other Operative
Documents.
(f) Information. Within 60 days after the end of each
calendar year and within 60 days of a request by Lessor or Owner Participant, or
such shorter period as may be set forth in any written request by the Internal
Revenue Service for information or documents, Lessee shall furnish in writing to
Lessor or Owner Participant such information and documents (or copies thereof)
regarding the Aircraft as may be reasonably requested by Lessor or Owner
Participant or the Internal Revenue Service in order to permit Lessor to file
its federal and state income tax returns (or to permit the filing of the federal
and state income tax returns of any affiliated group of corporations filing a
consolidated return of which Lessor is a member), or to maintain or defend any
claims related thereto and promptly, after reasonable notice, furnish to Lessor
or Owner Participant such information as may be reasonably requested by Lessor
or Owner Participant or the applicable Governmental Entity as may be required to
enable Lessor or Owner Participant to file any reports required to be filed by
it with any Governmental Entity because of its ownership or other interest in
the Aircraft, the Airframe or the Engines.
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(g) Place of Business. At all times while this Lease is in
effect, Lessee will not, without thirty (30) days prior written notice to Lessor
and Indenture Trustee (so long as the Lien of the Indenture shall not have been
discharged), change its chief executive office (as such term is defined under
Article 9 of the Uniform Commercial Code as adopted in Arizona) or location of
its books and records, from 0000 Xxxx Xxx Xxxxxx Xxxxxxxxx, Xxxxxxx, Xxxxxxx
00000, or such subsequent location of which Lessee shall have so notified Lessor
and, if applicable, Indenture Trustee.
(h) Certain Limitations on Use. Lessee shall use the
Aircraft, Airframe or Engines only in commercial passenger operations and
related cargo operations. Unless Owner Participant otherwise agrees, during the
Restricted Use Period, Lessee shall not use the Aircraft, Airframe or Engines or
permit the Aircraft, Airframe or Engines to be used either "predominantly
outside the United States" within the meaning of Section 48(a)(2) of the Code.
Unless the Owner Participant otherwise agrees, prior to permitting the Aircraft
to be operated in any member state of the European Community or other European
country, Lessee shall deliver to Lessor (i) a representation and warranty to the
effect that Lessee (or any Permitted Sublessee) has no knowledge of any dispute
with Eurocontrol or other relevant air traffic control authority over delinquent
charges payable by it and (ii) a letter from Lessee (or any Permitted Sublessee)
addressed to Eurocontrol or other relevant air traffic control authority
pursuant to which Lessee (or such Permitted Sublessee) authorizes the addressee
to issue to Lessor, upon Lessor's request from time to time, a statement of
account of all sums due by Lessee (or such Permitted Sublessee) to the authority
in respect of all aircraft (including, without limitation,the Aircraft) operated
by Lessee (or such Permitted Sublessee).
(i) Section 1110. Lessee acknowledges that Lessor would
not have entered into this Second Amended and Restated Aircraft Lease Agreement
unless it had available to it the benefits of a Lessor under Section 1110 of
Title 11 of the United States Code. Lessee covenants and agrees with Lessor that
to better ensure the availability of such benefits, Lessee shall support any
motion, petition or application filed by Lessor with any bankruptcy court having
jurisdiction over Lessee, whereby Lessor seeks recovery of possession of the
Aircraft under said Section 1110 and shall not in any way oppose such action by
Lessor unless Lessee shall have complied with the requirements of said Section
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1110 to be fulfilled in order to entitle Lessee to continued use and possession
of the Aircraft hereunder.
(j) Permits and Licenses. Lessee shall make or obtain, and
maintain in full force and effect, each and every consent, license, approval,
notice, registration, filing or other action with any Governmental Entity
necessary or advisable in connection with the operation or use of the Aircraft,
the Airframe, any Engine or Part or the execution, delivery or performance of
this Lease and the Operative Documents to which it is a party by Lessee or the
enforcement thereof against Lessee.
(k) Security Opinion; Annual Certificate. (i) During such
times that the Aircraft is registered under the Federal Aviation Act, Lessee
shall furnish to Lessor and to Indenture Trustee:
(1) (X) prior to the expiration of the time period covered by
the opinion of counsel rendered on the Restatement Date
and, thereafter, the immediately preceding opinion of
counsel, rendered pursuant to this Section 8(k)(i) and (Y)
upon any change in Law that would render the opinion of
counsel rendered on the Restatement Date or such
immediately preceding opinion of counsel, inaccurate, an
opinion of counsel with respect to Lessee and the FAA
reasonably satisfactory to each addressee of such opinion
(which counsel may be internal legal counsel of Lessee and
FAA counsel) stating, in the opinion of such counsel, that
such action has been taken with respect to the recording,
filing, re-recording and refiling of (i) the appropriate
Operative Documents and any supplements and amendments
thereto and (ii) such other appropriate documents, as is
necessary to maintain the perfection of Owner Trustee's
title to and/or interest in and Indenture Trustee's
security interest in the Aircraft and the Operative
Documents for the next six (6) years (or such other period
of time as reflects the then-current applicable Law),
reciting the details of such actions; or
(2) at any time that an opinion is not required pursuant to
Section 8(k)(i)(1), annually, a certificate reasonably
satisfactory to each recipient thereof signed by a
Responsible Officer of Lessee certifying that no such
action is
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necessary to maintain the perfection of such title
and/or interest and security interest.
(ii) During such times that the Aircraft is registered under any
Laws other than the Federal Aviation Act, Lessee shall furnish to Lessor and to
Indenture Trustee annually (but in any case, (X) prior to the expiration of the
time period covered by the immediately preceding opinion of counsel, rendered
pursuant to this Section 8(k)(ii) and (Y) promptly upon any change in Law that
would render such immediately preceding opinion of counsel, inaccurate), an
opinion of counsel reasonably satisfactory to each addressee of such opinion
stating, in the opinion of such counsel, that such action has been taken with
respect to the recording, filing, re-recording and refiling of (i) the
appropriate Operative Documents and any supplements and amendments thereto and
(ii) such other appropriate documents, as is necessary to maintain the
perfection of Owner Trustee's title to and/or interest in and Indenture
Trustee's security interest in the Aircraft and the Operative Documents for the
next six (6) years (or such other period of time as reflects the then-current
applicable Law), reciting the details of such actions.
(iii) Whether the Aircraft is registered under the Federal
Aviation Act or under any Laws other than the Federal Aviation Act, Lessee shall
furnish to Lessor annually a certificate (reasonably satisfactory to Lessor)
signed by a Responsible Officer of the Lessee certifying that Lessee is in
compliance with the provisions of the penultimate paragraph of Section 9(b)
regarding Excluded Property and any equipment or seats which such Excluded
Property replaces.
(l) Letter of Credit. (X) Lessee shall provide to
Lessor, as named beneficiary thereof, one or more irrevocable standby letters of
credit, in form and substance acceptable to Lessor in its sole and absolute
discretion (the "Letter of Credit"), including, without limitation, as to
renewal provisions, with a face amount available for drawdown at all times equal
to $1,000,000, which Letter of Credit shall:
(i) provide that the full amount thereof
shall be available for drawdown thereunder and payable in New York, New York, on
first demand by Lessor at any time, if accompanied by (i) its statement that it
believes that a Default under Section 17(e), (f) or (g) or an Event of Default
has occurred or (ii) that the letter of credit will
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expire within [thirty (30)] days from the date of demand, which amount may be
applied, retained or utilized as provided in clause (Y);
(ii) be maintained in full force and effect at
all times until ninety-one (91) days after the end of the Term date with a
commercial bank acceptable to Lessor, in its sole and absolute discretion,
having a long-term unsecured debt rating of "A" or better by Standard & Poor's
Rating Group (if the issuing bank's credit rating is lower than such rating,
Lessee shall replace such Letter of Credit issuer within five (5) Business Days
of any such reduction in rating with a commercial bank meeting such rating
requirement), provided, that a Letter of Credit in the form set forth in Exhibit
D-2 issued by the Industrial Bank of Japan, Limited will be acceptable to Lessor
for so long as the Industrial Bank of Japan, Limited maintains a long-term
unsecured debt rating at least equal to its rating on the date hereof;
(iii) be expressly designated as transferable and
assignable; and
(iv) permit partial drawings. If the Letter of
Credit is still in effect at the end of the Term, then Lessor shall return the
Letter of Credit to Lessee or terminate it.
(Y) If an Event of Default has occurred and is continuing, in addition to any
other rights or remedies Lessor may have hereunder, Lessor shall be entitled, in
each case as it may elect in its sole and absolute discretion, to draw on the
Letter of Credit and, with respect to amounts so drawn, hold same as security
for Lessee's obligations under this Lease, retain same for its own account or
apply (including, without limitation, by way of set off against) same or such
amounts thereof as it may elect to remedy any breach by Lessee of this Lease and
the other Operative Documents or to recompense Lessor for any loss, damage, cost
or expense or other Claim unless and until the Lien of the Indenture shall have
been discharged in accordance with the provisions of Section 10.06 thereof,
Lessor may apply (whether by way of set-off or otherwise) the amounts drawn
under the Letter of Credit solely to amounts that if received by Indenture
Trustee would then be distributable under the Indenture to Lessor or Owner
Participant; and provided, however, that neither the amount offset at any one
time nor the aggregate amount offset at different times shall reduce the amount
of any installment or payment of Rent (whether upon the
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termination of the Lease or otherwise) payable by Lessee to an amount
insufficient to pay in full the amounts then required to be paid on account of
the principal of and any interest on the Equipment Notes or otherwise owing to a
Note Holder or other Person under the Indenture (other than to Lessor or Owner
Participant).
(m) ERISA. Lessee will not, nor will it permit any of its
subsidiaries to, (a) terminate, within the meaning of Title IV of ERISA, any
Plan so as to result in any material liability to the PBGC, (b) engage in any
"prohibited transaction" (as defined in Section 4975 of the Code) involving any
Plan that would result in material liability for an excise tax or civil penalty
in connection therewith, (c) incur or suffer to exist any material "accumulated
funding deficiency" (as defined in Section 302 of ERISA), whether or not waived,
involving any Plan, or (d) allow or suffer to exist any event or condition with
respect to ERISA, which would be likely to have a material adverse effect on
Lessee's condition (financial or otherwise), business, operations or prospects
or on Lessor's interests, rights or remedies.
Section 9. Replacement of Parts; Alterations,
Modifications and Additions.
(a) Replacement of Parts. Lessee, at its own cost and
expense, will promptly replace, or cause to be replaced, all Parts which may
from time to time become worn out, lost, stolen, destroyed, seized, confiscated,
damaged beyond repair or permanently rendered unfit for use for any reason
whatsoever. In addition, in the ordinary course of maintenance, service, repair,
overhaul or testing, Lessee (or, if a Permitted Sublease is in effect, a
Permitted Sublessee) may at its own cost and expense remove any Parts, whether
or not worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond
repair or permanently rendered unfit for use, provided that Lessee (or, if a
Permitted Sublease is in effect, a Permitted Sublessee) shall replace at its own
cost and expense such Parts as promptly as possible. All replacement Parts shall
be free and clear of all Liens (except for pooling arrangements to the extent
permitted by paragraph (c) of this Section and Permitted Liens), be in at least
the equivalent or better modification status and service bulletin accomplishment
status, be fully interchangeable as to form, fit and function and shall be in as
good operating condition as, and have a value, remaining useful life and utility
at least equal to, the Parts replaced (assuming such replaced parts were in the
condition
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and repair in which they were required to be maintained by the terms hereof).
All Parts which are at any time removed from the
Aircraft shall remain the property of Lessor, subject to the Lien of the
Indenture if it has not been discharged, and subject to this Lease no matter
where located until such time as such Parts shall be replaced by parts which
have been incorporated or installed in or attached to the Aircraft and which
meet the requirements for replacement Parts specified above. Immediately upon
any replacement Part becoming incorporated or installed in or attached to the
Aircraft as above provided, or as provided in Section 9(c), without further act,
(i) title to the removed Part shall thereupon vest in Lessee free and clear of
all rights of Lessor, Indenture Trustee, Owner Participant and Note Holders and
shall no longer be deemed a Part hereunder, (ii) title to such replacement Part
shall thereupon vest in Lessor and become subject to the Lien of the Indenture
if it has not been discharged, and (iii) such replacement Part shall become
subject to the Lien of the Indenture (if it has not been discharged) and this
Lease and be deemed a Part for all purposes hereof to the same extent as the
Part which it has replaced.
(b) Alterations, Modifications and Additions.
Lessee, at its own cost and expense, shall make or cause to be made such
alterations and modifications in and additions to the Airframe and each Engine
to the extent made mandatory for Lessee in respect of the Aircraft, Engines or
Parts from time to time to meet the applicable standards of the FAA or under any
Law of any Governmental Entity having jurisdiction or issued by the manufacturer
of the Airframe, Engines or Parts. In addition, so long as no Default or Event
of Default has occurred and is continuing, Lessee (or, if a Permitted Sublease
is in effect, a Permitted Sublessee), at its own expense, may from time to time
make such alterations and modifications in and additions to the Airframe and
either Engine as Lessee (or, if a Permitted Sublease is in effect, a Permitted
Sublessee) may deem desirable in the proper conduct of its business, provided,
no such alteration, modification or addition diminishes the value, remaining
useful life or utility, or impairs the condition or airworthiness, of the
Airframe, either Engine or any Part below that immediately prior to such
alteration, modification or addition assuming that the Airframe, Engines and
Parts were then of the value, utility and remaining useful life and in the
condition and airworthiness required by the terms of this Lease. Except as
otherwise provided
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herein, title to all Parts incorporated or installed in or attached or added to
the Aircraft as the result of such alteration, modification or addition, shall
immediately vest in Lessor and become subject to the Lien of the Indenture (if
it has not been discharged) and this Lease, without the necessity for any
further act of transfer, document or notice. Notwithstanding the foregoing
sentence of this Section 9(b), Lessor agrees that so long as no Default or Event
of Default shall have occurred and be continuing Lessee (or, if a Permitted
Sublease is in effect, a Permitted Sublessee) may, at such time during the Term
for the Aircraft, remove any Part of such Aircraft, provided, that (i) such Part
is in addition to, and not in replacement or substitution for, any Part
originally incorporated or installed in or attached to, or delivered with, the
Aircraft on the Delivery Date or any Part in replacement of, or substitution
for, any such originally incorporated, installed, attached or delivered Part,
(ii) such Part is not required to be incorporated or installed in or attached or
added to the Aircraft pursuant to the terms of Section 6 or this Section 9 or to
maintain the insurance required by Section 12 and (iii) such Part can be removed
from the Aircraft without causing any material damage thereto and without
diminishing or impairing the value, utility, remaining useful life, condition or
airworthiness which the Aircraft would have had at such time had such
alteration, modification or addition not occurred. Upon the removal by Lessee of
any such Part as provided in the preceding sentence, title thereto shall,
without further act, vest in Lessee (or, if a Permitted Sublease is in effect, a
Permitted Sublessee) and such Part shall no longer be deemed part of the
Aircraft (such a part is herein called a "Removable Part"). Any Part not removed
by Lessee as above provided prior to the return of the Aircraft to Lessor
hereunder, whether pursuant to Section 16, Section 18 or otherwise, shall remain
the property of Lessor.
If any Removable Part is (i) owned by any third
party and leased to Lessee (or, if a Permitted Sublease is in effect, a
Permitted Sublessee), (ii) sold to Lessee (or, if a Permitted Sublease is in
effect, a Permitted Sublessee) subject to a conditional sale contract or other
security interest or (iii) leased to Lessee (or, if a Permitted Sublease is in
effect, a Permitted Sublessee) pursuant to a lease which is subject to a
security interest in favor of any third party, then Lessor will not acquire or
claim, as against such lessor, conditional vendor or secured party, any right,
title or interest in any such Removable Part as the result of such Removable
Part being installed on the
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Aircraft; provided, however, that (A) Lessor's inability to so acquire or claim
is subject to the express condition that such lessor, conditional vendor, or
secured party shall have agreed in writing (which agreement may be contained in
the lease, conditional sale agreement or security agreement) not to acquire or
claim, as against Lessor, any right, title or interest in the Aircraft, or any
Part other than its interest in such Removable Part by reason of such Removable
Part being installed thereon, and (B) any Removable Part not removed by Lessee
upon the termination or expiration of this Lease, at such time, shall become the
property of Lessor and be subject to this Lease, and provided, further, that (1)
if removal of any such Part shall affect the operation of the Aircraft in any
way whatsoever, Lessee shall replace such Part with an owned Part of the same
value, utility and remaining useful life and (2) Lessee shall repair any
unsightly area of the Aircraft as a result of such removal and make all other
repairs which are advisable and result from such removal.
In the event Lessee (or, if a Permitted Sublease
is in effect, a Permitted Sublessee) replaces a Part which is not required to be
replaced under Section 9(a) or 9(b) hereof, Lessee (or, if a Permitted Sublease
is in effect, a Permitted Sublessee) may remove the replacement Part so long as
it reinstalls the original Part and such original Part is free and clear of all
Liens, other than Permitted Liens, is in at least the same modification status
and service bulletin accomplishment status, is fully interchangeable as to form,
fit and function, has been overhauled, repaired and inspected by an agency
acceptable to the FAA or other Governmental Entity having jurisdiction, and is
in as good operating condition as, and has a utility, remaining useful life and
a value at least equal to that of such Part when it was removed from the
Aircraft.
Notwithstanding any other provision hereof, and
without limiting the foregoing, Lessee (or, if a Permitted Sublease is in
effect, Permitted Sublessee) may install in the Aircraft audio visual,
entertainment or telephonic equipment (including seats with such equipment
installed therein) (any or all of which are hereafter referred to as "Excluded
Property") in the ordinary course of business, and Lessor shall not claim or
acquire title thereto and the rights of the owners thereof therein shall not
constitute a default hereunder; provided that (i) any such Excluded Property
shall be removed prior to the date of a Return Occasion without causing any
damage to the Aircraft and without diminishing or impairing the value, utility,
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remaining useful life or condition which the Aircraft would have had at such
time had such Excluded Property not been installed, (ii) any equipment or seats
which such Excluded Property replaces shall be properly stored with the
interests of Lessor and, if the Lien of the Indenture is in effect, the
Indenture Trustee, duly noted thereon and acknowledged by any applicable bailee
or warehouse, and properly reinstalled on the Aircraft prior to the date of a
Return Occasion, and (iii) Lessee (or such Permitted Sublessee) shall make all
repairs which are required as a result of such removal and/or reinstallation.
In no event shall Lessor bear any liability or
cost for any alteration, modification, or addition, or for any grounding or
suspension of certification of the Aircraft, or for any loss of revenue arising
therefrom.
(c) Pooling. Any Part removed from the Airframe
or either Engine as provided in Section 9(a) may so long as no Default or Event
of Default shall have occurred and be continuing or would result therefrom be
subjected by Lessee (or, if a Permitted Sublease is in effect, a Permitted
Sublessee) to a normal pooling arrangement customary in the airline industry of
which Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee)
is a part entered into in the ordinary course of Lessee's or such Permitted
Sublessee's business, provided the Part replacing such removed Part shall be
incorporated or installed in or attached to the Aircraft in accordance with
Section 9(a) as promptly as possible, and in any event within sixty (60) days,
after the removal of such removed Part. In addition, any Replacement Part when
incorporated or installed in or attached to the Airframe or any Engine in
accordance with Section 9(a) may be owned by another Person subject to such a
normal pooling agreement; provided, however, that Lessee (or, if a Permitted
Sublease is in effect, a Permitted Sublessee), at its own expense, as promptly
thereafter as possible, and in any event within sixty (60) days, either (i)
causes title to such replacement Part to vest with Lessor in accordance with
Section 9(a) (and to be subjected to the Lien of the Indenture if it has not
been discharged) by Lessee (or, if a Permitted Sublease is in effect, a
Permitted Sublessee) acquiring title thereto for the benefit of Lessor free and
clear of all Liens except Permitted Liens, whereupon such replacement Part shall
become subject to this Lease and the Lien of the Indenture (if in effect)
without the necessity for any further act, document or notice, or (ii) replaces
such replacement Part by incorporating or installing in or attaching to the
Aircraft
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a further replacement Part owned by Lessee (or, if a Permitted Sublease is in
effect, a Permitted Sublessee) free and clear of all Liens other than Permitted
Liens and by causing title to such further replacement Part to vest in Lessor as
above provided and to be subjected to the Lien of the Indenture if it has not
been discharged, whereupon such replacement Part shall become subject to this
Lease and the Lien of the Indenture (if in effect) without the necessity for any
further act, document or notice.
Section 10. General Tax Indemnity.
(a) Indemnity. Lessee agrees that each payment of Rent
shall be free and clear of, and without deduction for, any and all withholdings
on account of Taxes of any nature whatsoever, whether or not an exclusion
pursuant to Section 10(b) applies, except as required by law. If any such
deduction or withholding of Taxes is required with respect to Rent, Lessee shall
pay an additional amount of Rent such that the net amount actually received by
each Indemnitee, after such deduction or withholding, will be equal to all such
amounts that would be received by such Indemnitee if no such deduction or
withholding had been required. If Lessee pays any withholding Tax to any
Indemnitee (or to any taxing authority for the account of any such Indemnitee)
as a result of the application of the preceding sentence with respect to any
withholding Tax which is an excluded tax in respect of such Indemnitee pursuant
to Section 10(b), then such Indemnitee (or, in the case of Taxes imposed on the
Owner Trustee, the Owner Participant to the extent the exclusion pursuant to
Section 10(b) is by reason of the place of organization or business, or
activities of, or is otherwise attributable to, the Owner Participant or any of
its related Indemnitees (other than the Owner Trustee)), shall reimburse Lessee
for such withholding Tax within 30 days of written notice accompanied by
evidence of payment for such withholding Taxes (exclusive of interest, penalties
and additions to Tax) paid by Lessee. Except as provided in Section 10(b),
Lessee agrees to pay, and to indemnify and hold each Indemnitee harmless from,
any and all Taxes, howsoever levied or imposed, whether levied or imposed upon
or with respect to or asserted against any Indemnitee, Lessee, the Aircraft, the
Airframe, any Engine or any Part thereof or interest therein, or otherwise by
any Federal, state or local government or taxing authority in the United States
of America or by any foreign government or any taxing authority or governmental
subdivision of a foreign country or of a territory or possession of the
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United States (each such governmental subdivision or taxing authority referred
to as a "Taxing Authority"):
(i) upon or with respect to, based upon or
measured by (A) the Aircraft, the Airframe, any Engine or any Part
thereof, or interest therein, (B) the manufacture, purchase,
ownership, delivery, leasing, acceptance, rejection, assigning,
possession, use, operation, location, settlement of any insurance
claim, sale, mortgaging, pledging, financing, subleasing, rental,
retirement, abandonment, registration, re- registration,
preparation, installation, modification, repair, maintenance,
replacement, transportation, storage, transfer of title, return or
other disposition of the Aircraft, the Airframe, any Engine or any
Part thereof or interest therein; or (C) the rentals, receipts,
income or earnings arising therefrom (including without limitation
the Rent), or
(ii) upon or with respect to the Operative
Documents (including the Equipment Notes), any interest in any
thereof, or any future amendment, supplement, waiver or consent
thereto requested by Lessee with respect to any thereof, or the
execution, delivery, or performance of any thereof, or the
acquisition or subsequent transfer thereof or the issuance of the
Equipment Notes or any other document executed and delivered in
connection with the consummation or confirmation of the
transactions contemplated by the Operative Documents or any
Indemnitee's interest in any of the foregoing, or the execution,
amendment, supplement, issuance, reissuance, refinancing or
delivery of any of the foregoing, or
(iii) the Trust Indenture Estate or the property,
or the income or other proceeds received with respect to the
property, held by the Indenture Trustee under the Indenture, or
(iv) the payment of the principal of, or interest
or premium on, or other amounts payable with respect to, the
Equipment Notes, whether as originally issued or pursuant to any
refinancing, modification or reissuance or any other obligation
evidencing any new loan,
(v) otherwise with respect to or in connection
with the transactions contemplated by the Operative Documents.
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(b) Exclusions. The following Taxes shall not be subject
to indemnification under subsection (a) of this Section 10:
(i) In the case of any Indemnitee, any Taxes
imposed by the Federal government of the United States of America
upon or with respect to, based on or measured by, the gross or net
income, receipts, capital, or net worth, franchises, excess
profits or conduct of business of such Indemnitee (other than
Taxes included in the calculation of an after-tax payment, Covered
Income Taxes described in subsection (c) of this Section 10, or
Taxes in the nature of sales or use Taxes, license Taxes,
value-added Taxes or property Taxes),
(ii) In the case of any Indemnitee, Taxes on,
based on, or measured by the gross or net income, receipts,
capital, or net worth, franchises, excess profits or conduct of
business of such Indemnitee (including minimum taxes, withholding
taxes and taxes on or measured by any items of tax preference),
imposed by any foreign, state or local government or taxing
authority (other than Taxes included in the calculation of an
after-tax payment, Taxes in the nature of sales Taxes, use Taxes,
property Taxes, value-added Taxes or rental Taxes, and Covered
Income Taxes described in subsection (c) of this Section 10),
(iii) In the case of any Indemnitee, Taxes which
are the direct result of gross negligence or willful misconduct of
such Indemnitee,
(iv) In the case of any Indemnitee, any Taxes
imposed as a result of a voluntary or involuntary bankruptcy of
such Indemnitee (other than, in the case of Owner Trustee, as a
result of the occurrence of an Event of Default) or any voluntary
sale, transfer of title, transfer or other disposition by such
Indemnitee or a related Indemnitee (for such purpose, Owner
Trustee and Owner Participant are related Indemnitees with respect
to each other) of the Aircraft, the Airframe, any Engine or any
Part thereof or interest therein, or any interest in the Rent or
part thereof or any interest in the Operative Documents or part
thereof, unless such sale, transfer or disposition occurs in
connection with (y) an Event of Default and the exercise by any
Indemnitee of its remedies under the Lease or the Indenture, as
the case may be, and (z)
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the substitution, pooling or interchange of the Aircraft, the
Airframe, any Engine or any Part pursuant to the terms of the
Lease; provided, however, that in all cases Owner Participant and
Owner Trustee shall consider in good faith such request as Lessee
shall make concerning the appropriate jurisdiction in which such
sale, transfer or disposition shall be made,
(v) In the case of any Indemnitee, Taxes imposed
as a result of a transferee of such Indemnitee of any interest in
the Aircraft, the Airframe, any Engine or any Part or any interest
in the Operative Documents being a foreign entity or not having
its principal office in the United States,
(vi) Any interest, penalties, fines and additions
to tax imposed on an Indemnitee (other than Taxes that are due and
payable with a return when properly filed) resulting from such
Indemnitee's failure to file returns that are timely and proper,
provided such failure was not attributable to such Indemnitee
contesting any claim in accordance with this Section 10 or to a
failure by Lessee to satisfy its obligations related to such
return,
(vii) Taxes imposed on an Indemnitee as a result
of a breach of its representations, warranties or covenants
contained in Sections 9(a), 9(b)(11), 9(c), 12 or 16 of the
Refunding Agreement or Section 21 (f) of this Agreement in any
material respect or from a failure by an Indemnitee to fulfill its
contest obligations,
(viii) So long as no Event of Default shall have
occurred and be continuing, Taxes attributable to the Aircraft
related to acts or events occurring after the later of the
termination of the Lease and the redelivery of the Aircraft, and
(ix) In the case of the Indenture Trustee, Taxes
imposed with respect to the Equipment Notes as a result of
activities of such Indemnitee unrelated to the transactions
contemplated by the Operative Documents.
(c) Covered Income Tax. For purposes of clauses (i) and
(ii) of subsection (b) of this Section 10, a Covered Income Tax includes:
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(i) any Tax based on or measured by gross or net income,
capital or net worth, franchises, excess profits or conduct of business
imposed on an Indemnitee by a Taxing Authority in or of any foreign
jurisdiction or a territory or possession of the United States, other
than any such Tax which would not have been imposed in the absence of
such Indemnitee's (including for purposes of this definition, all
entities with which such Indemnitee is combined, integrated, or
consolidated in such Taxing Authority's jurisdiction) engaging in
business, maintaining an office or other place of business or otherwise
being located in such jurisdiction (other than merely by reason of such
Indemnitee's participation in the transactions contemplated by the
Operative Documents); and
(ii) a Tax imposed by any Taxing Authority other than the
Federal government of the United States of America based on, or
measured by gross income or receipts, to the extent such Tax is
attributable to the operation or registration of the Aircraft in such
jurisdiction or to the transactions contemplated by the Operative
Documents or is the result of the activities of Lessee or any Affiliate
of either thereof in such jurisdiction, including residence.
(d) Reports and Returns. In case any report or return is required
to be made by Lessee with respect to any Taxes which are subject to
indemnification by Lessee under this Section 10, Lessee will either make such
report or return in such manner as will show the ownership of the Aircraft in
Owner Trustee or the interest of Owner Participant or its permitted assigns and
send a copy of such report or return to Owner Trustee and Owner Participant or
will notify Owner Trustee or Owner Participant of such requirement and make such
report or return in such manner as shall be reasonably satisfactory to Owner
Participant or Owner Trustee. If actual notice is given by any taxing authority
to an Indemnitee that a report or return is required to be filed with respect to
any such Taxes, the Indemnitee shall promptly notify Lessee of such required
report or return and Lessee shall either file such report or return in the
manner prescribed in the preceding sentence, or shall use its best efforts to
cause such report or return to be filed by the appropriate entity Each
Indemnitee agrees to respond to any reasonable request of Lessee for information
not within Lessee's control and within the control of and reasonably available
to such Indemnitee with respect to the filing of any such report or return, but
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Lessee agrees to pay any reasonable costs, fees, disbursements or other charges
of independent counsel or independent accountants incurred in connection with
such request.
(e) After-Tax Basis. Lessee further agrees that,
with respect to any payment or indemnity under this Section 10 and under Section
13 hereof, such payment or indemnity shall include the net amount necessary to
hold the recipient of the payment or indemnity harmless on an after-tax basis
from all Taxes required to be paid or credited by such recipient with respect to
such payment or indemnity under the laws of any Taxing Authority; provided,
however, that in the case of federal income taxes imposed on Owner Participant,
such Taxes shall be calculated on the basis of the assumption that Owner
Participant shall be subject to the highest federal corporate income tax rate
applicable to Owner Participant in the year of payment.
(f) Tax Benefit. If, by reason of any payment
made to or for the account of an Indemnitee by Lessee pursuant to this Section
10 or Section 13 hereof, such Indemnitee subsequently actually realizes a tax
deduction or credit (including foreign tax credit and any reduction in Taxes)
not previously taken into account in computing the amount of such payment, such
Indemnitee shall promptly pay to Lessee, but only if there shall then be no
Lease Event of Default and if Lessee shall have made all payments then due and
owing to such Indemnitee under the Operative Documents, an amount equal to the
sum of (A) the actual reduction in Taxes, if any, realized by such Indemnitee
which is attributable to such deduction or credit and (B) the actual reduction
in Taxes realized by such Indemnitee as a result of any payment made by such
Indemnitee pursuant to this sentence; provided, however, that such Indemnitee
shall not be obligated to make any payment pursuant to this Section 10 or
Section 13 hereof to the extent that the amount calculated pursuant to (A) above
would exceed (x) the amount of all prior payments by Lessee to such Indemnitee,
pursuant to this Section 10 or Section 13 hereof, net of any amount paid in
respect of Taxes required to be paid by such Indemnitee in respect of the
receipt or accrual of such amounts received by such Indemnitee from Lessee, less
(y) the portion of all prior payments computed pursuant to (A) above by such
Indemnitee to Lessee hereunder.
(g) Payment. If a claim is made against any Indemnitee
for any Taxes which may be subject to indemnification by Lessee hereunder and if
such Indemnitee
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has notice thereof, such Indemnitee shall promptly notify Lessee; provided that
the failure to provide such notice shall not release Lessee from any of its
obligations hereunder except to the extent Lessee's right to contest such claim
is precluded thereby. Any amount payable as an indemnity to any Indemnitee or
any amount payable to Lessee pursuant to this Section 10 is to be paid to such
party directly, in immediately available funds, within thirty (30) days after
receipt of a written demand therefor from such Indemnitee or Lessee, as the case
may be, except in the case of a payment to an Indemnitee to the extent that such
Taxes are being contested in good faith pursuant to this Section 10, in which
event the payment of such indemnity shall be made by the due date for the
payment of any Taxes that are the subject of such contest taking into account
all extensions of the due date that are available as a result of the contest. In
the event an Indemnitee makes a tax payment with respect to any such Taxes
(other than with funds advanced to such Indemnitee on an interest-free basis by
Lessee pursuant to this Section 10), Lessee shall reimburse the amount of such
payment and also shall pay to the Indemnitee interest on the amount of such
payment by such Indemnitee at the Interest Rate from the date of any such
payment by such Indemnitee to the date of such reimbursement by Lessee to the
Indemnitee hereunder. In the event an amount is payable to Lessee under this
Section 10, the Indemnitee owing such amount shall pay interest on such amount
at the Interest Rate from the date of receipt by such Indemnitee of any amount
giving rise to such obligation to pay Lessee until the date of payment to
Lessee.
(h) Contest. If reasonably requested by Lessee
in writing, an Indemnitee shall upon receipt of an indemnity reasonably
satisfactory to it and at the sole expense of Lessee (including, without
limitation, payment on demand of all out-of-pocket costs, expenses, additions to
tax because of underpayments of estimated Taxes, losses, legal and accounting
and investigatory fees and disbursements, penalties, and interest) in good faith
contest or shall permit Lessee, if desired by Lessee and such contest may be
conducted in the name of Lessee without involving Taxes of such Indemnitee not
indemnified hereunder, to contest in the name of Lessee and/or the Indemnitee,
the validity, applicability or amount of such Taxes by (x) resisting payment
thereof if practicable, (y) not paying the same except under protest, if protest
is necessary and proper, and (z) if payments be made, using reasonable efforts
to obtain a refund thereof in appropriate administrative and judicial
proceedings; provided, however, that, in each such instance,
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such proceedings do not involve any substantial risk or danger of the sale,
forfeiture or loss of the Aircraft, and provided further that the Indemnitee
shall have the right to forego administrative proceedings with respect to the
claim and contest the claim in an appropriate court of its choosing and provided
further that the Indemnitee shall not be required to undertake or allow in its
name or on its behalf any contest unless the following conditions are satisfied:
(i) no Event of Default has occurred and is
continuing,
(ii) the amount of such Taxes shall be at
least $50,000,
(iii) in the event an administrative proceeding
is to be appealed in a judicial proceeding, as for the first level
of judicial proceeding, Lessee shall have provided the Indemnitee
with an opinion of legal counsel selected by the Indemnitee and
reasonably acceptable to Lessee ("Tax Counsel") to the effect that
a reasonable basis exists to contest such claim (which opinion
shall be obtained at Lessee's sole cost and expense),
(iv) if such contest is to be initiated by the
payment of, and the claiming of a refund for, such Taxes, Lessee
shall have advanced or caused to be advanced to such Indemnitee
sufficient funds (on an interest-free basis) to make such payments
and shall have agreed to indemnify such Indemnitee against any
adverse tax consequences of such advance, and
(v) in the event a judicial decision is to be
appealed, the amount of such Taxes is at least $150,000 and the
Indemnitee shall have received an opinion of Tax Counsel (which
opinion shall be obtained at Lessee's sole expense) to the effect
that it is more likely than not that the Indemnitee will prevail,
and in the event that the subject matter of the contest is of a
continuing nature and has previously been decided adversely
pursuant to the contest provisions of this Section 10, there has
been a change in the law (including, without limitation,
amendments to statutes or regulations, administrative rulings and
court decisions) after such claim shall have been so previously
decided and such Indemnitee shall have received an opinion of Tax
Counsel, which opinion shall
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be obtained at Lessee's sole expense, to the effect that, as a
result of such change other than a change in statutory law, it is
more likely than not that the position which such Indemnitee or
Lessee, as the case may be, had asserted in such previous contest
would prevail and, in the case of a statutory change in law, it is
as likely as not that the position will prevail.
(i) Refund. If any Indemnitee shall obtain a
refund of all or any part of any Taxes paid by Lessee or from an advance by
Lessee, such Indemnitee shall pay Lessee the amount of such refund together with
any interest paid thereon attributable to the Taxes paid or advanced by Lessee
less the amount of any Taxes payable by such Indemnitee in respect of the
receipt of such refund and interest after giving credit to Lessee for any
savings by such Indemnitee in respect to any such Taxes by reason of deductions,
credits, allocations or allowances in respect of the payment of any such Taxes;
provided that such amount shall not be payable before such time as Lessee shall
have made all payments or indemnities then due to the Lessor and the Indemnitee
under the Lease and all other Operative Documents, and provided further that no
amount shall be payable during any period in which an Event of Default under the
Lease has occurred and is continuing unremedied unless this Lease has terminated
and Lessee has paid all amounts due the Lessor thereunder.
(j) Diligence. Lessee shall not be deemed to be
in default under any of the above indemnification provisions of this Section 10
so long as Lessee or the Indemnitee shall diligently prosecute such contest in
accordance with the provisions of this Section 10. Notwithstanding the
foregoing, if a claim is made against any Indemnitee for any Taxes which, if
successful, would result in the imposition of Taxes under circumstances which
would require Lessee to indemnify such Indemnitee, the Indemnitee shall be
released from its responsibility to contest such claim, or part thereof, if it
agrees in writing not to seek indemnification from Lessee in respect of the
claim, or such part thereof to be contested. In the event an Indemnitee fails to
contest, or refuses to permit Lessee to contest, a claim or part thereof which
the Indemnitee has the obligation to contest or to permit Lessee to contest
under this Section 10, then Lessee shall not be obligated to indemnify the
Indemnitee for such claim or such part thereof.
(k) Affiliated Group. In the event that the
Indemnitee is a member of an affiliated group (within the
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meaning of Section 1504(a) of the Code) which files a consolidated Federal
income tax return, the term "Indemnitee" shall mean and include such affiliated
group.
Section 11. Loss, Damage and Requisition.
(a) Event of Loss with Respect to the Airframe.
Subject to the other provisions of this Section 11, upon an Event of Loss with
respect to the Airframe or the Airframe and any Engines then installed thereon,
Lessee shall forthwith (and, in any event, within five (5) Business Days after
such occurrence) give Lessor written notice of such occurrence and within thirty
(30) days after such occurrence give Lessor written notice of its election,
subject to the terms hereof and of the Indenture, to perform one of the
following two options (it being agreed that if Lessee shall not have given
Lessor notice of such election within thirty (30) days after such occurrence,
Lessee shall be deemed to have elected to perform the option set forth in the
following clause (ii)), provided, that Lessee shall not have the right to select
the option set forth in clause (i) if a Default or an Event of Default shall
have occurred and be continuing at the time of such election or at the time of
replacement:
(i) within one hundred twenty (120) days (the
"Replacement Period") after the date of the Event of Loss (but in no event later
than the last day of the Term) Lessee shall convey, or cause to be conveyed to
Lessor as provided in Section 11(c) hereof, to be subjected to the Lien of the
Indenture if it has not been discharged, and to be leased by Lessee hereunder in
replacement of the Airframe and such Engines then installed thereon, title to a
replacement Airframe (together with the same number of replacement Engines as
the Engines), such replacement Airframe and Engines (A) to be free and clear of
all Liens (it being understood that, upon such conveyance, such replacement
Airframe and replacement Engines may be subject to Permitted Liens), (B) to have
a value, utility and remaining useful life, determined in accordance with the
Appraisal Procedure as provided in Section 11(c) hereof, at least equal to, and
to be in at least as good operating condition as, the Airframe and the Engines,
if any, so replaced (assuming the Airframe and the Engines were maintained in
accordance with the requirements of this Agreement, whether or not they are in
fact so maintained), and (C) to be a like Airbus A320-231 model aircraft with
equivalent or better modification status and, in the case of Engines, in
compliance with Section 11(b); provided that if Lessee shall not perform its
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obligation to effect such replacement under this clause by the end of the
Replacement Period, Lessee shall then be deemed to have elected to comply, and
shall comply, with the provisions of clause (ii) of this Section 11(a);
provided, further, that the payment specified therein shall be deemed to have
become due and payable on the Stipulated Loss Value Date occurring on or
immediately preceding the last day of the Replacement Period. Upon compliance
with the foregoing, Lessor will, subject to the rights of any insurers, transfer
to Lessee, "AS IS, WHERE IS," without recourse, representation or warranty
(except a warranty that such Airframe and Engines are free and clear of Lessor's
Liens and Head Lessor's Liens), all of Lessor's right, title and interest, if
any, in and to the Airframe and the Engines suffering the Event of Loss as well
as all of Lessor's right, title and interest in and to any Engine constituting
part of the Aircraft and replaced as provided above but not installed thereon at
the time of the Event of Loss. For all purposes hereof, a replacement Airframe
shall be deemed part of the property leased hereunder and shall be deemed the
"Airframe" as defined herein. No Event of Loss resulting in replacement of the
Airframe or Engines under this Section 11(a)(i) shall result in any reduction of
Rent.
(ii) On a Stipulated Loss Value Date on or
before one hundred twenty (120) days after the date of the Event of Loss (but in
no event later than the last day of the Term) Lessee shall pay to Lessor in
immediately available funds the sum of (A) the Stipulated Loss Value of the
Aircraft as shown on Exhibit A for such Stipulated Loss Value Date, plus all
Basic Rent or Renewal Rent, as the case may be, payable on each Basic Rent
Payment Date or Renewal Rent Payment Date, respectively, prior to the date of
payment of such Stipulated Loss Value which has not been paid when due, plus, if
such Stipulated Loss Value Date is also a Basic Rent Payment Date or a Renewal
Rent Payment Date, the amount of Basic Rent or Renewal Rent, as the case may be,
payable by Lessee on such Stipulated Loss Value Date, and (B) all Supplemental
Rent payable, whereupon (1) the obligation of Lessee to pay Basic Rent or
Renewal Rent, as the case may be, hereunder with respect to the Aircraft for any
period commencing after the date on which such Stipulated Loss Value is paid
shall terminate; provided that Lessee shall remain liable for, and shall pay on
or before the date the Stipulated Loss Value and Supplemental Rent are paid, all
payments of Basic Rent or Renewal Rent, as the case may be, for the Aircraft due
on or before the date of such payment of Stipulated Loss Value and Supplemental
Rent, (2) the Term shall terminate with respect to such Aircraft,
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and (3) Lessor will, subject to the rights of any insurers, transfer to Lessee,
"AS IS, WHERE IS," without recourse, representation or warranty (except a
warranty that such Airframe and Engines are free and clear of Lessor's Liens and
Head Lessor's Liens), all of Lessor's right, title and interest, if any, in and
to the Airframe and Engines suffering the Event of Loss, as well as all of
Lessor's right, title and interest, if any, in and to any Engine constituting
part of the Aircraft but not installed thereon at the time of the Event of Loss.
(b) Event of Loss with Respect to an Engine. Upon
an Event of Loss with respect to an Engine only, Lessee shall give Lessor prompt
written notice thereof and shall, at its own cost and expense, within sixty (60)
days after such occurrence (but in no event later than the last day of the Term)
convey or cause to be conveyed to Lessor as replacement for the Engine suffering
an Event of Loss, title to another IAE Model V2500 engine of like model and
equivalent or better modification status or, at Lessee's option, an IAE engine
of an improved model, in each such case which has a value, remaining useful life
and utility determined in accordance with the Appraisal Procedure at least equal
to such Engine and is suitable for installation and use on the Airframe without
diminishing the value, remaining useful life or utility of such Airframe, free
of all Liens (it being understood that, upon such conveyance, such replacement
Engine may be subject to Permitted Liens) and being in as good operating
condition as (including no greater number of cycles or hours than) the Engine
being replaced assuming the Engine being replaced was serviceable and otherwise
in the condition and repair required by the terms hereof immediately prior to
the Event of Loss. Prior to or at the time of any such conveyance, Lessee, at
its own cost and expense, will (i) furnish Lessor with a full warranty xxxx of
sale, in form and substance reasonably satisfactory to Lessor and Indenture
Trustee, as applicable, with respect to such replacement Engine; (ii) cause
supplements, in form and substance reasonably satisfactory to Lessor and
Indenture Trustee (if the Lien of the Indenture has not been discharged),
subjecting such replacement Engine to this Lease, the Indenture (if in effect)
and the Trust Agreement (if in effect), to be duly executed by Lessee, if
applicable, and duly filed for recordation pursuant to the Federal Aviation Act;
(iii) furnish Lessor and Indenture Trustee (if the Lien of the Indenture has not
been discharged) with such evidence of title to such Replacement Engine and of
compliance with the insurance provisions of Section 12 hereof with respect to
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such Replacement Engine as Lessor or Indenture Trustee (if the Lien of the
Indenture has not been discharged) may reasonably request; (iv) furnish Owner
Participant, Lessor and Indenture Trustee (if the Lien of the Indenture has not
been discharged) with an opinion of Lessee's counsel addressed to such parties
to the effect that title to such Replacement Engine has been duly conveyed to
Lessor free and clear of all Liens (except Permitted Liens), and is duly leased
hereunder and subject to the Lien of the Indenture (if it has not been
discharged); (v) furnish a certificate signed by a Responsible Officer of Lessee
certifying that, upon consummation of such replacement, no Default or Event of
Default will exist hereunder; (vi) furnish such documents and evidence with
respect to Lessee, Lessor or Indenture Trustee (if the Lien of the Indenture has
not been discharged), as such parties or their respective counsel may reasonably
request in order to establish the consummation of the transactions contemplated
by this Section 11(b), the taking of all corporate proceedings in connection
therewith and compliance with the conditions set forth in this Section 11(b), in
each case in form and substance satisfactory to such party; (vii) furnish such
Uniform Commercial Code financing statements covering the Replacement Engine as
may be requested by Lessor or Indenture Trustee (if the Lien of the Indentures
has not been discharged); (viii) furnish Owner Participant, at Lessee's
election, with (x) an opinion of tax counsel mutually satisfactory to Owner
Participant and Lessee and which opinion is reasonably satisfactory to Owner
Participant to the effect that such replacement will have no adverse tax
consequences to Lessor and Owner Participant or (y) an indemnity for any adverse
tax consequences to Lessor and Owner Participant; and (ix) furnish the appraisal
referred to above. Upon full compliance by Lessee with the terms of this Section
11(b), Lessor will, subject to the rights of any insurers, transfer to Lessee,
"AS IS, WHERE IS" without recourse, representation or warranty (except a
warranty that such Engine is free and clear of Lessor's Liens and Head Lessor's
Liens), all of Lessor's right, title and interest, if any, in the Engine which
suffered the Event of Loss. For all purposes hereof, each such Replacement
Engine shall be deemed an "Engine" as defined herein and shall be deemed part of
the same Aircraft as was the Engine replaced thereof. No Event of Loss covered
by this Section 11(b) shall result in any reduction in Rent.
(c) Conveyance of Replacement Airframe. Prior to or at the
time of any conveyance of a replacement Airframe pursuant to Section 11(a)
above, Lessee, at its own cost and
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expense, will furnish Lessor with the following documents which shall have been
duly authorized, executed and delivered by the respective parties thereto and
shall be in full force and effect on said date: (i) a full warranty xxxx of
sale, in form and substance satisfactory to Owner Participant and Indenture
Trustee (if the Lien of the Indenture has not been discharged), and an AC Form
8050-2 Xxxx of Sale (or such other form of xxxx of sale as may be approved by
the FAA on said date), executed by the owner thereof, in favor of Lessor and,
cause supplements, reasonably satisfactory to Owner Participant and Indenture
Trustee (if the Lien of the Indenture has not been discharged), to this Lease,
the Indenture (if then in effect) and the Trust Agreement (if then in effect),
with respect to such replacement Airframe and to be duly filed for recordation
pursuant to the Federal Aviation Act or other applicable Governmental Entity;
(ii) the certificate specified in Section 12(f) hereof demonstrating compliance
with the insurance requirements of Section 12 with respect to the replacement
Airframe and Engines; (iii) an opinion (addressed to Indenture Trustee, Lessor,
and Owner Participant) of Lessee's counsel (and such other evidence of title as
Owner Participant or Indenture Trustee (if the Lien of the Indenture has not
been discharged) may reasonably request) to the effect that, upon such
conveyance, Lessor will acquire good title to such replacement Airframe free and
clear of all Liens (it being understood that, upon such conveyance, such
replacement Airframe may be subject to Permitted Liens), that such replacement
Airframe will be leased hereunder to the same extent as the Airframe replaced
thereby and will be subject to the Lien of the Indenture (if it has not been
discharged) and that Lessor and Indenture Trustee, as the assignee of Lessor, is
entitled to the benefits of Section 1110 of Title 11 of the United States Code
with respect to such replacement airframe and engines to the same extent as with
respect to the Airframe and Engines then installed thereon prior to such
replacement; (iv) a certificate signed by a Responsible Officer of Lessee
certifying that, upon consummation of such replacement, no Default or Event of
Default will exist hereunder; (v) such documents and evidence with respect to
Lessee, Owner Participant or Indenture Trustee (if the Lien of the Indenture has
not been discharged), as such parties or their respective counsel may reasonably
request in order to establish the consummation of the transactions contemplated
by this Section 11(c), the taking of all corporate proceedings in connection
therewith and compliance with the conditions set forth in this Section 11(c), in
each case in form and substance satisfactory to each such party, including
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evidence that the Aircraft of which the replacement Airframe is a part has been
duly certificated by the FAA as to type and airworthiness in accordance with the
terms of this Lease and application for registration of such replacement
Airframe in the name of Lessor has been duly made with the FAA or other
applicable Governmental Entity and Lessee has temporary or permanent authority
to operate the replacement Airframe; (vi) furnish such Uniform Commercial Code
financing statements covering the replacement Airframe as may be requested by
Lessor or Indenture Trustee, (vii) furnish Owner Participant with an opinion of
tax counsel mutually satisfactory to Owner Participant and Lessee and which
opinion is reasonably satisfactory to Owner Participant to the effect that such
replacement will have no adverse tax consequences to Lessor and Owner
Participant; and (viii) an appraisal prepared in accordance with the Appraisal
Procedure which confirms that the replacement Airframe and any replacement
Engine has a value, utility and remaining useful life at least equal to that of
the Airframe and Engines which suffered the Event of Loss assuming that the same
were maintained in accordance with the requirements of this Lease whether or not
they are in fact so maintained. Upon full compliance by Lessee with the terms of
this Section 11(c), Lessor will, subject to the rights of any insurers, transfer
to Lessee "AS IS, WHERE IS," without recourse, representation or warranty
(except a warranty that such Airframe is free and clear of Lessor's Liens and
Head Lessor's Liens), all of Lessor's right, title and interest in and to the
Aircraft which suffered the Event of Loss. No Event of Loss with respect to the
Aircraft under the circumstances contemplated by the terms of this Section 11(c)
shall result in any reduction in Rent.
For all purposes of this Lease, each such
replacement Aircraft (together with any Engines constituting part of the
Aircraft being replaced as to which an Event of Loss has not occurred) shall be
deemed part of the property leased hereunder and shall be deemed the "Aircraft"
as defined herein.
(d) Application of Proceeds and Payments. Any
payments received at any time by Lessor or by Lessee from any insurer with
respect to an Event of Loss shall be applied in the manner specified in Sections
12(c) and (e) hereof. Subject to Section 11(f) below, any payments (other than
insurance proceeds) received at any time by Lessor or Lessee from any
Governmental Entity or other Person with respect to an Event of Loss will be
applied as follows (after reimbursement of Lessor, Indenture Trustee and Owner
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Participant for their reasonable out-of-pocket costs and expenses):
(i) unless clause (ii) below is applicable, so much of
such payments as shall not exceed the Stipulated Loss Value required to be paid
by Lessee pursuant to Section 11(a)(ii) of this Lease shall be paid to Lessor in
reduction of Lessee's obligation to pay such Stipulated Loss Value if not
already paid by Lessee, or, if already paid by Lessee, shall (unless a Default
or an Event of Default shall have occurred and be continuing) be applied by
Lessor to reimburse Lessee for its payment of such Stipulated Loss Value and the
balance, if any, of such payment remaining thereafter shall be paid over to, or
retained by, Lessor; or
(ii) if such payments are received as a result of an Event
of Loss with respect to the Airframe or an Engine which is being replaced
pursuant to Section 11(a)(i) or Section 11(b) hereof, all such payments shall be
paid over to, or retained by, Lessee if Lessee shall have fully performed or,
concurrently therewith fully performs, the terms of Sections 11(a)(i) and (c) or
Section 11(b) hereof, as the case may be, and of Section 15 hereof with respect
to the Event of Loss for which such payments are made and if no Default or Event
of Default shall have occurred and be continuing.
(e) Requisition for Use by Government with Respect to the
Aircraft. Subject to Section 11(f) below, in the event of the requisition for
use by a Governmental Entity of the Aircraft, the Airframe or an Engine (other
than a requisition constituting an Event of Loss), Lessee shall promptly notify
Lessor and Indenture Trustee (if the Lien of the Indenture has not been
discharged) thereof and all of Lessee's obligations under this Lease with
respect to such Airframe or Engine shall continue to the same extent as if such
requisition had not occurred. All payments received by Lessor or Lessee from the
Governmental Entity for the use of such Airframe or Engine during the Term shall
be paid over to, or retained by, Lessee if no Default or Event of Default shall
have occurred and be continuing; and all other payments received by Lessor or
Lessee from the Governmental Entity shall be paid over to, or retained by,
Lessor. If the Airframe and such Engines or engines are not returned by the end
of the Term, an Event of Loss shall be deemed to have occurred on the last day
of the Term and, on the last day of the Term, Lessee shall either pay to Lessor
the amount provided herein for an Event of Loss to the Airframe and such Engines
or engines on such date or provide a
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replacement Aircraft and Engine on such date in the condition provided for in
Section 16. In the event of the requisition for use by the Governmental Entity
of any Engine without the requisition for use of the Airframe, Lessee will
replace such Engine hereunder by complying with the terms of Section 11(b) to
the same extent as if an Event of Loss had occurred with respect to such Engine,
and thereafter any payments received by Lessor or Lessee from the Governmental
Entity with respect to such requisition shall be paid over to, or retained by,
Lessee.
(f) Application in Default. Any amount referred
to in clause (i) or (ii) of Section 11(d) or Section 11(e) which is otherwise
payable to Lessee shall not be paid to Lessee, or, if it has been previously
paid to or retained by Lessee, shall be paid by Lessee to Lessor, if at the time
of such payment or retention a Default or an Event of Default shall have
occurred and be continuing. In such case, all such amounts shall be paid to and
held by Indenture Trustee so long as the Lien of the Indenture shall not have
been discharged and thereafter by Lessor as security for the obligations of
Lessee, or, at the option of Lessor or the Indenture Trustee, as the case may
be, applied by Lessor or the Indenture Trustee, as the case may be, toward
payment of any of Lessee's obligations at the time due hereunder, as Lessor or
the Indenture Trustee, as the case may be, may elect, including, without
limitation, by reason of this Lease being declared or deemed in default. At such
time as there shall not be continuing any such Event of Default or Default, all
such amounts at the time held by Lessor or Indenture Trustee in excess of the
amount, if any, which Lessor or Indenture Trustee has elected for application as
provided above, shall be paid to Lessee.
Section 12. Insurance.
(a) Public Liability and Property Damage
Insurance. Lessee will carry and maintain in effect, or cause to be carried and
maintained in effect, at its own cost and expense, with Approved Insurers,
comprehensive aircraft and general public liability insurance (including,
without limitation, contractual liability, liability war risk and passenger
legal liability but excluding manufacturer's product liability insurance), and
property damage insurance with respect to the Aircraft, in an amount not less
than three hundred fifty million dollars ($350,000,000), combined single limit,
per occurrence or such higher amount, and of such type and terms, as are
customarily carried by prudent Certificated Air Carriers,
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similarly situated to Lessee, operating aircraft of similar size and engines and
as hereinafter provided. Each and any policy of insurance carried in accordance
with this Section 12(a), and each and any policy obtained in substitution or
replacement for any of such policies, (i) shall designate Lessor (in both its
individual and trustee capacity), Owner Participant, Indenture Trustee (in both
its individual and trustee capacity) and the other Indemnitees and their
respective permitted assigns, as additional insureds as their interests may
appear (but without imposing upon any such Person any obligation imposed upon
the insured, including, without limitation, the liability to pay any premiums
for any such policies), (ii) shall expressly provide that, in respect of the
interests of Lessor, Owner Participant, Indenture Trustee and the other
Indemnitees and their respective permitted assigns, in such policies, the
insurance shall not be invalidated as to an insured by any act or omission of
Lessee or any other insured and shall insure Lessor, Owner Participant,
Indenture Trustee and the other Indemnitees and their respective permitted
assigns, regardless as to any insured of any breach or violation by Lessee or
any other insured of any warranty, declaration or condition contained in such
policies, (iii) shall provide that if such insurance is cancelled for any reason
whatsoever, or is changed in any adverse way with respect to the interests of
Lessor, Owner Participant, Indenture Trustee and the other Indemnitees or if
such insurance is allowed to lapse for non-payment of premium, such
cancellation, change or lapse shall not be effective as to Lessor, Owner
Participant, Indenture Trustee and the other Indemnitees, and their respective
permitted assigns, until thirty (30) days, in each instance (seven (7) days or
such lesser period of time as is customarily available at the time in the case
of any war risk and allied perils coverage), after notice to Lessor, Owner
Participant, Indenture Trustee from such insurer or insurers, of such
prospective cancellation, change or lapse provided, however, that if any such
notice period is not reasonably obtainable, such policies shall provide for as
long a period of prior notice as shall then be reasonably obtainable, (iv) shall
include coverage for any country in or over which the Aircraft is located or
operated, and (v) shall provide that, as against Lessor, Owner Participant,
Indenture Trustee and the other Indemnitees, and their respective permitted
assigns, each insurer shall waive any rights of set-off, counterclaim or any
other deduction, whether by attachment or otherwise, and waives any rights it
may have to be subrogated to any right of any insured against Lessor, Owner
Participant, Indenture Trustee, or the other Indemnitees, or their respective
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permitted assigns, with respect to the Aircraft. Each liability policy shall be
primary without right of contribution from any other insurance which may be
carried by Lessor, Owner Participant, Indenture Trustee or the other
Indemnitees, or their respective permitted assigns, and shall expressly provide
that all of the provisions thereof shall operate in the same manner as if there
were a separate policy covering each insured, provided, that such policies shall
not operate to increase the insurer's limit of liability. Lessee shall cause its
insurers to agree that the indemnity and hold harmless provisions of Section 13
are insured as a contractual assumption of liability by Lessee's insurers,
subject to the terms, coverage, conditions, limitations and exclusions of the
policy of insurance. Without limiting the foregoing, the type and amount of the
insurance carried by Lessee hereunder shall be no less in amount and no less
comprehensive or favorable to Lessor, Owner Participant, Indenture Trustee and
the other Indemnitees then that carried by Lessee with respect to other A320-231
aircraft or similar-size aircraft owned or leased by Lessee.
(b) Insurance Against Loss or Damage. Lessee, at
its own expense, will maintain in effect, or cause to be carried and maintained
in effect, with Approved Insurers "all-risk" ground and flight aircraft hull
insurance (which shall include, but not be limited to, hijacking, a
disappearance clause and coverage against strikes, riots, commotions or labor
disturbances, air piracy, malicious acts or acts of sabotage and unlawful
seizure or wrongful exercise of control of the Aircraft in flight by a person on
board such Aircraft acting without the consent of Lessee) covering the Aircraft,
and "all-risk" coverage including transit insurance with respect to Engines and
Parts while not installed on such Aircraft or an aircraft, which in each case
considering all policy terms, limitations and exclusions is of the type, terms
and amount customarily maintained by prudent Certificated Air Carriers similarly
situated to Lessee and operating similar size aircraft and engines and as
hereinafter provided. Lessee shall also maintain, or cause to be maintained, war
risk and allied perils hull insurance reasonably acceptable to Lessor with
Approved Insurers if the Aircraft, Airframe or Engines are operated on routes or
kept in locations outside of the United States of America. In addition, at least
ten (10) Business Days (or, in the case of an emergency, at least two (2)
Business Days) prior to permitting the Aircraft, Airframe or Engines to be
operated or located outside of the United States of America, other than in
Canada or Mexico,
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Lessee shall notify Lessor thereof. If Owner Participant or Indenture Trustee
reasonably requests at any time and if such insurance is then customarily being
obtained by or for Persons leasing or financing similarly-sized aircraft
operating on similar routes to operators located in the jurisdiction of Lessee's
or, if a Permitted Sublease is in effect, the Permitted Sublessee's jurisdiction
of domicile, Lessee shall pay or reimburse Lessor for political risk,
repossession, expropriation, confiscation and similar insurance as Lessor may
arrange or cause to be arranged. Anything herein to the contrary
notwithstanding, at all times while the Aircraft is subject to this Lease, the
insurance required by this Section 12(b) shall be for an amount on an "agreed
value" basis not less than the Stipulated Loss Value from time to time
determined for the Aircraft. Without limiting the foregoing, the type and amount
of insurance carried by Lessee hereunder shall be no less comprehensive or
favorable to Lessor, Owner Participant, Indenture Trustee and the other
Indemnitees than that carried by Lessee with respect to similar-size aircraft
owned or leased by Lessee.
Each and any policy of insurance obtained and
maintained pursuant to this Section 12(b), and each and any policy obtained in
substitution or replacement for any such policies, (i) shall designate Lessor as
owner of the Aircraft, shall designate, so long as the Lien of the Indenture has
not been discharged, Indenture Trustee and, thereafter, Lessor, as sole loss
payee, as provided below and shall designate Lessor, Owner Participant,
Indenture Trustee (in both its individual capacity and its trustee capacity) and
the other Indemnitees and their respective permitted assigns as additional
insureds, as their respective interests may appear (but without imposing upon
Lessor, Owner Participant, Indenture Trustee and their respective permitted
assigns, any obligation imposed upon the insured, including, without limitation,
the liability to pay any premiums for any such policies), (ii) shall expressly
provide that, in respect of the interests of such an additional insured and its
permitted assigns, in such policies, the insurance shall not be invalidated as
to an insured by any act or omission of Lessee or any other additional insured,
and shall insure each such additional insured and its permitted assigns,
regardless of any breach or violation of any warranty, declaration or condition
contained in such policies by the Lessee or another additional insured, (iii)
shall provide that if such insurance is cancelled for any reason whatsoever, or
is changed in any adverse way with respect to the interests of
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Lessor, Owner Participant, Indenture Trustee and to the other Indemnitees and
their respective permitted assigns, or if such insurance is allowed to lapse,
such cancellation, change or lapse shall not be effective as to Lessor, Owner
Participant, Indenture Trustee, the other Indemnitees or their respective
permitted assigns, until thirty (30) days (seven (7) days or such lesser period
of time as is customarily available at the time in the case of any war risks or
allied perils coverage) after written notice to Lessor, Owner Participant and
Indenture Trustee from such insurer or insurers, as the case may be, of such
prospective cancellation, change or lapse provided, however, that if any such
notice period is not reasonably obtainable, such policies shall provide for as
long a period of prior notice as shall then be reasonably obtainable, (iv) shall
include coverage for any country in or over which the Aircraft may at any time
be located or operated, (v) shall provide that, as against Lessor, Owner
Participant, Indenture Trustee the other Indemnitees and their respective
permitted assigns, each insurer shall waive any rights of set-off, counterclaim
or any other deduction, whether by attachment or otherwise, and waives any
rights it may have to be subrogated to any right of any insured against Lessor,
Owner Participant, Indenture Trustee and the other Indemnitees and their
respective permitted assigns, with respect to the Aircraft, (vi) shall provide
that in the event of any damage or loss which is an Event of Loss hereunder and
which results in a payment, such payment shall be payable directly to Indenture
Trustee as sole loss payee, so long as the Lien of the Indenture shall not have
been discharged and thereafter to Lessor, as sole loss payee, and (vii) shall
provide that in the event of any damage or loss which is not an Event of Loss
hereunder and which results in a payment, such payment shall be payable directly
to Indenture Trustee, as sole loss payee for the account of all interests, so
long as the Lien of the Indenture shall not have been discharged and thereafter
to Lessor, as sole loss payee for the account of all interests. The insurance
required under this Section 12(b) may incorporate deductible amounts which shall
not exceed one million dollars ($1,000,000).
Each of Lessor and Owner Participant shall have
the right to carry additional and separate excess or contingent insurance for
its own benefit at its own expense, without, however, thereby limiting Lessee's
obligations under this Section 12, and Lessee shall not carry any such insurance
if it would conflict with or adversely affect other insurance carried by Lessor
or Owner Participant. Lessee shall have the right to carry insurance in excess
of
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the amounts required hereunder and the proceeds of such excess insurance shall
be payable to Lessee, provided, however, that such insurance does not conflict
with or adversely affect the insurance required hereunder or any excess or
contingent insurance carried by Lessor or Owner Participant. Lessee shall give
Lessor reasonable prior written notice of any insurance to be carried by Lessee
in addition to that required to be carried by Lessee as provided herein.
(c) Application of Insurance Proceeds for an Event
of Loss. It is agreed that insurance payments which arise from insurance
required to be carried by Lessee pursuant to this Section 12 and received as the
result of the occurrence of an Event of Loss shall be applied as follows (after
reimbursement of Lessor, Owner Participant and Indenture Trustee for their
reasonable out-of-pocket costs and expenses):
(i) unless clause (ii) below is applicable, so much of
such payments as shall not exceed the Stipulated Loss Value required to be paid
by Lessee pursuant to Section 11(a)(ii) of this Lease shall be paid to Indenture
Trustee so long as the Lien of the Indenture has not been discharged and
thereafter to Lessor in reduction of Lessee's obligation to pay such Stipulated
Loss Value if not already paid by Lessee, or, if already paid by Lessee, shall
(unless a Default or an Event of Default shall have occurred and be continuing)
be applied by Indenture Trustee or Lessor, as the case may be, to reimburse
Lessee for its payment of such Stipulated Loss Value and the balance, if any, of
such payment remaining thereafter shall be paid over to, or retained by, Lessor;
or
(ii) if such payments are received as a result of an Event
of Loss with respect to the Airframe or an Engine which is being replaced
pursuant to Section 11(a)(i) or Section 11(b) hereof, all such payments shall be
paid over by the Indenture Trustee or Lessor, as the case may be, to, or
retained by, Lessee if Lessee shall have fully performed or, concurrently
therewith fully performs, the terms of Section 11(a)(i) and (c) or Section 11(b)
hereof, as the case may be, and of Section 15 hereof with respect to the Event
of Loss for which such payments are made and if no Default or Event of Default
shall have occurred and be continuing.
(d) Application of Insurance Proceeds for Other than an Event
of Loss. The insurance payments of any
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property damage loss to the Airframe or any Engine not constituting an Event of
Loss with respect thereto will be applied in payment for the actual costs of
repairs or for replacement property which Lessee has incurred in accordance with
the terms of Section 9, 11 or 12(c) of this Lease against such documentation
evidencing payment by Lessee as Lessor may reasonably request to reimburse
Lessee for such repairs or replacements already paid for by Lessee, and any
balance remaining after compliance with such Sections with respect to such loss
shall be paid to Lessor. Lessee shall be entitled to receive from the insurer
any insurance proceeds not in excess of five hundred thousand dollars ($500,000)
as soon as such funds are paid and shall promptly receive such additional
insurance proceeds from the loss payee upon invoices for repair work in
progress, replacement parts which are ordered or for work completed as provided
above in this Section 12(d). Any amount referred to in this Section 12(d) which
is payable to Lessee shall not be paid to Lessee if at the time of such payment
any Default or Event of Default shall have occurred and be continuing, but shall
be held by Lessor as security for the obligations of Lessee under this Lease or
applied as provided in Section 12(e).
(e) Application in Default. Any amount referred
to in clause (ii) of Section 12(c) or Section 12(d) which is otherwise payable
to Lessee shall not be paid to Lessee, or if it has been previously paid to or
retained by Lessee, shall be paid by Lessee to Indenture Trustee, so long as the
Lien of the Indenture shall not have been discharged, and thereafter to Lessor,
if at the time of such payment or retention a Default or an Event of Default
shall have occurred and be continuing. In such case, all such amounts shall be
paid to and held by Indenture Trustee so long as the Lien of the Indenture shall
not have been discharged, and thereafter held by Lessor as security for the
obligations of Lessee, or, at the option of Indenture Trustee or Lessor, applied
by Indenture Trustee or Lessor toward payment of any of Lessee's obligations at
the time due hereunder, including, without limitation, by reason of this Lease
being declared or deemed declared in default, as Indenture Trustee or Lessor may
elect. At such time as there shall not be continuing any such Event of Default
or Default, all such amounts at the time held by Indenture Trustee or Lessor in
excess of the amount, if any, which Indenture Trustee or Lessor has elected for
application as provided above, shall be paid to Lessee.
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(f) Certificates. On or before the Delivery Date,
and thereafter on any renewal by the Lessee of the insurance required hereby
(but in no event less than once in every twelve (12) month period), Lessee will
furnish to Lessor and Indenture Trustee a certificate executed and delivered by
an Approved Insurer or the Approved Broker, describing in reasonable detail, and
in accordance with customary practice, insurance carried on the Aircraft and
Lessee shall also furnish an opinion or report by the Approved Insurer or the
Approved Broker certifying that the insurance then maintained on the Aircraft
complies with the terms of this Lease. Lessee will cause the Approved Broker to
agree to advise Lessor, Owner Participant and Indenture Trustee in writing at
least thirty (30) days (seven (7) days or such lesser period of time as is
customarily available at the time in the case of any war risk and allied perils
coverage) prior to the expiration, non-renewal, termination or cancellation for
any reason (including, without limitation, failure to pay premium therefor) or
material modification of any such insurance; provided, however, that if any such
notice period is not reasonably obtainable, such Approved Broker shall provide
for as long a period of prior notice as shall then be reasonably obtainable.
In the event Lessee shall fail to maintain
insurance as herein provided, Lessor, Owner Participant or Indenture Trustee at
their respective options, may provide such insurance and, in such event, Lessee
shall, upon demand, reimburse Lessor, as Supplemental Rent, or any other such
other Person who may have provided such insurance, for the cost thereof.
(g) Reinsurance. Lessee (or, if a Permitted
Sublease is in effect, the Permitted Sublessee) may carry primary insurance
outside of the aviation insurance markets in New York, London or Paris if the
relevant primary insurer shall have obtained reinsurance and such reinsurance
will (i) be on the same terms as the original insurance and will include the
provisions required by this Agreement, (ii) provide in case of any bankruptcy,
insolvency, liquidation, dissolution or similar proceedings of or affecting the
original insurer that the reinsurers' liability will be to make such payment as
would have fallen due under the relevant policy of reinsurance if the original
insurer had (immediately before such bankruptcy, insolvency, liquidation,
dissolution or similar proceedings) discharged its obligations in full under the
original insurance policies in respect of which the then relevant policy of
reinsurance has been effected; and (iii) contain a
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"cut-through" clause in the following form (or otherwise, satisfactory to Owner
Participant): "The Reinsurers and the Reinsured hereby mutually agree that in
the event of any claim arising under the reinsurances in respect of a total loss
or other claim where as provided by the Amended and Restated Aircraft Lease
Agreement dated as of December 19, 1989 as amended and restated as of November
__, 1996 and made between Wilmington Trust Company, as Owner Trustee, and
America West Airlines, Inc. such claim is to be paid to the person named as sole
loss payee under the primary insurances, the Reinsurers will in lieu of payment
to the original insured, its successors in interest and assigns pay to the
person named as sole loss payee under the primary insurances effected by the
original insured that portion of any loss due for which the Reinsurers would
otherwise be liable to pay the original insurer (subject to proof of loss), it
being understood and agreed that any such payment by the Reinsurers will (to the
extent of such payment) fully discharge and release the Reinsurers from any and
all further liability in connection therewith."
(h) Storage. During any period that the Aircraft
is in storage or otherwise grounded, Lessee may carry or cause to be carried, in
lieu of the insurance required by Sections 12(a) and (b) above, insurance
otherwise conforming with the provisions of said Sections 12(a) and (b) except
that the scope of the risk and the type of insurance, and the amount of the
insurance in the case of the insurance described in Section 12(a) above (but not
the amount of insurance to be carried under Section 12(b) above), shall be the
same as from time to time applicable to similar size passenger aircraft that
comprise Lessee's fleet in similar storage or grounding, and in any event
(including, without limitation, at any time when there shall be in existence a
Permitted Sublease), the same as from time to time customarily carried by
similarly-situated, prudent Certificated Air Carriers for passenger aircraft of
similar size as the Aircraft in similar storage or grounding.
(i) Amounts Held. So long as no Default or Event
of Default has occurred and is continuing, any amount held by Lessor or
Indenture Trustee, as the case may be, until application by Lessor or Indenture
Trustee, as the case may be, pursuant to this Section 12 shall be invested as
provided in Section 21(h) hereof.
(j) After the Term. Lessee shall continue to maintain at
its expense the insurance described in Section 12(a) for three years after the
expiration or termination of
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the Basic Term or Renewal Term, if Lessee has elected to renew the Lease in
accordance with Section 20, covering each Indemnitee as its interest may appear
and specifically insuring the indemnity contained in Section 13 to the extent of
the coverage of such policy.
(k) Governmental Indemnity. In lieu of certain of
the insurance described in Section 12 above, Lessee may provide a United States
governmental indemnity, to the extent and subject to the terms and conditions
specified in Section 6(c).
Section 13. General Indemnity.
Lessee hereby agrees to indemnify, reimburse,
defend and hold harmless each Indemnitee on an after-tax basis, as provided in
Section 10(e), within fifteen (15) days after demand from and against any and
all claims, damages (whether direct, indirect, incidental, special or
consequential), losses, charges, fees, liabilities, obligations, demands, suits,
judgments, actions and other legal proceedings (whether civil or criminal),
penalties, fines, other sanctions, and any reasonable costs and expenses, in
connection herewith, including, without limitation, reasonable attorney's fees
and expenses of whatever kind or nature (any and all of which are hereafter
referred to as "Claims") imposed on, or asserted by or against, or suffered or
incurred by, any Indemnitee from and after the Restatement Date, including,
without limitation, injury, death or property damage of passengers, shippers and
others, environmental control, noise and pollution regulations, which in any way
may result from, pertain to, or arise in any manner out of, or are in any manner
related to (1) the Operative Documents, the Purchase Documents or the Financing
Documents, or any of the transactions contemplated thereby; (2) the Aircraft,
the Airframe, any Engine or any engine used in connection with the Airframe or
any Part thereof, including, but not limited to, (A) the importation,
exportation, condition, manufacture, design, purchase, ownership, registration,
reregistration, deregistration (other than any deregistration caused by the
failure of the registered owner of the Aircraft to be a "citizen of the United
States" as defined under the Federal Aviation Act and the regulations thereunder
or to file the documentation necessary to continue FAA registration of the
Aircraft), delivery, nondelivery, assignment, leasing, subleasing,
sub-subleasing, acceptance, rejection, possession, repossession, return,
financing, Liens (excluding Lessor's Liens, Head Lessor's Liens and Lenders'
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Liens, but including the Lien of the Indenture), use, performance, modification,
maintenance, overhaul, operation, pooling, interchange, repair, testing, sale,
return or other disposition or application of the Aircraft, the Airframe, any
Engine, any engine used in connection with the Airframe or any Part (including,
but not limited to, latent and other defects whether or not discoverable by
Lessee or Lessor, Claims related to any actual or alleged violation of Law, loss
or damage to any property of passengers, shippers or otherwise or any Claim
related to patent, copyright, trademark or other infringement) either in the air
or on the ground, and, including, without limitation, any interest therein of an
Indemnitee or imposition of a Lien thereon (excluding Lessor's Liens, Head
Lessor's Liens and Lenders' Liens but including the Lien of the Indenture), or
the rentals, receipts or earnings therefrom (including, without limitation, the
Rent and any other amounts paid or payable with respect thereto); or (B) any
defect in the Aircraft, the Airframe, any Engine, any engine used in connection
with the Airframe or any Part thereof arising from the material or any article
used therein, whether from the design, testing or use thereof from any
maintenance, service, repair, overhaul or testing of such Aircraft, Airframe,
Engine, engine or Part, or otherwise regardless of when such defect shall be
discovered, whether or not such Aircraft, Airframe, Engine, engine or Part is at
the time in the possession of Lessee, and regardless of where such Aircraft,
Airframe, Engine, engine or Part may then be located; or (3) the breach of any
representation, warranty or covenant made by Lessee hereunder or under any of
the other Operative Documents or any Default or Event of Default; provided,
however, that the indemnity provided for in this Section 13 shall not apply to
any portion of a Claim of an Indemnitee to the extent it results from: (i) the
gross negligence or willful misconduct of such Indemnitee or any of its
directors, officers, employees, servants or agents (except any such gross
negligence or willful misconduct as may be attributed to an Indemnitee due to
its interest in the Aircraft, the Airframe, an Engine, any Operative Document,
any Purchase Document or any Financing Document), (ii) the material breach of
any express representation, warranty or covenant made by such Indemnitee herein
or in any other Operative Document, or the Financing Documents (not resulting
from a breach by Lessee of any of its representations, warranties or covenants
in the Operative Documents or in the Financing Documents), (iii) any Taxes,
whether or not Lessee is required to indemnify such Taxes under Section 10
hereof or the Tax Indemnification Agreement (it being understood that Section 10
hereof and the Tax
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Indemnification Agreement exclusively provide for Lessee's liability with
respect to Taxes), (iv) any Claim which relates solely to events which occurred
prior to the beginning of the Term (other than Claims related to the condition,
manufacture or design of the Aircraft) and any Claim concerning payment for or
the ownership of Buyer Furnished Equipment, (v) an underlying act which occurs
after the Aircraft has been returned to Lessor in accordance with the terms
hereof and the Term of this Lease has been terminated or has expired and the
return is not related to an Event of Default, (vi) as to such Indemnitee, an
underlying act which occurs after a disposition or other transfer (voluntary or
involuntary) by such Indemnitee of all or any part of its interest in the
Aircraft, the Airframe, any Engine, or any Part, or in the Financing Documents,
the Purchase Documents or the Operative Documents, except as contemplated under
or pursuant to the Operative Documents, the Financing Documents or the Purchase
Documents and except as resulting from the exercise of its remedies during the
period while an Event of Default has occurred and is continuing and prior to the
time such Indemnitee has received payment of all amounts owing to it hereunder
and except any Claim which is alleged or does relate to the period prior to such
disposition or (vii) the authorization or giving or withholding of any future
amendments, supplements, waivers or consents with respect to any of the
Financing Documents, the Purchase Documents or the Operative Documents, which
amendments, supplements, waivers or consents were not requested by Lessee or are
not required to give effect to the provisions of the Operative Documents, the
Financing Documents or the Purchase Documents (provided, however, in no event
will Lessee be liable for any Claims resulting from, pertaining to or arising
from or related to Lessor's granting or creating a Lessor's Lien or the granting
or creation of a Head Lessor's Lien or an Original Head Lessee's Lien). Upon
full payment of the indemnities herein, Lessee shall be subrogated to all rights
and remedies which such Indemnitee may have against any third party against whom
such Indemnitee has the right to assert a Claim which arises under any action
described in this Section 13 (except Claims under such Indemnitee's own
insurance policies or under the indemnification provisions of any of the
Financing Documents).
Without limiting Lessee's liability under this
Section 13, Lessee hereby waives and releases any Claim now or hereafter
existing against any Indemnitee, on account of any Claims for or on account of
or arising or in any way connected with injury to or death of personnel of
Lessee or
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loss or damage to property of Lessee or the loss of use of any property which
may result from or arise in any manner out of or in relation to the importation,
exportation, ownership, purchase, registration, reregistration, deregistration
(except as to Owner Participant or Lessor as and to the extent such Indemnitee
is responsible under the Refunding Agreement for Claims related to such
deregistration), delivery, non-delivery, assignment, leasing, subleasing,
manufacture, acceptance, rejection, possession, return, financing, performance,
modification, maintenance, condition, use, operation, pooling, interchange,
repair, testing, sale, return or other disposition of the Aircraft, the
Airframe, any Engine or any engine used in connection with the Airframe or any
Part thereof, either in the air or on the ground, or which may be caused by any
defect in such Aircraft, Airframe, Engine, engine or Part from the material or
any article used therein or from the design or testing thereof, or use thereof
or from any maintenance, service, repair, overhaul, or testing of such Aircraft,
Airframe, Engine, engine or Part, claims for infringement, loss of or injury to
any person, loss of or damage to any property or environmental damage,
regardless of when such defect may be discovered, whether or not such Aircraft,
Airframe, Engine, engine or Part is at the time in the possession of Lessee, and
regardless of the location of such Aircraft at any such time except to the
extent that such Claim results from (i) the gross negligence or willful
misconduct of such Indemnitee (except any such gross negligence or willful
misconduct as may be attributed to an Indemnitee due to its interest in the
Aircraft, the Airframe, an Engine, any Operative Document, any Purchase Document
or any Financing Document), (ii) the breach of any of its express
representations, warranties or covenants hereunder, under any other Operative
Document or Financing Document (not resulting from a breach by Lessee of any of
its representations, warranties or covenants in the Operative Documents or in
the Financing Documents), (iii) any Taxes, whether or not Lessee is required to
indemnify such Taxes under Section 10 hereof or the Tax Indemnification
Agreement (it being understood that Section 10 hereof and the Tax
Indemnification Agreement exclusively provide for Lessee's liability with
respect to Taxes), (iv) any Claim which relates solely to events which occurred
prior to the Restatement Date (other than Claims related to the condition,
manufacture or design of the Aircraft) and any Claim concerning payment for or
the ownership of Buyer Furnished Equipment, (v) an underlying act which occurs
after the Aircraft has been returned to Lessor in accordance with the terms
hereof and the Term of this Lease has been
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terminated or has expired and the return is not related to an Event of Default,
(vi) as to such Indemnitee, an underlying act which occurs after a disposition
or other transfer (voluntary or involuntary) by such Indemnitee of all or any
part of its interest in the Aircraft, the Airframe, any Engine, or any Part, or
in the Financing Documents, the Purchase Documents or the Operative Documents,
except as contemplated under or pursuant to the Operative Documents, the
Financing Documents or the Purchase Documents and except as resulting from the
exercise of its remedies during the period while an Event of Default has
occurred and is continuing and prior to the time such Indemnitee has received
payment of all amounts owing to it hereunder or thereunder and except any Claim
which is alleged or does relate to the period prior to such disposition, (vii)
the authorization or giving or withholding of any future amendments,
supplements, waivers or consents with respect to any of the Financing Documents,
the Purchase Documents or the Operative Documents, which amendments,
supplements, waivers or consents were not requested by Lessee or are not
required to give effect to the provisions of the Operative Documents, the
Financing Documents or the Purchase Documents or (viii) a Lessor's Lien, a Head
Lessor's Lien or a Lenders' Lien attributable to such Indemnitee.
Each Indemnitee shall, at Lessee's sole cost and
expense and with Lessee's cooperation, be entitled to conduct the defense of any
Claim against it; provided, however, that Lessee shall, at the request of any
Indemnitee and so long as no Event of Default has occurred and is continuing,
assume and conduct promptly and diligently, at its sole cost and expense, the
defense of such Indemnitee against any Claim of a third party with counsel
reasonably acceptable to such Indemnitee; and provided, further, however, that
Lessee shall have the right as well as the obligation to assume such defense to
the extent required under the terms of the applicable insurance policies so long
as no Default or Event of Default has occurred and is continuing. In the event
Lessee shall so assume the defense of any Claim, such Indemnitee shall cooperate
with Lessee in defending such Claim, but any expenses incurred by such
Indemnitee in connection therewith shall either be paid by Lessee to such
Indemnitee in advance, or reasonable security shall be provided by Lessee to
such Indemnitee for such payments. Neither Lessee nor an Indemnitee shall enter
into a settlement or other compromise with respect to any Claim which Lessee or
such Indemnitee is defending hereunder in
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excess of $100,000 without the prior written consent of the other, which consent
shall not be unreasonably withheld.
Each Indemnitee agrees to give Lessee prompt
notice of any Claims by a third party hereunder following such Indemnitee's
actual knowledge of such Claims by third parties, but the failure of such
Indemnitee to give the notice required by this Section 13 shall not constitute a
release by Lessor or such Indemnitee of, or reduce, any of the obligations or
liabilities of Lessee to such Indemnitee in respect of any such Claim or
otherwise affect the obligations or liabilities of Lessee to any Indemnitee in
respect of any such Claim, except to the extent that Lessee's ability to control
the defense thereof where Lessee has the right to control the defense thereof is
materially prejudiced as a result solely of such failure of such Indemnitee to
give such notice.
An Indemnitee or Lessee shall supply the other
with such information requested by the other as is reasonably necessary or
advisable for the other to control the defense of a Claim to the extent
permitted by this Section.
Nothing in this Section shall be construed as a
guaranty by Lessee of payments due pursuant to any indebtedness incurred with
respect to the purchase of the Aircraft or of the residual value of the
Aircraft.
Notwithstanding anything herein or in any other
Operative Document to the contrary, with respect to any Claim for which any
Indemnitee is entitled to indemnification under more than one provision of this
Lease or any other Operative Document, such Indemnitee shall be entitled to
recovery for such Claim only pursuant to one such provision as it may select in
its sole discretion (and, for the avoidance of doubt, such Indemnitee shall not
be entitled to any double recovery for the same Claim).
The indemnities contained in this Section 13 shall
continue in full force and effect notwithstanding the expiration or other
termination of this Lease and are expressly made for the benefit of and shall be
enforceable by each Indemnitee.
Section 14. Liens.
Lessee shall not directly or indirectly create, incur,
assume, or suffer to exist any Lien on or with respect to the Aircraft, the
Airframe, any Engine or any
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Part thereof, title thereto, or any interest of Lessor therein or in this Lease,
except (i) the respective rights of Lessor, Lessee, Owner Participant, Indenture
Trustee and any other Indemnitee as herein provided or provided under the other
Operative Documents or the Financing Documents; (ii) Lessor's Liens, Head
Lessor's Liens and Lenders' Liens; (iii) Liens for Taxes either not yet due or
being diligently contested in good faith by appropriate proceedings in
accordance with Section 10 and so long as adequate reserves are maintained with
respect to such Liens and only so long as neither such proceedings nor such
Liens involve any material danger of the sale, forfeiture or loss of any of the
Aircraft, the Airframe or any Engine, or any interest of Lessor or Indenture
Trustee therein or any risk of criminal liability of Lessor or Indenture
Trustee; (iv) inchoate materialmen's, mechanics', workmen's, repairmen's
employees', or other like inchoate Liens arising in the ordinary course of
business for sums not overdue by more than 45 days or being diligently contested
in good faith and only so long as neither such proceedings nor any such Liens
involve any material danger of the sale, forfeiture or loss of any of the
Aircraft, the Airframe or any Engine, or any interest of Lessor or Indenture
Trustee therein; (v) the rights of other Persons to the extent expressly
permitted by the provisions of Section 6(a), 9(c) or 19; (vi) Liens arising out
of any judgment or award against Lessee (or any Permitted Sublessee) unless the
judgment or award shall not, within thirty (30) days after the entry thereof,
have been discharged, vacated, reversed, or execution thereof stayed pending
appeal or shall not have been discharged, vacated or reversed within thirty (30)
days after the expiration of such stay and only so long as such Liens shall not
involve any material danger of the sale, forfeiture or loss of any of the
Aircraft, the Airframe or any Engine, or any interest of Lessor or Indenture
Trustee therein and provided that the execution of such judgment or award or an
attachment relating thereto shall not have occurred within such thirty (30) day
period; and, (vii) any other Lien with respect to which Lessee (or a Permitted
Sublessee) shall have provided a bond adequate in the reasonable opinion of
Indenture Trustee (if the Lien of the Indenture has not been discharged) and
Owner Participant. Lessee shall promptly, at its own expense, take or cause to
be taken such action as may be necessary to duly discharge any Lien (except for
the Liens referred to in clauses (i) through (vii) of this Section 14) directly
or indirectly created, incurred, assumed, or suffered to exist by Lessee if the
same shall arise at any time.
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Section 15. Protection of Title and Further
Assurances.
Forthwith upon the execution and delivery of this
Lease, the Indenture, the Trust Agreement, the Lease Supplement, Indenture
Supplement and Trust Supplement, and any other supplement from time to time
required by the terms hereof, Lessee will cause this Lease, the Indenture, the
Trust Agreement, the Lease Supplement, Indenture Supplement, the Trust
Supplement and such other supplements to be duly filed and recorded, and
maintained of record, in accordance with the applicable laws of the government
of registry of the Aircraft. If any filing or recording is reasonably necessary
to protect the interests of Lessor or Indenture Trustee, Lessee shall, at its
own cost and expense (except it shall be at Lessor's expense if in connection
with a change in ownership of the Aircraft or any other transfer or assignment
by Lessor other than as contemplated hereunder or under the Financing Documents
or in connection with an Event of Default) and upon request by Lessor or
Indenture Trustee, cause any financing statements and any and all additional
instruments and other documents, so far as permitted by applicable Law, to be
kept, filed, and recorded and to be re-executed, refiled and re-recorded at all
times in the appropriate office pursuant or in relation to any applicable Laws
of any Governmental Entity, to protect and preserve the rights and interests of
Lessor or Indenture Trustee hereunder, under the Indenture and in the Aircraft,
and Lessee shall furnish to Lessor and Indenture Trustee, evidence, reasonably
satisfactory to Lessor and Indenture Trustee, of each such filing or refiling
and recordation and re-recordation.
Without limiting the foregoing, Lessee shall do or
cause to be done, at Lessee's cost and expense (except it shall be at Lessor's
expense if in connection with a change in ownership of the Aircraft or any other
transfer or assignment by Lessor other than as contemplated hereunder or under
the Financing Documents or in connection with an Event of Default), any and all
acts and things within its control which may be required under the terms of the
Mortgage Convention to protect and preserve the title of Lessor, the Lien of the
Indenture, this Lease, and the interests of Lessor and Indenture Trustee within
the jurisdiction of any signatory which has ratified the Mortgage Convention in
such jurisdiction and in the territories thereof in which Lessee, any Permitted
Sublessee or any wet sublessee may operate the Aircraft, as Lessor or Indenture
Trustee may reasonably request. Lessee shall also do or cause to be done, at its
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own expense (except it shall be at Lessor's expense if in connection with a
change in the ownership of the Aircraft or any other transfer or assignment by
Lessor other than as contemplated hereunder or under the Financing Documents or
in connection with an Event of Default), any and all acts and things which may
be required under the terms of any other Law involving any jurisdiction in which
Lessee, any Permitted Sublessee or any wet lessee may operate the Aircraft,
which Owner Participant or Indenture Trustee may reasonably request, to protect
and preserve the title of the Lessor, this Lease, the Indenture and Lessor's and
Indenture Trustee's interest in the Aircraft and under any of the Operative
Documents or Financing Documents within any such jurisdiction.
In addition, at Lessee's expense, Lessee will
promptly and duly execute and deliver to Lessor or Indenture Trustee, as
applicable, such further documents and assurances and take such further actions
as Owner Participant or Indenture Trustee may from time to time reasonably
request in order to more effectively carry out the intent and purpose of this
Lease and the other Operative Documents and the Financing Documents and to
protect the rights and remedies created or intended to be created in favor of
Lessor or Indenture Trustee hereunder and the other Operative Documents and the
Financing Documents including, without limitation, if reasonably requested by
Owner Participant or Indenture Trustee, at the expense of Lessee (except it
shall be at Lessor's expense if in connection with a change in the ownership of
the Aircraft or any other transfer or assignment by Lessor or Indenture Trustee
other than as contemplated hereunder or under the Financing Documents or in
connection with an Event of Default), the execution and delivery of supplements
or amendments hereto in recordable form, subjecting to this Lease, the Indenture
and the other Financing Documents, any replacement Aircraft or Engine and the
recording or filing of counterparts thereof in accordance with the laws of any
appropriate jurisdiction.
Lessee's obligations under this Section 15 are
subject to the reasonable cooperation of the applicable
parties.
Section 16. Return of Aircraft and Records.
(a) Return. On any Return Occasion, Lessee, at its own
expense and risk, shall return the Aircraft to Lessor (or any Person designated
by Lessor) in at least the
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condition specified in this Section and Exhibit E hereto at any Lessee system
location in the continental United States selected by Lessor, as Lessor may
elect, or such other location as Lessor and Lessee may agree, fully equipped
with all required Engines, or other engines owned by Lessee (which shall
thereupon become Engines as hereinafter provided) meeting the conditions
specified in this Section and Exhibit E, duly installed thereon by delivering
the same to the Lessor at such location. Lessee shall comply with Section 11(b)
and this Section 16 with respect to any engines installed on the Aircraft
returned to Lessor hereunder and meeting the conditions described herein which
were not originally installed on the Aircraft.
(b) Status Upon Return. Upon any Return Occasion
hereunder, the Aircraft shall be: (i) free and clear of all Liens, except for
the Lien of the Indenture, Head Lessor's Liens, Original Head Lessee's Liens,
Lessor's Liens and Lenders' Liens, (ii) duly certified as an airworthy aircraft
by the FAA under Part 121 of the regulations promulgated under the Federal
Aviation Act and with a current and valid Airworthiness Certificate installed on
the Aircraft, unless such certificate shall have been suspended or revoked as a
result of the suspension or revocation of the registration of the Aircraft under
the Federal Aviation Act due to the ineligibility of the Aircraft to be
registered in the name of Lessor under the Federal Aviation Act (whether by
means of a voting trust agreement or otherwise) in which case the Aircraft shall
nevertheless meet all conditions for such certification and for the issuance of
such certificate; (iii) in full airworthy condition for over water and EROPS
operation according to the FAA standards required to allow the Aircraft to be
operated under, and in full compliance with, such Airworthiness Certificate and
Part 121 of the regulations promulgated under the Federal Aviation Act for such
operation, such compliance to be by means of such mechanical repairs or
modifications or such inspections as may be required thereby, but not by
operational restrictions, by logbook entries or other method of acceptance of
such restrictions; (iv) in full compliance with Lessee's Maintenance Program;
(v) to the extent the owner of the Aircraft is a "citizen of the United States"
within the meaning of Section 40102(a)(15) of the Federal Aviation Act and
reasonably cooperative with Lessee at Lessee's expense with respect to effecting
such registration, duly registered in the name of the Lessor or other then owner
of the Aircraft under the Federal Aviation Act; (vi) in full compliance with the
maintenance and operation provisions of this Lease and all FAA airworthiness
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directives, mandatory service bulletins and equivalent requirements which by
their terms require compliance on or before the last day of the Term (without
regard to any deferral, waiver, deviation or exemption granted by the FAA
specifically to Lessee delaying such compliance); (vii) in good and airworthy
operating condition, and in the same condition (including, without limitation,
in a passenger configuration suitable for passenger revenue service) as when
delivered to Lessee hereunder, ordinary wear and tear excepted, with no open or
outstanding deferred maintenance items, scheduled or unscheduled, with all
systems and components fully serviceable and operational and with no placards
restricting operation or use, and (viii) with all remaining warranties,
indemnities, policies and guarantees referred to in Section 5(d) made available
to Lessor in a manner and by documents in form and substance reasonably
satisfactory to Lessor.
(c) Engines. In the event any engine not owned by
Lessor shall be installed on the Aircraft on any Return Occasion, without
limiting Lessee's obligations under the Tax Indemnification Agreement, such
engine shall be of the same model and equivalent modification status as the
Engines or, at Lessee's option, an IAE engine of an improved model suitable for
installation and use on the Airframe without diminishing the value, remaining
useful life or utility of such Airframe, in each such case having a value,
remaining useful life and utility at least equal to (as determined in accordance
with the Appraisal Procedure), and be in an operating condition as good as the
Engines, assuming the Engines were in the condition and repair as required by
the terms hereof immediately prior to such termination and shall conform to the
return condition requirements set forth in this Section 16 and Exhibit E, and
Lessee, at its own expense and concurrently with such delivery, shall cause such
engine to become an Engine by complying with Section 11(b) hereof. Lessee's
obligation to comply with the terms of this Section 16(c) shall be conditioned
on Lessor's transferring to Lessee all of Lessor's right, title and interest in
and to any Engine not installed on the Aircraft at the Return Occasion "AS IS,
WHERE IS," without any representation, warranty or recourse of any kind
whatsoever, express or implied, except a warranty that such Engine is free and
clear of Lessor's Liens and Head Lessor's Liens.
(d) Records and Documents. Upon the return of the
Aircraft, Lessee shall deliver to Lessor (i) all logs, manuals and data, and
inspection, modification, overhaul and other records, related to the Aircraft,
including, without
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limitation, those required to be maintained with respect thereto under
applicable rules and regulations of the FAA, together with a detailed
description of the Maintenance Program then applied to the Aircraft and shall
provide Lessor and its designees access to the Maintenance Program which is
sufficient for a Person to maintain the Aircraft under an FAA approved
maintenance program after the Term or to transition maintenance to another
program, including, without limitation, another registry, or, in the event an
Event of Default shall have occurred, to continue to maintain the Aircraft under
the Maintenance Program, in each case as Lessor may reasonably request, and all
documentation with respect to the Aircraft set forth on Exhibit B or otherwise
delivered to Lessee at delivery thereof, and (ii) all records necessary or
required by the FAA to certify and place the Aircraft on an FAA or other
country's, as the case may be, approved maintenance program. All of the
foregoing shall, at Lessee's expense, be up-to-date and in the latest revision
status as of the last day of the Term, including, without limitation, all
software and other electronically- held materials which have been supplied by or
on behalf of Manufacturer, Manufacturer's Subsidiary or Original Head Lessee,
which must be updated to the latest revision status as of the last day of the
Term within such software base and all data therein or pertaining thereto shall
be deemed property of Lessor and shall be delivered to Lessor. If hard, i.e.,
non-computerized, copies of English language maintenance records are not
available, then Lessee shall cause the appropriate action to be taken with the
pertinent regulatory agencies to ensure that Lessor and the FAA are provided
with all requested necessary and proper guarantees of methods of compliance,
component overhaul and management, scheduling, quality control, serial number
verification, etc. These records shall be all inclusive to the Aircraft,
Airframe, Engines, components, rotables, and assemblies and, as a minimum,
extend to include all activities associated with each of the last completed
maintenance checks, repairs, scheduled inspections and functional tests, and
overhauls performed under Lessee's Maintenance Program. All components and
assemblies identified with safe life limits shall be identified with their
service histories, accumulated cycles or flight hours as applicable and
remaining service lives on a separate listing. All components and assemblies
which are identified on the maintenance records by part numbers and serial
numbers other than the manufacturer's shall be provided with interchange or
cross reference listing necessary to establish complete traceability. All
documentation, flight, and maintenance records as specified by United States
Federal Aviation
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Regulations 91.173, 91.174, and each paragraph of regulation 121.380 which
normally accompany the transfer of an aircraft which has been operating in
regulated commercial air service, shall be delivered to Lessor with the
Aircraft. Any documents or records required to be delivered hereunder shall be
in English.
(e) Condition of Aircraft. Upon any Return
Occasion, (i) Lessee shall return such Aircraft to Lessor in such condition that
the Aircraft shall also comply with each and every condition and requirement set
forth elsewhere in this Lease, including Exhibit E hereto and (ii) shall provide
that each oil tank on the Aircraft shall be full and the fuel tanks shall
contain as much fuel as such tanks contained at the time the Aircraft was
accepted by Lessee.
(f) Final Inspection. Upon any Return Occasion,
Lessee shall make the Aircraft available to Lessor at the location where the
"block 'C' Check" (or equivalent level designated check or checks) required
hereunder to be performed immediately prior to redelivery is to be performed for
detailed inspection of the documents referred to in paragraph (d) above and the
Airframe, Engines and Parts structure and parts, at Lessee's expense (excluding
compensation to representatives of Lessor), in order to verify that the
condition of such Aircraft complies with the requirements set forth above (such
inspection being hereinafter referred to as the "Final Inspection"). The Final
Inspection shall be combined with such "block 'C' Check" (or equivalent level
check or checks) and may include such other items as reasonably requested by
Lessor. Lessee shall give Lessor not less than thirty (30) days prior written
notice of the commencement date of such Final Inspection. The period allowed for
the Final Inspection shall be the same period during which such "block 'C'
Check" is being performed and shall have such duration as to permit the opening
of any areas of the Aircraft which are necessary or advisable to satisfy Lessor
as to compliance with the requirements of this Section 16 and Exhibit E. The
Final Inspection shall commence on the date so noticed which shall be on or
before the expiration of the Term with respect to the Aircraft and shall
continue on consecutive days until all activity required above to be conducted
has been concluded. To the extent that any portion of the Final Inspection
extends beyond the expiration of the Term, unless Lessor has terminated the
Lease pursuant to Section 18(f) hereof, the Term with respect to the Aircraft
undergoing the Final Inspection shall be deemed to have been automatically
extended, and all obligations (including, without
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limitation, the obligation to pay Rent hereunder) continued, on a daily basis
until the Final Inspection shall have been concluded; provided, however, that
Lessee shall not be required to pay Rent with respect to the Aircraft during the
period of extension to the extent that Lessor is responsible for the delay in
completion of the Final Inspection. All storage expenses attributable to any
Term extension pursuant to the preceding sentence shall be payable by Lessee,
except that Lessee shall not be liable for any storage expenses which are
incurred after the sixtieth (60th) day after the Term to the extent that storage
continues thereafter due to Lessor's delay in completion of the Final
Inspection.
(g) Aircraft Records and Documents. In order to
enable Lessor to prepare for the Final Inspection of the Aircraft pursuant to
Subsection 16(f) above, Lessee agrees to make available to Lessor at a
maintenance base of Lessee with adequate facilities for short-term maintenance,
where the Final Inspection is to occur, not later than ten (10) days prior to
the commencement of such Final Inspection, the Aircraft Records and Documents
listed in Exhibit B hereto, together with such other documentation (including,
without limitation, original airworthiness directive compliance documents and
other work documents) regarding the condition, use, maintenance, or operation as
Lessor may reasonably request or require to substantiate the status of the
Aircraft.
(h) Corrections and Subsequent Corrections. To
the extent that the Aircraft or any Engine fails upon a Return Occasion to
conform to any requirement imposed by this Lease Lessor may, at its option, (i)
continue the Lease in effect in the manner provided for in Section 16(f) above
with regard to automatic extension until such time as such Aircraft is brought
up to the condition required by this Section 16, including Exhibit E, or (ii)
accept the return of such Aircraft and thereafter have any such nonconformance
corrected, at such time as Lessor may deem appropriate but not to commence later
than ninety (90) days following the return of such Aircraft, at commercial rates
then charged by the Person selected by Lessor to perform such correction. The
Letter of Credit shall not be released and any costs and expenses (including,
materials and labor) incurred by Lessor for such correction shall be indemnified
by Lessee in favor of Lessor (and prior to the end of the Term, Lessee shall
make adequate provision to Lessor's satisfaction in respect of such indemnity)
and shall become Supplemental Rent payable by Lessee within ten (10) days
following the submission of a written statement by Lessor to Lessee,
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identifying the items corrected and setting forth the expense of such
correction. Lessee's obligations to pay such Supplemental Rent shall survive the
Expiration Date or other termination of this Lease.
(i) Functional Flight Check. Immediately prior to
the expiration of the Term, Lessor will be permitted to conduct a non-commercial
functional flight check flight of no more than two (2) hours duration in
accordance with the Manufacturer's functional flight check procedures at
Lessee's expense to demonstrate the airworthiness of the Aircraft and proper
functioning of all systems and components. A qualified pilot and up to five (5)
other representatives selected by Lessor may take part in such flight to verify
compliance of the Aircraft with the requirements of this Lease, provided, that
Lessor shall be responsible for the charges of such qualified pilot and
representatives. Lessee may combine the functional flight check provided in this
Section 16(i) with the delivery flight specified in Section 16(a) and such
functional flight check shall include the landing. Any discrepancy or
malfunction detected during any functional flight check (including a functional
flight check combined with a delivery flight) shall be corrected, at Lessee's
expense, and prior to the expiration of the Term. To the extent that any actions
to correct any such discrepancy or malfunction extend beyond the Term, the
provisions of the first sentence of Section 16(h) shall apply. All storage
expenses attributable to any Term extension pursuant to the preceding sentence
shall be payable by Lessee.
(j) Export Certificate of Airworthiness. Lessee
shall, at Lessee's expense, take such action as Lessor may reasonably request to
assist Lessor in obtaining any required documents in relation to the export of
the Aircraft from the United States (including, without limitation, a valid and
subsisting export certificate of airworthiness with respect to the Aircraft and
export license) and in relation to the deregistration of the Aircraft.
(k) Service Bulletin and Modification Kits.
Lessee shall deliver to Lessor, at no cost to Lessor, all service bulletin kits
furnished without charge by the manufacturer for installation on the Aircraft
which have not been so installed together with appropriate instructions for
installation. In the event such uninstalled kits were purchased or manufactured
by Lessee, then Lessor shall be advised of such kits by Lessee and have a right
of first
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refusal to purchase such kits at Lessee's cost for a period of ninety (90) days
after return.
(l) Storage Upon Return. Upon any Return
Occasion, Lessee shall, at Lessor's request and at Lessee's risk and expense, in
addition to other storage referred to above, arrange for the parking, storage
and insurance of the Aircraft for a period not exceeding sixty (60) days at such
reasonable location as Lessor requests where Lessee has or can arrange for
storage. Lessee shall pay or cause to be paid all costs and expenses for such
parking, storage and insurance.
(m) Resale/Release Cooperation. During the last
twelve (12) months of the Term, with reasonable notice and at reasonable times,
Lessee will cooperate, and cause any Permitted Sublessee to cooperate, in all
reasonable respects, with the efforts of Lessor to sell or lease the Aircraft
after the end of the Term, by permitting prospective purchasers or lessees,
except to the extent prohibited by applicable Law, to inspect the Aircraft and
the records relating thereto to the extent it does not unreasonably interfere
with the operation or maintenance of the Aircraft or the conduct of Lessee's
business.
Section 17. Events of Default.
Any one or more of the following occurrences or
events shall constitute an Event of Default (whether any such event shall be
voluntary or involuntary or come about or be effected by operation of Law or
pursuant to or in compliance with any judgment, decree or order of any court or
any order, rule or regulation of any other Governmental Entity):
(a) Lessee shall fail to make (i) any payment of
Basic Rent, Renewal Rent or Stipulated Loss Value to Lessor within three (3)
Business Days after the date on which such payment is due, or (ii) any other
payment of Supplemental Rent due hereunder within ten Business Days after the
date on which such payment is due and Lessee has received written demand
therefor by the party entitled thereto (provided that any failure to pay any
amount owed by Lessee under the Tax Indemnification Agreement or any failure of
Lessee to pay to Lessor or the Owner Participant when due any Excepted Payments
(as defined in the Indenture) shall not constitute an Event of Default unless
notice is given by the Owner Participant to Lessee and the Indenture Trustee
that such failure shall constitute an Event of Default); or
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(b) Lessee shall fail to obtain and maintain in
full force and effect any insurance required under the provisions of Section 12
hereof or shall operate the Aircraft outside of the scope or in violation of the
terms of the insurance or United States Government indemnity coverage required
to be maintained with respect to such Aircraft; or
(c) Any representation or warranty made by Lessee
in the Operative Documents (other than the Trust Agreement, each Trust
Supplement, the Indenture, each Indenture Supplement, the Equipment Notes, the
Intercreditor Agreement, each Liquidity Facility, the Underwriting Agreement and
the Tax Indemnification Agreement) or in any certificate furnished by Lessee in
connection therewith is incorrect at the time made in any material respect and
such incorrectness shall not have been cured within thirty (30) days after the
receipt by Lessee of a written notice from Lessor or the Indenture Trustee
advising Lessee of the existence of such incorrectness; or
(d) Lessee shall fail to perform or observe any
covenant, condition, or agreement to be performed or observed by it pursuant to
this Lease or any other Operative Document (other than the Trust Agreement, each
Trust Supplement, the Indenture, each Indenture Supplement, the Equipment Notes,
the Intercreditor Agreement, each Liquidity Facility, the Underwriting
Agreement, and [the Tax Indemnification Agreement)], and such failure shall
continue uncured for thirty (30) days after written notice thereof is given by
Lessor or Indenture Trustee to Lessee; provided, however, that if Lessee shall
have undertaken to cure any such failure which arises under the first or second
sentence of Section 6(c), or Section 6(d), as such provisions of Section 6
relate to maintenance, service, repair or overhaul, or Section 9, and
notwithstanding the diligence of Lessee in attempting to cure such failure, such
failure is not cured within said thirty (30) day period but is curable with
future due diligence, there shall exist no Event of Default under this Section
17 so long as Lessee is proceeding with due diligence to cure such failure and
such failure is remedied not later than one hundred eighty (180) days after
receipt by Lessee of such written notice; or
(e) Lessee consents to the appointment of a
custodian, receiver, trustee or liquidator of itself or all or any material part
of Lessee's property or Lessee's consolidated property, or Lessee admits in
writing its inability to, or is unable to, or does not, pay its debts
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generally as they come due, or makes a general assignment for the benefit of
creditors, or Lessee files a voluntary petition in bankruptcy or a voluntary
petition seeking reorganization in a proceeding under any bankruptcy or
insolvency Laws (as now or hereafter in effect), or an answer admitting the
material allegations of a petition filed against Lessee in any such proceeding,
or Lessee by voluntary petition, answer or consent seeks relief under the
provisions of any other bankruptcy, insolvency or other similar Law providing
for the reorganization or winding-up of corporations, or provides for an
agreement, composition, extension or adjustment with its creditors, or any
corporate action (including, without limitation, any board of directors or
shareholder action) is taken by Lessee in furtherance of any of the foregoing,
whether or not the same is fully effected or accomplished; or
(f) An order, judgment or decree is entered by any
court appointing, without the consent of Lessee, a custodian, receiver, trustee
or liquidator of Lessee, or of all or any material part of Lessee's property, or
Lessee's consolidated property, or all or any material part of Lessee's property
or Lessee's consolidated property is sequestered, and any such order, judgment
or decree of appointment or sequestration remains in effect, undismissed,
unstayed or unvacated for a period of sixty (60) days after the date of entry
thereof or at any time an order for relief is granted; or
(g) An involuntary petition against Lessee in a
proceeding under the Federal bankruptcy laws or other insolvency Laws (as now or
hereafter in effect) is filed and is not withdrawn or dismissed within sixty
(60) 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 corporations which may apply to Lessee, any court of competent
jurisdiction assumes jurisdiction over, or custody or control of, Lessee or of
all or any material part of Lessee's property, or Lessee's consolidated property
and such jurisdiction, custody or control remains in effect, unrelinquished,
unstayed or unterminated for a period of sixty (60) days or at any time an order
for relief is granted in such proceeding; or
(h) Lessee's cessation of business as a commercial
passenger Certificated Air Carrier or, except in either case in connection with
a labor dispute, announcement thereof or Lessee's suspension of its business as
a commercial
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passenger Certificated Air Carrier, or for any reason the preponderant business
activity of Lessee shall cease to be that of a commercial passenger Certificated
Air Carrier; or
(i) Lessee's loss or suspension of its United
States air carrier license or certificate under Part 121 of the Federal Aviation
Regulations or certificate under Section 41102(a) of the Federal Aviation Act;
or
(j) if the existence, validity, enforceability or
priority of the rights or interests of Lessor under this Lease, or the rights or
ownership of Lessor of the Aircraft under this Lease in respect of the Aircraft
or the rights or interests of Note Holders under the Indenture are challenged by
Lessee or any Person claiming by, through or on behalf of Lessee unless Lessee
demonstrates that such a claim was not rightfully made by, through or on behalf
of Lessee.
Section 18. Remedies.
Upon the occurrence of any Event of Default and at
any time thereafter so long as the same shall be continuing, Lessor may, at its
option, declare by written notice to Lessee this Lease to be in default,
provided, however, that this Lease shall be deemed to be declared in default
automatically without the necessity of such written declaration upon the
occurrence of any Event of Default described in paragraph (e), (f) or (g) of
Section 17 hereof; and at any time thereafter, so long as any outstanding Event
of Default shall not have been remedied, Lessor may do one or more of the
following with respect to all or any part of the Airframe and any or all of the
Engines as Lessor in its sole discretion shall elect, to the extent permitted
by, and subject to compliance with any mandatory requirements of, applicable Law
then in effect:
(a) Demand that Lessee, and Lessee shall upon the
written demand of Lessor and at Lessee's expense, immediately return the
Aircraft to Lessor in the manner specified in such notice, in which event such
return shall not be delayed for the purposes of complying with the return
conditions specified in Section 16 and Exhibit E hereof (none of which
conditions shall be deemed to affect Lessor's possession of the Aircraft) or
delayed for any other reason; provided, however, that Lessee shall remain and be
liable to Lessor for amounts provided for herein or other damages resulting from
the Aircraft or any Engine not being in the condition required by Section 16 and
Exhibit E. Notwithstanding the foregoing, at Lessor's option, Lessee
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shall be required thereafter to take such actions as would be required by the
provisions of this Lease if such Aircraft were being returned at the end of the
Term hereof with respect to such Aircraft. In addition, Lessor, at its option
and to the extent permitted by applicable Law, may enter upon the premises where
all or any part of the Aircraft is located to take immediate possession of and,
at Lessor's option, remove the same (and/or any engine which is not an Engine
but which is installed on the Airframe, subject to the rights of the owner,
lessor or secured party thereof) by summary proceedings or otherwise, all
without liability accruing to Lessor for or by reason of such entry or taking of
possession whether for the restoration of damage to property, or otherwise,
caused by such entry or taking, except direct damages to the extent caused by
Lessor's gross negligence or willful misconduct.
(b) Sell or cause to be sold, the Aircraft or any
part thereof, or Lessor's interest therein, at private or public sale, as Lessor
in its sole discretion may determine, or otherwise dispose of, hold, use,
operate, or lease to others, or keep idle the Aircraft, as Lessor in its sole
discretion may determine, all free and clear of any rights of Lessee or any
Permitted Sublessee and except as hereinafter set forth in this Section 18.
Lessor may be the purchaser at any such sale.
(c) Whether or not Lessor shall have exercised, or
shall thereafter at any time exercise, any of its rights under paragraph (a) or
paragraph (b) above, Lessor, by written notice to Lessee specifying a payment
date which shall be a Stipulated Loss Value Date may demand that Lessee pay to
Lessor, and Lessee shall pay to Lessor, on the Stipulated Loss Value Date
specified in such notice, as liquidated damages for loss of bargain and not as a
penalty (in lieu of the Basic Rent or Renewal Rent, as the case may be, due for
the period commencing after the Stipulated Loss Value Date specified for payment
in such notice), any unpaid Rent for the Aircraft to and including the
Stipulated Loss Value Date specified in such notice, plus whichever of the
following amounts as Lessor may specify, in its sole and absolute discretion, in
such notice: (i) an amount equal to the excess, if any, of the sum of the
Stipulated Loss Value for the Aircraft computed as of the date specified in such
notice plus, if such date is a Basic Rent Payment Date or a Renewal Rent Payment
Date, an amount equal to the Basic Rent or Renewal Rent, as the case may be, due
on such date, over the fair market sale value of the Aircraft as of the date
specified in such notice or (ii) an amount equal to the
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excess, if any, of the sum of the Stipulated Loss Value for the Aircraft
computed as of the date specified in such notice plus, if such date is a Basic
Rent Payment Date or Renewal Rent Payment Date, an amount equal to the Basic
Rent or the Renewal Rent, as the case may be, due on such date, over the fair
market rental value of the Aircraft for the remainder of the Term as of the date
specified in such notice.
(d) In the event Lessor, pursuant to paragraph (b)
above, shall have sold the Aircraft, or its interest therein, Lessor, in lieu of
exercising its rights under paragraph (c) above, may, if it shall so elect,
demand that Lessee pay Lessor, and Lessee shall pay to Lessor on such demand, as
liquidated damages for loss of bargain and not as a penalty (in lieu of the
Basic Rent or Renewal Rent, as the case may be, due for the period commencing
after the Stipulated Loss Value Date immediately prior to the date such sale
occurs), any unpaid Rent for such Aircraft due to and including the date of
sale, plus the amount by which the Stipulated Loss Value of such Aircraft,
computed as of such Stipulated Loss Value Date, exceeds the net proceeds of such
sale (after deducting all costs of such sale).
(e) In the event that Lessor, pursuant to
paragraph (b) above, shall have relet the Aircraft under a long term lease,
Lessor, in lieu of exercising its rights under paragraph (c) above with respect
to such Aircraft, may, if it shall so elect, demand that Lessee pay Lessor, and
Lessee shall pay Lessor on such demand, as liquidated damages for loss of
bargain and not as a penalty (in lieu of the Basic Rent or Renewal Rent, as the
case may be, for such Aircraft due after the time of reletting) any unpaid Rent
for such Aircraft due up to the date of reletting, plus the amount, if any, by
which the aggregate Basic Rent or Renewal Rent, as the case may be, for such
Aircraft, which would otherwise have become due over the Basic Term or Renewal
Term, as the case may be, discounted periodically (equal to installment
frequency) to present worth as of the date of reletting at the rate of 8.50% per
annum, exceeds the aggregate basic rental payments to become due under the
reletting from the date of such reletting to the date upon which the Term for
such Aircraft would have expired but for Lessee's default, discounted
periodically (equal to installment frequency) to present worth as of the date of
the reletting at the rate of 8.50% per annum.
(f) Cancel, rescind and/or terminate this Lease by
written notice to Lessee which cancellation, rescission
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and/or termination shall be effective upon dispatch, whereupon Lessee's right to
possess and use the Aircraft shall immediately cease, however, Lessee shall be
and remain liable for damages and losses suffered by Lessor and all other
amounts payable by Lessee hereunder.
(g) Proceed by appropriate court action or
actions, either at law or in equity, to enforce any other remedy or right Lessor
may have hereunder, under the other Operative Documents, at law or in equity,
including, without limitation, proceed by court order to enforce performance by
Lessee of the applicable covenants of this Lease or to recover damages for the
breach thereof.
In addition to the foregoing, Lessee shall be
liable (without duplication of the remedies above and of Lessee's obligations
under Section 10 and Section 13 hereof and subject to the exclusions set forth
therein) for any and all unpaid Rent before, during or after the exercise of any
of the above mentioned remedies (including without limitation interest on unpaid
amounts with respect to all amounts not paid when due, including, without
limitation, any amounts payable pursuant to the foregoing provisions of this
Section 18), and, except as specified above until satisfaction of all of
Lessee's obligations to Lessor hereunder and for all legal fees and other costs
and expenses incurred by any Indemnitee by reason of the occurrence of any Event
of Default or the exercise of an Indemnitee's remedies with respect thereto,
including all costs and expenses incurred in connection with the return of the
Aircraft in accordance with the terms of Section 16 and Exhibit E hereof or in
placing the Aircraft in the condition and with airworthiness certification as
required by such Section and such Exhibit and costs and expenses related to the
Lease, the Refunding Agreement, the Indenture, the Pass- Through Trust
Agreements, the Intercreditor Agreement or each Liquidity Facility. All
liquidated damages payable pursuant to the foregoing shall bear interest, which
shall be payable on the date the payment of such liquidated damages is due at a
rate equal to the Interest Rate from and including the date due to and excluding
the date actually paid.
In effecting any repossession, Lessor, its
representatives and agents, to the extent permitted by applicable Law, (i) shall
have the right to enter upon any premises where it reasonably believes the
Aircraft, the Airframe, an Engine or Part to be located, (ii) shall not be
liable, in conversion or otherwise, for the taking of any
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personal property of Lessee which is in or attached to the Aircraft, the
Airframe, an Engine or Part which is repossessed, (iii) shall not be liable or
responsible, in any manner, for any damage or injury to any of Lessee's property
in repossessing and holding the Aircraft, the Airframe, an Engine or Part,
except for direct damages caused by Lessor's gross negligence or willful
misconduct, and (iv) shall have the right to maintain possession of and dispose
of the Aircraft, the Airframe, an Engine or Part on any premises owned by Lessee
or under Lessee's control.
If requested by Lessor, Lessee shall, at its sole
expense, assemble and make the Aircraft, the Airframe, an Engine or Part
available at a place designated by Lessor in accordance with Section 16 and
Exhibit E hereof. Lessee hereby agrees that, in the event of the return to or
repossession by Lessor of the Aircraft, the Airframe, an Engine or Part, or
otherwise upon the occurrence of an Event of Default, any rights in any warranty
(express or implied), service life policy, infringement indemnity, performance
guaranty or the like heretofore made available to Lessee or otherwise held by
Lessee shall without further act, notice or writing be deemed automatically
cancelled and shall be enforceable solely by and for the benefit of, and
assigned to, Lessor. Lessee shall be liable to Lessor (without duplication) for
all expenses, disbursements, costs and fees incurred in (i) repossessing,
storing, preserving, shipping, maintaining, repairing and refurbishing the
Aircraft, the Airframe, an Engine or Part to the condition required by Section
16 and Exhibit E hereof and (ii) preparing the Aircraft, the Airframe, an Engine
or Part for sale or lease, advertising the sale or lease of the Aircraft, the
Airframe, an Engine or Part and selling or releasing the Aircraft, the airframe,
an Engine or Part. Lessor is hereby authorized and instructed, at its option, to
make expenditures which Lessor considers advisable to repair and restore the
Aircraft, the Airframe, an Engine or Part to the condition required by Section
16 and Exhibit E hereof, all at Lessee's sole expense.
For the purpose of this Section 18, the "fair
market rental value" or the "fair market sales value" of the Aircraft, Airframe,
an Engine or Part shall be determined pursuant to the Appraisal Procedure.
At any sale of the Aircraft, the Airframe, an
Engine or Part pursuant to this Section, Owner Participant may bid for and
purchase such property and Lessee agrees that the amounts paid therefor shall be
used in the
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computations contemplated herein and Lessee shall remain liable for any
deficiency.
No remedy referred to in this Section is intended
to be exclusive, but, to the extent permitted by Law, each shall be cumulative
and in addition to any other remedy referred to above or otherwise available to
Lessor at law or in equity; and, to the extent permitted by Law, the exercise or
beginning of exercise by Lessor of any one or more of such remedies shall not
preclude the simultaneous or later exercise by Lessor of any or all of such
other remedies. No waiver by Lessor of any Event of Default shall in any way be,
or be construed to be, a waiver of the same Event of Default in the future or
any other prior or future Event of Default. To the extent permitted by Law,
Lessee hereby waives any right it may have to require Lessor to mitigate damages
in connection with the remedies described in Sections 18(c), (d) or (e) above.
Lessee hereby irrevocably appoints Lessor as
Lessee's attorney-in-fact (which appointment is coupled with an interest) to
execute all documents deemed necessary to release, terminate and void Lessee's
interest in the Aircraft leased hereunder or otherwise to more effectively carry
out Lessor's rights and remedies and to file said documents for recordation with
the FAA, under the Uniform Commercial Code, and with any other appropriate
Governmental Entity, and otherwise act in Lessee's name and place with respect
to the Aircraft, provided that an Event of Default has occurred and is
continuing and this Lease has been declared or deemed to be in default.
Section 19. Alienation.
(a) Lessor Assignments. In addition, and subject,
to the transactions contemplated by Section 19(b), Lessor shall not assign or
transfer any interest of Lessor in this Lease and/or the Aircraft and/or the
proceeds hereof to any Person except as provided herein, in the Trust Agreement,
in the Indenture and in the Refunding Agreement.
Any such assignment shall be subject to the
condition that the transferee shall agree not to disturb the quiet enjoyment by
Lessee of the Aircraft as and to the extent so agreed by Lessor in Section
21(f).
(b) Security for Obligations. In order to secure the
Equipment Notes, Lessor has created, by the Indenture, a security interest in
the Trust Indenture Estate, including,
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without limitation, this Lease and all Rent and other sums payable hereunder,
except as provided in the Indenture and subject in each case to Liens permitted
hereunder. The Indenture provides, among other things for the assignment by
Lessor to Indenture Trustee of its right, title and interest in, to and under
this Lease, to the extent set forth in the Indenture, for the creation of a
first-mortgage lien on and perfected security interest in all of Lessor's right,
title and interest in and to the Aircraft in favor of Indenture Trustee. Lessee
hereby consents to such assignment and to the creation of such mortgage and
security interest and acknowledges receipt of copies of the Trust Agreement and
the Indenture, it being understood that such consent shall not affect any
requirement or the absence of any requirement for any consent under any other
circumstances. Until the Lien of the Indenture has been discharged, Lessee will
furnish to Indenture Trustee counterparts of all notices and other writings of
any kind required to be delivered hereunder by Lessee to Lessor. Until the Lien
of the Indenture has been discharged, (a) Lessee shall make all payments of
Rent, Stipulated Loss Value and all other amounts payable hereunder (other than
Excepted Payments) to Indenture Trustee as provided in Sections 4(c) and 4(d),
and (b) Indenture Trustee shall be entitled to exercise the rights of Lessor
(but not Owner Participant) herein as and to the extent provided herein or in
the Indenture and any express reference to Indenture Trustee in any Section of
this Lease shall not give rise to any implication that Indenture Trustee may not
exercise the rights of Lessor in any other Section of this Lease as and to the
extent provided in the Indenture.
The provisions of this Lease and the Refunding
Agreement which require or permit action by, the payment of monies to, the
consent or approval of, the furnishing of any instrument or information to, or
the performance of any other obligation to, Indenture Trustee, shall not be
effective, and the Sections hereof containing such provisions shall be read as
though there were no such requirements or provisions and all moneys otherwise
payable to Indenture Trustee hereunder shall be paid to Lessor, after Lessee
shall have received from Indenture Trustee notice of discharge of the Lien of
the Indenture.
Any payment or performance by Lessee to Indenture
Trustee shall constitute payment or performance of such obligation to Lessor by
Lessee under this Lease.
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Any payment or performance of an obligation of Lessee under this Lease
by a Permitted Sublessee shall constitute payment or performance of such
obligation by Lessee.
Section 20. Renewal Option.
Lessee may renew this Lease as provided in the following clause (i) and
subject to the following clause (ii):
(i) Exercise of Renewal Option. Provided that this Lease has not
been previously terminated and that no Default or Event of Default shall have
occurred and be continuing at the time of the giving of irrevocable notice
hereinafter referred to in this clause (i) or at the time of the commencement of
the Renewal Term, Lessee, at its option, may renew this Lease for one Renewal
Term consisting of a period equal to five years. The right to renew this Lease
for such Renewal Term pursuant to this clause (i) shall be exercised upon
irrevocable notice from Lessee received by Lessor of Lessee's election to so
renew this Lease not less than twelve (12) months and not more than twenty-four
(24) months prior to the last day of the Basic Term. The Renewal Rent for the
Renewal Term shall be the "fair market rental value" of the Aircraft for such
Renewal Term (the "renewal fair market rental value") as determined in
accordance with the Appraisal Procedure. For purposes of this paragraph (i), the
Appraisal Procedure shall be initiated by Lessee no earlier than nine (9) months
prior to the end of the Basic Term. If Lessee shall fail to exercise its option
to extend the term of this Lease for the Renewal Term in accordance with the
provisions of this paragraph, all of Lessee's rights to extend the Term for such
Renewal Term shall expire. Lessee shall pay all reasonable costs and expenses,
including, without limitation, reasonable legal fees and expenses, incurred by
Lessor, Owner Participant and the Indenture Trustee in connection with the
exercise of such option.
(ii) Provisions Applicable During Renewal Term. All provisions of
this Lease, including, without limitation, as to Rent and Stipulated Loss Values
(with appropriate adjustments, an amount equal to the greater of 120% of the
"fair market sales value" of the Aircraft as of the first day of the Renewal
Term as determined pursuant to the Appraisal Procedure or the amount set forth
on Exhibit A as of the end of the Basic Term), shall remain in effect and be
applicable during such Renewal Term, except that Lessee
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shall pay to Lessor, semi-annually in advance as Renewal Rent on each Renewal
Rent Payment Date, the amount for such Renewal Term as determined in accordance
with clause (i) of this Section 20.
Section 21. Miscellaneous.
(a) Severability, Amendment, and Construction.
Any provision of this Lease which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. To the extent permitted by Law, [each of Lessor and] Lessee
hereby waives any provision of Law which renders any provision hereof prohibited
or unenforceable in any respect. No term or provision of this Lease may be
changed, waived, discharged, or terminated orally, but only by an instrument in
writing expressed to be a supplement or amendment to, or waiver or termination
of this Lease signed by an officer of the party against which the enforcement of
the change, waiver, discharge, or termination is sought. This Lease shall
constitute an agreement of lease, and nothing herein shall be construed as
conveying to Lessee any right, title, or interest in the Aircraft or any Engine
or Part except as a lessee only. Without limiting the foregoing, the parties
hereto agree to treat this Agreement as a lease for United States federal income
tax purposes and Lessee will not file a tax return which is inconsistent with
the foregoing and nothing contained herein shall be construed as an election by
Lessor to treat Lessee as having acquired the Aircraft for the purpose of the
investment credit allowed by Section 38 of the 1954 Code or any similar or
successor statute. The headings in this Lease are for convenience of reference
only and shall not define or limit any of the terms or provisions hereof.
(b) GOVERNING LAW. THIS LEASE HAS BEEN EXECUTED AND
DELIVERED IN THE STATE OF NEW YORK AND SHALL IN ALL RESPECTS BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL SUBSTANTIVE LAWS OF THE STATE OF NEW
YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY, AND PERFORMANCE, WITHOUT
REGARD TO PROVISIONS GOVERNING CONFLICTS OF LAW WHICH MIGHT LEAD TO THE
APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.
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(c) Notices. All notices required or permitted
under the terms and provisions hereof shall be in writing and shall be sent to
Lessor or Lessee at their respective addresses set forth in Exhibit C hereto (or
such other addresses as the parties may designate from time to time in writing).
Until such time as the Lien of the Indenture is discharged, all notices, reports
or other documents provided to Lessor or Lessee shall be provided concurrently
to Indenture Trustee at such address as Indenture Trustee may designate from
time to time. All notices hereunder shall become effective when received.
(d) Lessor's Right to Perform for Lessee. If Lessee fails
to make any payment of Rent required to be made by it hereunder or fails to
perform or comply with any covenant, agreement, or obligation contained herein,
Lessor shall have the right but not the obligation to make such payment or
conform or comply with such agreement, covenant, or obligation, and the amount
of such payment and the amount of the reasonable expenses of Lessor incurred in
connection with such payment or the performance thereof or compliance therewith,
together with interest thereon at the Interest Rate, shall be payable by Lessee
to Lessor (as Supplemental Rent) upon demand. The taking of any such action by
Lessor pursuant to this Section 21(d) shall not constitute a waiver or release
of any obligation of Lessee under this Lease, nor a waiver of any Event of
Default which may arise out of Lessee's nonperformance of such obligation, nor
an election or waiver by Lessor or any remedy or right available to Lessor under
or in relation to this Lease.
(e) Counterparts. To the extent, if any, that this Lease
constitutes chattel paper (as such term is defined in the Uniform Commercial
Code as in effect in any applicable jurisdiction), no security interest in this
Lease may be created through the transfer or possession of any counterpart other
than the original counterpart, which shall be identified as the counterpart
containing the receipt therefor executed by or on behalf of Indenture Trustee on
the signature page thereof. Subject to the preceding sentence, this Lease may be
executed in two or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument.
(f) Quiet Enjoyment. Lessor covenants that, so long as no
Event of Default shall have occurred and be continuing and this Lease has not
been declared or deemed to be in default, Lessor shall not take or cause to be
taken
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any action to interfere with the right of Lessee to the possession, use,
operation and quiet enjoyment of and other rights with respect to the Aircraft
hereunder, and all rents, revenues, profits and income therefrom, in accordance
with the terms of this Lease without interference from Lessor or any Person
lawfully claiming by or through it and without interference from any Person
making a Claim concerning payment for or the ownership of Buyer Furnished
Equipment with respect to the Aircraft, provided, that the foregoing shall not
be deemed to have modified the obligations of Lessee pursuant to Section 4(d)
hereof, which obligations remain absolute and unconditional.
(g) Brokers. Lessee and Lessor agree that, except
as provided in the Refunding Agreement, there has been no third party as agent
involved in this Lease and each indemnifies the other from liability for fees,
commissions, or other claims made upon the other due to any such claim.
(h) Investment of Funds. Any monies which are
held by Lessor or Indenture Trustee and are payable to Lessee shall, unless a
Default or an Event of Default shall have occurred and be continuing, be
invested as provided below until paid to Lessee or applied by Lessor or
Indenture Trustee to the extent provided herein. Until paid to Lessee or applied
as provided herein or in the Indenture such monies shall be invested by Lessor
or Indenture Trustee from time to time at the expense of Lessee in Specified
Investments, as directed by Lessee in accordance with the provisions of Section
3.07 of the Indenture if the Lien of the Indenture shall not have been
discharged and thereafter as provided below. There shall be promptly (but not
more frequently than monthly) remitted to Lessee any gain (including interest
received) realized as the result of any such investment (net of any fees,
commissions and other reasonable expenses, if any, incurred in connection with
such investment) unless a Default or an Event of Default shall have occurred and
be continuing. Lessee will promptly pay to Lessor or Indenture Trustee, as the
case may be, and hold Lessor or Indenture Trustee harmless from, on demand, the
amount of any loss realized as the result of any such investment (together with
any Taxes, fees, commission and other reasonable expenses, if any, incurred in
connection with such investment).
(i) Entire Agreement; Amendment. This Lease
(including the Exhibits hereto), any related letter agreements and the other
Operative Documents, the Financing Documents and the Purchase Documents
(including the Exhibits
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thereto) and all closing documents delivered in connection with any of the
foregoing embody the entire agreement and understanding among the parties hereto
with respect to the subject matter hereof. This Lease may be changed, waived,
discharged, amended, revised or terminated only by an instrument in writing
signed by the party against which enforcement is sought.
(j) Expenses. Without limiting Section 13 or 18, Lessee
agrees within fifteen (15) days after demand to pay or reimburse Lessor for all
reasonable out-of-pocket costs and expenses (including, without limitation,
legal and other professional fees and expenses) incurred or payable by Lessor in
connection with or related to (i) the fees and expenses of Owner Trustee and
Indenture Trustee, (ii) to the extent requested by or relating to acts or
omissions of Lessee or as otherwise provided herein or to give effect to the
provisions hereof, or the other Operative Documents, the Financing Documents or
the Purchase Documents, any future amendments, supplements or other
modifications thereof, or waivers or consents thereunder, and (iii) any Default
or Event of Default or the enforcement of any of Lessor's rights, remedies or
privileges hereunder or at law or in equity, but not Lessor's legal fees and
expenses in connection with the negotiation and execution of this Lease or the
other Operative Documents.
(k) Federal Bankruptcy Code. In the event Section 1110 of
Title 11 of the United States Code is amended, or if it is repealed and another
statute is enacted in lieu thereof, Lessor and Lessee agree to amend this Lease
and take such other action not inconsistent with this Lease as Lessor reasonably
deems necessary so as to afford to Lessor the rights and benefits as such
amended or substituted statute confers upon owners and lessors of aircraft
similarly situated to Lessor.
(l) U.S. Registration Number. At Lessee's request, Lessor
shall use its best efforts to have the Aircraft registered under the United
States Registration Number designated by Lessee.
(m) Submission to Jurisdiction; Service of Process; Waiver
of Forum Non Conveniens; Waiver of Jury Trial. [Each of] Lessee [and Lessor]
hereby irrevocably agrees that any suit, action or proceeding related to this
Lease or any of the other Operative Documents to which it is a party or the
subject matter hereof or thereof or of any of the transactions contemplated
hereby and thereby may be
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instituted in, and submits for itself and its property to the non-exclusive
jurisdiction of, (i) the courts of the State of New York in New York County and
(ii) the United States District Court for the Southern District of New York.
[Each of] Lessee [and Lessor] represents and warrants that it is not currently
entitled to, and agrees that to the extent that Lessee [or Lessor] hereinafter
may acquire, any immunity (including, without limitation, sovereign immunity)
from jurisdiction of any court or from any legal process, Lessee hereby, to the
extent permitted by Law, waives such immunity, and agrees not to assert, by way
of motion, as a defense, or otherwise, in any such suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of the
above-named courts that it is immune from any legal process (whether through
service or notice, attachment prior to judgment, attachment in aid of execution,
execution or otherwise) with respect to itself or its property, that the suit,
action or proceeding is brought in an inconvenient forum, that the venue of the
suit, action or proceeding is improper, or that this Lease or any of the other
Operative Documents or the subject matter hereof or thereof or any of the
transactions contemplated hereby and thereby may not be enforced in or by such
courts. [Each of] Lessee [and Lessor] hereby generally consents to service of
process by registered mail, return receipt requested, addressed to it at its
address set forth in Exhibit C, or at such other office of Lessee [or Lessor] as
from time to time may be designated by Lessee [or Lessor] in writing to Lessor
or Lessee, Owner Participant and Indenture Trustee. [Each of] Lessee [and
Lessor] hereby agrees that its submission to jurisdiction and its designation of
service of process by mail set forth above is made for the express benefit of
Lessor, [Lessee,] Owner Participant, Indenture Trustee, each Note Holder and
their successors and assigns. EACH OF LESSEE AND LESSOR HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY AND ALL RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE
OF ACTION BASED UPON OR ARISING OUT OF THE OPERATIVE DOCUMENTS OR ANY DEALINGS
BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THE TRANSACTIONS CONTEMPLATED
THEREBY OR THE LESSOR/LESSEE RELATIONSHIP BEING ESTABLISHED, including, without
limitation, contract claims, tort claims, breach of duty claims and other common
law and statutory claims. Lessor and Lessee represent and warrant that each has
reviewed this waiver with its legal counsel, and that each knowingly and
voluntarily waives its jury trial rights following consultation with such legal
counsel. THIS WAIVER IS IRREVOCABLE, AND THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THE OPERATIVE
DOCUMENTS. In the event of
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litigation, this Agreement may be filed as a written consent to a trial by the
court.
(n) Limitation on Recourse. The parties hereto agree that
all statements, representations, covenants and agreements made by Lessor (when
made in its capacity as such and not in its individual capacity) contained in
this Agreement, unless expressly otherwise stated, are made and intended only
for the purpose of binding the Trust Estate and establishing the existence of
rights and remedies that can be exercised and enforced against the Trust Estate.
Therefore, no recourse shall be had with respect to anything contained in this
Agreement (except for any express provisions that Lessor is responsible for in
its individual capacity), against Lessor in its individual capacity or against
any institution or person that becomes a successor trustee or co-trustee or any
officer, director, trustee, servant or direct or indirect parent or controlling
Person or Persons of any of them; provided that (i) this Section 21(n) shall not
be construed to prohibit any action or proceeding against any party hereto for
its own willful misconduct or grossly negligent conduct for which it would
otherwise be liable and (ii) nothing contained in this Section 21(n) shall be
construed to limit the exercise and enforcement in accordance with the terms of
this Agreement or such other agreements of rights and remedies against the Trust
Estate. The foregoing provisions of this Section 21(n) shall survive the
termination of this Agreement and the other Operative Documents.
(o) Successor Trustee. Lessee agrees that in the case of
the appointment of any successor Owner Trustee pursuant to the terms of the
Trust Agreement, such successor Owner Trustee shall, upon written notice by such
successor Owner Trustee, succeed to all the rights, powers and title of Lessor
hereunder and shall be deemed to be Lessor and the owner of the Aircraft for all
purposes hereof without the necessity of any consent or approval by Lessee
(subject to Section 14(d) of the Refunding Agreement) and without in any way
altering the terms of this Lease or Lessee's obligations hereunder. One such
appointment and designation of a successor Owner Trustee shall not exhaust the
right to appoint and designate further successor Owner Trustees pursuant to the
Trust Agreement, but such right may be exercised repeatedly as long as this
Lease shall be in effect.
(p) Article 2-A of the UCC. The parties hereto agree that
the Original Head Lease as amended and restated
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by this Second Amended and Restated Aircraft Lease Agreement (and as otherwise
extended, amended, modified, renewed or supplemented) shall be governed by
Article 2-A of the Uniform Commercial Code of New York.
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IN WITNESS WHEREOF, Lessor and Lessee, each
pursuant to due authority, have each caused this Lease to be executed by their
duly authorized officers as of the day and year first above written.
Lessor:
WILMINGTON TRUST COMPANY, not
in its individual capacity,
except as otherwise expressly
provided herein, but solely as
Owner Trustee
By:__________________________
Title:
Lessee:
AMERICA WEST AIRLINES, INC.
By:___________________________
Title:
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ANNEX I
to
Second Amended and Restated Aircraft Lease Agreement
DESCRIPTION OF ORIGINAL HEAD LEASE
Aircraft Lease Agreement [GPA 1989 BN-10] dated as of December 19, 1989
between Wilmington Trust Company, as trustee under Trust Agreement [GPA 1989
BN-10] dated as of December 19, 1989, as lessor, and GPA Leasing USA Sub I,
Inc., as lessee, which was recorded by the Federal Aviation Administration on
December 27, 1989 and assigned Conveyance No. S86322, as supplemented and
amended by the following described instruments:
Date of FAA FAA
Instrument Instrument Recording Date Conveyance No.
---------- ---------- -------------- --------------
Lease Supplement 12/22/89 12/27/89 S86322
[GPA 1989 BN-10]
No. 1
Amended and as of 10/25/91 Q52004
Restated Aircraft 10/01/91
Lease Agreement
[GPA 1989 BN-10]
Lease Supplement 10/24/91 10/25/91 Q52004
[GPA 1989 BN-10]
No. 2
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EXHIBIT A
to
Second Amended and Restated Aircraft Lease Agreement
STIPULATED LOSS VALUES
The Stipulated Loss Value of the Aircraft leased hereunder during the Term shall
be determined as of the date provided in the Lease and shall be an amount equal
to the amount shown below as of the applicable date set forth below.
Stipulated Loss
Value Date
A
119
EXHIBIT B
to
Second Amended and Restated Aircraft Lease Agreement
AIRCRAFT RECORDS AND DOCUMENTS
One original (or, if greater, the number delivered to Lessee) of
each of the following:
A. CERTIFICATES
1. Certificate of Airworthiness (FAA)
2. Lessee to supply Radio License
2a. Certificate of Sanitary Construction
B. AIRCRAFT STATUS RECORDS
3. Log Book (currently on Aircraft)
4. Airframe Maintenance Status (with time-to-go or
time since last)
5. Airworthiness Directive Compliance Report
6. Modification Status report
7. Weighing Report (most recent)
8. Accident and incident report
9. List of Life Limited Components (with
time-to-go)
C. AIRCRAFT MAINTENANCE RECORDS (last heavy maintenance
visits)
10. Test Flight Reports
11. Job Cards and Work Accomplishment Documents
(copies)
12. X-ray pictures (most recent)
B
120
D. AIRCRAFT HISTORY RECORDS
13. Log Books
14. Aircraft Maintenance History Cards
15. Mechanical Interruption Summary
E. ENGINE RECORDS (for each engine)
16. Last overhaul and repair documents
17. Airworthiness Directive Compliance Report
18. List of Life Limited Components
19. Modification Status Report
F. APU RECORDS
20. Last Overhaul and Repair Documents
21. Airworthiness Directive Compliance Report
22. List of Life Limited Components
23. Modification Status Report
G. COMPONENT RECORDS
24. Component records maintained in accordance with
a record keeping policy approved by and
acceptable to the FAA to certify the status and
maintenance histories of the components
H. MANUALS
25. Approved Flight Manual
26. Flight Crew Operating Manual
27. Weight and Balance Manual
28. Wiring Diagram Manual
29. Illustrated Parts Catalog
I. MISCELLANEOUS TECHNICAL DOCUMENTS
30. Operations Specification
31. Passenger Cabin Configuration Drawings
B
121
J. Any other documents, manuals, reports or related information delivered with
or related to the Aircraft, updated as may be required to reflect the
current aircraft status.
B
122
EXHIBIT C
to
Second Amended and Restated Aircraft Lease Agreement
DEFINITIONS AND VALUES
Basic Rent: During the Basic Term of the Lease, Basic Rent
shall be payable in semi-annual installments,
each of which shall be in an amount equal to the
amount, and in advance, as set forth in Schedule
I hereto.
Basic Rent
Payment Date: Each such date set forth as such on Schedule I
hereto.
Delivery
Location: Toulouse, France.
Manufacturer: Airbus Industrie
Maximum Foreign
Use Percentage: The Permitted Percentages as defined in the
Original Head Lease Tax Indemnification
Agreement.
Payment Location: So long as the Lien of the Indenture shall remain
in effect, Citibank, N.A., 000 Xxxx Xxxxxx, Xxx
Xxxx, XX for the account of The Chase Manhattan
Bank, as successor in interest to Manufacturers
Hanover Trust Company, Account No. _____ and
thereafter (and at all times with respect to
Excepted Payments) _____, for the account of
_____ Account No. _____.
Renewal Rent: During the Renewal Term of the Lease, Renewal
Rent shall be payable in installments,
semi-annually in advance.
Renewal Rent
Payment Date: The same day and month during each year of the
Renewal Term on which Basic Rent was due (the
Basic Rent Payment Dates). If a Renewal Rent
Payment Date shall fall on a
C
123
day which is not a Business Day, any payment due
on such Renewal Rent Payment Date shall be made
on the next succeeding Business Day.
Restricted Use
Period: On and after the Delivery Date until and
including the last day of the Owner Participant's
seventh full fiscal year after the Delivery Date.
Lease
Identification: A fireproof metal plate bearing the following
legend: "Title to this Aircraft is held by
Wilmington Trust Company, not in its individual
capacity but solely as Owner Trustee, Lessor,
which is the registered owner thereof on the U.S.
FAA Aircraft Registry, and which has leased this
Aircraft to America West Airlines, Inc., as
Lessee" and, for so long as the Lien of the
Indenture shall not have been discharged, bearing
the following additional legend: "Mortgaged to
The Chase Manhattan Bank as Indenture Trustee."
Lessee's
Address: America West Airlines, Inc.
0000 Xxxx Xxx Xxxxxx Xxxxxxxxx
Xxxxxxx, Xxxxxxx 00000
Telex: 755089 (Answerback: AMERWEST)
Telecopier: (000) 000-0000
Attention: Senior Vice President -
Legal Affairs
Lessor's
Address: Wilmington Trust Company
Xxxxxx Xxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Telecopier: ( )
Attention:
C
124
EXHIBIT D-1
to
Second Amended and Restated Aircraft Lease Agreement
LEASE SUPPLEMENT NO. 3
LEASE SUPPLEMENT NO. 3, dated November, 1996, between WILMINGTON
TRUST COMPANY, a Delaware corporation (not in its individual capacity but solely
as Owner Trustee under a Trust Agreement [GPA 1989 BN-10] dated as of December
19, 1989, as amended and supplemented to the date hereof (together with its
successors and assigns, "Lessor"), and AMERICA WEST AIRLINES, INC., a Delaware
corporation (together with its successors, "Lessee").
Lessor and Lessee have heretofore entered into that certain Second
Amended and Restated Aircraft Lease Agreement [GPA 1989 BN-10] dated as of
December 19, 1989, as Amended and Restated as of October 1, 1991, and as further
Amended and Restated as of November __, 1996 (as further amended, supplemented
or otherwise modified from time to time, herein called the "Lease Agreement",
and the defined terms therein being hereinafter used with the same meaning) and
that certain Lease Supplement [GPA 1989 BN-10] No. 1 dated December 22, 1989
("Lease Supplement No. 1") and Lease Supplement [GPA 1989 BN-10] No. 2 dated
October 24, 1991 ("Lease Supplement No. 2"). The Lease Agreement provides for
the execution and delivery from time to time of a Lease Supplement substantially
in the form hereof for the purpose of leasing the aircraft described below (or
confirming the leasing of the aircraft described below) under the Lease
Agreement as and when delivered by Lessor to Lessee in accordance with the terms
thereof.
The Lease Agreement relates to the aircraft, parts and engines
described below, and a counterpart of the Lease Agreement is attached hereto and
made a part hereof, and this Lease Supplement, together with such attachment, is
being filed for recordation on the date hereof with the FAA as one document.
NOW, THEREFORE, in consideration of the premises and other good
and sufficient consideration, Lessor and Lessee hereby agree as follows:
1. Lessor hereby confirms that it has delivered and leased to
Lessee under the Lease Agreement on December 22, 1989 as evidenced by Lease
Supplement No. 1, and Lessee
D-1
125
hereby confirms that it has accepted and leased from Lessor under the Lease
Agreement on December 22, 1989 as evidenced by Lease Supplement No. 1, that
certain Airbus Model A320-231 commercial jet aircraft airframe and two IAE V2500
engines (each of which Engines has 750 or more rated takeoff horsepower or the
equivalent of such horsepower) described in Schedule 1 hereto (the "Delivered
Aircraft").
2. The Delivery Date of the Delivered Aircraft is December 22,
1989.
3. The Basic Term for the Delivered Aircraft shall commence on the
Delivery Date and shall end on the Expiration Date, which shall be June 2, 2013
unless the Lease is extended or terminated prior thereto in accordance with the
terms thereof.
4. Lessee hereby agrees to and confirms its obligation to pay Rent
(as defined in the Lease Agreement) in the amounts and at the times provided in
the Lease Agreement.
5. Lessee hereby confirms to Lessor that (i) the Delivered
Aircraft and each Engine installed thereon or belonging thereto have been duly
marked in accordance with the terms of Section 6(e) of the Lease Agreement, and
(ii) Lessee has accepted the Delivered Aircraft for all purposes of Lease
Supplement No. 1 as further supplemented by Lease Supplement No. 2, hereof and
of the Lease Agreement, and the Delivered Aircraft is (A) as far as Lessee
reasonably ascertained from the acceptance procedures provided for in the
Purchase Agreement airworthy, in accordance with specifications, and in good
working order and repair, it being understood that Lessee by this confirmation
is not giving any warranty of any kind with respect to the Aircraft, and (B)
free and clear of all Liens except Permitted Liens.
6. All of the terms and provisions of the Lease Agreement,
including, without limitation, as to governing law, are hereby incorporated by
reference in this Lease Supplement No. 3 to the same extent as if fully set
forth herein.
7. This Lease Supplement No. 3 may be executed in any number of
counterparts; each of such counterparts, except as provided in Section 21(e) of
the Lease Agreement, shall for all purposes be deemed to be an original, and all
such counterparts shall together constitute but one and the same Lease
Supplement. To the extent, if any, that this
D-1
126
Lease Supplement constitutes chattel paper (as such term is defined in the
Uniform Commercial Code as in effect in any applicable jurisdiction), no
security interest in this Lease Supplement may be created except by the transfer
or possession of the counterpart containing the printed receipt therefor
executed by Indenture Trustee on the signature page hereof.
D-1
127
IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease
Supplement No. 3 to be duly executed as of the day and year first above written.
Lessor:
WILMINGTON TRUST COMPANY, not in its
individual capacity, except as otherwise
expressly provided herein, but solely as
Owner Trustee
By:_______________________________
Title:
Lessee:
AMERICA WEST AIRLINES, INC.
By:_______________________________
Title:
D-1
128
The undersigned acknowledges receipt of this original counterpart
of the foregoing Lease Supplement on this _______ day of ____________, 1996 and
consents to the terms hereof.
THE CHASE MANHATTAN BANK, AS
SUCCESSOR IN INTEREST TO MANUFACTURERS
HANOVER TRUST COMPANY, not in its
individual capacity, but solely as
Indenture Trustee
By:_______________________________
Title:
X-0
000
XXXXXXXX 1
to
LEASE SUPPLEMENT NO. 3
Airbus Model A320-231
Airframe
U.S. Registration No. Manufacturers Serial No.
N631AW 77
Installed
IAE
Engines
Model No. Serial No.
V2500 V0069
V2500 V0076
X-0
000
XXXXXXX X-0
to
Second Amended and Restated Aircraft Lease Agreement
LETTER OF CREDIT
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EXHIBIT E
to
Second Amended and Restated Aircraft Lease Agreement
RETURN CONDITION REQUIREMENTS
In addition to the requirements set forth in Section 16 of the
Lease, on any Return Occasion with respect to the Aircraft, Lessee, at its own
cost and expense, shall return the Aircraft in compliance with the following:
(1) The Aircraft shall have at all times theretofore been
maintained and modified in accordance with Sections 6(d) and 9 hereof with the
same care, maintenance status and consideration for the technical condition of
the Aircraft as if such Aircraft were owned and were to have been kept in
continued regular service by Lessee, without discrimination as to any other
similar aircraft owned or leased by Lessee.
(2) The Aircraft shall be clean by good commercial airline
standards as on the Delivery Date with only such modifications to the Aircraft
as are permitted under this Lease.
(3) The Aircraft shall have installed the full complement of
Engines (as used herein the term "Engines" includes engines for which title will
be transferred to Lessor pursuant to Section 16(c)) and other equipment, parts,
components, accessories, and loose equipment subleased hereunder or substituted
therefor, each such item functioning in accordance with its intended use.
(4) Lessee, at Lessor's request, shall activate any systems
installed on the Aircraft previously deactivated by Lessee and shall assure each
such system is properly functioning for its intended use.
(5) Each Engine shall have just completed a hot and cold section
boroscope and/or radiographic isotope inspection by Lessor (at Lessee's cost and
expense) of the low and high pressure compressors and turbine area, and shall
have just completed engine condition runs, and any discrepancies detected shall
be corrected at Lessee's cost and expense in accordance with the Manufacturer's
maintenance policies and procedures.
(6) Lessee's name, logo, and all other exterior markings shall
have been removed in a good and workmanlike
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manner from the Aircraft and the Aircraft shall have been repainted in a good
and workmanlike manner in the livery specified by Lessor.
(7) The Aircraft shall have simultaneously with such return
completed a "block 'C' Check" or the equivalent level designated check or checks
(inclusive of all phases of a "block 'C' Check" or equivalent level designated
check if the Maintenance Program is a "phase" program), in accordance with
Lessee's Maintenance Program such that all inspections and airworthiness
directives having terminating actions due within the next "block 'C' Check" or
equivalent level designated check(s), and all other actions as per the
Manufacturer's minimum recommendations in its then current maintenance planning
document for such check or checks, shall have been accomplished immediately
prior to redelivery.
(8) Neither the Aircraft nor any Engine shall have any scheduled
or unscheduled open or deferred maintenance items or placards.
(9) No Engine shall be on "Watch" and each Engine shall comply
with Lessee's Maintenance Program without waiver, deviations or exceptions.
(10) Each landing gear assembly shall have no less than 50% of
allowable hours or cycles, whichever is the more limiting factor, under Lessee's
Maintenance Program, remaining until the next scheduled overhaul or replacement.
(11) Each Engine shall have not less than 5,000 hours or 5,000
cycles, whichever is the more limiting factor, remaining on any hour or cyclic
limited part, and each Engine shall have not more than 5,000 hours or 5,000
cycles, whichever is the more limiting factor, since the last engine compressor
refurbishment, and each Engine shall have not more than 2,500 hours or 2,500
cycles, whichever is the more limiting factor, since its last turbine
restoration, based on Lessee's historical experience of engine on-wing service
life or based on Lessee's hard time engine overhaul limit if in effect. The
Engine hour and cycle limits described herein shall be in accordance with
Lessee's Maintenance Program and the manufacturer's mandatory hour and cyclic
life limits and presumes an hour-to-cycle ratio of two (2.0) hours to one (1)
cycle. If the actual hour-to-cycle ratio is less than 2.0:1, then the cyclic
limit amounts described herein shall be increased proportionately.
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(12) Each cycle, time or calendar controlled component in
accordance with Lessee's Maintenance Program or the Manufacturer's mandatory
life limits shall have no less than twelve months or 5,000 hours or 5,000
cycles, whichever is the more limiting factor, remaining until the next
scheduled overhaul or replacement or 100% of the allowable time if less than
twelve months.
(13) The Airframe shall be returned to Lessor with not less than
fifty percent (50%) of the total scheduled period between scheduled Major
Structural Inspections of the most comprehensive type (currently referred to as
an "eight year" heavy structural inspection" or "8C" inspection under the
Manufacturer's maintenance planning document in effect on the date hereof) with
respect to allowable hours, cycles or calendar months, whichever is the more
limiting factor, remaining until the next scheduled Major Structural Inspection
of the most comprehensive type, including, without limitation, the replacement
of any safe-life limited parts, required in accordance with the Lessee's then
current Maintenance Program or the Manufacturer's mandatory life limits and,
therefore, at a minimum, having just completed a "four-year heavy structural
inspection" or "4C" inspection as referred to in the Manufacturer's maintenance
planning document in effect on the date hereof.
(14) All software associated with or relating to any on-board
avionic equipment must be delivered to Lessor and be in a condition complying
with the Manufacturer's then recommended standards.
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EXHIBIT F-1
to
Second Amended and Restated Aircraft Lease Agreement
FOREIGN AIR CARRIERS
Aer Lingus
Air Canada
Air France (Compagnie Nationale Air France)
Air New Zealand, Ltd.
All Nippon Airways
Alitalia - Italy's World Airlines
Ansett Airlines of Australia
Australian Airlines
Austrian Airlines (Oesterreichische Luftverkehrs AG)
British Airways
Canadian Airlines International Ltd.
Cathay Pacific
Deutsche Lufthansa Aktiengesellschaft (Lufthansa German
Airlines)
Finnair Oy
Iberia
Japan Air Lines, Co., Ltd (JAL)
KLM - Royal Dutch Airlines (Koninklijke Luchtvaart
Maatschappij)
Korean Air
Malaysian Airlines
QANTAS
Sabena Belgian World Airlines (Societe Anonyme Belge
D'Exploitation De La Navigation Aerienne)
Scandinavian Airlines Systems (SAS)
Singapore Airlines
Swissair (Swiss Air Transport Company Ltd.)
TAP Air Portugal (Transportes Aeros Portugeses)
Thai Airways International Ltd.
Toa Domestic Airlines - TDA
Union Des Transports Aeriens
Varig S.A. (Viacao Aerea Rio-Grandense S.A.)
(a) Lessor may at any time, by written notice to Lessee, propose
the deletion of particular airlines from the above list of Foreign Air Carriers
(as the same may be amended pursuant to this provision) based upon Lessor's
reasonable judgment. Lessee may at any time, by written notice to Lessor,
propose the addition of particular airlines to such list of Foreign Air Carriers
based upon
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Lessee's reasonable judgment and which are comparable to the above airlines.
(b) If Lessee has not objected in writing to the deletion of a
particular airline proposed by Lessor as provided in paragraph (a) of this
Exhibit, or if Lessor has not objected in writing to the addition of a
particular airline proposed by Lessee as provided in paragraph (a), in each case
within thirty (30) days after receipt of notice of such proposal, the list of
Foreign Air Carriers shall be deemed amended without further act to delete or
add such airline. If Lessee or Lessor delivers a timely objection in writing to
a proposal made by the other pursuant to paragraph (a), each party agrees to
consult promptly at the request of the other in a good-faith effort to resolve
the disagreement through negotiation; provided, however, that an airline which
Lessor has proposed to delete shall be deleted from such list if there will be
at least twenty (20) or such lesser number as Lessor and Lessee shall reasonably
determine, if the number of airlines of a type similar to the airlines listed
above which may be included within the definition of Foreign Air Carriers is
substantially reduced as a result of consolidation in the airline industry other
airlines remaining on such list after giving effect to such deletion and any
other deletions then proposed by Lessor.
(c) Notwithstanding any other provision hereof, no addition shall
be made, and an airline shall be deleted from such list if, such airline would
not be permitted to be a lessee under the provisions of the Lease, and no
deletion of an airline from the list of Foreign Air Carriers pursuant to this
Exhibit shall affect any existing sublease or other agreement providing for
transfer of possession of the Aircraft, the Airframe or any Engine or Part which
was permitted under the Lease at the time entered into, or preclude any
subsequent renewal or extension of such sublease or other agreement.
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EXHIBIT F-2
to
Second Amended and Restated Aircraft Lease Agreement
SCHEDULE OF DOMICILES OF PERMITTED SUBLESSEES
Argentina Malta
Australia Mexico
Austria Morocco
Bahamas Netherlands
Belgium New Zealand
Brazil Norway
Canada Paraguay
Chile People's Republic of China
Denmark Philippines
Egypt Portugal
Finland Republic of China (Taiwan)*
France Singapore
Germany South Africa
Greece South Korea
Hong Kong Spain
Hungary Sweden
Iceland Switzerland
India Thailand
Indonesia Tobago
Ireland Trinidad
Italy United Kingdom
Japan Uruguay
Luxembourg Venezuela
Malaysia
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* So long as on the date of entering into the proposed sublease such country
and the United States have diplomatic relations at least as good as those
in effect on the Restatement Date.
(a) Lessor may at any time, by written notice to Lessee, propose
the deletion of a particular country from the above list of Permitted Foreign
Sublessee Domiciles (as the same may be amended pursuant to this provision)
based
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upon Lessor's reasonable judgment. Lessee may at any time, by written notice to
Lessor, propose the addition of particular countries which are comparable to the
above countries to such list of Permitted Foreign Sublessee Domiciles based upon
Lessee's reasonable judgment.
(b) If Lessee has not objected in writing to the deletion of a
particular country proposed by Lessor as provided in paragraph (a) of this
Exhibit, or if Lessor has not objected in writing to the addition of a
particular country proposed by Lessee as provided in paragraph (a), in each case
within thirty (30) days after receipt of notice of such proposal, the list of
Permitted Foreign Sublessee Domiciles shall be deemed amended without further
act to delete or add such country. If Lessee or Lessor delivers a timely
objection in writing to a proposal made by the other pursuant to paragraph (a),
each party agrees to consult promptly at the request of the other in a
good-faith effort to resolve the disagreement through negotiation.
(c) Notwithstanding any other provision hereof, no deletion of a
country from the list of Permitted Foreign Sublessee Domiciles pursuant to this
Exhibit shall affect any existing sublease or other agreement providing for
transfer of possession of the Aircraft, the Airframe or any Engine or Part which
was permitted under the Lease at the time entered into, or preclude any
subsequent renewal or extension of such sublease or other agreement.
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EXHIBIT G
to
Amended and Restated Aircraft Lease Agreement
OPINION OF LESSEE'S SPECIAL COUNSEL
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