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EXHIBIT 4.23
THE RIGHTS OF LESSOR UNDER THIS AMENDED AND RESTATED ENGINE LEASE AGREEMENT [GPA
1990 AWA-E1] AND IN THE ENGINE COVERED HEREBY WILL BE OR HAS BEEN ASSIGNED TO,
AND ARE OR WILL BE SUBJECT TO A SECURITY INTEREST IN FAVOR OF, FLEET NATIONAL
BANK, AS INDENTURE TRUSTEE UNDER AN AMENDED AND RESTATED TRUST INDENTURE AND
SECURITY AGREEMENT [GPA 1990 AWA-E1] DATED AS OF NOVEMBER , 1996. AS PROVIDED
IN SECTION 21(e) HEREOF, TO THE EXTENT, IF ANY, THAT THIS AMENDED AND RESTATED
ENGINE 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 ENGINE 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 FLEET NATIONAL BANK, AS INDENTURE TRUSTEE, ON
THE SIGNATURE PAGE THEREOF.
AMENDED AND RESTATED ENGINE LEASE AGREEMENT
[GPA 1990 AWA-E1]
Dated as of December 12, 1990
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 1990 AWA-E1]
dated as of December 12, 1990, as amended
Lessor
and
AMERICA WEST AIRLINES, INC.
Lessee
One IAE International Aero Engine AG V2500-A1 Engine
Manufacturer's Serial No. V0025
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TABLE OF CONTENTS
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Section 1. Definitions................................................................................ 1
Section 2. Agreement to Lease......................................................................... 19
Section 3. Delivery and Acceptance; Term.............................................................. 19
(a) Time of Delivery......................................................................... 19
(b) Place of Delivery and Acceptance......................................................... 19
(c) Acceptance of Engine..................................................................... 19
(d) Term of Lease............................................................................ 19
Section 4. Rent....................................................................................... 20
(a) Rent................................................................................. 20
(i) Basic Rent.................................................................. 20
(ii) Supplemental Rent........................................................... 20
(b) Minimum Payments..................................................................... 20
(c) Date, Place and Method of Payment.................................................... 21
(d) Prohibition Against Setoff, Counterclaim, Etc........................................ 21
Section 5. Representations, Warranties and Covenants.................................................. 23
(a) Warranties and Disclaimer of Warranties.............................................. 23
(b) Representations and Warranties of Lessor. ........................................... 24
(c) No Amendments to Financing Documents................................................. 24
(d) Suppliers' Warranties................................................................ 24
Section 6. Possession and Use......................................................................... 25
(a) Possession........................................................................... 25
(i) Lease, Assignment and Transfer.............................................. 25
(ii) Certain Limitations on Transfers............................................ 28
(b) [Intentionally Left Blank]........................................................... 32
(c) Lawful Insured Operations............................................................ 32
(d) Maintenance.......................................................................... 33
(e) Registration and Insignia............................................................ 35
Section 7. Inspection................................................................................. 35
Section 8. Additional Covenants of Lessee............................................................. 36
(a) Financial Information................................................................ 36
(b) Maintenance of Corporate Existence................................................... 38
(c) Maintenance of Status................................................................ 38
(d) Payment of Taxes..................................................................... 38
(e) Consolidation, Merger, Etc........................................................... 38
(f) Information.......................................................................... 40
(g) Place of Business.................................................................... 40
(h) Certain Limitations on Use........................................................... 40
(i) Section 1110......................................................................... 41
(j) Permits and Licenses................................................................. 41
(k) Security Opinion; Annual Certificate................................................. 41
(l) Letter of Credit..................................................................... 43
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Section 9. Replacement of Parts; Alterations,
Modifications and Additions................................................................ 45
(a) Replacement of Parts................................................................. 45
(b) Alterations, Modifications and Additions............................................. 46
(c) Pooling.............................................................................. 48
Section 10. General Tax Indemnity..................................................................... 49
(a) Indemnity............................................................................ 49
(b) Exclusions........................................................................... 50
(c) Covered Income Tax................................................................... 52
(d) Reports and Returns.................................................................. 54
(e) After-Tax Basis...................................................................... 54
(f) Tax Benefit.......................................................................... 54
(g) Payment.............................................................................. 55
(h) Contest.............................................................................. 56
(i) Refund............................................................................... 57
(j) Diligence............................................................................ 58
(k) Affiliated Group..................................................................... 58
(l) Verification......................................................................... 58
(m) Survival............................................................................. 59
Section 11. Loss, Damage and Requisition.............................................................. 59
(a) Event of Loss with Respect to the Engine............................................. 59
(b) Conveyance of Replacement Engine..................................................... 61
(c) Application of Proceeds and Payments................................................. 63
(d) Requisition for Use by Government with
Respect to the Engine................................................................ 63
(e) Application in Default............................................................... 64
Section 12. Insurance................................................................................. 64
(a) Public Liability and Property Damage Insurance....................................... 64
(b) Insurance Against Loss or Damage..................................................... 66
(c) Application of Insurance Proceeds for
an Event of Loss..................................................................... 69
(d) Application of Insurance Proceeds for
Other than an Event of Loss.......................................................... 69
(e) Application in Default............................................................... 70
(f) Certificates......................................................................... 70
(g) Reinsurance.......................................................................... 71
(h) Storage.............................................................................. 72
(i) Amounts Held......................................................................... 72
(j) After the Term....................................................................... 72
(k) Governmental Indemnity............................................................... 72
Section 13. General Indemnity......................................................................... 72
Section 14. Liens..................................................................................... 78
Section 15. Protection of Title and Further Assurances................................................ 79
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Section 16. Return of Engine and Records.............................................................. 80
(a) Return............................................................................... 80
(b) Status Upon Return................................................................... 81
(c) Substitute Engine.................................................................... 81
(d) Records and Documents................................................................ 82
(e) Condition of Engine.................................................................. 83
(f) Final Inspection..................................................................... 83
(g) Engine Records and Documents......................................................... 84
(h) Corrections and Subsequent Corrections............................................... 85
(i) [Intentionally Left Blank]........................................................... 85
(j) Exportation of the Engine............................................................ 85
(k) Service Bulletin and Modification Kits............................................... 85
(l) Storage Upon Return.................................................................. 85
(m) Resale/Release Cooperation........................................................... 86
Section 17. Events of Default......................................................................... 86
Section 18. Remedies.................................................................................. 88
Section 19. Security for Obligations.................................................................. 94
Section 20. Renewal Option[, Purchase Option]......................................................... 95
[(a)] Renewal Option......................................................................... 95
(i) Exercise of Renewal Option.................................................. 95
(ii) Provisions Applicable During Renewal Term................................... 96
Section 21. Miscellaneous............................................................................. 96
(a) Severability, Amendment, and Construction............................................ 96
(b) GOVERNING LAW........................................................................ 97
(c) Notices.............................................................................. 97
(d) Lessor's Right to Perform for Lessee................................................. 97
(e) Counterparts......................................................................... 98
(f) Quiet Enjoyment...................................................................... 98
(g) Brokers.............................................................................. 98
(h) Investment of Funds.................................................................. 98
(i) Entire Agreement; Amendment.......................................................... 99
(j) Expenses............................................................................. 99
(k) Federal Bankruptcy Code.............................................................. 99
(l) [Reserved]...........................................................................100
(m) Submission to Jurisdiction; Service of
Process; Waiver of Forum Non Conveniens;
Waiver of Jury Trial.................................................................100
(n) Limitation on Recourse...............................................................101
(o) Successor Trustee....................................................................102
(p) Article 2-A of the UCC...............................................................102
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ANNEXES
Annex A - Description of Original Head Lease
EXHIBITS
Exhibit A - Stipulated Loss Values
Exhibit B - Engine Records and Documents
Exhibit C - Definitions and Values
Exhibit D-1 - Lease Supplement No. 2
Exhibit D-2 - Letter of Credit
Exhibit E - Return Condition Requirements
Exhibit F-1 - Foreign Air Carriers
Exhibit F-2 - Permitted Foreign Sublessee Domiciles
Exhibit F-3 - Permitted Sublessee Assignment Consent
Exhibit G - Opinion of Lessee's Special Counsel
Exhibit H - [Intentionally Left Blank]
Exhibit I - [Intentionally Left Blank]
Exhibit J - [Intentionally Left Blank]
Exhibit K - Form of Engine Status Report
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AMENDED AND RESTATED ENGINE LEASE AGREEMENT
THIS AMENDED AND RESTATED ENGINE LEASE AGREEMENT dated as of
December 12, 1990 and 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 1990 AWA-E1] dated as of December 12, 1990, as amended, and with
its principal place of business at Xxxxxx Xxxxxx Xxxxx, Xxxxxxxxxx, Xxxxxxxx
00000 (together with its successors and permitted assigns, "Lessor"), and
AMERICA WEST AIRLINES, INC., a Delaware corporation, with its chief executive
office at 0000 Xxxx Xxx Xxxxxx Xxxxxxxxx, Xxxxxxx, Xxxxxxx 00000 (together with
its successors and permitted assigns, "Lessee").
W I T N E S S E T H:
WHEREAS, Lessor and Lessee desire to amend and, solely for the
convenience of the parties, restate in its entirety the Original Head Lease (as
hereinafter defined) as of the Restatement Date (as hereinafter defined) as
hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual promises herein
contained, Lessor and Lessee agree as follows:
Section 1. Definitions.
The following terms shall have the following respective
meanings for all purposes of this Lease (including the Recitals) and shall be
equally applicable to both the singular and the plural forms of the terms
defined herein:
As used herein, the terms "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", "Registration Rights
Agreement", "Restatement Date", "Trust Company", "Trust Estate", 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).
"Affiliate" shall mean, with respect to any specified Person,
any other Person which, directly or
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indirectly, owns or controls, is controlled by or is under common control with
such specified Person. Control will be deemed to exist based on (i) ownership of
25% or more of the voting securities of a Person or (ii) the power to direct or
elect or cause the direction or election of the management and policies of a
Person whether by contract or otherwise.
"Appraisal Procedure" shall mean the following procedure for
determining the "fair market sales value" or "fair market rental value" of the
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 the 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 the Engine or such 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 the Engine or such 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 Engine 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 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 the Engine or such Part for which such appraisal is to be conducted. If
Lessor
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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 the Engine or such 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 the Engine or such 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 Engine shall mean the Basic Rent
specified in Exhibit C and payable throughout the Basic Term for the Engine
pursuant to Section 4(a)(i).
"Basic Rent Payment Date" shall mean each day determined in
accordance with Exhibit C upon which a payment of Basic Rent becomes payable. If
a Basic Rent Payment Date shall fall on a day which is not a Business Day, any
payment due on such Basic Rent Payment Date shall be made on the next succeeding
Business Day.
"Basic Term" shall mean the period specified in Lease
Supplement No. 2.
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"Business Day" shall mean any day other than a Saturday,
Sunday or other day on which banking institutions in New York, New York or
Hartford, Connecticut are authorized or required by Law to be closed.
"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 and certificated so as to fall
within the purview of 11 U.S.C. Section 1110 or any analogous statute.
"Civil Reserve Air Fleet Program" shall mean the Civil Reserve
Air Fleet Program administered by the United States Government and authorized
under 10 U.S.C. Section 9511, et seq., as amended, or any substantially similar
or substitute program of the United States Government.
"Claims" shall have the meaning specified in Section 13.
"Code" shall mean the Internal Revenue Code of 1986, as
amended, and the rules and regulations promulgated thereunder.
"Commonly Controlled Person" shall mean an entity, whether or
not incorporated, which is under common control with Lessee within the meaning
of Section 414(b) or (c) of the Code.
"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 __, 1990, being the date
the Engine was delivered to and accepted by
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the Original Head Lessee as Lessee hereunder for all purposes of this Lease.
"Delivery Location" shall mean the location for the delivery
of the Engine specified in Exhibit C.
"$" and "dollars" shall mean the lawful currency of the
United States of America.
"Engine" shall mean (i) the IAE Model V2500-A1 engine listed
by manufacturer's serial number in Lease Supplement No. 1, (ii) Parts or
components thereof, (iii) ancillary equipment or devices furnished therewith
under this Lease (including any separate equipment described on one or more
Lease Supplements hereto), (iv) the Engine Records and Documents and all other
manuals and records with respect to such Engine, and (v) all substitutions,
replacements and renewals of any and all thereof, including but not limited to,
any replacement engine which may from time to time be substituted, pursuant to
Section 6(a) or 11(a), for the 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.
"Engine Records and Documents" shall mean the items identified
in Exhibit B hereto, all of which shall be maintained in the English language.
"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 Engine: (a) loss of such property or the use thereof due to theft
or disappearance for a period in excess of sixty (60) consecutive days, but in
no event later than the last day of the Term; (b) destruction or damage of such
property that renders repair uneconomic or such property permanently unfit for
normal use by Lessee (or, if a Permitted Sublease is in
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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 sixty (60) days beyond the Term; (g) as a result of any law, rule,
regulation, order or other action by the FAA, the Department of Transportation
or any other Governmental Entity having jurisdiction, the use of the Engine in
the normal course of Lessee's (or, if a Permitted Sublease is in effect, the
Permitted Sublessee's) business of air transportation of passengers shall have
been prohibited for a period of six (6) consecutive months, unless Lessee (or
the Permitted Sublessee), prior to the expiration of such six-month period,
shall have undertaken and shall be diligently carrying forward all steps which
are necessary or desirable to permit such normal use of such item of equipment
by Lessee (or the Permitted Sublessee), or, in any event, if such normal use
shall have been so prohibited by any such Governmental Entity for a period of
twelve (12) consecutive months or is continuing sixty (60) days after the last
day of the Term; or (h) as otherwise provided herein.
"Expiration Date" shall mean the date specified in Lease
Supplement No. 2, on which date the Basic Term of this Lease shall expire.
"FAA" shall mean the Federal Aviation Administration of the
United States Department of Transportation or any successor agency.
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"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, 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 Engine by such jurisdiction and, to the extent not inconsistent
therewith, all FAA-airworthiness directives and other requirements made
mandatory to the Engine 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
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agency of any thereof, however constituted; and (iii) any association,
organization, or institution of which any entity described in (i) or (ii) above
is a member or to whose jurisdiction any such entity is subject or in whose
activities any such entity is a participant but only to the extent that any
entity described in clause (i), (ii) or (iii) has jurisdiction over Lessor,
Lessee, Indenture Trustee, Note Holders, any sublessee, the Engine or its
operations.
"GPA Aircraft" shall mean any aircraft which is the subject of
any of the Other Leases.
"Head Lessor's Lien" shall mean a "Lessor's Lien" under and as
defined in the Original Head Lease.
"IAE" shall mean IAE International Aero Engines AG, a company
organized and existing under the laws of Switzerland.
"Indemnitee" shall mean Lessor (in its individual capacity and
as trustee under the Trust Agreement), the Original Head Lessee (only with
respect to the Tax Indemnification Agreement), the Trust Estate, Parent (only
with respect to the Tax Indemnification Agreement), Owner Participant, the Trust
Indenture Estate, Indenture Trustee (in its individual capacity and as trustee
under the Indenture) and 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, their respective successors and
permitted assigns and (and, in the case of a permitted assign of Owner
Participant that is a partnership, the partners of such partnership), and any
combination thereof and their respective officers, directors, agents, servants,
employees, subsidiaries, Affiliates, shareholders and [partners].
"Indenture" shall mean the Amended and Restated Trust
Indenture and Security Agreement [GPA 1990 AWA-E1] dated as of December 12,
1990, and 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.
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"Interest Rate" shall mean (i) with respect to the portion of
any payment of Rent that may be required by the Indenture to be paid to the
holders of any outstanding Equipment Notes issued thereunder, a per annum rate
of interest equal to the Past Due Rate applicable thereto under and as defined
in the Indenture computed on the basis of a 360-day year and twelve 30-day
months and (ii) with respect to any other amount, a per annum rate of interest
equal to the sum of the rate of interest publicly announced by Citibank, N.A.,
at its principal office in New York City, as its prime or similar base rate from
time to time in effect from the date the amount becomes due to the date it is
paid in full, plus 2%, computed on the basis of a year of 365 or 366 days, as
the case may be, and actual number of days elapsed.
"Law" shall mean and include (i) any statute, rule, decree,
constitution, regulation, order, judgment or other directive of any Governmental
Entity; (ii) any treaty, pact, compact or other agreement to which any
Governmental Entity is a signatory or party; (iii) any judicial or
administrative interpretations of the application of any Law described in (i) or
(ii) above; and (iv) except where expressly excluded herein, any amendment or
revision of any Law described in (i), (ii), or (iii) above.
"Lease Agreement," "this Lease Agreement," "this Lease," "this
Agreement," "herein," "hereunder," "hereby," "hereof" or other like words shall
mean this Lease as originally executed and as amended, supplemented or otherwise
modified from time to time, including, without limitation, by one or more Lease
Supplements, as a whole and not to any particular Section or other subdivision,
and any reference to a "Section" or an "Exhibit" shall refer to a Section or
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 and Lease
Supplement No. 2 and each subsequent Lease Supplement entered into hereunder.
"Lease Supplement No. 1" shall mean Lease Supplement [GPA 1990
AWA-E1] No. 1 dated the Delivery Date between Lessor and Original Head Lessee,
as Lessee.
"Lease Supplement No. 2" shall mean Lease Supplement [GPA 1990
AWA-E1] No. 2, substantially in the
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form of Exhibit D hereto, entered into between Lessor and Lessee on the
Restatement Date for the purpose of confirming the leasing of the Engine
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 Engine or any
other portion of the Trust Estate or the Trust Indenture Estate arising as a
result of (i) Claims against Indenture Trustee in its individual capacity (and
not as Indenture Trustee) not related to its interest in the Engine or the
administration of the Trust Estate or the Trust Indenture Estate pursuant to the
Indenture, whether under Section 9-207(2)(e) of the Uniform Commercial Code or
otherwise, (ii) acts or omissions of Indenture Trustee in its individual
capacity (and not as Indenture Trustee) not contemplated hereunder or under the
other Operative Documents, or acts or omissions of Indenture Trustee in its
individual capacity (and not as Indenture Trustee) which are in violation of any
of the Operative Documents, or (iii) Taxes imposed on or Claims against
Indenture Trustee in its individual capacity (and not as Indenture Trustee)
which are excluded from indemnification by Lessee, or (iv) Claims against
Indenture Trustee in its individual capacity (and not as Indenture Trustee)
arising out of the voluntary or involuntary transfer by Indenture Trustee in its
individual capacity (and not as Indenture Trustee) of all or any portion of its
interest in the 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 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
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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 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 Engine, the Trust Estate,
the Operative Documents or the Financing Documents other than any transfers or
dispositions pursuant to Sections 2, 6, 9, 11, 16, 18 or 19 (except Liens
resulting from a transfer not permitted by such Section) of this Lease or
pursuant to Section 10 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 Engine 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 which is applicable to IAE AG V2500 Engines 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 Engine
is subject to a Permitted Sublease to a Foreign Air Carrier any other FAA
approved maintenance program for the Engine which is approved by the aviation
authority of the country of registry and complies with the requirements
applicable to maintenance of the Engine contained in the definition of
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Foreign Air Carrier. The Maintenance Program shall encompass scheduled
maintenance, condition monitored maintenance, and on-condition maintenance of
the Engine, including, but not limited to, servicing, testing, preventive
maintenance, repairs, structural inspections, structure life improvements,
system checks, overhauls, approved modifications, service bulletins, engineering
orders, airworthiness directives, and corrosion control inspections and
treatments. All modifications and supplements to the Maintenance Program shall
be provided to Lessor upon its reasonable request and Lessor shall be given
reasonable access to the Maintenance Program upon its request.
"Manufacturer" shall mean IAE in its capacity as manufacturer
of the Engine, together with any subcontractor or supplier thereof.
"Maximum Foreign Use Percentage" shall have the meaning
specified in Exhibit C.
"Mortgage Convention" shall mean the Convention for the
International Recognition of Rights in Aircraft, signed (ad referendum) at
Geneva, Switzerland, on June 19, 1948, and amended from time to time, but
excluding the terms of any adhesion thereto or ratification thereof containing
reservations to which the United States of America does not accede.
"Net Worth" shall mean, with respect to any Person, such
Person's stockholders' equity minus any intangible assets.
"Operative Documents" shall mean this Lease, each Lease
Supplement, any sublease, the Tax Indemnification Agreement, the Financing
Documents, 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 Engine Lease Agreement
[GPA 1990 AWA-E1], with respect to the Aircraft, dated as of December 12, 1990,
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 1990 AWA-E1], dated as of
December 12, 1990,
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and amended and restated as of the Restatement Date between the Original Head
Lessee and Owner Participant, as amended, supplemented or otherwise modified
from time to time.
"Original Head Lessee" shall mean GPA Leasing USA I, Inc., a
Connecticut corporation.
"Original Sublease" shall mean the Initial Sublease (as
defined in the Original Head Lease) as in effect immediately prior to the
Restatement Date.
"Other Leases" shall mean any and all lease agreements, as
amended, supplemented or otherwise modified from time to time (other than this
Lease) between Lessor or its successors or permitted assigns and Lessee [or any
of its Affiliates] or any of their successors or permitted assigns relating to
any or all, as the context so requires, of (a) Airbus model A320 aircraft and
(b) V2500 engines.
"Other Letters of Credit" shall mean any and all letters of
credit pursuant to Section 8(1) of the Other Leases.
"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.
"Participation Agreement" shall mean the Participation
Agreement [GPA 1990 AWA-E1], dated as of December 12, 1990, among Original Head
Lessee, Parent, Owner Participant, Owner Trustee, Indenture Trustee and the
"Lender" named therein, [as amended by the Letter Agreement dated as of July 29,
1993], as the same may be further 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 which may now or from time to time be incorporated or installed
in or attached to or were provided by the Manufacturer with the Engine or so
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long as title thereto shall remain vested in Lessor in accordance with the terms
of Section 9 hereof after removal from such 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.
"Payment Location" shall have the meaning set forth in Exhibit
C, as the same may be changed from time to time by Lessor as provided in Section
4(c).
"Permitted Lien" shall mean any Lien referred to in clauses
(i) through (vii) of the first sentence of Section 14 hereof.
"Permitted Sublease" shall have the meaning specified in
Section 6(a)(iii)(1).
"Permitted Sublessee" shall mean a Certificated Air Carrier
or, after the Restricted Use Period, (a) any Foreign Air Carrier, (b) the United
States Government or an agency or instrumentality thereof which bears the full
faith and credit of the United States of America or (c) any other Person
approved in writing by the Owner Participant and the Indenture Trustee.
"Person" shall mean and include any individual person,
corporation, partnership, firm, joint stock company, joint venture, trust,
estate, unincorporated organization, association, Governmental Entity, or
organization or association of which any of the above is a member or a
participant.
"Purchase Agreement" shall mean the Engine Sale Agreement
dated as of September 28, 1990, among IAE and Original Head Lessee, as the same
may be amended, supplemented or otherwise modified to the extent permitted by
the terms thereof from time to time.
"Purchase Documents" shall mean the Purchase Agreement and any
other agreement, document or certificate delivered or entered into pursuant to
the foregoing, as amended, supplemented or otherwise modified.
"Removable Part" shall have the meaning set forth in Section
9(b).
"Renewal Rent" shall mean the rent payable pursuant to Section
20.
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"Renewal Rent Payment Date" shall mean each day determined in
accordance with Exhibit C upon which a payment of Renewal Rent becomes payable.
If a Renewal Rent Payment Date shall fall on a day which is not a Business Day,
any payment due on such Renewal Rent Payment Date shall be made on the next
succeeding Business Day.
"Renewal Term" shall mean the period described in Section 20
following the end of the Basic Term if Lessee shall have exercised its renewal
option in accordance with Section 20.
"Rent" shall mean Basic Rent or Renewal Rent, as the case may
be, and Supplemental Rent, collectively.
"Replacement Engine" shall have the meanings specified in
accordance with its 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 Engine 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.
"Shipping Stand" shall mean the cradle designed to hold an
engine which has a suitable shock mounting system to allow the engine to be
transported by truck or other vehicle without damage, listed by part number and
manufacturer's serial number in Lease Supplement No. 1.
"Specified Investments" shall mean (i) direct obligations of
the United States Government, the obligations of which bear the full faith and
credit of the United States; (ii) obligations fully guaranteed by the United
States; (iii) certificates of deposit issued by any commercial bank incorporated
under the laws of the United States or one of the States thereof (but not
exceeding $10,000,000 in principal amount or deposits at any given time for any
one bank) having a combined capital surplus and undivided income of at least
$750,000,000 and having a rating of "B" or better from Xxxxxxxx BankWatch, Inc.;
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(iv) repurchase agreements (but not exceeding $10,000,000 in principal amount or
deposits at any given time for any one bank) with any financial institution
having combined capital 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 the
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 Date" shall mean each monthly date listed, or
with respect to any Renewal Term determined as set forth, on Exhibit A hereto.
"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[(a)] (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 Engine, such Stipulated Loss Value shall be based on the ratio that the
original cost to Lessor of the Engine bears to Lessor's Cost (as set forth in
the Original Head Lease) for the Engine.
"Stipulated Loss Value Date" shall mean each monthly date
listed with respect to any Renewal Terms 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
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Operative Document, including, without limitation, (i) any 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 or Section 21 of the Refunding
Agreement; (iii) any payment of an amount equal to average daily Basic Rent or
Renewal Rent in connection with an extension of the Term of this Lease as a
result of (a) an incipient Event of Loss and the operation of Section 11 hereof
or (b) the need to correct and failure of the Aircraft to satisfy the
requirements of Section 16 and Exhibit E hereof; (iv) [Intentionally Left
Blank]; (v) an amount equal to any payment due to the Owner Trustee in respect
of fees or expenses as provided in Section 21(j) hereof; (vi) an amount equal to
any payment due to the Indenture Trustee in respect of fees or expenses as
provided in [the Indenture and/or] the Refunding Agreement and/or Section 21(j)
hereof; (vii) the Pro Rata Share of any payment due to any Pass Through Trustee
in respect of fees or expenses pursuant to the Pass Through Trust Agreement
and/or the Refunding Agreement; (viii) the Pro Rata Share of any payment due to
the Subordination Agent in respect of fees, compensation, costs or expenses
pursuant to the Intercreditor Agreement and/or the Refunding Agreement; (ix) an
amount equal to the amount payable by the 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); and (x) to the extent permitted by
applicable Law, interest at the Interest Rate calculated: (1) on any part of any
installment of Basic Rent or Renewal Rent, or average daily Basic Rent referred
to in clause (iii) of this definition of Supplemental Rent", 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 1990 AWA-E1], dated as of
December 12, 1990, and as amended and restated as of November __, 1996, 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.
"Taxing Authority" shall have the meaning specified in Section
10(a).
"Term" shall mean, collectively, the Basic Term specified in
Lease Supplement No. 2 and the Renewal Term, if Lessee extends the Term in
accordance with Section 20, in either case, or as extended or deemed extended as
a result of the occurrence of an event described in clause (iii) to the
definition of "Supplemental Rent" in this Lease, for which the Engine is leased
hereunder pursuant to Section 2.
"Trust Agreement" shall mean the Trust Agreement [GPA 1990
AWA-E1] dated as of December 12, 1990 as amended by Trust Supplement No. 1, and
as further amended by Trust Supplement No. 2, between Lessor, in its individual
capacity, and Owner Participant, as beneficiary, as the same may be amended,
supplemented or otherwise modified from time to time. The term "Trust Agreement"
shall also include the Trust Supplements.
"Trust Estate" shall have the meaning specified in the Trust
Agreement.
"Trust Supplement" shall mean Trust Supplement No. 1 and Trust
Supplement No. 2 and each subsequent Trust Supplement entered into thereunder
and any further supplement to the Trust Agreement.
"Trust Supplement No. 1" shall mean Trust Agreement Supplement
[GPA 1990 AWA-E1] No. 1 dated the Delivery Date between Lessor and Owner
Participant for the purposes of bringing the Aircraft and the Original Head
Lease into the Trust Estate.
"Trust Supplement No. 2" shall mean Trust Agreement Supplement
[GPA 1990 AWA-E1] No. 2 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 Engine to a third party pursuant to which such Engine (i) shall
be operated solely by regular employees of Lessee possessing all current
certificates and licenses required under the Federal Aviation Act (it is
understood that cabin attendants need not be regular employees of Lessee) and
Lessee otherwise maintains operational control and possession thereof, and (ii)
shall be maintained by Lessee in accordance with its normal maintenance
practices and this Lease to which the Engine is subject, and otherwise the
insurance required hereunder shall be maintained and the Engine shall be used
and operated in accordance with this Lease.
Section 2. Agreement to Lease. Lessor hereby agrees to lease
the Engine to Lessee, and Lessee hereby agrees to lease the Engine from Lessor,
on the terms and subject to the conditions set forth in this Lease.
Section 3. Delivery and Acceptance; Term.
(a) Time of Delivery. The Engine was delivered to Lessee, and
Lessee accepted delivery of the Engine, on December __, 1990.
(b) Place of Delivery and Acceptance. The Engine was delivered
to and accepted by Lessee at the Delivery Location.
(c) Acceptance of Engine. The Engine 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 Engine for all
purposes of this Lease and Lessee's acceptance of the Engine was conclusive
evidence that, as between Lessor and Lessee, the Engine 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.
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Section 4. Rent.
(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 arrears and in advance as set forth on Schedule I attached to
Exhibit C, due and payable on each Basic Rent Payment Date to the Lessor; and
(ii) Supplemental Rent. Any and all
Supplemental Rent, which shall be due and payable ten (10) Business Days after
demand unless otherwise specifically provided. 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 or Renewal Rent. Lessee's obligation to pay
Supplemental Rent which is due and owing pursuant to the terms hereof shall
survive the expiration or termination of Lessee's obligation to pay Basic Rent
or Renewal Rent hereunder.
(b) Minimum Payments. Notwithstanding any provision in this
Lease or in any other Operative Document to the contrary, under all
circumstances and in any event, (i) the Stipulated Loss Value, together with the
payment of Supplemental Rent and all other Rent then due hereunder, as of any
time and as of the date of any payment thereof shall (both before and after
giving effect to any reductions therefrom) be in an amount at least sufficient
to pay in full as of such time or date the aggregate unpaid principal amount of
the Equipment Notes then outstanding and all accrued and unpaid interest
(assuming interest has been timely paid) thereon plus any Make-Whole Amount due
and payable to the Note Holders pursuant to the Indenture, and (ii) Basic Rent
payable on any Basic Rent Payment Date shall at least equal the aggregate amount
of principal and interest due and payable on the Equipment Notes on such Basic
Rent Payment Date. It is agreed, however, that no installment of Basic Rent or
Stipulated Loss Value shall be increased or adjusted and no amounts in respect
of any Make-Whole Amount shall be payable by reason of (A) any attachment or
diversion of Rent on account of any Lessor's Lien or Head Lessor's Lien or
Lenders' Lien, (B) any modification of the [payment] 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
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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 or Hartford, Connecticut as Indenture Trustee may direct by
thirty (30) days prior written notice to Lessee, except for all Excepted
Payments. All Excepted Payments, and, upon discharge of the Lien of the
Indenture, all payments of Rent thereafter made hereunder, shall be paid in such
immediately available funds no later than 12:00 p.m. (noon), New York City time,
on the date payable hereunder, to Lessor or to Owner Participant, as
appropriate, in accordance with the payment instructions set forth in Exhibit C
or at such other address 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 Lessee, Owner Participant, Indenture Trustee, any Note
Holder, any Manufacturer, any Person providing services with respect to the
Engine, 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 Engine (subject to the provisions of Section
11(a)(ii) hereof), any interruption or cessation in the use
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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 Engine or any
other Person; (iii) any Liens with respect to the Engine; (iv) the invalidity or
unenforceability or lack of due authorization or other infirmity of this Lease
or any sublease or any absence of right, power or authority of Lessor, Original
Head Lessee, Lessee or Indenture Trustee to enter into this Lease or the
Indenture, as the case may be; (v) any insolvency, bankruptcy, reorganization,
or similar proceedings by or against Lessor, Original Head Lessee, Lessee, any
sublessee, Indenture Trustee or any Note Holder; (vi) any Taxes or (vii) any
other circumstance or happening of any nature whatsoever, whether or not similar
to any of the foregoing; it being the expressed intention of Lessor and Lessee
that all Rent payable hereunder shall be payable in all events, unless the
obligation to pay the same shall be terminated pursuant to the express
provisions of this Agreement.
Except as expressly set forth elsewhere in this Agreement,
Lessee hereby waives, to the extent permitted by applicable Law, any and all
rights which it may now have or which at any time hereafter may be conferred
upon it, by statute or otherwise, to terminate, xxxxx, cancel, quit, reduce,
defer, suspend or surrender this Lease or the Engine or any obligation imposed
upon Lessee hereunder or under the other Operative Documents (including, without
limitation, payment of Rent), except in accordance with the terms hereof.
Each payment of Rent made by Lessee shall be final. Lessee
will not seek to recover all or any part of any payment of Rent for any reason
whatsoever except manifest error.
If for any reason whatsoever this Lease shall be terminated in
whole or in part by operation of Law, except as specifically provided herein,
Lessee waives all rights (if any) to any diminution in its Rent obligations
hereunder and nonetheless agrees to pay, to Indenture Trustee or Lessor as
provided in Section 4(c) hereof an amount equal to each Basic Rent or Renewal
Rent, as the case may be, payment and any Supplemental Rent payment at the time
such payments would have become due and payable in accordance with the terms
hereof had this Lease not been terminated in whole or in part, and so long as
such payments are made and all other terms and conditions hereof are complied
with by Lessee,
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Lessor and Lessee will deem this Lease to remain in full force and effect.
The foregoing shall not, however, be construed as a waiver of
Lessee's other rights to seek damages, specific performance, other remedies at
law or equity or any combination thereof, as against the Original Head Lessee,
Lessor, Indenture Trustee or any other Person having an interest herein through
the Original Head Lessee, Lessor, Indenture Trustee or any other Person as shall
be liable therefor, on account of any failure of the Original Head Lessee,
Lessor, Indenture Trustee or any other such Person to perform its express
obligations under this Lease and the other Operative Documents, or to enforce
any judgment obtained therefor.
Section 5. Representations, Warranties and Covenants.
(a) Warranties and Disclaimer of Warranties.
THE ENGINE WAS DELIVERED AND IS BEING LEASED
BY LESSOR TO LESSEE "AS IS" AND "WHERE IS". LESSEE EXPRESSLY AGREES THAT IT TOOK
THE ENGINE ON SUCH BASIS. LESSOR HAS NOT AND SHALL NOT BE DEEMED TO HAVE MADE,
BY VIRTUE OF HAVING LEASED THE ENGINE UNDER THIS LEASE OR BY HAVING ACQUIRED THE
ENGINE OR DONE OR FAILED TO DO ANY ACT OR ACQUIRED OR FAILED TO ACQUIRE ANY
STATUS UNDER OR IN RELATION TO THIS LEASE, AND NEITHER LESSOR NOR OWNER
PARTICIPANT HAS MADE, AND LESSOR FOR ITSELF AND OWNER PARTICIPANT, HEREBY
SPECIFICALLY DISCLAIMS, ANY GUARANTY, REPRESENTATION OR WARRANTY, EXPRESS OR
IMPLIED, AS TO THE TITLE (EXCEPT AS HEREINBELOW PROVIDED), AIRWORTHINESS, VALUE,
CONDITION, DESIGN, OPERATION, MERCHANTABILITY, OR FITNESS FOR USE FOR A
PARTICULAR OR ANY PURPOSE OF THE ENGINE, OR AS TO THE QUALITY OF THE MATERIAL OR
WORKMANSHIP OF THE ENGINE, THE ABSENCE THEREFROM OF LATENT OR OTHER DEFECTS
WHETHER OR NOT DISCOVERABLE, THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT,
TRADEMARK OR COPYRIGHT OR AS TO ANY OTHER GUARANTY, REPRESENTATION OR WARRANTY
WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE ENGINE, 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
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(OTHER THAN ITS OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT WHICH IS NOT
ATTRIBUTABLE TO ITS INTEREST IN THE ENGINE) 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 ENGINE OR BY ANY INADEQUACY THEREOF OR
DEFICIENCY OR DEFECT THEREIN OR BY ANY OTHER CIRCUMSTANCE IN CONNECTION
THEREWITH, (ii) THE USE, OPERATION OR PERFORMANCE OF THE ENGINE 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 ENGINE. THE WARRANTIES AND REPRESENTATIONS SET FORTH IN THIS SECTION
5(a)(i) ARE EXCLUSIVE AND IN LIEU OF ALL OTHER REPRESENTATIONS OR WARRANTIES
WHATSOEVER WITH RESPECT TO THE ENGINE, EXPRESS OR IMPLIED, AND LESSOR SHALL NOT
BE DEEMED TO HAVE MADE ANY OTHER IMPLIED WARRANTIES, OR GUARANTEES, INCLUDING
BUT NOT LIMITED TO, ANY IMPLIED WARRANTY OF MERCHANTABILITY, ANY IMPLIED
WARRANTY ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OF
TRADE, OR ANY IMPLIED WARRANTY OF FITNESS FOR A PARTICULAR OR ANY USE, EXCEPT
THAT: (A) Lessor represents and warrants that, (x) on the Delivery Date, Lessor
had, and on the Restatement Date Lessor has, the right to lease the Engine
hereunder and (y) on the Delivery Date the Engine was free of Head Lessor's
Liens and on the Restatement Date the Engine is free of Lessor's Liens and Head
Lessor's Liens and (B) Lessor covenants that shall not create, incur, assume or
suffer to exist any Lessor's Lien on the Engine.
(b) Representations and Warranties of Lessor. Lessor hereby
represents and warrants, as of the Restatement Date that its representations and
warranties set forth in Section 9(b) of the Refunding Agreement were true when
made and continue to be true and correct.
(c) No Amendments to Financing Documents. Lessor covenants and
agrees that Lessor will not, without the prior written consent of Lessee, amend,
modify, supplement or waive any provision of any Financing Document in such a
way as to materially increase Lessee's obligations hereunder or materially
reduce Lessee's rights hereunder.
The representations, warranties and covenants of Lessor under
Sections 5(a) and 5(b) and this Section 5(c) shall survive the execution and
delivery of this Lease and the delivery of the Engine and the Restatement Date.
(d) Suppliers' Warranties. So long as a Default or an Event of
Default has not occurred and is continuing
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and provided that the Engine 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 propulsion system performance guaranty, of the
Manufacturer or any subcontractor or vendor with respect thereto under the
Purchase Documents (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 Engine), to the extent that the same may be assigned
or otherwise made available to Lessee, and Lessor agrees to exert its reasonable
efforts, at Lessee's expense and upon its request, to enforce such rights as
Lessor may have with respect thereto for the benefit of Lessee; provided,
however, that upon and during the continuance of a Default or an Event of
Default, such assignment or other rights which are otherwise made available to
Lessee shall immediately and automatically without further action be deemed
cancelled and, to the extent of any remaining interest held by Lessee, deemed
reassigned to Lessor and all such rights shall revert to Lessor automatically
including all claims thereunder whether or not perfected and all amounts payable
shall be paid to and held by Lessor. In no event, however, shall Lessee have any
right to amend, supplement or otherwise modify the Purchase Agreement (by change
order or otherwise). In connection with the foregoing, Lessee agrees to be bound
by and comply with all applicable terms, conditions and limitations of the
provisions of the Purchase Agreement.
Section 6. Possession and Use.
(a) Possession.
(i) Lease, Assignment and Transfer. LESSEE
WILL NOT ASSIGN THIS LEASE OR ANY RIGHTS OR OBLIGATIONS HEREUNDER OR INTEREST
HEREIN (EXCEPT AS PROVIDED IN SECTION 8(e) BELOW) OR SUBLEASE, WET LEASE OR
OTHERWISE IN ANY MANNER TRANSFER, DELIVER OR RELINQUISH POSSESSION OR USE OF THE
ENGINE; 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 Engine or this Lease or the insurance
required to be maintained hereunder and Lessee is otherwise in full compliance
with Section 12, and so long
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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 the 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 Lessor has been given an
opportunity to review the interchange, maintenance, servicing, pooling
or similar arrangement, including but not limited to all agreements and
other documents relating thereto and has consented, which consent shall
not be unreasonably withheld, to the placement of the Engine into such
interchange, maintenance, servicing, pooling or similar arrangement and
provided, further that (A) no transfer of the registration of the
Engine shall be effected in connection therewith and (B) (i) no such
agreement or arrangement contemplates, results in or requires the
transfer of title to the Engine, and (ii) if Lessor's title to the
Engine shall be divested under any such agreement or arrangement, such
divestiture shall be deemed to be an Event of Loss with respect to the
Engine and not an Event of Default and Lessee shall comply with Section
11(a) hereof in respect thereof;
(2) deliver possession of the Engine to
the Manufacturer, or in accordance with the Maintenance Program to an
FAA certified repair station, for testing, service, storage, repair,
maintenance, inspection or overhaul work on the Engine or any part
thereof or for alterations or modifications in or additions to the
Engine to the extent required or permitted by the terms of Section 9
hereof;
(3) transfer possession of the Engine
to the United States of America or any instrumentality
or agency thereof pursuant to a sublease;
(4) (i) subject the Engine to the Civil
Reserve Air Fleet Program and transfer possession of the 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 Engine to the United States Government
pursuant to the Civil Reserve Air Fleet Program and provide Lessor with
the name and address of
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the Contracting Office Representative for the Military Airlift Command
of the United States Air Force to whom notices must be given;
(ii) subject the Engine 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
Untied 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 the Engine on an airframe
owned by Lessee free and clear of all Liens except (A) Permitted Liens
and Liens which apply only to engines (other than the Engine),
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 the engine installed thereon;
(6) install the 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 the 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 the Engine on any airframe subject to the Lien of such
mortgage, unless and until Lessee shall become the owner of the 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
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the Engine by reason of the 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 the 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 the Engine and Lessee shall comply with Section 11(a) hereof
in respect thereof, Lessor not intending hereby to waive any right or
interest it may have to or in the Engine under applicable law until
compliance by Lessee with such Section 11(a); or
(8) enter into a Wet Lease for the
aircraft on which the Engine is installed in the ordinary course of
Lessee's business for a period not extending beyond the Term; provided
that if Lessee shall enter into any Wet Lease for a period of more than
six months (including renewal options) Lessee shall provide to Lessor
written notice of such Wet Lease (such notice to be given at least ten
(10) Business Days prior to entering into such Wet Lease, if
practicable, but in any event promptly after entering into such Wet
Lease).
(9) sublease the Engine 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 the Engine which is deemed to have
been an Event of Loss) and any Wet Lease shall be expressly subject and
subordinate to all the terms of this Lease and the Lien of the
Indenture (if it has not been discharged);
(2) Lessee's obligations hereunder and
under the other Operative Documents shall continue in full force and
effect and Lessee shall remain primarily liable hereunder for the
performance of all of the terms of this Lease to the same extent as if
such
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transfer had not occurred and no provision of this Lease shall be
deemed a waiver of the Lessor's rights hereunder or under the other
Operative Documents or discharge nor diminish any of Lessee's
obligations hereunder or under the other Operative Documents;
(3) During the Restricted Use Period,
no Wet Lease, Permitted Sublease Permitted Sublease or other
relinquishment of possession of the 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 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
(5) No transfer, Wet Lease, Permitted
Sublease or other relinquishment of possession of the Engine shall in
any way discharge or diminish any of Lessee's obligations to Lessor or
any other Person hereunder for which obligations Lessee shall remain
primarily liable;
(6) The sublessee under any Permitted
Sublease, in its consent thereto, shall confirm that from and after the
occurrence and continuance of an Event of Default and, unless an Event
of Default specified in Section 17(e), (f) or (g) of this Lease has
occurred and is continuing, this Lease being deemed or declared in
default, Lessor (and, so long as the Lien of the Indenture shall not
have been discharged, Indenture Trustee) shall be entitled to enforce
directly and in its own name all representations, warranties,
indemnities, covenants and agreements under the applicable Permitted
Sublease; and
(7) Each Permitted Sublease shall (A)
provide that (I) the Engine may not be operated or used other than as
provided in this Lease and shall be maintained and operated as required
hereunder, (II) Lessor may avoid or terminate such sublease following
an Event of Default hereunder and (III) to the extent
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not accomplished by an assignment of the Permitted Sublease, upon the
occurrence of an Event of Default hereunder, Lessee's rights under such
Permitted Sublease shall automatically be deemed assigned to Lessor;
and (B) be a "net lease" in accordance with industry practice and shall
be comparable to, or more restrictive than, this Lease and under such
Permitted Sublease (except a sublease to the United States Government
or a Foreign Air Carrier after the Restricted Use Period), Lessee as
lessor under such Permitted Sublease, must be entitled to the same
benefits under 11 U.S.C. Section1110 as Lessor is entitled hereunder
and such Permitted Sublease shall contain provisions regarding such
Section1110 which are substantially the same as the related provisions
of this Lease. In addition, from and after the occurrence and
continuance of an Event of Default, all rent and other amounts payable
by the Permitted Sublessee under such Permitted Sublease shall be paid
directly to Indenture Trustee and, upon discharge of the Lien of the
Indenture, Lessor.
(iii) Permitted Subleases. With respect to
any sublease pursuant to Sections 6(a)(i)(3) or (4) (to the extent permitted by
Law) or Section 6(a)(i)(9) above:
(1) Lessee may sublease the Aircraft 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
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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 Engine 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 Engine by the government of the country of
such Permitted Sublessee's country of domicile) the laws of such
Permitted Sublessee's country of domicile require fair compensation by
the government of such jurisdiction payable in currency freely
convertible into dollars for the loss of use of the Engine 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 Engine, to the registry of the Engine 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.
Any Permitted Sublease shall expressly provide that the rights
of any Permitted Sublessee shall be expressly subject and subordinate to all the
terms of this
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Lease and to the Lien of the Indenture (if it has not been discharged),
including, without limitation, the covenants contained in Sections 6(c), 6(d)
and 6(e) hereof and Lessor's rights to repossession pursuant to Section 18
hereof and to avoid or terminate such Permitted Sublease upon such repossession,
and Lessee shall remain primarily liable hereunder for the performance of all of
the terms of this Lease to the same extent as if such Permitted Sublease had not
occurred. No Permitted Sublease shall in any way discharge or diminish any of
Lessee's obligations to Lessor hereunder or under the other Operative Documents
or constitute a waiver of Lessor's rights or remedies hereunder or under the
other Operative Documents, and such rights shall continue as if such Permitted
Sublease had not occurred. Any Permitted Sublease shall expressly prohibit any
further sub-sublease or assignment or any other similar transfer of the Engine
or rights thereto by the Permitted Sublessee. Lessee shall provide to the Owner
Participant and the Indenture Trustee (i) written notice of any Permitted
Sublease hereunder (such notice to be given not later than ten Business Days
prior to entering into any Permitted Sublease with any proposed Permitted
Sublessee), and (ii) a copy of each Permitted Sublease together with an
assignment, as security for Lessee's obligations hereunder, of such Permitted
Sublease, and if Lessor [or the Indenture Trustee] so requests, a consent
thereto from such Permitted Sublessee, substantially in the form of Exhibit F-3
hereto, within ten (10) Business Days following the effective date of such
Permitted Sublease.
(b) [Intentionally Left Blank]
(c) Lawful Insured Operations. Lessee will not permit
the Engine to be serviced, repaired, maintained, used or operated in violation
of any Law of any Governmental Entity having jurisdiction, or contrary to the
Manufacturers' operating manuals or instructions, or in violation of any
airworthiness certificate or limitation, license or registration issued by any
such authority or any manufacturer's specifications, service bulletins or other
requirements, including, without limitation, any manufacturer's requirements as
may be applicable to keep in full force and effect each material warranty,
product or performance guaranty, service life policy or the like, in each case,
to the extent made mandatory for Part 121 operators similarly situated to Lessee
or the Permitted Sublessee if the Aircraft or which the Engine is installed is
registered with the FAA, or the applicable laws of any other jurisdiction in
which the aircraft on which the Engine is installed may then be registered in
accordance with Section 11 of the Refunding Agreement, unless the validity
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38
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 Engine or impair the interest of Lessor therein or impair the
validity or priority of the Lien of the Indenture or result in a material risk
of criminal liability of Lessor, Owner Participant or Indenture Trustee and are
not inconsistent with any insurance required to be maintained by Lessee
hereunder. In the event that such Law or other requirement requires alteration
of the Engine 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 Engine, or suffer or permit the
Engine 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 Engine
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
Engine or suffer or permit the Engine 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, alterations, modifications, and testing (A) in accordance with good
airline industry practice and in such manner to provide complete data and
documentation necessary to substantiate certification, (B) as may be necessary
and required under, and in compliance with, applicable Law, including, without
limitation, FAA rules, regulations and other requirements, any other applicable
rules, regulations and requirements by any other applicable Governmental Entity,
the Maintenance Program, airworthiness directives having a compliance date
during the Term, and the service 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
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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 Engine, as shall be the case with
respect to similar engines owned by Lessee without discrimination and as if
Lessee owned the Engine and was going to use the Engine 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 Engine, as shall be the case with respect
to similar engines owned by such Permitted Sublessee without discrimination and
as if the Permitted Sublessee owned the Engine and was going to use the Engine
in continued regular customer service after the expiration of the Permitted
Sublease, 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 Engine, as
shall be the case with respect to similar engines owned by such Permitted
Sublessee without discrimination and as if the Permitted Sublessee owned the
Engine and was going to use the Engine 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 Engine 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 Engine in
as good a condition as when delivered to Lessee, ordinary wear and tear
excepted, and in good operating condition; (ii) keep the Engine or cause the
Engine to be kept in such condition as is necessary to maintain in good standing
the airworthiness of such Engine at all times under the Federal Aviation Act and
any other applicable law or the applicable laws of any other jurisdiction in
which the Engine may be registered in accordance with Section 11 of the
Refunding Agreement (provided that if any grounding is fleetwide in nature and
so long as Lessee or a Permitted Sublessee is contesting in good faith such
grounding, Lessee shall not be deemed in violation of this maintenance
covenant); and (iii) maintain in English all records, logs and other materials
required by, and in a manner acceptable to, the FAA or any other Governmental
Entity having jurisdiction and as provided under the Maintenance Program and
Lessee's record keeping policies.
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(e) Registration and Insignia. Lessee shall cause the
interests of Lessor and Indenture Trustee with respect to the Engine 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 recorded under
the Federal Aviation Act in the name of Lessor or any successor or assignee, so
long as the applicable parties to the Refunding Agreement cooperate with Lessee
with respect thereto as reasonably requested by Lessee. Lessee shall not
[register] the Engine or permit the Engine 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 first priority mortgage on the Engine 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 Engine to
another country. Lessee agrees at its expense to place such appropriate
insignia, plates and other identification ("Lease Identification") on the 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,
within five (5) Business Days of delivery of the Engine, Lessee has fastened or
caused to be fastened 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 Engine as a designation that would be reasonably interpreted
as a claim of ownership or Lien; provided, however, that Lessee may cause the
Engine to have placed thereon the customary colors and insignia of Lessee or any
Permitted Sublessee under a Permitted Sublease 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 Engine as Lessor, Owner
Participant or Indenture Trustee may reasonably request. Lessee shall permit, or
cause any sublessee to permit, any person designated by Lessor, Owner
Participant or Indenture Trustee on reasonable prior notice at reasonable times
to visit, inspect and survey the Engine, its condition, use, and
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operation, and the records maintained in connection therewith, and to visit and
inspect the properties and to discuss the affairs, finances and accounts of
Lessee with the principal officers of Lessee, provided, that so long as no
Default or Event of Default has occurred hereunder inspections shall be
endeavored to be performed during regularly scheduled maintenance checks of the
Engine. 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 Engine. Upon Lessor's, Owner Participant's or Indenture
Trustee's request, Lessee will notify such Person of the next scheduled
maintenance check for the Engine. Lessor, Owner Participant and Indenture
Trustee shall have no duty to make any such inspection and shall not incur any
liability or obligation by reason of not making any such inspection. Lessor's,
Owner Participant's or Indenture Trustee's failure to object to any condition or
procedure observed or observable in the course of an inspection hereunder shall
not be deemed to waive or modify any of the terms of this Lease with respect to
such condition or procedure.
Section 8. Additional Covenants of Lessee.
Lessee covenants and agrees that:
(a) Financial Information. Lessee agrees to furnish Lessor,
until the expiration or other termination of the Term of this Lease, the
following:
(i) within sixty (60) days following the end of each
quarter of Lessee's fiscal year, except the last such quarter of such year,
commencing after the Restatement Date, a copy of Lessee's Quarterly Report on
Form 10-Q as filed with the Securities and Exchange Commission or, if Lessee no
longer files such report, an unaudited consolidated balance sheet of Lessee and
its consolidated 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
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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 Engine, together with certificates of
insurance evidencing such insurance and the opinion provided for in Section
12(f);
(v) within fifteen (15) days following the end of
each calendar month throughout the Term, an Engine status report, substantially
in the form of Exhibit K hereto, including, without limitation, (A) a summation
of hours and cycles accumulated on the Engine 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 the 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
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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 Engine (or any Part) with a repair or
replacement cost (including labor charges) in excess of $1,000,000;
(viii) immediately after Lessee knows or should know of the
occurrence thereof, notice of a Default; and
(ix) from time to time such other information as Lessor may
reasonably request.
(b) Maintenance of Corporate Existence. Except as provided in
Section 8(e) below, during the term of this Lease, Lessee will preserve and
maintain its corporate existence and its rights, privileges, licenses and
franchises material to Lessee's ability to perform its obligations hereunder in
each applicable jurisdiction.
(c) Maintenance of Status. Lessee is, and shall remain so long
as it shall be the Lessee under this Lease, a "citizen of the United States" as
defined in Section 40102(a)(15) of the Federal Aviation Act, and Lessee is and
shall maintain its status at all times as a Certificated Air Carrier, including,
without limitation, its status so as to fall within the purview of 11 U.S.C.
Section 1110 or any analogous statute.
(d) Payment of Taxes. Lessee will pay or cause to be paid all
Taxes imposed upon it, or upon its income or profits, or upon any property
belonging to it, on or prior to the due date thereof, including any extensions
which have been duly obtained or granted; provided, however, that Lessee shall
not be required to pay any such Taxes, the payment of which is being diligently
contested in good faith and by appropriate proceedings with appropriate reserves
so 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 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
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or merge into or with any other corporation or other Person, and Lessee shall
not convey, transfer, lease or otherwise dispose of all or substantially all of
its property and other assets (in one or a series of transactions) to any
corporation or other Person, unless:
(i) the Person formed by or surviving such consolidation or
merger or the Person which acquires by conveyance, transfer, lease or other
disposition all or substantially all of such property and other assets or stock
(the "Successor Entity"): (A) shall be a corporation organized and existing
under the Laws of the United States of America or any State thereof or the
District of Columbia; (B) immediately after giving effect to such transaction,
shall be Lessee or shall have acquired or succeeded to all or substantially all
of such property and other assets (including, without limitation, all or
substantially all of Lessee's property and other assets) as an entirety and,
unless the Owner Participant otherwise agrees, shall have a Net Worth of not
less than Lessee's Net Worth immediately prior to such transaction; (C) shall be
a "citizen of the United States" of America as defined in Section 40102(a)(15)
of the Federal Aviation Act and a Certificated Air Carrier; and (D) shall
execute and deliver to Lessor and Indenture Trustee such recordations and
filings with any Governmental Entity and such other documents as Lessor
determines shall be reasonably necessary or advisable (including, without
limitation, to preserve and protect the interests of the Lessor and the priority
of the Lien of the Indenture (if it has not been discharged)) to evidence, or in
connection with, such consolidation, merger, sale, lease, transfer or other
disposition and an agreement, in form and substance reasonably satisfactory to
Lessor, which is a legal, valid, binding and enforceable assumption by such
Successor Entity of the due and punctual performance and observance of each
covenant and condition of this Lease and the other Operative Documents to which
Lessee is a party and agreement to be bound thereby, and an officer's
certificate to such effect, and to the effect that the other requirements of
this paragraph have been satisfied, and a legal opinion from 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.
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(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 Engine 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 Engine.
(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 Engine
only in commercial passenger operations and related cargo operations. Unless the
Owner Participant otherwise agrees, during the Restricted Use Period, Lessee
shall not use the Engine or permit the Engine to be used either "predominantly
outside the United States" within the meaning of Section 48(a)(2) of the Code,
or in such manner that the percentage of the income, deduction or credit
attributable to the Engine for federal income tax purposes during any taxable
year of the Lessor considered to be from foreign sources exceeds the Maximum
Foreign Use Percentage. Unless Owner Participant otherwise agrees, prior to
permitting the Engine 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
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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 engines (including, without limitation, the Engine) operated
by Lessee (or such Permitted Sublessee).
(i) Section 1110. Lessee acknowledges that Lessor would not
have entered into this Amended and Restated Engine 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
Engine under said Section 1110 and shall not in any way oppose such action by
Lessor unless Lessee shall have complied with the requirements of said Section
1110 to be fulfilled in order to entitle Lessee to continued use and possession
of the Engine hereunder. The acknowledgement, covenant and agreement contained
in this Section 8(i) shall continue in full force and effect and survive the
expiration or other termination of this Lease and are expressly made for the
benefit of and shall be enforceable by Lessor, Owner Participant and, if the
Lien of the Indenture has not been discharged, Indenture Trustee.
(j) Permits and Licenses. Lessee shall make or obtain, and
maintain in full force and effect, each and every consent, license, approval,
notice, registration, filing or other action with any Governmental Entity
necessary or advisable in connection with the operation or use of the Engine or
any Part or the execution, delivery or performance of this Lease or the
enforcement thereof against Lessee.
(k) Security Opinion; Annual Certificate. (i) During such
times that the [Engine and/or the Airframe on which it is installed] 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, if any, rendered
pursuant to this
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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, if any, inaccurate, an opinion of
counsel with respect to Lessee and the FAA reasonably
satisfactory to each addressee of such opinion (which
counsel may be internal legal counsel of Lessee and
FAA counsel) stating, in the opinion of such counsel,
that such action has been taken with respect to the
recording, filing, re-recording and refiling of (i)
the appropriate Operative Documents and any
supplements and amendments thereto and (ii) such
other appropriate documents, as is necessary to
maintain the perfection of Lessor's title to and/or
interest in and Indenture Trustee's security interest
in the Engine and the Operative Documents for the
next five (5) 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)(l), annually at
Lessor's or Indenture Trustee's request, a
certificate reasonably satisfactory to each
recipient thereof signed by a Responsible
Officer of Lessee certifying that no such
action is necessary to maintain the
perfection of such title and/or interest and
security interest.
(ii) During such times that the [Engine and/or the Airframe on
which it is installed] 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, if any, 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, if any, 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
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Trustee's security interest in the Engine and the Operative Documents for the
next five (5) years (or such other period of time as reflects the then-current
applicable Law), reciting the details of such actions.
(l) Letter of Credit. 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 demand at any
time, if a Default under Section 17(e), (f) or (g) or an Event of Default has
occurred, which amount may be applied, retained or utilized as provided in
clause (Y) below;
(ii) be maintained in full force and effect at all times until
ninety-one (91) days after the Expiration Date with a commercial bank acceptable
to Lessor, in its sole and absolute discretion, having a long-term unsecured
debt rating of "A" or better by Standard & Poor's Rating Group (if the issuing
bank's credit rating is lower than such rating, Lessee shall replace such Letter
of Credit issuer within five Business Days of any such reduction in rating with
a commercial bank meeting such rating requirement), provided, that a Letter of
Credit in substantially 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 transferrable 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 ninety-one (91) days following the date of such
expiration or other termination of this Lease so long as no Default or Event of
Default has occurred or is continuing hereunder or under any Other Lease, upon
payment in full of all amounts then due and owing to Owner Trustee and Owner
Participant under the Operative Documents.
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If an Event of Default has occurred or is continuing under
this Lease or an Event of Default has occurred or is continuing under any Other
Lease (as therein defined), in addition to any other rights and remedies Lessor
may have hereunder, under any Other Lease, any sublease and any and all other
remedies available at Law (including, without limitation, the Uniform Commercial
Code as adopted in New York) or equity and upon exercising its rights under the
Letter of Credit and any Other Letters of Credit, Lessor shall be entitled, in
each case as it may elect in its sole and absolute discretion, to (i) hold any
amounts drawn under the Letter of Credit or Other Letters of Credit as security
for Lessee's obligations under this Lease, the Other Leases or any sublease,
(ii) retain any amounts drawn under the Letter of Credit or Other Letters of
Credit for its own account or apply (including, without limitation, by way of
set off against) such drawn amounts, as it may elect to remedy any breach by
Lessee of this Lease or any other Operative Documents or Other Leases or (iii)
recompense Lessor, Owner Participant or any of their respective Affiliates for
any loss, damage, cost or expense or other Claim; provided, however, that in the
case of the use of such drawn amounts to make any payment of Rent, Lessee's
right of offset shall be limited to amounts distributable under the Indenture at
the time such payment is made to Lessor, Owner Participant or any of their
respective Affiliates (and shall not include any amounts distributable to
Indenture Trustee in its individual capacity or to the Note Holders); and
provided, further, however, that neither the amount so applied at any one time
nor the aggregate amount so applied at different times shall reduce the amount
of any installment or payment of Rent (whether upon the termination of the Lease
or otherwise) payable by Lessee to an amount insufficient to pay in full the
amounts 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. Lessee shall not be
entitled to any refund or credit with respect to any amounts so applied or
retained and Lessor's application or retention of any such amounts shall not
constitute a cure of the applicable Event of Default. Any amount retained shall
be considered the property of Lessor and Lessor may commingle such amount with
its general funds and Lessee, further, hereby absolutely and irrevocably
disclaims, to the maximum extent permitted by applicable Law, any interest
therein. Lessee shall not be entitled to any interest or other earnings on such
retained amount and such amount shall not be refundable.
On application, retention or other utilization of all or any
portion of the amounts drawn under the Letter of
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Credit in accordance with this Section 8(l), Lessee shall on demand reinstate
the amount of the Letter of Credit to the full [face amount] Lease Payment or
provide to Lessor an additional Letter of Credit meeting the requirements of
this Section 8(l), so that the Letter of Credit at all times equals the original
[face amount] provided for herein.
Section 9. Replacement of Parts; Alterations, Modifications
and Additions.
(a) Replacement of Parts. Lessee, at its own cost and expense,
will promptly replace, or cause to be replaced, all Parts which may from time to
time become worn out, lost, stolen, destroyed, seized, confiscated, damaged
beyond repair or permanently rendered unfit for use for any reason whatsoever.
In addition, in the ordinary course of maintenance, service, repair, overhaul or
testing, Lessee (or, if a Permitted Sublease is in effect, a Permitted
Sublessee) may at its own cost and expense remove any Parts, whether or not worn
out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or
permanently rendered unfit for use, provided that Lessee (or, if a Permitted
Sublease is in effect, a Permitted Sublessee) shall replace at its own cost and
expense such Parts as promptly as possible. All replacement Parts shall be free
and clear of all Liens (except for pooling arrangements to the extent permitted
by paragraph (c) of this Section and Permitted Liens), be in at least the
equivalent or better modification status and service bulletin accomplishment
status, be fully interchangeable as to form, fit and function and shall be in as
good operating condition as, and have a value, remaining useful life and utility
at least equal to, the Parts replaced (assuming such replaced parts were in the
condition and repair in which they were required to be maintained by the terms
hereof).
All Parts which are at any time removed from the Engine 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 Engine and which meet the requirements for
replacement Parts specified above. Immediately upon any replacement Part
becoming incorporated or installed in or attached to the Engine as above
provided, or as provided in Section 9(c), without further act, (i) title to the
removed Part shall thereupon vest in Lessee (or, if a Permitted Sublease is in
effect, a Permitted Sublessee), free and clear of all rights of Lessor,
Indenture Trustee, Owner Participant and Note
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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 Engine to the extent made mandatory for
Lessee (or a sublessee) in respect of the Engine 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 Engine 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 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 Engine or any Part below that immediately prior to such
alteration, modification or addition assuming that the Engine and Parts were
then of the value, utility and remaining useful life and in the condition and
airworthiness required by the terms of this Lease. Except as otherwise provided
herein, title to all Parts incorporated or installed in or attached or added to
the Engine 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 Engine, remove any Part of such Engine, 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 Engine 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
Engine pursuant to
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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 Engine without causing
any material damage thereto and without diminishing or impairing the value,
utility, remaining useful life, condition or airworthiness which the Engine
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 Engine (such a part is herein called a
"Removable Part"). Any Part not removed by Lessee as above provided prior to the
return of the Engine 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 Engine; 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 Engine, 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 Engine 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 Engine 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)
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00
xxxxxx, Xxxxxx (xx, 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 Engine.
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 Engine, or for any loss of revenue arising therefrom.
(c) Pooling. Any Part removed from the 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 that Lessor has been given an opportunity to review the pooling
arrangement, including but not limited to all agreements and other documents
relating thereto, and has consented, which consent shall not be unreasonably
withheld, to the placement of Parts into such pooling arrangement and provided
further that the Part replacing such removed Part shall be incorporated or
installed in or attached to the Engine 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 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 and transferring title to Lessor free and clear of all Liens
except Permitted Liens, whereupon such replacement Part shall become subject to
this Lease and the
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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 Engine 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. 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 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
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possession of the United States (each such governmental subdivision or taxing
authority referred to as a Taxing Authority"):
(i) upon or with respect to, based upon or measured
by (A) the 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, reregistration, deregistration, preparation, installation,
modification, repair, maintenance, replacement, transportation, storage,
transfer of title, return or other disposition of the Engine or any Part thereof
or interest therein; (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 modification or reissuance, or
(v) otherwise with respect to or in connection with
the transactions contemplated by the Operative Documents.
(b) Exclusions. The following Taxes shall not be
subject to indemnification under subsection (a) of this Section 10:
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(i) In the case of any Indemnitee, Taxes imposed on,
based on, or measured by, the gross or net income of such Indemnitee or Taxes in
lieu thereof (including minimum taxes, withholding taxes and taxes on or
measured by any item of tax preference) imposed by the federal government of the
United States of America (other than taxes in the nature of sales or use taxes,
license taxes, or property taxes).
(ii) In the case of any Indemnitee, Taxes imposed on,
based on, or measured by the 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 state, local or foreign government or
taxing authority (other than Taxes in the nature of sales Taxes, use Taxes,
license Taxes or property Taxes, and Covered Income Taxes described in
subsection (c) of this Section 10),
(iii) In the case of any Indemnitee, Taxes which
arise out of or are caused by any 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 or any
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 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 (A) an Event of Default and the
exercise by any Indemnitee of its remedies under this Lease or the Indenture, as
the case may be or (B) the substitution, pooling or interchange of the Engine or
any Part pursuant to the terms hereof; 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 on a
transferee of such Indemnitee of any interest in the Engine or any Part or any
interest in the Operative Documents to the extent the amount of any such Taxes
exceeds the amount of such Taxes that would have been imposed had there not been
any such transfer, unless such transfer results from action by or on behalf of
such Indemnitee taken
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in connection with any Event of Default that has occurred and is continuing or
upon the request of the Lessee,
(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(b) or
to a failure by Lessee to satisfy its obligations related to such return,
(vii) With respect to an Indemnitee other than the
Indenture Trustee or the Trust Indenture Estate, Taxes which arise out of or are
caused by (i) any act or omission or material misrepresentation of any
Indemnitee where such act or omission is not permitted by the Financing
Documents or the Operative Documents, or (ii) a failure by an Indemnitee to
fulfill its contest obligations, and, in the case of the Indenture Trustee and
the Trust Indenture Estate, Taxes imposed as a result of a breach of such
Indemnitee's representations, warranties, or covenants contained in Sections
9(a), 12 or 14(a) of the Refunding Agreement in any material respect, or from a
failure by such Indemnitee to fulfill its contest obligations, and
(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 Engine.
(c) Covered Income Tax. For purposes of clauses (i) and (ii)
of subsection (b) of this Section 10, a Covered Income Tax includes:
(i) in the case of an Indemnitee other than the
Indenture Trustee or the Trust Indenture Estate, any Tax imposed on, based on or
measured by gross or net income, receipts, capital or net worth, franchises,
excess profits or conduct of business (other than taxes which are in the nature
of sales or use taxes, license taxes or property taxes) imposed on an Indemnitee
(A) by any state or local Taxing Authority other than Taxes imposed by any such
state or local jurisdiction in which the Indemnitee has its principal place of
business or is subject to such Tax as a result of business transactions or other
presence unrelated to the transactions contemplated by the Financing Documents
or the Operative Documents, unless such Taxes are imposed by such jurisdiction
solely as a result of (x) the operation of the Engine in such jurisdiction or
(y) the transactions
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contemplated by the Operative Documents, to the extent such taxes are directly
attributable to such operation of the Engine or to such transactions, and (B) by
any foreign jurisdiction which are imposed as a result of Lessee's or
sublessee's activities in such foreign jurisdiction in connection with the
transactions contemplated by the Financing Documents or the Operative Documents,
provided, however, a Covered Income Tax also includes the incremental amount of
franchise taxes, taxes on doing business, capital stock taxes or taxes on, based
on or measured by gross or net income of the original Owner Participant
attributable to the Lease (excluding, however, any taxes that would be excluded
under any provision other than clauses (i) and (ii) of subsection (b) of this
Section 10) which are imposed by the "Home State" of a sublessee (the Home State
of a sublessee being the jurisdiction in which such sublessee maintains its
principal operations and maintenance center), or in the absence of a [Permitted
Sublessee], the jurisdiction where the Engine is stored, but only to the extent
such incremental taxes result from activities of Lessee [or Permitted Sublessee]
under the Lease in or with respect to the Home State or the jurisdiction where
the Engine is stored, and taking into account in calculating such incremental
taxes all state tax benefits and savings in the Home State resulting from
activities of Lessee [or Permitted Sublessee] under the Lease, disregarding for
such purpose any actual or constructive changes in ownership of the original
Owner Participant, provided, however, that Owner Participant and Lessee agree to
negotiate, in good faith, a cap to Lessee's liability for indemnity payments
attributable to taxes incurred in sublessee's Home State with respect to each
[Permitted Sublessee]; and
(ii) in the case of the Indenture Trustee or the
Trust Indenture Estate, any Tax based on or measured by gross or net income,
receipts, capital or net worth, franchises, excess profits or conduct of
business (including minimum taxes, withholding taxes, and taxes on or measured
by any item of tax preference) imposed on such Indemnitee by a Taxing Authority
in or of any foreign jurisdiction or a territory or possession of the United
States, other than any such Tax which would not have been imposed in the absence
of such Indemnitee's (including for purposes of this definition, all entities
with which such Indemnitee is combined, integrated, or consolidated in such
Taxing Authority's jurisdiction) engaging in business, maintaining an office or
other place of business or otherwise being located in such jurisdiction other
than merely by reason of such Indemnitee's participation in the transactions
contemplated by the Operative Documents.
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(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 Engine in
Owner Trustee or the interest of Owner Participant or its permitted assigns and
send a copy of such report or return to the applicable Indemnitee or will notify
the applicable Indemnitee of such requirement and make such report or return in
such manner as shall be reasonably satisfactory to such Indemnitee. If actual
notice is given by any taxing authority to an Indemnitee that a report or return
is required to be filed with respect to any such Taxes, the Indemnitee shall
promptly notify Lessee of such required report or return and Lessee shall either
file such report or return in the manner prescribed in the preceding sentence,
or shall use its best efforts to cause such report or return to be filed by the
appropriate entity. Each Indemnitee agrees to respond to any reasonable request
of Lessee for information not within Lessee's control and within the control of
and reasonably available to such Indemnitee with respect to the filing of any
such report or return, but Lessee agrees to pay any reasonable costs, fees,
disbursements or other charges of independent counsel or independent accountants
incurred in connection with such request.
(e) After-Tax Basis. Lessee further agrees that, with respect
to any payment or indemnity under this Section 10 and under Section 13 hereof,
such payment or indemnity shall include the net amount necessary to hold the
recipient of the payment or indemnity harmless on an after-tax basis from all
Taxes required to be paid or credited by such recipient with respect to such
payment or indemnity under the laws of any Taxing Authority; provided, however,
that in the case of Taxes imposed on the 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 and the highest corporate income tax rate in
the jurisdiction in which Owner Participant files a consolidated state income
tax return (currently Virginia).
(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
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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 (i) the actual reduction
in Taxes, if any, realized by such Indemnitee which is attributable to such
deduction or credit and (ii) the reduction calculated on the same basis as the
gross up in Section 10(e) hereof 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 (i) above would exceed (A) 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 (B) the portion of all prior payments computed
pursuant to (i) above by such Indemnitee to Lessee hereunder.
(g) Payment. If a claim is made against any Indemnitee for any
Taxes which may be subject to indemnification by Lessee hereunder and if such
Indemnitee has notice thereof, such Indemnitee shall promptly notify 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
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amount at the Interest Rate from the date of receipt by such Indemnitee of any
amount giving rise to such obligation to pay Lessee until the date of payment to
Lessee.
(h) Contest. In the event that an Indemnitee receives a
written notice of a claim which, if sustained, would require the payment of an
indemnity by Lessee pursuant to this Section 10, such Indemnitee shall promptly
notify Lessee of such claim and, if requested by Lessee in writing, shall, at
Lessee's sole expense, in good faith contest or shall permit Lessee, if desired
by Lessee and such contest may be conducted in whole or in part separately in
the name of Lessee without involving Taxes of such Indemnitee not indemnified
hereunder, to contest in the name of Lessee and/or the Indemnitee, the validity,
applicability or amount of such Taxes by (x) resisting payment thereof if
practicable, (y) not paying the same except under protest, if protest is
necessary and proper, and (z) if payments be made, using reasonable efforts to
obtain a refund thereof in appropriate administrative and judicial proceedings;
provided, however, the Lessee shall not be permitted to contest in the name of
such Indemnitee if such contest involves Taxes imposed against such Indemnitee
that are unrelated to the transactions contemplated by the Financing Documents
or the Operative Documents or Taxes based on or measured by the gross or net
income of the Indemnitee, and provided, that if the Indemnitee determines in
good faith that there is a material possibility of a material adverse impact
upon the Indemnitee with respect to such contest, such Indemnitee may retain or
reassert control of any contest that Lessee would otherwise be permitted to
contest; 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) Lessee shall have (a) furnished Indemnitee with a written
opinion of tax counsel selected by Indemnitee and reasonably acceptable to
Lessee to the effect that a reasonable basis (as defined in ABA Opinion 85-352)
exists to contest such claim (which opinion shall be obtained at Lessee's sole
cost and expense), provided however, that in the event 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, 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
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which the Indemnitee or the Lessee, as the case may be, had asserted in such
previous contest would prevail and, in the case of statutory changes-in-law, it
is as likely as not that the position will prevail, and (b) agreed to pay
Indemnitee for all reasonable costs and expenses which Indemnitee may incur in
contesting such claim (including without limitation, payment on demand of all
out-of-pocket costs, expenses, additions to tax because of underpayment of
estimated taxes, losses, legal and accounting and investigatory fees and
disbursements, penalties, and interests),
(ii) a threshold amount of $50,000 for any individual
claim is at issue,
(iii) there is no substantial risk or danger of the sale,
loss or forfeiture of the Engine,
(iv) Lessee shall have admitted its liability to
indemnify Owner Participant for such claim or set forth in writing why it is not
so liable,
(v) if such contest is to be initiated by the payment of,
and the claiming of a refund for, such Taxes, the Lessee shall have advanced to
such Indemnitee sufficient funds (on an interest free basis) to make such
payments,
(vi) no claim shall be appealed to the U.S. Supreme
Court,
(vii) no appeal of a trial court decision shall be
undertaken unless Lessee at its sole cost and expense shall have furnished
Indemnitee with a written opinion of tax counsel selected by Indemnitee and
reasonably acceptable to Lessee to the effect that Indemnitee is more likely
than not to prevail in such appeal, and
(viii) no Event of Default has occurred and is
continuing.
(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
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of any such Taxes; provided that such amount shall not be payable before such
time as Lessee shall have made all payments or indemnities then due to the
Lessor and the Indemnitee under the Lease and all other Operative Documents, and
provided further that no amount shall be payable during any period in which an
Event of Default under the Lease has occurred and is continuing unremedied
unless this Lease has terminated and Lessee has paid all amounts due the Lessor
thereunder.
(j) Diligence. Lessee shall not be deemed to be in default
under any of the above indemnification provisions of this Section 10 so long as
Lessee or the Indemnitee shall diligently prosecute such contest in accordance
with the provisions of this Section 10. Notwithstanding the foregoing, if a
claim is made against any Indemnitee for any Taxes which, if successful, would
result in the imposition of Taxes under circumstances which would require Lessee
to indemnify such Indemnitee, the Indemnitee shall be released from its
responsibility to contest such claim or part thereof, if it agrees in writing
not to seek indemnification from Lessee in respect of the claim, or such part
thereof to be contested. In the event an Indemnitee fails to contest, or refuses
to permit Lessee to contest, a claim or part thereof which the Indemnitee has
the obligation to contest or to permit Lessee to contest under this Section 10,
then Lessee shall not be obligated to indemnify the Indemnitee for such claim or
such part thereof.
(k) Affiliated Group. In the event that the Indemnitee is a
member of an affiliated group (within the meaning of Section 1504(a) of the
Code) which files a consolidated Federal income tax return, the term
"Indemnitee" shall mean and include any member of such affiliated group.
(l) Verification. At Lessee's request, the amount of any
indemnity payment by Lessee pursuant to this Section 10 or any payment by an
Indemnitee to Lessee pursuant to this Section 10 shall be verified and certified
by an independent public accounting firm selected by such Indemnitee and
reasonably satisfactory to Lessee. In order to enable such accountants to verify
the indemnity amount, such Indemnitee shall provide to the accountants (for
their own confidential use) information reasonably necessary for such
verification to which Lessor has access; provided, however, such information
shall not be disclosed to Lessee or any person other than such accountants. The
fee of such firm shall be payable by Lessee unless such verification shall
result in an adjustment in Lessee's favor exceeding 10% of the amount of the
indemnity payment.
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(m) Survival. All of the obligations and rights of Lessee
and Lessor under this Section 10 with respect to the Engine or any Part thereof
shall survive the assignment, or expiration or other termination, of the Lease
with respect to the Engine for a period of six (6) years from the occurrence of
such assignment, or expiration or termination, except that such obligations
shall survive the expiration of such six (6) year period with respect to any
claim asserted prior to the expiration of such six (6) year period but in either
case only to the extent such obligation or claim relates to events which
occurred or conditions which existed during the Term. Such obligations are
expressly undertaken by Lessee for the benefit of, and shall be enforceable by,
Lessor. The provisions of this Section 10(m) are subject to the exclusions of
Section 10(b)(viii).
Section 11. Loss, Damage and Requisition.
(a) Event of Loss with Respect to the Engine. Subject to
the other provisions of this Section 11, upon an Event of Loss with respect to
the Engine, 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(b) 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 Engine, title to a replacement Engine, such replacement
Engine (A) to be free and clear of all Liens (it being understood that, upon
such conveyance, such replacement Engine 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(b) hereof, at least equal
to, and to be in at least as good operating condition as, the Engine (assuming
the Engine was maintained
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in accordance with the requirements of this Agreement, whether or not it is in
fact so maintained), and (C) to be another IAE V2500 Engine of like model and
equivalent or better modification status delivered by the Manufacturer not
earlier than June 30, 1988 [or, at Lessee's option, an IAE engine of an improved
model] and in compliance with Section 11(b); provided that if Lessee shall not
perform its obligation to effect such replacement under this clause by the end
of the Replacement 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 the 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 and to
the Engine suffering the Event of Loss. For all purposes hereof, a replacement
Engine shall be deemed part of the property leased hereunder and shall be deemed
the "Engine" as defined herein. No Event of Loss resulting in replacement of the
Engine under this Section 11(a)(i) shall result in any reduction of Rent. In
addition to the foregoing, if Lessor so requests, as a condition to any
substitution of the Engine under this Lease, Lessee shall use its best efforts
to ensure that IAE acknowledges that such substitution shall not affect any
product support or other agreements between or among IAE, Parent, Lessor or
Lessee.
(ii) On a Stipulated Loss Value Date or before one
hundred twenty (120) days after the date of the Event of Loss (or, if earlier,
with respect to insurance proceeds, on the date on which insurance proceeds with
respect to the Event of Loss are received by the loss payee) Lessee shall pay to
Lessor in immediately available funds the sum of (A) the Stipulated Loss Value
of the Engine as shown on Exhibit A for such Stipulated Loss Value Date, plus
all Basic Rent or Renewal Rent, as the case may be, payable on each Basic Rent
Payment Date or Renewal Rent Payment Date, respectively, prior to the date of
payment of such Stipulated Loss Value which has not been paid when due, plus, if
such Stipulated Loss Value Date is also a Basic Rent Payment Date or a Renewal
Rent Payment Date, the amount of Basic Rent or Renewal Rent, as the case may be,
payable by Lessee on such Stipulated Loss Value Date, or, if such Stipulated
Loss Value Date occurs after the last day of the Term, plus an amount equal to
the average daily Basic Rent
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or Renewal Rent, as the case may be, in effect on the last day of the Term, for
each day from and including the last day of the Term to and excluding such
Stipulated Loss Value Date, and (B) all Supplemental Rent payable, whereupon (1)
the obligation of Lessee to pay Basic Rent or Renewal Rent, as the case may be,
hereunder with respect to the Engine 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 Engine 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 Engine, 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 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 and to the Engine suffering the Event of Loss.
(b) Conveyance of Replacement Engine. Upon an Event of
Loss with respect to the Engine, Lessee shall give Lessor prompt written notice
thereof and shall, at its own cost and expense, within sixty (60) days after
such occurrence 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 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 Owner Participant and Indenture Trustee, as
applicable, with respect to such replacement Engine; (ii) cause supplements, in
form and substance reasonably satisfactory to Owner Participant and Indenture
Trustee (if the Lien of the Indenture has not been discharged), subjecting such
replacement Engine to this Lease, the Indenture (if in effect) and the Trust
Agreement (if in effect), to be duly executed by Lessee, if applicable, and duly
filed for
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recordation pursuant to the Federal Aviation Act; (iii) furnish Lessor and
Indenture Trustee (if the Lien of the Indenture has not been discharged) with
such evidence of title to such Replacement Engine and of compliance with the
insurance provisions of Section 12 hereof with respect to such Replacement
Engine as Owner Participant or Indenture Trustee (if the Lien of the Indenture
has not been discharged) may reasonably request; (iv) furnish Owner Participant
and Indenture Trustee (if the Lien of the Indenture has not been discharged)
with an opinion of Lessee's counsel addressed to such parties and to Lessor to
the effect that title to such Replacement Engine has been duly conveyed to
Lessor free and clear of all Liens (except Permitted Liens) and it is duly
leased hereunder and subject to the Lien of the Indenture (if it has not been
discharged) and that Lessor, and Indenture Trustee as assignee of Lessor, is
entitled to the benefits of Section 1110 of Title 11 of the United States Code
with respect to such replacement engine to the same extent as with respect to
the Engine prior to such replacement; (v) furnish a certificate signed by a
Responsible Officer of Lessee certifying that, upon consummation of such
replacement, no Default or Event of Default will exist hereunder; (vi) furnish
such documents and evidence with respect to Lessee, Owner Participant or
Indenture Trustee (if the Lien of the Indenture has not been discharged), as
such parties or their respective counsel may reasonably request in order to
establish the consummation of the transactions contemplated by this Section
11(b), the taking of all corporate proceedings in connection therewith and
compliance with the conditions set forth in this Section 11(b), in each case in
form and substance satisfactory to such party; (vii) furnish such Uniform
Commercial Code financing statements covering the Replacement Engine as may be
requested by Lessor or Indenture Trustee (if the Lien of the Indenture has not
been discharged); (viii) furnish Owner Participant with an opinion of tax
counsel mutually satisfactory to Owner Participant and Lessee and which opinion
is reasonably satisfactory to Owner Participant to the effect that such
replacement will have no adverse tax consequences to Lessor and Owner
Participant; 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. No Event of Loss
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covered by this Section 11(b) shall result in any reduction in Rent.
(c) Application of Proceeds and Payments. Any payments
received at any time by Lessor or by Lessee from any insurer (including a
Governmental Entity providing an indemnity in lieu thereof) with respect to an
Event of Loss shall be applied in the manner specified in Sections 12(c) and (e)
hereof. Subject to Section 11(e) below, any payments (other than insurance or
such indemnity proceeds) received at any time by Lessor or Lessee from any
Governmental Entity or other Person with respect to an Event of Loss will be
applied as follows (after reimbursement of Lessor, Indenture Trustee and Owner
Participant for their reasonable out-of-pocket costs and expenses):
(i) unless clause (ii) below is applicable, so much of
such payments as shall not exceed the Stipulated Loss Value and other payments
required to be paid by Lessee pursuant to Section 11(a)(ii) of this Lease shall
be paid to Lessor in reduction of Lessee's obligation to pay such Stipulated
Loss Value and other payments if not already paid by Lessee, or, if already paid
by Lessee, shall (unless a Default or an Event of Default shall have occurred
and be continuing) be applied by Lessor to reimburse Lessee for its payment of
such Stipulated Loss Value and other payments and the balance, if any, of such
payment remaining thereafter shall be paid over to, or retained by, Lessor; or
(ii) if such payments are received as a result of an
Event of Loss with respect to the Engine which is being replaced pursuant to
Section 11(a)(i) and (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 (b) hereof, 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) Requisition for Use by Government with Respect to the
Engine. Subject to Section 11(e) below, in the event of the requisition for use
by a Governmental Entity of the Engine, Lessee will replace such Engine
hereunder by complying with the terms of Section 11(a) 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.
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(e) Application in Default. Any amount referred to in clause
(i) or (ii) of Section 11(c) or Section 11(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 Lessor, if at the time of such
payment or retention a Default or an Event of Default shall have occurred and be
continuing. In such case, all such amounts shall be paid to and held by
Indenture Trustee so long as the Lien of the Indenture shall not have been
discharged and thereafter by Lessor as security for the obligations of Lessee,
or, at the option of Lessor or the Indenture Trustee, as the case may be,
applied by Lessor or the Indenture Trustee, as the case may be, toward payment
of any of Lessee's obligations at the time due hereunder, as Lessor or the
Indenture Trustee, as the case may be, may elect, including, without limitation,
by reason of this Lease being declared or deemed in default. At such time as
there shall not be continuing any such Event of Default or Default, all such
amounts at the time held by Lessor or Indenture Trustee in excess of the amount,
if any, which Lessor or Indenture Trustee has elected for application as
provided above, shall be paid to Lessee.
Section 12. Insurance.
(a) Public Liability and Property Damage Insurance. Lessee
will carry and maintain in effect, or cause to be carried and maintained in
effect, at its own cost and expense, with Approved Insurers, comprehensive
aircraft and general public liability insurance (including, without limitation,
contractual liability, liability war risk and passenger legal liability
products, completed operation liability covering maintenance of aircraft, but
excluding manufacturer's product liability insurance), and property damage
insurance with respect to the Engine and any airframe on which the Engine is
installed (for purposes of this Section 12, any such airframe together with the
Engine which is installed thereon shall be referred to as, the "Aircraft"), in
amounts not less than three hundred fifty million dollars ($350,000,000),
combined single limit, per occurrence or such higher amount, and of such types
and terms, as are customarily carried by prudent Certificated Air Carriers,
similarly situated to Lessee, operating aircraft of similar size and similar
type 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
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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 or additional insured by any act or omission of
Lessee or any other insured or additional insured and shall insure Lessor, Owner
Participant, Indenture Trustee and the other Indemnitees and their respective
permitted assigns, regardless as to any insured or additional insured of any
breach or violation by Lessee or any other insured or additional insured of any
warranty, declaration or condition contained in such policies, (iii) shall
provide that if such insurance is cancelled for any reason whatsoever, or is
changed in any adverse way with respect to the interests of Lessor, Owner
Participant, 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 the
insurance standard for war/allied perils coverage), after notice to Lessor,
Owner Participant and 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 Engine 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
permitted assigns, with respect to the Engine. 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
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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 IAE
V2500 engines or similar type engines or similar-type 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 [and
spares] 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 Engine
and/or the Aircraft, as the case may be, and "all-risk" coverage including
transit insurance with respect to the Engine 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
[and spares] insurance reasonably acceptable to Lessor with Approved Insurers if
the Engine or the Aircraft is 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 Engine or the Aircraft to be operated or located outside of the United
States of America, other than in Canada or Mexico, Lessee shall notify Lessor
thereof. If Owner Participant or Indenture Trustee reasonably requests at any
time and if such insurance is then customarily being obtained by or for Persons
leasing or financing similarly sized aircraft operating on similar routes to
operators located in the jurisdiction of Lessee's or, if a Permitted Sublease is
in effect, the Permitted Sublessee's jurisdiction of domicile, Lessee shall pay
or reimburse Lessor for political risk, repossession, expropriation,
confiscation and similar insurance as Lessor may arrange or cause to be
arranged;
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provided that Indenture Trustee shall not be obligated to request such insurance
and shall not be liable for any failure to request such insurance. Anything
herein to the contrary notwithstanding, at all times while the Engine 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 Engine. 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 or similar engines 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
Engine, 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 Lessor, Owner
Participant, Indenture Trustee and to the other Indemnitees and their respective
permitted assigns, or if such insurance is allowed to lapse, such cancellation,
change or lapse shall not be effective as to Lessor, Owner Participant,
Indenture Trustee, the other Indemnitees or their respective permitted assigns,
until thirty (30) days (seven (7) days or such lesser period of time as is the
insurance industry standard for war/allied perils coverage) after written notice
to Lessor, Owner Participant and Indenture Trustee from such insurer or
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insurers, as the case may be, of such prospective cancellation, change or lapse,
(iv) shall include coverage for any country in or over which the Engine or 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 Engine,
(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 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.
In the event that separate policies are maintained to cover
"all-risk" ground and flight aircraft, hull and war risks and allied perils
insurance, Lessee shall include a 50/50 provisional claims settlement clause as
contained in the policies of insurance maintained by Lessee with respect
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to all other aircraft in Lessee's fleet, and a copy of the 50/50 provisional
claims settlement clause in effect on the Restatement Date shall be attached to
the insurance certificate issued on the Restatement Date.
(c) Application of Insurance Proceeds for an Event of Loss. It
is agreed that insurance payments which arise from insurance required to be
carried by Lessee pursuant to this Section 12 and received as the result of the
occurrence of an Event of Loss shall be applied as follows (after reimbursement
of Lessor, Owner Participant 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 and other payments
required to be paid by Lessee pursuant to Section 11(a)(ii) of this Lease shall
be paid to Indenture Trustee so long as the Lien of the Indenture has not been
discharged and thereafter to Lessor in reduction of Lessee's obligation to pay
such Stipulated Loss Value and any other payments if not already paid by Lessee,
or, if already paid by Lessee, shall (unless a Default or an Event of Default
shall have occurred and be continuing) be applied by Indenture Trustee or
Lessor, as the case may be, to reimburse Lessee for its payment of such
Stipulated Loss Value and other payments and the balance, if any, of such
payment remaining thereafter shall be paid over to, or retained by, Lessor; or
(ii) if such payments are received as a result of an
Event of Loss with respect to the Engine which is being replaced pursuant to
Section 11(a)(i) and 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 (b) hereof and of Section 15 hereof,
as the case may be, with respect to the Event of Loss for which such payments
are made and if no Default or Event of Default shall have occurred and be
continuing.
(d) Application of Insurance Proceeds for Other than an Event
of Loss. The insurance payments of any property damage loss to the 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
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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.
(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 Engine 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 Engine complies with
the
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terms of this Lease. Lessee will cause the Approved Broker to agree to advise
Lessor, Owner Participant and Indenture Trustee in writing at least thirty (30)
days (seven (7) days or such lesser period of time as is the insurance industry
standard for war/allied perils coverage) prior to the expiration, non-renewal,
termination or cancellation for any reason (including, without limitation,
failure to pay premium therefor) or material modification of any such insurance.
In the event Lessee shall fail to maintain insurance as herein
provided, Lessor, Owner Participant or Indenture Trustee at their respective
options, may provide such insurance and, in such event, Lessee shall, upon
demand, reimburse Lessor, as Supplemental Rent, or any other such other Person
who may have provided such insurance, for the cost thereof.
(g) Reinsurance. Lessee (or if a Permitted Sublease is in
effect, the Permitted Sublessee) may carry primary insurance outside of the
aviation insurance markets in New York, London or Paris, if the relevant primary
insurer shall have obtained reinsurance and such reinsurance (i) is on the same
terms as the original insurance and includes the provisions required by this
Agreement; (ii) provides in case of any bankruptcy, insolvency, liquidation,
dissolution or similar proceedings of or affecting the original insurer that the
reinsurers' liability will be to make such payment as would have fallen due
under the relevant policy of reinsurance if the original insurer had
(immediately before such bankruptcy, insolvency, liquidation, dissolution or
similar proceedings) discharged its obligations in full under the original
insurance policies in respect of which the then relevant policy of reinsurance
has been effected; and (iii) contains a "cut-through" clause in the following
form (or otherwise, satisfactory to Owner Participant): "The Reinsurers and the
Reinsured hereby mutually agree that in the event of any claim arising under the
reinsurances in respect of a total loss or other claim where as provided by the
Amended and Restated Engine Lease Agreement [GPA 1990 AWA-E1] dated 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
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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 Engine or 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 engines or 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 similar
engines as the engines in similar storage or grounding.
(i) Amounts Held. So long as no Default or Event of Default
has occurred and is continuing, any amount held by Lessor or Indenture Trustee,
as the case may be, until application by Lessor or Indenture Trustee, as the
case may be, pursuant to this Section 12 shall be invested as provided in
Section 21(h) hereof.
(j) After the Term. Lessee shall continue to maintain at its
expense the insurance described in Section 12(a) for three years after the
expiration or termination of the Basic Term or Renewal Term, if Lessee has
elected to renew the Lease in accordance with Section 20, covering each
Indemnitee as its interest may appear and specifically insuring the indemnity
contained in Section 13 to the extent of the coverage of such policy.
(k) Governmental Indemnity. In lieu of certain of the
insurance described in Section 12 above, Lessee may provide a United States
governmental indemnity, to the extent and subject to the terms and conditions
specified in Section 6(c).
Section 13. General Indemnity.
Lessee hereby agrees to indemnify, reimburse, defend and hold
harmless each Indemnitee on a net after-tax basis, as provided in Section 10(e),
within fifteen (15) days after demand from and against any and all claims
(whether or not based on strict liability), damages (whether
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direct, indirect, incidental, special or consequential), losses, charges, fees,
liabilities, obligations, demands, suits, judgments, actions and other legal
proceedings (whether civil or criminal), penalties, fines, other sanctions, and
any reasonable costs and expenses, in connection herewith, including, without
limitation, costs and expenses set forth in Section 21(j) hereof and reasonable
attorney's fees and expenses of whatever kind or nature (any and all of which
are hereafter referred to as "Claims") imposed on, or asserted by or against, or
suffered 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 Engine or any Part thereof or, 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 Engine 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 Engine), delivery, nondelivery, assignment, leasing, subleasing,
sub-subleasing, acceptance, rejection, possession, repossession, control,
return, financing, Liens (excluding Lessor's Liens, Head Lessor's Liens and
Lenders' Liens, but including the Lien of the Indenture), use, performance,
modification, maintenance, overhaul, operation, pooling, interchange, repair,
testing, sale, return or other disposition or application of the Engine 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 [or in the Operative Documents] 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 Engine 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 the Engine or such
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Part, or otherwise regardless of when such defect shall be discovered, whether
or not the Engine or such Part is at the time in the possession of Lessee, and
regardless of where the Engine or such 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 Engine, any Operative Document, any Purchase Document or any
Financing Document), (ii) the material breach of any express representation,
warranty or covenant made by such Indemnitee herein or in any other Operative
Document, or the Financing Documents (not resulting from a breach by Lessee of
any of its representations, warranties or covenants in the Operative Documents
or in the Financing Documents), (iii) any Taxes, whether or not Lessee is
required to indemnify such Taxes under Section 10 hereof or the Tax
Indemnification Agreement (it being understood that Section 10 hereof and the
Tax Indemnification Agreement exclusively provide for Lessee's liability with
respect to Taxes), (iv) any Claim which relates solely to events which occurred
prior to the Restatement Date (other than Claims related to the condition,
manufacture or design of the Engine), (v) an underlying act which occurs after
the Engine 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 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 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
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required to give effect to the provisions of the Operative Documents, the
Financing Documents or the Purchase Documents (provided, however, in no event
will Lessee be liable for any Claims resulting from, pertaining to or arising
from or related to Lessor's granting or creating a Lessor's Lien or the granting
or creation of a Head Lessor's Lien). Upon full payment of the indemnities
herein, Lessee shall be subrogated to all rights and remedies which such
Indemnitee may have against any third party against whom such Indemnitee has the
right to assert a Claim which arises under any action described in this Section
13 (except Claims under such Indemnitee's own insurance policies or under the
indemnification provisions of any of the Financing Documents).
Without limiting Lessee's liability under this Section 13,
Lessee hereby waives and releases any Claim now or hereafter existing against
any Indemnitee, on account of any Claims for or on account of or arising or in
any way connected with injury to or death of personnel of Lessee or loss or
damage to property of Lessee or the loss of use of any property which may result
from or arise in any manner out of or in relation to the importation,
exportation, ownership, purchase, registration, reregistration, deregistration
(except as to Owner Participant or Lessor as and to the extent such Indemnitee
is responsible under the Refunding Agreement for Claims related to such
deregistration), delivery, non-delivery, assignment, leasing, subleasing,
manufacture, acceptance, rejection, possession, return, financing, performance,
modification, maintenance, condition, use, operation, pooling, interchange,
repair, testing, sale, return or other disposition of the Engine or any Part
thereof, either in the air or on the ground, or which may be caused by any
defect in the Engine or such 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 the Engine or such 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 the Engine or such Part is at the time in the possession of
Lessee, and regardless of the location of the Engine 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 [solely] to its interest in
the Engine, any Operative Document, any Purchase Document or any Financing
Document), (ii) or the breach of any of its express representations, warranties
or covenants hereunder, under any other Operative
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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) any underlying act which occurs
after the Aircraft has been returned to Lessor in accordance with the terms
hereof and the Term of this Lease has been terminated or has expired and the
return is not related to an Event of Default, (vi) as to such Indemnitee, an
underlying act which occurs after a disposition or other transfer (voluntary or
involuntary) by such Indemnitee of all or any part of its interest in the
Aircraft, the Airframe, any Engine, or any Part, or in the Financing Documents,
the Purchase Documents or the Operative Documents (except as contemplated under
or pursuant to the Operative Documents, the Financing Documents or the Purchase
Documents and except as resulting from the exercise of its remedies during the
period while an Event of Default has occurred and is continuing and prior to the
time such Indemnitee has received payment of all amounts owing to it hereunder
or thereunder and except any Claim which is alleged or does relate to the period
prior to such disposition), (vii) or 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
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obligation to assume such defense to the extent required under the terms of the
applicable insurance policies so long as no Default or Event of Default has
occurred and is continuing. In the event Lessee shall so assume the defense of
any Claim, such Indemnitee shall cooperate with Lessee in defending such Claim,
but any expenses incurred by such Indemnitee in connection therewith shall
either be paid by Lessee to such Indemnitee in advance, or reasonable security
shall be provided by Lessee to such Indemnitee for such payments. Neither Lessee
nor an Indemnitee shall enter into a settlement or other compromise with respect
to any Claim which Lessee or such Indemnitee is defending hereunder in excess of
$100,000 without the prior written consent of the other, which consent shall not
be unreasonably withheld.
Each Indemnitee agrees to give Lessee prompt notice of any
Claims by a third party hereunder following such Indemnitee's actual knowledge
of such Claims by third parties, but the failure of such Indemnitee to give the
notice required by this Section 13 shall not constitute a release by Lessor or
such Indemnitee of, or reduce, any of the obligations or liabilities of Lessee
to such Indemnitee in respect of any such Claim or otherwise affect the
obligations or liabilities of Lessee to any Indemnitee in respect of any such
Claim, except to the extent that Lessee's ability to control the defense thereof
where Lessee has the right to control the defense thereof is materially
prejudiced as a result solely of such failure of such Indemnitee to give such
notice.
An Indemnitee or Lessee shall supply the other with such
information requested by the other as is reasonably necessary or advisable for
the other to control the defense of a Claim to the extent permitted by this
Section.
Nothing in this Section shall be construed as a guaranty by
Lessee of payments due pursuant to any indebtedness incurred with respect to the
purchase of the Engine or of the residual value of the Engine.
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).
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The indemnities contained in this Section 13 shall continue in
full force and effect notwithstanding the expiration or other termination of
this Lease or any of the other Operative Documents and are expressly made for
the benefit of and shall be enforceable by each Indemnitee.
Section 14. Liens.
Lessee shall not directly or indirectly create, incur, assume,
or suffer to exist any Lien on or with respect to the Engine or any Part
thereof, title thereto, or any interest of Lessor therein or in this Lease,
except (i) the respective rights of Lessor, Lessee, Owner Participant, Indenture
Trustee 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
Engine or any Part, 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 the Engine or any Part, 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 the Engine or any Part, 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
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Participant. Lessee shall promptly, at its own expense, take or cause to be
taken such action as may be necessary to duly discharge any Lien (except for the
Liens referred to in clauses (i) through (vii) of this Section 14) directly or
indirectly created, incurred, assumed, or suffered to exist by Lessee if the
same shall arise at any time.
Section 15. Protection of Title and Further
Assurances.
Forthwith upon the execution and delivery of this Lease, the
Indenture, the Trust Agreement, Lease Supplement, Indenture Supplement and Trust
Supplement, and any other supplement from time to time required by the terms
hereof, Lessee will cause this Lease, the Indenture, the Trust Agreement, Lease
Supplement, Indenture Supplement, Trust Supplement and such other supplements to
be duly filed and recorded, and maintained of record, in accordance with the
applicable laws of the government of registry of the Aircraft and the Engine. 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 Engine 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 Engine, 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 Engine 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
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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 Engine, as Lessor or Indenture Trustee may reasonably
request. Lessee shall also do or cause to be done, at its own expense (except it
shall be at Lessor's expense if in connection with a change in the ownership of
the Engine 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 Engine, 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 Engine 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 Engine 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 Engine and the recording or filing of
counterparts thereof in accordance with the laws of any appropriate
jurisdiction.
Section 16. Return of Engine and Records.
(a) Return. On any Return Occasion, Lessee, at its own expense
and risk, shall return the Engine to Lessor (or any Person designated by Lessor)
in at least the condition specified in this Section and Exhibit E hereto at any
Lessee system location in the continental United States
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selected by Lessor, as Lessor may elect, or such other location as Lessor and
Lessee may agree.
(b) Status Upon Return. Upon any Return Occasion hereunder,
the Engine shall be: (i) free and clear of all Liens, except for the Lien of the
Indenture, Head Lessor's Liens, Lessor's Liens and Lenders' Liens, (ii) duly
certified as an airworthy engine by the FAA under Part 121 of the regulations
promulgated under the Federal Aviation Act which are in effect on the date of
such Return Occasion; (iii) in full airworthy condition [for over water and
EROPS operation] according to the FAA standards required to allow the Engine to
be operated under, and in full compliance with, an applicable standard
certificate of airworthiness 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) in full compliance with the maintenance and operation
provisions of this Lease and all FAA airworthiness directives, mandatory service
bulletins and equivalent requirements which by their terms require compliance on
or before the last day of the Term (without regard to any deferral, waiver,
deviation or exemption granted by the FAA specifically to Lessee delaying such
compliance); (vi) in good and airworthy operating condition, and in the same
condition 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 (vii) 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) Substitute Engine. In the event any engine not owned by
Lessor shall be redelivered 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 Engine or, at Lessee'
option, an IAE engine of an improved model suitable for installation and use on
an 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 Engine, assuming the
Engine was in the condition and repair as required by the
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terms hereof immediately prior to such termination and shall confirm 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 such Engine 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.
(d) Records and Documents. Upon the return of the Engine,
Lessee shall deliver to Lessor (i) all logs, manuals and data, and inspection,
modification, overhaul and other records, related to the Engine, including,
without limitation, those required to be maintained with respect thereto under
applicable rules and regulations of the FAA, together with a detailed
description of the Maintenance Program then applied to the Engine and shall
provide Lessor and its designees access to the Maintenance Program which is
sufficient for a Person to maintain the Engine 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 Engine under the
Maintenance Program, in each case as Lessor may reasonably request, and all
documentation with respect to the Engine 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 Engine 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 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
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shall be all inclusive to the Engine, 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; such identification shall be
sufficient to allow traceability of such components and assemblies from the date
on which such components and assemblies were manufactured to the date on which
such identification is made, and to measure the service histories, accumulated
cycles or flight hours as applicable and remaining service lives in each engine,
including but not limited to the Engine, in which such components and assemblies
have been used. All components and assemblies which are identified on the
maintenance records by part numbers and serial numbers other than the
manufacturer's shall be provided with interchange or cross reference listing
necessary to establish complete traceability. All documentation, flight, and
maintenance records as specified by United States Federal Aviation Regulations
91.173, 91.174, and each paragraph of regulation 121.380 which normally
accompany the transfer of an engine which has been operating in regulated
commercial air service, shall be delivered to Lessor with the Engine. Any
documents or records required to be delivered hereunder shall be in English.
(e) Condition of Engine. Upon any Return Occasion, Lessee
shall return such Engine to Lessor in such condition that the Engine shall also
comply with each and every condition and requirement set forth elsewhere in this
Lease, including Exhibit E hereto.
(f) Final Inspection. Upon any Return Occasion, Lessee shall
make the Engine available to Lessor at the location where the 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 Engine and Parts structure and parts, at Lessee's
expense (excluding compensation to representatives of Lessor), in order to
verify that the condition of such Engine 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 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
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Final Inspection. The period allowed for the Final Inspection shall be the same
period during which such checks are being performed and shall have such duration
as to permit the opening of any areas of the Engine which are customarily
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 Engine and shall continue on consecutive days until all activity
required above to be conducted has been concluded. To the extent that any
portion of the Final Inspection extends beyond the expiration of the Term,
unless Lessor has terminated the Lease pursuant to Section 18(g) hereof, the
Term with respect to the Engine undergoing the Final Inspection shall be deemed
to have been automatically extended, and all obligations (including, without
limitation, the obligation to pay Rent hereunder) continued, on a daily basis
until the Final Inspection shall have been concluded and Lessee shall pay Rent
during any such extension in an amount equal to the average daily Basic Rent or
Renewal Rent, as the case may be, paid in respect of the last year of the Basic
Term or Renewal Term, as the case may be (and Stipulated Loss Value during such
extension shall equal the Stipulated Loss Value on the last day of the Basic
Term or Renewal Term, as the case may be); provided, however, that Lessee shall
not be required to pay Rent with respect to the Engine 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) Engine Records and Documents. In order to enable Lessor to
prepare for the Final Inspection of the Engine 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 Engine 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 Engine. Such Records and Documents
shall be sufficient to enable Lessor to trace the service history, accumulated
cycles or
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flight hours as applicable and remaining service life of the Engine, including
but not limited to a listing of each airframe on which the Engine has been
installed.
(h) Corrections and Subsequent Corrections. To the extent that
the 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 the Engine is brought up to the condition required by this
Section 16, including Exhibit E, or (ii) accept the return of the Engine 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 the Engine, at commercial rates then charged by the Person selected by
Lessor to perform such correction. Lessee's obligations to pay such Supplemental
Rent shall survive the Expiration Date or other termination of this Lease.
Nothing set forth in this paragraph shall constitute a limitation on Lessor's or
Owner Participant's ability to recover from Lessee any damages, expenses or
losses pursuant to Sections 13 or 18 hereof suffered as a result of Lessee's
failure to effect the return of the Engine at the time, in the place and in the
condition as specified in this Section 16 and Exhibit E hereto.
(i) [Intentionally Left Blank].
(j) Exportation of the Engine. 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 Engine from
the United States (including, without limitation, a valid and subsisting export
license).
(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 Engine which have not
been so installed together with appropriate instructions for installation. In
the event such uninstalled kits were purchased or manufactured by Lessee, then
Lessor shall be advised of such kits by Lessee and have a right of first refusal
to purchase such kits at Lessee's cost for a period of ninety (90) days after
return.
(l) Storage Upon Return. Upon any Return Occasion, Lessee
shall, at Lessor's request and at Lessee's risk and expense, in addition to
other storage referred to above, arrange for the parking, storage and insurance
of the
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Engine 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 Engine after the end
of the Term, by permitting prospective purchasers or lessees, except to the
extent prohibited by applicable Law, to inspect the Engine and the records
relating thereto to the extent it does not unreasonably interfere with the
operation or maintenance of the Engine 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 Owner Participant when due any Excepted Payments (as defined in the
Indenture) shall not constitute an Event of Default unless Lessor delivers
notice to Lessee; or
(b) Lessee shall fail to obtain and maintain in full force and
effect any insurance required under the provisions of Section 12 hereof or shall
operate the Engine 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 Engine; or
(c) Any representation or warranty made by Lessee herein or in
the Refunding Agreement or in the Pass Through
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Trust Agreement or in any certificate furnished by Lessee in connection herewith
or therewith is or was incorrect at the time made in any material respect and
such incorrectness shall not have been cured within thirty (30) days after the
receipt by Lessee of a written notice from Lessor or the Indenture Trustee
advising Lessee of the existence of such incorrectness; or
(d) Lessee shall fail to perform or observe any covenant,
condition, or agreement to be performed or observed by it pursuant to this
Lease, the Refunding Agreement and the Pass Through Trust 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 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
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(f) An order, judgment or decree is entered by any court
appointing, without the consent of Lessee, a custodian, receiver, trustee or
liquidator of Lessee, or of all or any material part of Lessee's property, or
Lessee's consolidated property, or all or any material part of Lessee's property
or Lessee's consolidated property is sequestered, and any such order, judgment
or decree of appointment or sequestration remains in effect, undismissed,
unstayed or unvacated for a period of ninety (90) days after the date of entry
thereof or at any time an order for relief is granted; or
(g) An involuntary petition against Lessee in a proceeding
under the Federal bankruptcy laws or other insolvency Laws (as now or hereafter
in effect) is filed and is not withdrawn or dismissed within ninety (90) days
thereafter or at any time an order for relief is granted in such proceeding, or
if, under the provisions of any Law providing for reorganization or winding-up
of corporations which may apply to Lessee, any court of competent jurisdiction
assumes jurisdiction over, or custody or control of, Lessee or of all or any
material part of Lessee's property, or Lessee's consolidated property and such
jurisdiction, custody or control remains in effect, unrelinquished, unstayed or
unterminated for a period of ninety (90) days or at any time an order for relief
is granted in such proceeding; or
(h) Lessee's cessation of business as a commercial passenger
Certificated Air Carrier or, except in either case in connection with a labor
dispute, announcement thereof or Lessee's suspension of its business as a
commercial passenger Certificated Air Carrier, or for any reason the
preponderant business activity of Lessee shall cease to be that of a commercial
passenger Certificated Air Carrier; or
(i) Lessee's loss or suspension of its United States air
carrier license or certificate under Part 121 of the Federal Aviation
Regulations or certificate under Section 41102(a) of the Federal Aviation Act.
Section 18. Remedies.
Upon the occurrence of any Event of Default and at any time
thereafter so long as the same shall be continuing, Lessor may, at its option,
declare by written notice to Lessee this Lease to be in default, provided,
however, that this Lease shall be deemed to be declared in default automatically
without the necessity of such written declaration upon the occurrence of any
Event of Xxxxxxx xxxxxxxxx
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xx xxxxxxxxx (x), (x) 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 the Engine as Lessor in its
sole discretion shall elect, to the extent permitted by, and subject to
compliance with any mandatory requirements of, applicable Law then in effect:
(a) Demand that Lessee, and Lessee shall upon the written
demand of Lessor and at Lessee's cost and expense, immediately return, and
Lessee hereby agrees that it shall return promptly, the Engine 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 Engine) 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 Engine not being in the condition
required by Section 16 and Exhibit E. Notwithstanding the foregoing, at Lessor's
option, Lessee shall be required thereafter to take such actions as would be
required by the provisions of this Lease if the Engine were being returned at
the end of the Term hereof with respect to the Engine. In addition, Lessor or
Lessor's agent, at its option and to the extent permitted by applicable Law, may
but shall not be obligated to enter upon the premises where the Engine is
located to take immediate possession of and, at Lessor's option, remove the same
by summary proceedings or otherwise, all without liability accruing to Lessor or
Lessor's agent for or by reason of such entry or taking of possession or removal
whether for the restoration of damage to property, or otherwise, caused by such
entry or taking[, except direct damages to the extent caused by Lessor's gross
negligence or willful misconduct.
(b) With or without taking possession thereof, sell or cause
to be sold, the Engine or any part thereof, or Lessor's interest therein, at
private or public sale, as Lessor in its sole discretion may determine, or
otherwise dispose of, hold, use, operate, or lease to others, or keep idle the
Engine, as Lessor in its sole discretion may determine, all free and clear of
any rights of Lessee or any Permitted Sublessee and except as hereinafter set
forth in this Section 18. Lessor may be the purchaser at any such sale.
(c) Whether or not Lessor shall have exercised, or shall
thereafter at any time exercise, any of its rights under paragraph (a) or
paragraph (b) above, Lessor, by
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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 Engine 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
Engine computed as of the date specified in such notice plus, if such date is a
Basic Rent Payment Date or a Renewal Rent Payment Date, an amount equal to the
Basic Rent or Renewal Rent, as the case may be, due on such date, over the fair
market sale value of the Engine as of the date specified in such notice or (ii)
an amount equal to the excess, if any, of the sum of the Stipulated Loss Value
for the Engine 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 Engine 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 Engine, or its interest therein, Lessor, in lieu of
exercising its rights under paragraph (c) above, may, if it shall so elect,
demand that Lessee pay Lessor, and Lessee shall pay to Lessor on such demand, as
liquidated damages for loss of bargain and not as a penalty (in lieu of the
Basic Rent or Renewal Rent, as the case may be, due for the period commencing
after the Stipulated Loss Value Date immediately prior to the date such sale
occurs), any unpaid Rent for the Engine due to and including the date of sale,
plus the amount by which the Stipulated Loss Value of the Engine, computed as of
such Stipulated Loss Value Date, exceeds the net proceeds of such sale (after
deducting all costs of such sale).
(e) [In lieu of exercising its rights under paragraphs (b),
(c) or (d) above, by notice to Lessee, Lessor may require Lessee to pay, on the
next Stipulated Loss Value Date, to Lessor, and Lessee hereby agrees that it
will so pay to Lessor, as liquidated damages for loss of a bargain and not as a
penalty (in lieu of the [Basic Rent or Renewal Rent, as the case may be, payable
in advance for the period on and after the Stipulated Loss Value Date) any
unpaid] Basic Rent or Renewal Rent, as the case may be,
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payable in advance and after the Stipulated Loss Value Date), any unpaid Basic
Rent or Renewal Rent, as the case may be, for such Engine due and unpaid for any
period prior to and including, and any Basic Rent or Renewal Rent payable on,
the Stipulated Loss Value Date, plus, an amount equal to the Stipulated Loss
Value for the Engine computed as of such Stipulated Loss Value Date; and upon
such payment of liquidated damages and the payment of all other Rent then due
hereunder and the discharge of the Lien of the Indenture pursuant to Section
[10.01] thereof, Lessor shall, at Lessee's expense, transfer, without recourse
or warranty (except as to the absence of Lessor's Liens and the Lien of the
Indenture), all right, title and interest of Lessor in and to the Engine to
Lessee or as it may direct and Lessor shall, at Lessee's expense, execute and
deliver such documents evidencing such transfer and take such further action as
Lessee shall reasonably request.
(f) In the event that Lessor, pursuant to paragraph (b) above,
shall have relet the or Engine under a long term lease, Lessor, in lieu of
exercising its rights under paragraph (c) above with respect to such or Engine,
may, if it shall so elect, demand that Lessee pay Lessor, and Lessee shall pay
Lessor on such demand, as liquidated damages for loss of bargain and not as a
penalty (in lieu of the Basic Rent or Renewal Rent, as the case may be, for such
Engine due after the time of reletting) any unpaid Rent for such Engine 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 Engine 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 the Engine would have expired but
for Lessee's default, discounted periodically (equal to installment frequency)
to present worth as of the date of the reletting at the rate of 8.50% per annum.
(g) Cancel, rescind and/or terminate this Lease by written
notice to Lessee which cancellation, rescission and/or termination shall be
effective upon dispatch, whereupon Lessee's right to possess and use the Engine
shall immediately cease, however, Lessee shall be and remain liable for damages
and losses suffered by Lessor and all other amounts payable by Lessee hereunder.
(h) Lessor may exercise any other right or remedy which may be
available to it under applicable laws, or may
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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 Engine in accordance
with the terms of Section 16 and Exhibit E hereof or in placing the Engine in
the condition and with airworthiness certification as required by such Section
and such Exhibit and costs and expenses related to the Lease, the Refunding
Agreement, the Indenture, the Pass Through Trust Agreements, the Intercreditor
Agreement or each Liquidity Facility. All liquidated damages payable pursuant to
the foregoing shall bear interest, which shall be payable on the date the
payment of such liquidated damages is due at a rate equal to the Interest Rate
from and including the date due to and excluding the date actually paid.
In effecting any repossession, Lessor, its representatives and
agents, to the extent permitted by applicable Law, (i) shall have the right to
enter upon any premises where it reasonably believes the Engine or Part to be
located, (ii) shall not be liable, in conversion or otherwise, for the taking of
any personal property of Lessee which is in or attached to the 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 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 Engine or
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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 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 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 Engine or Part to the condition required by Section 16 and
Exhibit E hereof and (ii) preparing the Engine or Part for sale or lease,
advertising the sale or lease of the Engine or Part and selling or releasing the
Engine or Part. Lessor is hereby authorized and instructed, at its option, to
make expenditures which Lessor considers advisable to repair and restore the
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 Engine or Part shall be
determined pursuant to the Appraisal Procedure.
At any sale of the Engine or Part pursuant to this Section ,
Owner Participant may bid for and purchase such property and Lessee agrees that
the amounts paid therefor shall be used in the computations contemplated herein
and Lessee shall remain liable for any deficiency.
No remedy referred to in this Section is intended to be
exclusive, but, to the extent permitted by Law, each shall be cumulative and in
addition to any other remedy referred to above or otherwise available to Lessor
at law or in equity; and, to the extent permitted by Law, the exercise 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
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Default. To the extent permitted by Law, Lessee hereby waives any right it may
have to require Lessor to mitigate damages in connection with the remedies
described in Sections 18(c), (d), (e) or (f) above.
Lessee hereby irrevocably appoints Lessor as Lessee's
attorney-in-fact (which appointment is coupled with an interest) to execute all
documents deemed necessary to release, terminate and void Lessee's interest in
the Engine 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 Engine,
provided that an Event of Default has occurred and is continuing and this Lease
has been declared or deemed to be in default.
The provisions of this Section 18 shall continue in full force
and effect and survive the expiration or other termination of this Lease and are
expressly made for the benefit of and shall be enforceable by Lessor, Owner
Participant and, if the Lien of the Indenture has not been discharged, Indenture
Trustee.
Section 19. Security for Obligations.
Security for Obligations. In order to secure the Equipment
Notes, Lessor has created, by the Indenture, a security interest in the Trust
Indenture Estate, including, without limitation, this Lease and all Rent and
other sums payable hereunder, except as provided in the Indenture and subject in
each case to Liens permitted hereunder. The Indenture provides, among other
things for the assignment by Lessor to Indenture Trustee of its right, title and
interest in, to and under this Lease, to the extent set forth in the Indenture,
for the creation of a first-mortgage lien on and perfected security interest in
all of Lessor's right, title and interest in and to the Engine 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
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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) (other than
Expected Rights) herein as and to the extent provided herein or in the Indenture
and any express reference to Indenture Trustee in any Section of this Lease
shall not give rise to any implication that Indenture Trustee may not exercise
the rights of Lessor in any other Section of this Lease as and to the extent
provided in the Indenture.
The provisions of this Lease and the Refunding Agreement which
require or permit action by, the payment of monies to, the consent or approval
of, the furnishing of any instrument or information to, or the performance of
any other obligation to, Indenture Trustee, shall not be effective, and the
Sections hereof containing such provisions shall be read as though there were no
such requirements or provisions and all moneys otherwise payable to Indenture
Trustee hereunder shall be paid to Lessor, after Lessee shall have received from
Indenture Trustee notice of discharge of the Lien of the Indenture.
Any payment or performance by Lessee to Indenture Trustee
shall constitute payment or performance of such obligation to Lessor by Lessee
under this Lease.
Any payment or performance of an obligation of Lessee under
this Lease by a Permitted Sublessee shall constitute payment or performance of
such obligation by Lessee.
Section 20. Renewal Option[, Purchase Option].
[(a)] 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
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Rent for the Renewal Term shall be the greater of (i) the "fair market rental
value" of the Engine 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, but in no event less than
the greater of 120% of the "fair market sales value" of the Engine as of the
first day of the Renewal Term as determined pursuant to the Appraisal Procedure
or the amount set forth on Exhibit A as of the end of the Basic Term), shall
remain in effect and be applicable during such Renewal Term, except that Lessee
shall pay to the Lessor, semi-annually in arrears as Renewal Rent on each
Renewal Rent Payment Date, the amount for such Renewal Term as determined in
accordance with clause (i) of this Section 20.
Section 21. Miscellaneous.
(a) Severability, Amendment, and Construction. Any provision
of this Lease which is prohibited or unenforceable in any jurisdiction shall, as
to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the 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,
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or interest in the Engine or any 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 Engine
for the purpose of the investment credit allowed by Section 38 of the 1954 Code
or any similar or successor statute. The headings in this Lease are for
convenience of reference only and shall not define or limit any of the terms or
provisions hereof.
(b) GOVERNING LAW. THIS LEASE HAS BEEN EXECUTED AND DELIVERED
IN THE STATE OF NEW YORK AND SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE INTERNAL SUBSTANTIVE LAWS OF THE STATE OF NEW YORK,
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY, AND PERFORMANCE WITHOUT REGARD
TO PROVISIONS GOVERNING CONFLICTS OF LAW WHICH MIGHT LEAD TO THE APPLICATION OF
THE LAWS OF ANOTHER JURISDICTION.
(c) Notices. All notices and instructions between Lessor and
Lessee required or permitted under the terms and provisions hereof shall be in
writing and shall be sent to Lessor or Lessee at their respective addresses set
forth in Exhibit C hereto (or such other addresses as the parties may designate
from time to time in writing). All notices, reports or other documents provided
to Lessor or Lessee shall be provided concurrently to Indenture Trustee (until
such time as the Lien of the Indenture is discharged) and to Owner Participant,
at such address as Owner Participant Indenture Trustee, respectively, may
designate from time to time. All notices and instructions 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
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Lessee's nonperformance of such obligation, nor an election or waiver by Lessor
or any remedy or right available to Lessor under or in relation to this Lease.
(e) Counterparts. To the extent, if any, that this Lease
constitutes chattel paper (as such term is defined in the Uniform Commercial
Code as in effect in any applicable jurisdiction), no security interest in this
Lease may be created through the transfer or possession of any counterpart other
than the original counterpart, which shall be identified as the counterpart
containing the receipt therefor executed by or on behalf of Indenture Trustee on
the signature page thereof. Subject to the preceding sentence, this Lease may be
executed in two or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument.
(f) Quiet Enjoyment. Lessor covenants that, so long as no
Event of Default shall have occurred and be continuing and this Lease has not
been declared or deemed to be in default, Lessor shall not take or cause to be
taken any action to interfere with the right of Lessee to the possession, use,
operation and quiet enjoyment of and other rights with respect to the Engine
hereunder, and all rents, revenues, profits and income therefrom, in accordance
with the terms of this Lease without interference from Lessor or any Person
lawfully claiming by or through it, provided that Lessor and Owner Participant
shall not be liable for any such interference by Indenture Trustee, Pass Through
Trustee, Note Holder or any other Person lawfully, claiming by or through them,
and provided further, that the foregoing shall not be deemed to have modified
the 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
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Investments, as directed by Lessee in accordance with the provisions of Section
3.07 of the Indenture if the Lien of the Indenture shall not have been
discharged and thereafter as provided below. There shall be promptly (but not
more frequently than monthly) remitted to Lessee any gain (including interest
received) realized as the result of any such investment (net of any fees,
commissions and other reasonable expenses, if any, incurred in connection with
such investment) unless a Default or an Event of Default shall have occurred and
be continuing. Lessee will promptly pay to Lessor or Indenture Trustee, as the
case may be, and hold Lessor or Indenture Trustee harmless from, on demand, the
amount of any loss realized as the result of any such investment (together with
any Taxes, fees, commission and other reasonable expenses, if any, incurred in
connection with such investment).
(i) Entire Agreement; Amendment. This Lease (including the
Exhibits hereto), any related letter agreements and the other Operative
Documents, the Financing Documents and the Purchase Documents (including the
Exhibits thereto) and all closing documents delivered in connection with any of
the foregoing embody the entire agreement and understanding among the parties
hereto with respect to the subject matter hereof. This Lease may be changed,
waived, discharged, amended, revised or terminated only by an instrument in
writing signed by the party against which enforcement is sought.
(j) Expenses. Without limiting Section 13 or 18, Lessee agrees
within fifteen (15) days after demand to pay or reimburse Lessor for all
reasonable out-of-pocket costs and expenses (including, without limitation,
legal and other professional fees and expenses) incurred or payable by Lessor in
connection with or related to (i) the fees and expenses of Owner Trustee and
Indenture Trustee, (ii) to the extent requested by or relating to acts or
omissions of Lessee or as otherwise provided herein or to give effect to the
provisions hereof, or the other Operative Documents, the Financing Documents or
the Purchase Documents, any future amendments, supplements or other
modifications hereof or thereof, or waivers or consents hereunder or thereunder,
and (iii) any Default or Event of Default or the enforcement of any of Lessor's
rights, remedies or privileges hereunder or at law or in equity, but not
Lessor's legal fees and expenses in connection with the negotiation and
execution of this Lease or the Financing Documents.
(k) Federal Bankruptcy Code. In the event Section 1110 of
Title 11 of the United States Code is amended, or if it is repealed and another
statute is enacted
-99-
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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 engines similarly situated
to Lessor.
(l) [Reserved].
(m) Submission to Jurisdiction; Service of Process; Waiver of
Forum Non Conveniens; Waiver of Jury Trial. Each of Lessee and Lessor hereby
irrevocably agrees that any suit, action or proceeding related to this Lease or
any of the other Operative Documents to which it is a party or the subject
matter hereof or thereof or any of the transactions contemplated hereby and
thereby may be instituted in, and submit for itself and its property to the
non-exclusive jurisdiction of, (i) the courts of the State of New York in New
York County and (ii) the United States District Court for the Southern District
of New York. Each of Lessee and Lessor represents and warrants that it is not
currently entitled to, and agrees that to the extent that Lessee or Lessor
hereinafter may acquire, any immunity (including, without limitation, sovereign
immunity) from jurisdiction of any court or from any legal process, it hereby,
to the extent permitted by Law, waives such immunity, and agrees not to assert,
by way of motion, as a defense, or otherwise, in any such suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction of
the above-named courts that it is immune from any legal process (whether through
service or notice, attachment prior to judgment, attachment in aid of execution,
execution or otherwise) with respect to itself or its property, that the suit,
action or proceeding is brought in an inconvenient forum, that the venue of the
suit, action or proceeding is improper, or that this Lease or any of the other
Operative Documents or the subject matter hereof or thereof or any of the
transactions contemplated hereby and thereby may not be enforced in or by such
courts. Each of Lessee and Lessor hereby generally consents to service of
process by registered mail, return receipt requested, addressed to it at its
address set forth in Exhibit C, or at such other office of Lessee or Lessor as
from time to time may be designated by Lessee or Lessor (as applicable) in
writing to Lessee or Lessor (as applicable), Owner Participant and Indenture
Trustee. Each of Lessee and Lessor hereby agrees that its submission to
jurisdiction and its designation of service of process by mail set forth above
is made for the express benefit of Lessor, Lessee, Owner Participant, Indenture
Trustee (as applicable), each Note Holder and their successors and assigns (as
-100-
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applicable). Final (after all appeals) judgment (the enforcement of which has
not been stayed) against either Lessee or Lessor obtained in any suit originally
brought in the court of the State of New York in New York County or in the
United States District of New York shall be conclusive, and, to the extent
permitted by applicable Law, may be enforced in other jurisdictions by suit on
the judgment, a certified or true copy of which shall be conclusive evidence of
the fact and of the amount of any indebtedness or liability of Lessee therein
described; provided that the plaintiff at its option may bring suit, or
institute other judicial proceedings, against Lessee or Lessor, as the case may
be, or any of their assets in the courts of any country or place where such
Person or such assets may be found. EACH OF LESSEE AND LESSOR HEREBY IRREVOCABLY
AND UNCONDITIONALLY WAIVES ANY AND ALL RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF THE OPERATIVE DOCUMENTS OR ANY
DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THE TRANSACTIONS
CONTEMPLATED THEREBY OR THE LESSOR/LESSEE RELATIONSHIP BEING NOTHING HEREIN
SHALL BE CONSTRUED AS CONVEYING TO LESSEE ANY RIGHT, TITLE, OR INTEREST IN
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 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
-101-
107
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 Engine 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 by this Amended and Restated Engine
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.
-102-
108
IN WITNESS WHEREOF, Lessor and Lessee, each pursuant to due
authority, have each caused this Lease to be executed by its duly authorized
officer as of the day and year first above written.
Lessor:
WILMINGTON TRUST COMPANY,
not in its individual
capacity, except as
otherwise expressly
provided herein, but solely
as Owner Trustee
By:
---------------------
Title:
Lessee:
AMERICA WEST AIRLINES, INC.
By:
---------------------
Title:
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The undersigned acknowledges receipt of this original
counterpart of the foregoing Lease on this ____ day of November, 1996 and
consent to the terms hereof.
FLEET NATIONAL BANK, not in its
individual capacity, but solely as
Indenture Trustee
By:
---------------------
Title:
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110
ANNEX I
to
Amended and Restated Engine Lease Agreement
DESCRIPTION OF ORIGINAL HEAD LEASE
111
AWA - E1 LEASE
EXHIBIT A
to
Amended and Restated Engine Lease Agreement
STIPULATED LOSS VALUES
The Stipulated Loss Value of the Engine 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.
$[---------------]
1/ 2/
-- --
------------------
1 Thereafter, during any (i) Renewal Term or (ii) extension or deemed extension
of the Term of the Lease due to the occurrence of an event described in clause
(iii) to the definition of "Supplemental Rent" in the Lease, "Stipulation Loss
Value Date" shall mean the __the day of each calendar month.
2 Thereafter, such amount as determined in accordance with Section 20(ii) of
the Lease.
A
112
EXHIBIT B
to
Amended and Restated Engine Lease Agreement
ENGINE RECORDS AND DOCUMENTS
One original (or, if greater, the number delivered to Lessee) of each of the
following:
A. ENGINE RECORDS
1. Last overhaul and repair documents
2. Airworthiness Directive Compliance Report
3. List of Life Limited parts as outlined in Chapter
5 of the Manufacturers Maintenance Manual, supported by full
traceability of each part to the OEM or its approved licensee
or a FAR 121 operator
4. Modification Status Report
B. COMPONENT RECORDS
1. Component and accessory 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
C. Any other documents, manuals, reports or related
information delivered with or related to the Engine,
updated as may be required to reflect the current
engine status.
B
113
EXHIBIT C
to
Amended and Restated Engine 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 and in arrears,
as set forth in Schedule I hereto.
Basic Rent
Payment Date: Each such date set forth as such on
Schedule I hereto.
Delivery
Location: Phoenix, Arizona.
Manufacturer: IAE
Maximum Foreign
Use Percentage: The Permitted Percentages as defined in
the Tax Indemnification Agreement.
Payment Location: So long as the Lien of the Indenture
shall remain in effect, Fleet National
Bank, 000 Xxxx Xxxxxx,Xxxxxxxx, XX
00000, Attn. Xxxxxx Xxxx, Corporate
Trust Administration, Ref. GPA-AWA, for
the account of Fleet National Bank
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
arrears].
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 Date).
If a Renewal Rent Payment Date shall
fall on a day which is not a Business
Day, any payment due on such Renewal
C
114
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
Engine is held by Wilmington Trust
Company, not in its individual capacity
but solely as Owner Trustee, as Lessor,
and which has leased this Engine 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
Fleet National 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
115
EXHIBIT D-1
to
Amended and Restated Engine Lease Agreement
LEASE SUPPLEMENT NO. 2
LEASE SUPPLEMENT NO. 2, 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 1990 AWA-E1] dated
___________, 1996, as amended, supplemented, or otherwise modified from time to
time) (together with its successors and assigns, "Lessor"), and AMERICA WEST
AIRLINES, INC., a Delaware corporation (together with its successors, "Lessee").
Lessor and Lessee have heretofore entered into that certain
Amended and Restated Engine Lease Agreement [GPA 1990 AWA-E1] dated as of
December 12, 1990, as 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 No. 1 dated December __, 1990
("Lease Supplement No. 1"). 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 engine described below (or confirming the
leasing of the engine 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 engine and parts 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 __, 1990, as evidenced by Lease
Supplement No. 1, and Lessee hereby confirms that it has accepted and leased
from Lessor under the Lease Agreement on December __, 1990, as evidenced by
Lease Supplement No. 1, that certain IAE V2500-A1 engine (which engine has 750
or more rated takeoff horsepower or the equivalent of such horsepower) and
shipping stand (which
D-1
116
shipping stand is comprised of a cradle designed to hold the engine which has a
suitable shock mounting system to allow the engine to be transported by truck or
other vehicle without damage) described in Schedule 1 hereto (collectively, the
"Delivered Engine").
2. The Delivery Date of the Delivered Engine is December __,
1990.
3. The Basic Term for the Delivered Engine shall commence on
the Delivery Date and shall end on the Expiration Date, which shall be December
31, 2008, unless the Lease is 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
Engine has been duly marked in accordance with the terms of Section 6(e) of the
Lease Agreement, and (ii) Lessee has accepted the Delivered Engine for all
purposes of Lease Supplement No. 1 and of the Lease Agreement, and the Delivered
Engine is (A) as far as Lessee reasonably ascertained, 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 Engine, 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. 2 to the same extent as if fully set
forth herein.
7. This Lease Supplement No. 2 may be executed in any number
of counterparts, each of such counterparts, except as provided in Section 21(e)
of the Lease Agreement, shall for all purposes be deemed to be an original, and
all such counterparts shall together constitute but one and the same Lease
Supplement. To the extent, if any, that this Lease Supplement constitutes
chattel paper (as such term is 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
117
IN WITNESS WHEREOF, Lessor and Lessee have each caused this
Lease Supplement No. 2 to be duly executed by its duly authorized officer on the
day and year first above written.
Lessor:
WILMINGTON TRUST COMPANY, not in
its individual capacity, except as
otherwise expressly provided
herein, but solely as Owner Trustee
By:
-------------------------------
Title:
Lessee:
AMERICA WEST AIRLINES, INC.
By:
-------------------------------
Title:
D-1
118
The undersigned acknowledges receipt of this original
counterpart of the foregoing Lease Supplement on this ___ day of November, 1996
and consents to the terms hereof.
FLEET NATIONAL BANK, not in
its individual capacity, but
solely as Indenture Trustee
By:
-------------------------------
Title:
X-0
000
XXXXXXXX 1
to
LEASE SUPPLEMENT XX. 0
XXX Xxxxxx
Xxxxx Xx. Xxxxxx Xx.
X0000-X0 V0025
Shipping Stand
Part No. Serial No.
111400 22359-6
D-1
120
EXHIBIT D-2
to
Amended and Restated Engine Lease Agreement
LETTER OF CREDIT
D-2
121
EXHIBIT E
to
Amended and Restated Engine 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 Engine, Lessee, at its own
cost and expense, shall return the Engine in compliance with the following:
(1) The Engine 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 Engine as if such Engine were owned and were to have been kept in continued
regular service by Lessee, without discrimination as to any other similar engine
owned or leased by Lessee.
(2) The Engine shall be clean by good commercial airline
standards as on the Delivery Date with only such modifications to the Engine as
are permitted under this Lease.
(3) The Engine shall have installed the full complement of
equipment, parts, components, accessories, and loose equipment subleased
hereunder or substituted therefor, each such item functioning in accordance with
its intended use and the Engine shall be placed on the Shipping Stand.
(4) Lessee, at Lessor's request, shall activate any systems
installed on the Engine previously deactivated by Lessee and shall assure each
such system is properly functioning for its intended use, unless such
deactivation was accomplished pursuant to a manufacturer's service bulletin.
(5) The Engine shall have just completed a full hot and cold
section baroscope and/or radiographic isotope inspection by Lessor (at Lessee's
cost and expense) of the low and high pressure compressors and turbine area, and
shall have just completed engine condition runs, and any discrepancies detected
shall be corrected at Lessee's cost and expense in accordance with the
Manufacturer's maintenance policies and procedures.
E
122
(6) Lessee's name, logo, and all other exterior markings shall
have been removed in a good and workmanlike manner from the Engine.
(7) The Engine shall have simultaneously with such return
completed a ground inspection, an operation ground check, engine performance
check and all other designated check or checks, in accordance with Lessee's
Maintenance Program such that all inspections and airworthiness directives
published prior to the most recent shop visit for the Engine having terminating
actions due within the next calendar year and all other actions as per the
Manufacturers' minimum recommendations in its then current maintenance planning
document due within the next calendar year shall have been accomplished
immediately prior to redelivery.
(8) The Engine shall not have any scheduled or unscheduled
open or deferred maintenance items or placards.
(9) The Engine shall not be on "Watch" and the Engine shall
comply with Lessee's Maintenance Program without waiver, deviations or
exceptions.
(10) The 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, [including but not limited to critical turbine parts such as
combustors and high pressure turbine airfoils, if then limited by Lessee's
Maintenance Program,] and the 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 the 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.
(11) 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
E
123
scheduled overhaul or replacement or 100% of the allowable time if less than
twelve months.
(12) The Engine shall have been stored and transported in
accordance with the Manufacturer's recommendations.
(13) For purposes of the Lease, including but not limited to
this Exhibit E, "serviceability", at the time of any Return Occasion, shall mean
that the Engine is in a condition which at a minimum satisfies the requirements
set forth in item 10 above.
E
124
EXHIBIT F-1
to
Amended and Restated Engine 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 Lessee's reasonable judgment and which are comparable to the above
airlines.
F-1
125
(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 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 Engine or any Part which was permitted under the Lease at the
time entered into, or preclude any subsequent renewal or extension of such
sublease or other agreement.
F-1
126
EXHIBIT F-2
to
Amended and Restated Engine Lease Agreement
PERMITTED FOREIGN SUBLESSEE DOMICILES
Argentina Malta
Australia Mexico
Austria Morocco
Bahamas Netherlands
Belgium New Zealand
Brazil Norway Paraguay
Canada People's Republic of China
Chile Philippines
Denmark Portugal
Egypt Republic of China (Taiwan)*
Finland Singapore
France South Africa
Germany South Korea
Greece Spain
Hong Kong Sweden
Hungary Switzerland
Iceland Thailand
India Tobago
Indonesia Trinidad
Ireland United Kingdom
Italy Uruguay
Japan Venezuela
Luxembourg
Malaysia
------------------------------------
* So long as on the date of entering into the proposed sublease such
country and the United States of America have diplomatic relations at
least as good as those in effect on the Restatement Date.
(a) Lessor may at any time, by written notice to Lessee,
propose the deletion of a particular country from the above list of Permitted
Foreign Sublessee Domiciles (as the same may be amended pursuant to this
provision) based upon Lessor's reasonable judgment. Lessee may at any time, by
written notice to Lessor, propose the addition of particular countries which are
comparable to the above countries to such list of Permitted Foreign Sublessee
Domiciles based upon Lessee's reasonable judgment.
F-2
127
(b) If Lessee has not objected in writing to the deletion of a
particular country proposed by Lessor as provided in paragraph (a) of this
Exhibit, or if Lessor has not objected in writing to the addition of a
particular country proposed by Lessee as provided in paragraph (a), in each case
within 30 days after receipt of notice of such proposal, the list of Permitted
Foreign Sublessee Domiciles shall be deemed amended without further act to
delete or add such country. If Lessee or Lessor delivers a timely objection in
writing to a proposal made by the other pursuant to paragraph (a), each party
agrees to consult promptly at the request of the other in a good-faith effort to
resolve the disagreement through negotiation.
(c) Notwithstanding any other provision hereof, and 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 Engine or any Part which was
permitted under the Lease at the time entered into, or preclude any subsequent
renewal or extension of such sublease or other agreement.
F-2
128
EXHIBIT F-3
to
Amended and Restated Engine Lease Agreement
PERMITTED SUBLESSEE ASSIGNMENT CONSENT
F-3
129
EXHIBIT G
to
Amended and Restated Engine Lease Agreement
OPINION OF LESSEE'S SPECIAL COUNSEL
G
130
EXHIBIT H
to
Amended and Restated Engine Lease Agreement
[Intentionally Left Blank]
H
131
EXHIBIT I
to
Amended and Restated Engine Lease Agreement
[Intentionally Left Blank]
I
132
EXHIBIT J
to
Amended and Restated Engine Lease Agreement
[Intentionally Left Blank]
J
133
EXHIBIT K
to
Amended and Restated Engine Lease Agreement
FORM OF ENGINE STATUS REPORT
DELIVERED ENGINE STATUS
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ENGINE SERIAL NO.
POSITION AS DELIVERED CURRENT LOCATION & STATUS TOTAL HOURS TOTAL CYCLES
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1
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2
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Spare 1
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Spare 2
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134
MONTHLY DATA RETURN DOCUMENT
THE FOLLOWING SECTION NEED ONLY BE REPORTED IF ONE OF THE FOLLOWING EVENTS HAS
TAKEN PLACE DURING THE FOREGOING MONTH.
ENGINE REMOVAL AND SHOP VISIT REPORT
OR REMOVED ENGINE
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SERIAL NUMBER DATE OF REMOVAL
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POSITION AIRFRAME TOTAL HOURS
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ENGINE TOTAL HOURS AIRFRAME TOTAL CYCLES AT REMOVAL
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ENGINE TOTAL CYCLES
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REASON FOR REMOVAL
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REPAIR AGENT LOCATION
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INTENDED WORKSCOPE
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MODS/ADs/SBs TO BE ACCOMPLISHED
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OR INSTALLED ENGINE
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SERIAL NUMBER TIME SINCE LAST SHOP VISIT
POSITION LAST SHOP VISIT DESCRIPTION
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ENGINE TOTAL HOURS NEXT LIMITER
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ENGINE TOTAL CYCLES TIME TO NEXT LIMITER
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