EXHIBIT 4.g
LEASE AGREEMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N660FE)
Dated as of September 1, 1995
Amended and Restated as of October 26, 1995
between
NBD BANK,
Not in its Individual Capacity,
but Solely as Owner Trustee,
AS LESSOR
and
FEDERAL EXPRESS CORPORATION,
AS LESSEE
COVERING ONE AIRBUS A300F4-605R AIRCRAFT
SERIAL NO. 759, REGISTRATION NO. N660FE
CERTAIN OF THE RIGHT, TITLE AND INTEREST IN AND TO THIS LEASE
AGREEMENT OF NBD BANK, AS OWNER TRUSTEE, HAS BEEN ASSIGNED TO AND IS SUBJECT
TO A LIEN AND SECURITY INTEREST IN FAVOR OF THE CHASE MANHATTAN BANK (NATIONAL
ASSOCIATION), AS INDENTURE TRUSTEE UNDER THE TRUST INDENTURE AND SECURITY
AGREEMENT (FEDERAL EXPRESS CORPORATION TRUST NO. N660FE) DATED AS OF SEPTEMBER
1, 1995, AS AMENDED AND RESTATED AS OF OCTOBER 26, 1995 FOR THE BENEFIT OF THE
HOLDERS OF THE CERTIFICATES REFERRED TO IN SUCH TRUST INDENTURE AND SECURITY
AGREEMENT. THIS LEASE AGREEMENT HAS BEEN EXECUTED IN SEVERAL COUNTERPARTS.
ONLY THE CHATTEL-PAPER "ORIGINAL" COUNTERPART CONTAINS THE RECEIPT THEREFOR
EXECUTED BY THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION), AS INDENTURE
TRUSTEE, ON THE SIGNATURE PAGES THEREOF.
TABLE OF CONTENTS
Page
Initial Recitals.............................................................1
ARTICLE 1
DEFINITIONS
ARTICLE 2
ACCEPTANCE UNDER THE LEASE
Section 2.01. Affirmation of Acceptance under the Lease................ 2
ARTICLE 3
RENT AND RENT ADJUSTMENT
Section 3.01. Owner Participant Payment................................ 2
Section 3.02. Interim Rent and Basic Rent.............................. 2
Section 3.03. Supplemental Rent........................................ 3
Section 3.04. Adjustments to Interim Rent, Basic Rent, Stipulated Loss
Value, Termination Value and the EBO Price After the
Delivery Date.......................................... 3
Section 3.05. Minimum Interim Rent and Basic Rent...................... 5
Section 3.06. Payment to Indenture Trustee............................. 6
Section 3.07. Costs and Expenses....................................... 6
ARTICLE 4
RENEWAL OPTIONS AND PURCHASE OPTIONS
Section 4.01. Renewal Options.......................................... 6
Section 4.02. Purchase Options......................................... 7
Section 4.03. Appraisal Procedures..................................... 9
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
Section 5.01. Disclaimer of Representations and Warranties............. 11
Section 5.02. No Modification of Other Warranties...................... 12
Section 5.03. Certain Agreements of the Lessee......................... 12
ARTICLE 6
LIENS
Section 6.01. Liens.................................................... 12
ARTICLE 7
AIRCRAFT REGISTRATION, MAINTENANCE AND OPERATION
Section 7.01. Registration, Maintenance and Operation.................. 14
Section 7.02. Possession and Permitted Transfer and Sublease........... 16
Section 7.03. Insignia................................................. 20
ARTICLE 8
REPLACEMENT AND POOLING OF PARTS
Section 8.01. Replacement of Parts..................................... 21
Section 8.02. Pooling of Parts......................................... 22
ARTICLE 9
ALTERATIONS, MODIFICATIONS AND ADDITIONS
Section 9.01. Required Alterations and Modifications................... 23
Section 9.02. Other Alterations and Modifications...................... 23
ARTICLE 10
VOLUNTARY TERMINATION
Section 10.01. Right of Termination Upon Obsolescence or Surplus....... 24
Section 10.02. Retention of Aircraft by the Lessor..................... 27
Section 10.03. Voluntary Termination as to Engines..................... 28
ARTICLE 11
LOSS, DESTRUCTION, REQUISITION
Section 11.01. Lessee's Election Rights................................ 28
Section 11.02. Payment of Stipulated Loss Value........................ 29
Section 11.03. Replacement of Airframe and Engines..................... 30
Section 11.04. Event of Loss with Respect to an Engine................. 33
Section 11.05. Application of Payments from the Government or Others... 35
Section 11.06. Requisition of an Airframe and the Installed Engines
for Use by Government................................. 36
Section 11.07. Requisition for Use by Government of an Engine Not
Installed on the Airframe............................. 37
Section 11.08. Application of Payments During Existence of Certain
Defaults.............................................. 37
ARTICLE 12
RETURN OF AIRCRAFT
Section 12.01. Return of Aircraft...................................... 37
Section 12.02. Return of Engines....................................... 38
Section 12.03. Return of Manuals....................................... 38
Section 12.04. Condition of Aircraft................................... 39
Section 12.05. Delayed Return of Aircraft.............................. 40
Section 12.06. Storage................................................. 41
Section 12.07. Special Markings........................................ 41
Section 12.08. Lessor's Option to Purchase Parts....................... 41
ARTICLE 13
INSURANCE
Section 13.01. Comprehensive Airline Liability and Property Damage
Liability Insurance................................... 42
Section 13.02. Insurance Against Loss or Damage to Aircraft and Engines 44
Section 13.03. Application of Insurance Proceeds....................... 46
Section 13.04. Reports................................................. 47
Section 13.05. Lessor's Insurance...................................... 48
Section 13.06. Self-Insurance.......................................... 48
ARTICLE 14
INSPECTION
Section 14.01. Right of Inspection..................................... 48
Section 14.02. No Obligation to Inspect................................ 49
ARTICLE 15
ASSIGNMENT
Section 15.01. Lessee's Right to Assign................................ 49
Section 15.02. Citizenship............................................. 49
ARTICLE 16
EVENTS OF DEFAULT
Section 16.01. Events of Default....................................... 50
ARTICLE 17
REMEDIES
Section 17.01. Remedies Upon Lessee's Default.......................... 52
Section 17.02. Cumulative Remedies..................................... 55
Section 17.03. Waiver.................................................. 55
Section 17.04. Lessor's Right to Perform for Lessee.................... 55
ARTICLE 18
COVENANT OF QUIET ENJOYMENT
Section 18.01. Quiet Enjoyment......................................... 56
ARTICLE 19
FURTHER ASSURANCES
Section 19.01. Further Assurances...................................... 56
ARTICLE 20
NET LEASE
Section 20.01. Nature of Lease......................................... 57
ARTICLE 21
SUCCESSOR LESSOR
Section 21.01. Successor Lessor........................................ 58
ARTICLE 22
SECURITY FOR LESSOR'S OBLIGATIONS
Section 22.01. Security for Lessor's Obligations to Holders............ 59
Section 22.02. Intentionally Left Blank................................ 59
Section 22.03. Consent of Lessee to Assignment of Lease as Security.... 59
ARTICLE 23
SECURITY FUNDS
Section 23.01. Investment of Security Funds............................ 59
ARTICLE 24
CONCERNING THE LESSOR
Section 24.01. Lessor's Entry Into Lease............................... 61
ARTICLE 25
NOTICES
Section 25.01. Notices................................................. 61
ARTICLE 26
MISCELLANEOUS
Section 26.01. Section Headings and Captions........................... 62
Section 26.02. References.............................................. 62
Section 26.03. APPLICABLE LAW.......................................... 62
Section 26.04. Severability............................................ 63
Section 26.05. No Oral Modification.................................... 63
Section 26.06. Agreement as Chattel Paper.............................. 63
Section 26.07. Counterparts............................................ 63
Section 26.08. Public Release of Information........................... 63
ARTICLE 27
TRUE LEASE
Section 27.01. Intent of the Parties................................... 64
Section 27.02. Section 1110 Compliance................................. 64
Section 27.03. Finance Lease........................................... 64
Schedule I Definitions
Schedule II Owner Participant Amount, Interim Rent and Basic Rent
Schedule III Stipulated Loss Values
Schedule IV Termination Values
Schedule V Purchase Option Schedule
Exhibit A Form of Lease Supplement
LEASE AGREEMENT
(Federal Express Corporation Trust No. N660FE)
Lease Agreement (Federal Express Corporation Trust No. N660FE) dated
as of September 1, 1995, as amended and restated as of October 26, 1995 (this
"Lease"), between NBD BANK, a Michigan banking corporation, not in its
individual capacity but solely as Owner Trustee under the Trust Agreement (as
defined in Article 1 below) (the "Lessor"), and FEDERAL EXPRESS CORPORATION, a
Delaware corporation (the "Lessee").
W I T N E S S E T H :
WHEREAS, the Lessor and the Lessee have heretofore entered into the
Original Lease dated as of September 1, 1995 as supplemented by Lease
Supplement No. 1 dated September 20, 1995.
WHEREAS, the Original Lease was recorded by the FAA on September 21,
1995 and assigned Conveyance Number 2A267706.
WHEREAS, pursuant to Article 15 of the Original Participation
Agreement, the Lessee, the Original Loan Participants, the Owner Participant,
the Indenture Trustee and the Lessor desire to refinance, in full, the
Original Loan Certificates on the Refunding Date; and
WHEREAS, in connection with such refinancing, the Lessee, the Owner
Participant, the Lessor and the Indenture Trustee desire that the Original
Lease be amended and restated in its entirety as provided herein;
NOW, THEREFORE, in consideration of the mutual promises herein, and
other good and valuable consideration, the receipt and adequacy of which is
hereby acknowledged by the parties, the Lessor and the Lessee agree that the
Original Lease be and the same is hereby amended and restated in its entirety
as follows:
ARTICLE 1
DEFINITIONS
Unless otherwise specifically provided herein, the capitalized terms
herein shall have the meanings given in Schedule II to the Participation
Agreement, a copy of which schedule is annexed hereto as Schedule I, for all
purposes of this Lease and shall be equally applicable to both the singular
and the plural forms of the terms defined.
ARTICLE 2
ACCEPTANCE UNDER THE LEASE
Section 2.01. Affirmation of Acceptance under the Lease. The Lessor,
having accepted delivery of the Aircraft from AVSA on the Delivery Date and
having simultaneously leased the Aircraft to the Lessee, and the Lessee,
having leased the Aircraft from the Lessor on the Delivery Date, as evidenced
by the execution by the Lessor and the Lessee of the initial Lease Supplement
(which is incorporated by reference herein), hereby affirm the terms and
conditions of the Original Lease as herein amended and restated and of the
Purchase Agreement Assignment. This Lease shall last for the Term, at all
times during which full legal title to the Aircraft shall remain vested with
the Lessor to the exclusion of the Lessee, notwithstanding the possession and
use thereof by the Lessee or any other Person.
ARTICLE 3
RENT AND RENT ADJUSTMENT
Section 3.01. Owner Participant Payment. The Owner Participant has
agreed, so long as no Event of Default has occurred and is continuing, to make
available to the Lessor funds sufficient to pay to the Indenture Trustee on
the Owner Participant Payment Date an amount equal to the amounts scheduled to
be paid on the Certificates on such date, all in accordance with the
provisions of Section 2.03 of the Participation Agreement. To the extent such
amount is not paid when due on the Owner Participant Payment Date, the Lessee
shall make an advance on behalf of the Owner Participant as described in
Section 3.05 hereof equal to such amount and, if not otherwise reimbursed, the
Lessee shall have the right to offset such amount pursuant to Section 3.05
hereof.
Section 3.02. Interim Rent and Basic Rent. No Rent (other than
Supplemental Rent, if any) shall be payable for the Preliminary Term. The
Lessee agrees to pay to the Lessor in immediately available funds on the
Commencement Date, Interim Rent in the amount set forth on Schedule II hereto
for such date, subject to increase or decrease as provided in Section 3.04
hereof, with such Interim Rent being allocated to the Interim Term. The
Lessee agrees to pay to the Lessor in immediately available funds, on each
Rent Payment Date, Basic Rent for the Aircraft during the Basic Term, each
payment being set forth on Schedule II hereto opposite the applicable Rent
Payment Date, subject to increase or decrease as provided in Sections 3.04 of
this Lease. Each payment of Interim Rent and Basic Rent shall be made in
arrears or in advance, all as stated in Schedule II hereto. Each payment of
Basic Rent designated as advance rent shall be allocated over the six-month
period beginning on the Rent Payment Date on which such advance rent payment is
scheduled to be made, and each installment of Basic Rent that is designated as
payable in arrears shall be accrued over the six-month period ending on and
including the day immediately preceding the Rent Payment Date on which such
arrears payment is scheduled to be made and each installment of Interim Rent
that is designated as payable in arrears shall be accrued over the Interim
Term.
Section 3.03. Supplemental Rent. The Lessee agrees to pay or cause
to be paid to the Lessor, or to whomever shall be entitled to it, any and all
Supplemental Rent promptly as the same shall become due. If the Lessee fails
to pay any Supplemental Rent when due, the Lessor shall have all rights,
powers and remedies provided for in this Lease, or by law or equity or
otherwise in the case of nonpayment of Interim Rent or Basic Rent. The Lessee
will also pay to the Person entitled thereto, on demand, as Supplemental Rent,
to the extent permitted by applicable law, an amount equal to interest at the
Past Due Rate on any part of any installment of Interim Rent or Basic Rent not
paid when due, for any period until the same shall be paid and on any payment
of Supplemental Rent not paid when due, for the period until the same shall be
paid. In addition, the Lessee will pay to the Lessor, as Supplemental Rent, in
the case of any prepayment of the Certificates pursuant to Section 6.02 of the
Indenture (except in the case of an Indenture Event of Default in the absence
of any Event of Default) or any prepayment or purchase of the Certificates
pursuant to clause (ii) of the first sentence of Section 8.02(a) of the
Indenture, an amount equal to the aggregate amount of any Make-Whole Premium
payable on such prepayment or purchase. The expiration or other termination
of the Lessee's obligation to pay Interim Rent or Basic Rent shall not limit
or otherwise modify the obligations of the Lessee with respect to the payment
of Supplemental Rent.
Section 3.04. Adjustments to Interim Rent, Basic Rent, Stipulated
Loss Value, Termination Value and the EBO Price after the Delivery Date. The
percentages for Interim Rent and Basic Rent referred to in Schedule II hereto
and for Stipulated Loss Value and Termination Value in Schedule III and
Schedule IV, respectively, hereto and the EBO Price shall be adjusted (upward
or downward) subject to the minimum value established by Section 3.05 hereof
and the definitions of Stipulated Loss Value and Termination Value to reflect
(i) any costs and expenses paid by the Lessor or the Owner Participant
pursuant to Section 10.01 of the Participation Agreement being greater or less
than the Estimated Expense Amount, (ii) any Refinancing pursuant to Section
15.01 of the Participation Agreement, (iii) any reoptimization pursuant to
Section 15.02 of the Participation Agreement, (iv) the Owner Participant
Amount being different from the amount set forth on Schedule II hereto or
paid, in whole or in part, on a date other than as set forth on Schedule II
hereto or (v) payments pursuant to Section 5 of the Tax Indemnity Agreement by
an adjustment of Interim Rent and Basic Rent. Each such adjustment pursuant
to clause (i), (ii), (iv) or (v) of the first sentence of this Section 3.04
shall maintain the Owner's Economic Return (and, while maintaining such
Return, minimize the aggregate Net Present Value of Rents to the Lessee) and
shall not cause the EBO Price to be less than the greater of (i) the
Termination Value as of such Rent Payment Date and (ii) the estimate set forth
in the Appraisal of the Fair Market Value of the Aircraft at the time of
exercise of the purchase option under Section 4.02(a)(F) hereof. In the event
of an adjustment pursuant to clause (iii) of the first sentence of this
Section 3.04, the Owner Participant may recalculate Interim Rent and Basic
Rent as set forth in Schedule II hereto in order to maintain the Owner's
Economic Return, recalculate the Owner Participant Amount set forth in
Schedule II hereto and, subject to the provisions of Section 15.02 of the
Participation Agreement, recalculate the schedule of principal repayments, the
Stipulated Loss Value percentages set forth in Schedule III hereto, the
Termination Value percentages set forth in Schedule IV hereto and the EBO
Price in a manner consistent with such recalculation of Interim Rent and Basic
Rent; provided that any such recalculations may not (A) increase the Net
Present Value of Rents to the Lessee, (B) increase as of any date the sum of
(1) the Net Present Value of Rents to the Lessee payable through such date
plus (2) the present value of the Stipulated Loss Value, the Termination Value
or the EBO Price as of such date, in each case discounted at the Debt Rate,
beyond such net present values prior to such adjustment, or (C) otherwise
result in any adverse impact (including tax consequences) to the Lessee for
which the Owner Participant has not agreed to indemnify the Lessee on terms
reasonably acceptable to the Lessee. The Owner Participant shall promptly
notify the Lessee and the Lessor and the Lessee shall promptly notify the
Owner Participant and the Lessor of the need for any such adjustment. As
promptly as feasible after any such notification, the Lessor shall furnish the
Lessee with a notice setting forth the amount of any such adjustments together
with the calculations upon which the adjustments are based; provided, however,
that the Lessor and the Owner Participant shall not be required to disclose to
the Lessee in such notice any confidential or proprietary information
(including methodology or assumptions) relating to such calculations. At the
request and, subject to the next succeeding sentence, expense of the Lessee,
the accuracy of the calculation of such adjustments and the consistency of the
calculation with the calculation used to determine Interim Rent, Basic Rent,
Stipulated Loss Values, Termination Values and the EBO Price shall be verified
first, by First Chicago Leasing Corporation or such other financial advisor
chosen by the Lessee and second, if such adjustments are still believed to be
in error and are not reconciled with the Owner Participant within fifteen
(15) Business Days, by a firm of nationally recognized independent public
accountants selected by the Lessee and reasonably acceptable to the Owner
Participant and, in order to enable them to verify such adjustments, the Owner
Participant shall make available to such accountants (for their own
confidential use and not to be disclosed to the Lessee or any other Person and
subject to the execution of a confidentiality agreement reasonably
satisfactory to the Owner Participant) all information reasonably necessary
for such verification, including the name of the lease analysis program used
by the Owner Participant to calculate such adjustments. The Lessee will pay
the reasonable costs and expenses of the verification process under this
Section 3.04 unless as a result of such verification process by the
independent public accountants Interim Rent or Basic Rent is adjusted and such
adjustment causes the Net Present Value of Rents to decline by 10 or more
basis points (in which event the Owner Participant shall pay the reasonable
costs and expenses of such verification process). The Lessor and the Lessee
shall execute and deliver an amendment to this Lease to reflect each
adjustment under this Section 3.04.
All adjustments under this Section 3.04 shall be in compliance with
the requirements of Revenue Procedure 75-21, 1975-1 C.B. 715 and Sections
4.02(5), 4.07(1), 4.07(2) and 4.08(1) of Revenue Procedure 75-28, 1975-1 C.B.
752 and shall be structured so as to not cause the Lease to be a "disqualified
leaseback or long-term agreement" within the meaning of Section 467 of the
Code.
Section 3.05. Minimum Interim Rent and Basic Rent. Notwithstanding
any other provisions of the Operative Agreements to the contrary, each
installment of Interim Rent and Basic Rent due on each Rent Payment Date and
not constituting an Excepted Payment shall be, under any and all
circumstances, an amount at least sufficient to pay in full any installment of
principal of and interest on the Certificates required to be paid pursuant to
the Certificates (other than amounts becoming due on account of the exercise
of remedies pursuant to Article 17 hereof) on such Rent Payment Date. To the
extent that the Owner Participant does not provide the Lessor with funds on
the Owner Participant Payment Date as referred to in Section 3.01 hereof if
and when due, the Lessee shall on such date advance on behalf of the Owner
Participant (and such advance shall be deemed a demand loan owing to the Lessee
from the Owner Participant bearing interest at the Past Due Rate plus 3%) an
amount equal to the funds not so provided. Unless otherwise reimbursed, the
Lessee shall, in addition to all other rights and remedies under applicable
law but subject to Article 20 hereof, be entitled to offset against any
payments due from the Lessee to the Lessor (including, without limitation,
Interim Rent, Basic Rent and payments due to the Lessor under Article 9 of the
Participation Agreement but not including the fees and expenses payable to NBD
or to the Owner Participant under the Tax Indemnity Agreement and Excepted
Payments), until the Lessee has fully offset such advance plus interest
thereon at the Past Due Rate plus 3% from the date of such advance until the
date of such reimbursement or offset; provided, however, that in the case of
any payment due from the Lessee which is distributable under the terms of the
Indenture, the Lessee's right of offset shall be limited to the amount
distributable to the Lessor thereunder (and shall not include any amounts
distributable to the Indenture Trustee in its individual capacity or to the
Holders of the Certificates or any of them). No such offset or aggregate
combined effect of separate offsets shall reduce the amount of any installment
of Interim Rent and Basic Rent, or the amount of Stipulated Loss Value,
Termination Value or EBO Price, to an amount insufficient to pay in full the
payments then required to be made on account of the principal of and interest
on the Certificates then Outstanding. If the Owner Participant is not
required to provide such funds under Section 3.01 hereof, the Lessee shall
make a payment of Supplemental Rent in an amount equal to the Owner
Participant Amount.
Section 3.06. Payment to Indenture Trustee. All Rent payable by the
Lessee to the Lessor shall be paid to the Lessor at its principal office at 000
Xxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000, Attention: Corporate Trust
Department, or as the Lessor may otherwise direct, by wire transfer of
immediately available funds in U.S. Dollars with sufficient information to
identify sources and applications of such funds no later than 10:30 a.m., New
York time on the due date of such payment; provided, however, that so long as
the Indenture shall not have been discharged the Lessor hereby directs, and
the Lessee agrees, that all Rent (other than Excepted Payments, which shall be
paid by the Lessee directly to the Person entitled thereto) (all without
set-off or counterclaim as and to the extent provided in Article 20 hereof) and
all amounts referred to in Section 3.01 hereof shall be paid directly to the
Indenture Trustee at its principal office at 4 Chase Xxxxxxxxx Xxxxxx, 0xx
Xxxxx, Xxxxxxxx, Xxx Xxxx 00000, Attention: Corporate Trust Administration, or
as the Indenture Trustee may otherwise direct within the United States by wire
transfer of immediately available funds in U.S. Dollars no later than 10:30
a.m., New York time, on the due date of such payment. In any case where a
scheduled Rent Payment Date shall not be a Business Day such Rent Payment Date
shall be adjourned to the next succeeding Business Day without interest
thereon for the period of such extension (provided that payment is made on
such next succeeding Business Day).
Section 3.07. Costs and Expenses. As between the Lessor and the
Lessee, all obligations under this Lease shall be done, performed and complied
with at the Lessee's cost and expense, whether or not so expressed, unless
otherwise expressly stated to the contrary.
ARTICLE 4
RENEWAL OPTIONS AND PURCHASE OPTIONS
Section 4.01. Renewal Options. (a) Election to Renew or Purchase.
The Lessee shall provide the Lessor with irrevocable written notice (the
"Preliminary Notice") not more than 360 days nor less than 180 days prior to
the end of the Basic Term or the preceding Renewal Term, as the case may be,
whether it will exercise its options either to renew this Lease pursuant to
this Section 4.01 or to purchase the Aircraft pursuant to Section 4.02(a)(B)
hereof or, if a further Renewal Term is available, pursuant to Section
4.02(a)(C) hereof. If, following delivery of a Preliminary Notice, the Lessee
shall not have notified the Lessor, at least 30 days prior to the end of the
Basic Term or a current Renewal Term, that it is renewing this Lease in
accordance with this Section 4.01, the Lessee's Preliminary Notice shall be
deemed an irrevocable notice of purchase satisfying Section 4.02(a)(B) hereof.
Provided that (i) no Event of Default shall have occurred and be continuing at
the time of renewal, (ii) this Lease has not otherwise expired or terminated,
and (iii) the Lessee shall have timely delivered the respective Preliminary
Notice, the Lessee may, by irrevocable written notice delivered to the Lessor
not less than 30 days prior to the end of the Basic Term, extend the Term for
a single Fixed Renewal Term of not less than one (1) nor more than three (3)
years commencing on the expiration of the Basic Term. The Lessee shall pay
the Fixed Renewal Rent during any Fixed Renewal Term.
In addition, provided that (i) no Event of Default shall have
occurred and be continuing at the time of renewal, (ii) this Lease has not
otherwise expired or terminated, and (iii) the Lessee shall have delivered the
Preliminary Notice, the Lessee may by written notice delivered to the Lessor
not less than 30 days prior to the end of the Basic Term or the preceding
Renewal Term, as the case may be, elect to extend the Term for a Renewal Term
or further Renewal Term commencing on the expiration of the Basic Term or the
preceding Renewal Term and ending one or more years thereafter for a rent
equal to the then-current Fair Market Rental of the Aircraft. The Lessee
shall pay the Fair Market Rental during any Fair Market Renewal Term.
(b) Terms and Conditions. Any such renewal shall be on the same
terms and conditions as provided herein, except that (i) rent for the Aircraft
due during any Renewal Term shall be payable semi-annually in arrears on the
dates corresponding to the Rent Payment Dates during such Renewal Term, and
(ii) during any Renewal Term, the Stipulated Loss Value for the Aircraft shall
as of any Stipulated Loss Value Determination Date during the Renewal Term be
equal to the higher of the Stipulated Loss Value and the Fair Market Value of
the Aircraft as of the end of the Basic Term or the next preceding Renewal
Term, if applicable.
Section 4.02.Purchase Options. (a) Election to Purchase. Provided
that (i) this Lease has not otherwise expired or terminated, (ii) either no
Event of Default shall have occurred and be continuing at the time of the
notice provided below or, if an Event of Default occurs after such notice has
been given, the Lessee shall have provided evidence reasonably satisfactory to
the Lessor and the Owner Participant of its financial ability to purchase the
Aircraft and (iii) the Lessee shall have previously given the Preliminary
Notice under Section 4.01(a) hereof (in the case of paragraph (B) below or, if
a further Renewal Term is available, paragraph (C) below) or the applicable
notice for each other paragraph below, as the case may be, the Lessee may:
(A) by written notice delivered to the Lessor and the Owner
Participant, not more than 180 nor less than 90 days prior to July 2, 2008
or January 2, 2012, as the case may be, elect to terminate the Lease and
purchase the Aircraft on July 2, 2008 or January 2, 2012, for, at the
Lessee's option, either (1) an amount in immediately available funds equal
to the greater of the Fair Market Value or the Termination Value on such
date or (2)(i) the assumption by the Lessee, pursuant to Section 7.11 of
the Participation Agreement, of all of the obligations of the Lessor under
the Indenture, the Certificates and Section 7.04 of the Participation
Agreement and (ii) the payment to the Lessor of an amount equal to the
excess of (A) the greater of the Fair Market Value or the Termination Value
on such date over (B) the unpaid principal of the Certificates plus accrued
interest as of such date. Such notice (which shall be revocable by the
Lessee upon written notice no later than the Business Day prior to the date
15 days prior to the applicable Rent Payment Date) shall either direct the
Lessor to prepay the Certificates in full on such Termination Date pursuant
to Section 6.02 of the Indenture or state that the Lessee shall exercise
its option to assume the Certificates pursuant to Section 7.11 of the
Participation Agreement and Section 2.12 of the Indenture; or
(B) by irrevocable written notice delivered to the Lessor and the
Owner Participant not more than 180 nor less than 30 days prior to the end
of the Basic Term (or deemed given pursuant to the second sentence of
Section 4.01(a) hereof), elect to purchase the Aircraft on the last day of
the Basic Term for an amount equal to the Fair Market Value thereof on such
date; or
(C) by irrevocable written notice delivered to the Lessor and the
Owner Participant not more than 180 days nor less than 30 days prior to the
end of any Renewal Term, elect to purchase the Aircraft on the last day of
such Renewal Term at a price equal to the Fair Market Value of the Aircraft
on such day; provided, however, that the Lessee shall have paid all Rent
due and payable under this Lease on or prior to the expiration of any such
Renewal Term; or
(D) exercise the purchase option in this Section 4.02(a)(D) which is
more particularly described in Schedule V hereto by reference to this
Section 4.02(a)(D) and which shall be in an amount not less than the
greater of the amount specified in Schedule V hereto and the Fair Market
Value;
(E) exercise the purchase option in this Section 4.02(a)(E) which is
more particularly described in Schedule V hereto by reference to this
Section 4.02(a)(E) and which shall be in an amount not less than the
greater of the amount specified in Schedule V hereto and the Fair Market
Value; or
(F) by irrevocable written notice delivered to the Lessor and the
Owner Participant not more than 180 nor less than 90 days prior to January
2, 2015, elect to terminate this Lease and purchase the Aircraft on such
Rent Payment Date for an amount specified in Ancillary Agreement I (the
"EBO Price") with respect to this Section 4.02(a)(F) which amount shall not
be less than the greater of (i) the Termination Value as of such Rent
Payment Date and (ii) the estimate set forth in the Appraisal of the Fair
Market Value at the time of exercise of the option under this Section
4.02(a)(F).
The Lessee shall give the Lessor, the Owner Participant and the
Indenture Trustee not more than 180 and not less than 90 days' prior written
notice of its election to purchase pursuant to Section 4.02(a)(D) or
4.02(a)(E) hereof. Such notice shall be revocable by the Lessee upon
written notice no later than the Business Day prior to the date 15 days prior
to the applicable Rent Payment Date and such notice shall either direct the
Lessor to prepay the Certificates in full on such Termination Date pursuant to
Section 6.02 of the Indenture or state that the Lessee shall exercise its
option to assume the Certificates pursuant to Section 7.11 of the
Participation Agreement and Section 2.12 of the Indenture. In the event that
the Lessee shall have given notice to purchase the Aircraft under Section
4.02(a)(A), 4.02(a)(D) or 4.02(a)(E) hereof and shall fail to
make payment (and, if applicable, assume the Certificates) on the applicable
Termination Date, the Lease shall continue and the Lessee shall pay to the
Owner Trustee any losses, costs and expenses of the Owner Participant incurred
in connection with such failure.
(b) Terms and Conditions. If the Lessee elects to purchase the
Aircraft pursuant to Section 4.02(a) hereof, the Lessee shall pay to the
Lessor on the applicable Termination Date by wire transfer of immediately
available funds any Basic Rent payable on such Termination Date (to the extent
payable in arrears but not to the extent payable in advance), the applicable
purchase price together with any other amounts past due hereunder or due on
the applicable Termination Date and all other Supplemental Rent then due under
this Lease including, without limitation, the aggregate amount of any
Make-Whole Premium applicable to any Certificate (if such purchase occurs
prior to the Premium Termination Date for such Certificate) and amounts due
under the Participation Agreement and the Tax Indemnity Agreement, whereupon
(and upon discharge of the Lien of the Indenture in accordance with Section
14.01 thereof) the Lessor will transfer to the Lessee, without recourse or
warranty (except as to the absence of Lessor's Liens), all of the Lessor's
right, title and interest in and to the Aircraft on an "as-is, where is"
basis. In connection with such transfer, the Lessee shall prepare and the
Lessor shall execute or arrange for the execution of a xxxx of sale evidencing
such transfer and such other documents as the Lessee may reasonably require.
In connection with any termination or proposed termination of this Lease, the
Lessee shall pay, at the time of the applicable Termination Date, all related
reasonable costs and expenses of the Owner Participant, the Lessor and the
Indenture Trustee.
Section 4.03. Appraisal Procedures. (a) Generally. Whenever Fair
Market Rental or Fair Market Value is required to be determined under this
Lease (unless otherwise provided herein), it shall be determined by the mutual
agreement of the Lessor and the Lessee in accordance with the definitions of
such terms in Article 1. If the Lessee and the Lessor cannot agree by the
date 60 days prior to the date for exercise of the applicable option, such
amount shall be determined by independent appraisal conducted by appraisers
selected pursuant to Section 4.03(b) hereof. At any time prior to final
determination of such amount pursuant to Section 4.03(b) hereof, the Lessee
and the Lessor shall be entitled to submit to the appraisers (and shall submit
to each other any bids submitted to the appraisers) any bids from unrelated
third parties, and such bids shall be accorded the weight such appraisers deem
appropriate. The Lessor and the Lessee shall each have an opportunity to
comment on any such bids after receiving a copy thereof.
(b) Selection. If an independent appraisal is required pursuant to
this Lease, the Lessor and the Lessee shall consult for the purpose of
appointing a mutually acceptable, qualified aircraft appraiser. If they are
unable to agree on a single appraiser within ten (10) Business Days, then the
independent appraisal shall be arrived at by mutual agreement of two
nationally recognized, independent aircraft appraisers, one chosen by the
Lessor and one chosen by the Lessee, or, if such appraisers cannot agree on
the amount of such appraisal, their appraisals shall be treated in the manner
described in Section 4.03(c) hereof with an appraisal arrived at by a third
nationally recognized, independent aircraft appraiser chosen by the mutual
consent of such two appraisers; provided, however, that if either party shall
fail to appoint an appraiser within fifteen (15) Business Days after a written
request to do so by the other party, or if such two appraisers cannot agree on
the amount of such appraisal and fail to appoint a third appraiser within
twenty (20) Business Days after the date of the appointment of the second of
such appraisers, then either party may initiate an arbitration proceeding with
the American Arbitration Association for purposes of appointing a nationally
recognized, independent aircraft appraiser.
(c) Valuation. If one appraiser is chosen, the value determined by
such appraiser shall be final and binding upon the Lessor and the Lessee. If
two appraisers are chosen, one appraiser by the Lessor and one by the Lessee,
and such appraisers agree on the value, such value shall be final and binding
upon the Lessor and the Lessee. If three appraisers shall be appointed and
the difference between the determination which is farther from the middle
determination is more than 125% of the difference between the middle
determination and the third determination, then such further determination
shall be excluded, the remaining two determinations shall be averaged, and
such average shall be final and binding upon the Lessor and the Lessee.
Otherwise, the average of all three determinations shall be final and binding
upon the Lessor and the Lessee.
(d) Rules of Appraisal. Any appraisal pursuant to this Section 4.03
shall be conducted in accordance with the commercial rules of the American
Arbitration Association as then in effect, as modified by this Section 4.03
and the definitions of Fair Market Value and Fair Market Rental. All expenses
of any independent appraisal shall be borne by the Lessee, except that each of
the Lessee and the Owner Participant (in the case of the Lessor) shall bear
any fees, costs and expenses of its respective attorneys in connection with
such appraisal except in the case of an Event of Default or in the case of a
revocation by the Lessee of its election to terminate the Lease under Section
4.02 hereof, in which case such expenses shall be borne by the Lessee.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
Section 5.01. Disclaimer of Representations and Warranties. THE
LESSEE ACKNOWLEDGES AND AGREES THAT (i) THE AIRFRAME AND EACH ENGINE IS OF
A SIZE, DESIGN, AND CAPACITY AND MANUFACTURE SELECTED BY AND ACCEPTABLE TO
THE LESSEE, (ii) THE LESSEE IS SATISFIED THAT THE AIRFRAME AND EACH ENGINE
IS SUITABLE FOR ITS PURPOSES, (iii) NEITHER THE OWNER PARTICIPANT NOR THE
LESSOR IS A MANUFACTURER OR A DEALER IN PROPERTY OF SUCH KIND AND (iv) THE
AIRFRAME AND EACH ENGINE IS LEASED HEREUNDER SUBJECT TO ALL APPLICABLE LAWS
AND GOVERNMENTAL REGULATIONS, NOW IN EFFECT OR HEREAFTER ADOPTED, WITHOUT
REPRESENTATION OR WARRANTY OF ANY KIND BY THE LESSOR (IN ITS INDIVIDUAL
CAPACITY OR AS OWNER TRUSTEE), THE INDENTURE TRUSTEE, THE OWNER PARTICIPANT
OR ANY HOLDER. THE LESSOR LEASES THE AIRFRAME AND EACH ENGINE, AS-IS,
WHERE-IS, AND NEITHER THE LESSOR (IN ITS INDIVIDUAL CAPACITY OR AS OWNER
TRUSTEE), THE INDENTURE TRUSTEE, THE OWNER PARTICIPANT NOR ANY HOLDER
MAKES, HAS MADE OR SHALL BE DEEMED TO HAVE MADE, AND EACH HAS AND WILL HAVE
BEEN DEEMED TO HAVE EXPRESSLY DISCLAIMED, ANY WARRANTY OR REPRESENTATION
EITHER EXPRESS OR IMPLIED, AS TO (A) THE TITLE, AIRWORTHINESS,
WORKMANSHIP, CONDITION, VALUE, FITNESS FOR ANY PARTICULAR USE OR PURPOSE,
DESIGN, OPERATION OR MERCHANTABILITY OF THE AIRFRAME, EACH ENGINE OR ANY
PART THEREOF, (B) THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT
DISCOVERABLE, (C) THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK
OR COPYRIGHT, (D) THE ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN
TORT, (E) THE LESSOR'S TITLE THERETO, (F) THE LESSEE'S OR ANY SUBLESSEE'S
RIGHT TO THE QUIET ENJOYMENT THEREOF (EXCEPT AS PROVIDED IN ARTICLE 18
HEREOF) OR (G) ANY OTHER MATTER WHATSOEVER. IT IS AGREED THAT ALL RISKS
INCIDENT TO THE MATTERS DISCUSSED IN THE PRECEDING SENTENCE, AS AMONG THE
LESSOR, THE INDENTURE TRUSTEE, THE OWNER PARTICIPANT AND THE LESSEE, ARE TO
BE BORNE BY THE LESSEE. The provisions of this Section 5.01 have been
negotiated by the Lessor and the Lessee and, except as provided in Article
7 of the Participation Agreement, are intended to be a complete exclusion
and negation of any representations or warranties of the Lessor, the
Indenture Trustee and the Owner Participant, express or implied, with
respect to the Airframe and each Engine that may arise pursuant to any law
now or hereafter in effect, or otherwise.
Section 5.02. No Modification of Other Warranties. None of the
provisions of this Article 5 or any other provision of this Lease shall be
deemed to amend, modify or otherwise affect the representations, warranties or
other obligations (express or implied) of the Lessee, AVSA, the Manufacturer
or the Engine Manufacturer or any of their respective subcontractors or
suppliers, with respect to the Airframe, the Engines or any Parts incorporated
or installed in or attached to the Airframe or Engines, or to release the
Lessee, AVSA, the Manufacturer or the Engine Manufacturer or any of their
respective subcontractors or suppliers from any such representation, warranty
or obligation. So long as an Event of Default shall not have occurred and be
continuing under this Lease and to the extent permitted under the applicable
warranty, patent indemnity, or service-life policy, (i) the Lessor shall
assign or otherwise make available to the Lessee such rights as the Lessor may
have under any warranty, patent indemnity, or service-life policy made or
given by the Manufacturer, AVSA or Engine Manufacturer or any of their
respective subcontractors or suppliers, and any other claims against the
Manufacturer, AVSA and Engine Manufacturer or any such subcontractor or
supplier with respect to the Aircraft, including all rights to demand, accept
and retain all rights in and to property (other than the Aircraft), data and
services of any kind which the Manufacturer, AVSA and Engine Manufacturer are
obligated to provide and do provide pursuant to the Purchase Agreement or the
GTA with respect to the Aircraft; and (ii) all payments pursuant to any
manufacturer's or subcontractor's warranty, patent indemnity, or service-life
policy obligation shall be paid to the Lessee; provided that the Lessee shall
apply such payments to the cost of repair or correction of any condition of
the Aircraft which gave rise to such payments.
Section 5.03. Certain Agreements of the Lessee. The Lessee
agrees with the Lessor for the benefit of the Owner Participant that the
Lessee shall perform the agreements, covenants and indemnities of the Lessee
set forth in the Participation Agreement to the extent the same are applicable
to the Owner Participant, as fully and to the same extent and with the same
force and effect as if set forth in full in this Article 5.
ARTICLE 6
LIENS
Section 6.01. Liens. The Lessee will not directly or indirectly
create, incur, assume or suffer to exist, and will promptly, at its own cost
and expense, take such action as may be necessary to discharge, any Lien on or
with respect to the Lessor's Estate or this Lease or the Aircraft, the
Airframe or any Engine or any Part or title thereto or any interest therein
except:
(a) the respective rights of the Lessor and the Lessee as provided
in this Lease, the security interest and Lien of the Indenture and the
rights of the Owner Participant, the Lessor and the Indenture Trustee under
the Trust Agreement, the Indenture and the Participation Agreement;
(b) the rights of any sublessee or transferee or other Person under a
sublease, transfer, assignment or other such arrangement expressly
permitted by the terms of this Lease;
(c) Lessor's Liens and Indenture Trustee's Liens to the extent
required to be discharged by the Owner Participant, the Lessor or the
Indenture Trustee, as the case may be, in accordance with Section 7.03(b),
7.04(b) or 7.05(b) of the Participation Agreement;
(d) Liens for taxes imposed against the Lessee either not yet due or
being contested in good faith by appropriate proceedings so long as such
Liens or proceedings do not involve any material danger of the sale,
forfeiture or loss of the Lessor's Estate, the Aircraft, the Airframe or
any Engine or any interest therein or any material risk of civil
liabilities (unless the Owner Trustee, the Indenture Trustee and the Owner
Participant shall be indemnified to its satisfaction against such
liabilities by the Lessee) or any risk of the assertion of criminal charges
against the Lessor, the Owner Participant, the Indenture Trustee or any
Holder;
(e) materialmen's, mechanics', workmen's, repairmen's, employees' or
other like Liens arising against the Lessee in the ordinary course of the
Lessee's business for amounts the payment of which is either not yet due or
is being contested in good faith by appropriate proceedings so long as such
Liens or proceedings do not involve any material danger of the sale,
forfeiture or loss of the Lessor's Estate, the Aircraft, the Airframe or
any Engine or any interest therein; and
(f) Liens arising from judgments or awards against the Lessee with
respect to which (i) at the time an appeal or proceeding for review is
being prosecuted in good faith and with respect to which there shall have
been secured a stay of execution pending such appeal or proceeding for
review and then only for the period of such stay and (ii) there is not, and
such proceedings do not involve, any material danger of the sale,
forfeiture or loss of the Lessor's Estate, the Aircraft, Airframe or any
Engine or any interest therein.
ARTICLE 7
AIRCRAFT REGISTRATION, MAINTENANCE AND OPERATION
Section 7.01. Registration, Maintenance and Operation. The
Lessee, at its own cost and expense, shall:
(a) cause the Aircraft to remain at all times duly registered in the
name of the Lessor as owner, pursuant to the Transportation Code and,
subject to the proviso to Section 6.03(b) of the Participation Agreement,
to remain at all times duly registered pursuant to the Transportation Code
and at all times act in accordance with the rules and regulations of the
Aeronautics Authority or the applicable laws, rules and regulations of any
other jurisdiction in which the Aircraft may then be registered in
accordance with Section 6.03(b) of the Participation Agreement;
(b) maintain, inspect, service, repair, test and overhaul the
Aircraft (or cause the same to be done) so as to keep the Aircraft (and any
engine which is not an Engine but is installed on the Aircraft) in as good
operating condition as when delivered to the Lessor on the Delivery Date,
ordinary wear and tear excepted, and in any event (i) in accordance with
the applicable regulations of the Aeronautics Authority or of the
regulatory agency or body of any other jurisdiction in which the Aircraft
may then be registered pursuant to Section 6.03(b) of the Participation
Agreement and the Lessee's maintenance program approved by the Aeronautics
Authority or such agency or body, (ii) in the same manner and with the same
care used by the Lessee with respect to other A300-600 series aircraft and
CF6-80C2-A5F series engines (or other engines permitted by the terms of
this Lease to be used on the Aircraft) owned, operated or leased by the
Lessee, to the extent that the same regulations, and the Lessee's
FAA-approved maintenance program shall apply to any such aircraft and
related engines, owned or leased by the Lessee, and utilized in similar
circumstances, and without discriminating against the Aircraft, with
respect to its use, operation or maintenance in contemplation of the
expiration or termination of this Lease other than withdrawal of the
Aircraft from use and operation as is necessary to prepare the Aircraft for
return to the Lessor upon such expiration or termination, and (iii) so as
to keep the Aircraft in such condition as may be necessary to enable its
airworthiness certification to be maintained in good standing at all times
under the Transportation Code or any applicable rule or regulation of the
applicable regulatory agency or body of any other jurisdiction in which the
Aircraft may then be registered;
(c) maintain, or cause to be maintained, all records, logs and other
materials in respect of the Aircraft required by the Aeronautics Authority,
or the applicable regulatory agency or body of any other jurisdiction in
which the Aircraft may then be registered, all such records and logs to be
maintained in the English language, to the extent required by the
Transportation Code (which records, logs and other materials shall, as
between the Lessor and the Lessee and all parties claiming through the
Lessee, be the property of the Lessor but shall become the property of the
Lessee upon purchase by the Lessee of the Aircraft pursuant to the terms of
this Lease or upon the occurrence of an Event of Loss and the Lessee's
compliance with Section 11.03 hereof);
(d) promptly furnish to the Lessor such information within the
Lessee's possession as may be required to enable the Lessor to file any
reports to be filed by the Lessor with any governmental authority because
of the Lessor's ownership of or the Owner Participant's interest in the
Aircraft;
(e) not maintain, service, repair, overhaul, use or operate the
Aircraft or any Engine in violation of any airworthiness certificate or
registration relating thereto, or in violation of any law or any license,
rule, regulation or order of or by any government or governmental authority
having jurisdiction over the Lessee or the Aircraft or any Engine or for
any purpose for which the Aircraft or any Engine is not designed; provided,
however, that the Lessee (or if a sublease shall then be in effect, the
sublessee thereunder) may in good faith contest the validity or application
of any such law, license, rule, regulation or order in any manner that does
not adversely affect the Lessor, its right, title or interest in the
Aircraft or any Engine or the interests of the Indenture Trustee or the
Owner Participant therein, or in any Operative Agreement (excluding any
interests indemnified for under the Tax Indemnity Agreement) and such
contest or non-compliance will not result in any material risk of loss,
forfeiture or damage to the Aircraft or in any risk of criminal liability
to the Lessor, the Indenture Trustee or the Owner Participant; and if any
such law, license, rule, regulation or order requires alteration of the
Aircraft or any Engine, the Lessee will conform the same therewith at its
own cost and expense and will maintain the Aircraft or any Engine in
compliance with such law, license, rule, regulation or order; and
(f) not operate or locate the Airframe or any Engine, or suffer the
Airframe or any Engine to be operated or located in any area excluded from
coverage by any insurance policy required by the terms of Article 13
hereof, unless the Lessee has obtained, prior to the operation or location
of the Airframe or any Engine in such area, indemnification or other
insurance from the Government, or other insurance acceptable to the Lessor
in its sole discretion, against the risks and in the amounts required by,
and in compliance with, Article 13 hereof covering such area (and naming
the Lessor, or so long as this Lease is assigned to the Indenture Trustee,
the Indenture Trustee, as loss payee in respect of indemnification or
insurance payable in respect of casualties to the Aircraft) or unless the
Aircraft is only temporarily located in such area as a result of an
isolated occurrence attributable to a hijacking, medical emergency,
equipment malfunction, weather conditions, navigational error or other
similar unforeseen circumstances and the Lessee is using its good faith
efforts to remove the Aircraft from such area.
The Lessee may, at any time during the Term, install an engine or
engines on the Airframe and operate the Aircraft with such engine or engines
installed thereon and the Lessor shall have no right, title or interest in and
to any such engine until such time, if any, that such engine is returned to
the Lessor under Section 12.02 hereof.
Section 7.02. Possession and Permitted Transfer and Sublease. (a)
Conditions. The Lessee will not, without the prior written consent of the
Lessor, sublease or otherwise in any manner deliver, transfer or relinquish
possession of the Aircraft, the Airframe or any Engine or install any Engine,
or permit any Engine to be installed, on any airframe other than the Airframe;
provided, that, so long as (i) in the case of clause (i) below, no Event of
Default shall have occurred and be continuing, (ii) the Lien of the Indenture
is not impaired thereby, (iii) all applicable governmental approvals in
connection therewith have been obtained and (iv) the Lessee shall comply with
the provisions of Article 13 hereof, the Lessee may without the prior written
consent of the Lessor:
(i) so long as the sublessee is generally meeting its material
obligations as they come due and is not subject to a proceeding or final
order under applicable bankruptcy, insolvency or reorganization laws on the
date the sublease is entered into, (A) sublease the Aircraft or any Engine
to a U.S. Air Carrier, (B) sublease the Aircraft or any Engine to an Air
Carrier which is principally based in and domiciled in one of the countries
listed on Schedule III of the Participation Agreement, (C) sublease the
Aircraft or any Engine to an Air Carrier that is principally based in and
a domiciliary of a country which is a party to the International Convention
on the Recognition of Rights in Aircraft, or (D) sublease the Aircraft or
any Engine to any other Air Carrier not described in this Section which
shall be reasonably acceptable to the Lessor as evidenced by its prior
written consent; provided, that, with respect to clauses (B) and (C) above,
at all times during any such sublease the United States of America
maintains normal diplomatic relations with the country in which such Air
Carrier is principally based and domiciled. In the case of any sublease (x)
such sublease shall include the provisions required by Section 7.02(b)
hereof and expressly require the sublessee to operate and maintain the
Aircraft in compliance with the applicable provisions of this Lease, (y)
such sublease shall provide that such sublessee will not transfer
possession of, or any other rights to, the subleased Airframe or any Engine
to any other Person without the prior written consent of the Lessor (except
as permitted by subparagraphs (ii) through (viii) below and except that, in
the case of subparagraph (iv), possession of the Aircraft may only be
transferred at the direction of the Lessee) and (z) such sublease shall
expire not later than the expiration of the Basic Term or any applicable
Renewal Term hereof. Prior to any sublease to an Air Carrier permitted
under Section 7.02(a)(i)(B) or (C) above: (I) the maintenance standards of
the aeronautical authority of the country of domicile or principal
operation of the sublessee taken as a whole shall not be materially less
stringent than those of the FAA or at least comparable to those, taken as a
whole, required by the central civil aviation authority of any of the
United Kingdom, France, Canada, Japan or Germany; (II) the Lessee will
provide opinions of counsel (such counsel and the form and substance of
such opinions to be reasonably satisfactory to the Lessor and the Indenture
Trustee) with respect to (A) the legality, validity and enforceability of
the Operative Agreements and the sublease in such country, (B) that the
laws of such country require fair compensation by the government of such
country payable in a currency freely convertible into U.S. dollars for the
loss of the use of or title to the Aircraft in the event of a requisition
of use or title by such government, (C) the Lessor's title to the subleased
equipment will be recognized, (D) the required agreement of such foreign
air carrier that its rights under the sublease are subject and subordinate
to all the terms of this Lease is enforceable against such foreign air
carrier under applicable law (subject only to customary exceptions to
enforceability), (E) that it is not necessary for the Owner Participant,
the Lessor or the Indenture Trustee to register or qualify to do business
in such country as a result of the proposed sublease or in order for the
Owner Participant, the Lessor or the Indenture Trustee to enforce the terms
and conditions of the Operative Agreements, (F) there is no tort liability
of the owner of an aircraft not in possession thereof or of Persons lending
money to such an owner for the purchase of an aircraft, under the laws of
such jurisdiction other than tort liability which might have been imposed
on such owner or Persons under the laws of the United States or any state
thereof (it being understood that, in the event that such latter opinion
cannot be given in a form satisfactory to the Lessor, such opinion shall be
waived if insurance reasonably satisfactory to the Lessor is available to
cover such risk to the Owner Participant and is provided at or before the
execution of such a sublease, at the Lessee's cost and expense), (G) that
there exist no possessory rights in favor of such sublessee under the laws
of such country which would, upon bankruptcy or insolvency of the Lessee
(and assuming that at such time such sublessee is not bankrupt or
insolvent) or of the sublessee, prevent the return of the Aircraft in
accordance with the terms of this Lease and (H) all necessary governmental
approvals required for the subleased equipment, the Airframe or any Engine,
as the case may be, to be imported and, to the extent reasonably
obtainable, exported from the applicable country of domicile upon
repossession of such subleased equipment by the Lessor (and the Lessee as
sublessor), shall have been procured at the Lessee's own cost and expense
by the Lessee prior to commencement of any such sublease; (III) duties and
tariffs, if applicable, shall be paid for by the Lessee and (IV) the Lessee
shall effect or cause to be effected at the Lessee's own cost and expense
all recordings and filings that are required, or reasonably requested by
the Lessor, to continue the Lessor's right, title and interest to the
Aircraft and rights under the Lease (and sublease) and to perfect and
maintain the priority of the Lien of the Indenture;
(ii) subject the Airframe or permit the Airframe to be subjected to
normal interchange agreements or subject the Engines or permit any Engine
to be subjected to normal interchange or pooling agreements or
arrangements, in each case customary in the airline industry, entered into
by the Lessee in the ordinary course of its business with a vendor
domiciled in the United States or in a country with which the United States
maintains normal diplomatic relations or (x) any United States air carrier
certificated under Section 41102(a) of the Transportation Code or any
successor provision or (y) any "foreign air carrier" (as such term is
defined in the Transportation Code) as to which there is in force a permit
granted under Section 41302 of the Transportation Code and which is (I)
organized in a country listed on Schedule III to the Participation
Agreement, (II) organized in a country with which the United States then
maintains normal diplomatic relations, (III) is a party to the Convention
on the International Recognition of Rights in Aircraft or (IV) otherwise
provides equivalent protection to owners, lessors and mortgagees of
aircraft; provided that no transfer of the registration of the Airframe or
any Engine shall be effected and that throughout the period that the
Airframe or any Engine is subjected to such interchange or pooling
agreement or arrangement the terms of this Lease shall be observed; and
provided, further, that no such agreement or arrangement contemplates or
requires the transfer of title to or registration of the Airframe or any
Engine, and if the Lessor's title to any Engine shall nonetheless be
divested under any such agreement or arrangement, such divestiture shall be
deemed to be an Event of Loss with respect to such Engine and the Lessee
shall comply with Section 11.04 of this Lease in respect of such Engine;
(iii) deliver or permit the delivery of possession of the Airframe or
any Engine to their respective manufacturers or certified maintenance
providers for testing, service, repair, maintenance or overhaul work or for
alterations or modifications in or additions to the Airframe or any Engine
to the extent required or permitted by the terms of Article 9 hereof;
(iv) transfer or permit the transfer of possession of the Airframe
or any Engine pursuant to a contract or agreement with the Government or
pursuant to the Civil Reserve Air Fleet Program ("CRAF Program")
administered pursuant to Executive Order No. 12056, as amended, or any
similar or substitute programs of the Government, so long as the Lessee (or
any permitted sublessee or transferee pursuant to this Section) shall
promptly notify the Lessor upon such transfer of possession and provide the
Lessor and the Indenture Trustee with the name and address of the
Contracting Officer or representative of the Military Aircraft Command of
the United States Air Force to whom notices must be given in respect of the
Aircraft, provided, that if such transfer of possession continues beyond the
end of the Basic Term or the then-current Renewal Term, the Basic Term or
the Renewal Term, as applicable, shall be automatically extended (including
the obligation to pay Rent per diem at a rate equal to the Fair Market
Rental) for six (6) months after the end of the Term (or, if shorter, until
the date of return of the Aircraft);
(v) install or permit the installation of an Engine on an airframe
which is owned by the Lessee or any permitted sublessee free and clear of
all Liens, except (A) Liens of the type permitted under Section 6.01
hereof, (B) Liens which apply only to the engines (other than an Engine),
appliances, parts, instruments, appurtenances, accessories, furnishings and
other equipment (other than Parts) installed on such airframe and which do
not apply to substantially all of such airframe and (C) the rights of an
Air Carrier under normal interchange or pooling agreements which are
customary in the airline industry and do not contemplate or require the
transfer of title to such airframe or the engines installed on it;
(vi) install or permit the installation of an Engine on an airframe
leased to the Lessee or any permitted sublessee or transferee or purchased
by the Lessee subject to a conditional sale or other security agreement,
provided that (A) such lease, conditional sale or other security agreement
does not cover the Engine so installed and the Lessee shall have received
from the lessor, conditional vendor or secured party of such airframe an
agreement (which may be the lease or conditional sale or other security
agreement covering such airframe), whereby such lessor, conditional vendor
or secured party expressly agrees that neither it nor its successors or
assigns will acquire or claim any right, title or interest in any Engine
by reason of such Engine being installed on such airframe at any time, and
(B) such airframe is and remains free and clear of all Liens except the
rights of the parties to the lease or conditional sale or other security
agreement covering such airframe and Liens of the type permitted by
subparagraph (v) of this Section 7.02(a);
(vii) install or permit the installation of an Engine on an airframe
owned by the Lessee, leased to the Lessee or purchased by the Lessee
subject to a conditional sale or other security agreement under
circumstances where neither subparagraph (v) nor subparagraph (vi) of this
Section 7.02(a) is applicable, provided that such installation shall be
deemed an Event of Loss with respect to such Engine and the Lessee shall
comply with Section 11.04 hereof in respect of such Engine, the Lessor not
intending to waive any right, title or interest it may have to or in such
Engine under applicable law until compliance by the Lessee with such
Section 11.04; and
(viii) enter into a wet lease under which the Lessee has effective
control of the Aircraft in the ordinary course of the Lessee's business
which shall not be considered a transfer of possession hereunder, provided
that the Lessee's obligations under this Lease shall continue in full force
and effect notwithstanding any such wet lease.
(b) Rights of Transferee. Notwithstanding the provisions of Section
7.02(a) hereof, the rights of any transferee who takes possession of the
Aircraft, the Airframe or any Engine by reason of a transfer permitted by
Section 7.02(a) hereof shall be subject and subordinate to, and any sublease
or wet lease permitted by Section 7.02(a) hereof shall be made expressly
subject and subordinate to, all the terms of this Lease, including, without
limitation, the Lessor's right to repossession pursuant to Article 17 hereof
and to avoid such sublease upon such repossession, and the Lessee shall remain
primarily liable for the performance of all the terms of this Lease to the
same extent as if such sublease or transfer had not occurred. Any such
sublease shall be for a term shorter than the Lease (as such Lease shall have
been extended in accordance with its terms) and shall include appropriate
provisions for the maintenance, inspection (as required by Section 14.01
hereof), operation, use and insurance of the Aircraft, the Airframe and each
Engine in accordance with the provisions of this Lease and shall provide
assurances reasonably satisfactory to the Lessor that the sublessee may not
further sublease any of such equipment. The Lessee shall notify the Lessor
within ten (10) Business Days after the consummation of any sublease which has
a term greater than one year. The Lessee shall promptly provide the Lessor,
the Owner Participant and the Indenture Trustee a copy of any sublease (if so
requested by the Lessor) and, prior to execution and delivery of any sublease
deliver to Lessor all other documents required hereunder relating to such
sublease or transfer of possession.
(c) No Release of Lessee/Costs of Subleasing. No sublease,
interchange or pooling agreement or other relinquishment of possession
permitted under this Article 7 of any of the Aircraft, the Airframe or any
Engine shall in any way discharge or diminish any of the Lessee's obligations
to the Lessor, the Indenture Trustee or the Owner Participant under this
Lease, the Participation Agreement or the Tax Indemnity Agreement or
constitute a waiver of any of the Lessor's rights and remedies hereunder or
thereunder or extend beyond the end of the Term (except as provided in Section
7.02(a)(iv) hereof). Subject to the terms and conditions of this Lease, the
Lessee will retain the right to cure any default by any sublessee permitted
pursuant to this Section 7.02 and to terminate such sublease upon such
default. The Lessee shall pay all costs of the Owner Participant, the
Indenture Trustee and the Lessor incurred in connection with any subleasing or
proposed subleasing.
Section 7.03. Insignia. (a) Nameplate. On or prior to the
Delivery Date or as soon thereafter as possible, the Lessee agrees to affix
to and maintain in the cockpit of the Airframe, in a clearly visible
location, and on each Engine, a clearly visible metal nameplate bearing the
inscription "NBD BANK, AS OWNER TRUSTEE, OWNER AND LESSOR," and, so long as
such Airframe or Engines shall be subject to the Lien of the Indenture, the
additional inscription "THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION), AS
INDENTURE TRUSTEE, MORTGAGEE" (such nameplate to be replaced, if necessary,
from time to time with a nameplate reflecting the name of any successor
Lessor or successor Indenture Trustee, in each case as permitted by the
Operative Agreements).
(b) Lessee's Marks. Except as provided in Section 7.03(a) hereof,
the Lessee will not allow the name of any Person to be placed on the Airframe
or any Engine as a designation that might be interpreted as a claim of
ownership; provided, that during the Term, the Lessee may cause the Aircraft
to be lettered "Federal Express Corporation" or may letter, paint or xxxx it
in some other appropriate manner for convenience of identification of the
Lessee's interest or the interest of any permitted sublessee (including but
not limited to the Lessee's or any permitted sublessee's customary colors and
insignia) and to bear insignia plates or other markings identifying the
supplier or manufacturer of the Airframe or the Engines or any Parts of either.
ARTICLE 8
REPLACEMENT AND POOLING OF PARTS
Section 8.01. Replacement of Parts. (a) Generally. The Lessee, at
its own cost and expense, will replace or cause to be replaced as promptly as
practicable all Parts which may from time to time be incorporated or installed
in or attached to the Airframe or any Engine and which may from time to time
become worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond
repair or permanently rendered unfit for use for any reason, except as
otherwise provided in Section 9.01 or 9.02 hereof. In addition, the Lessee
may, at its own cost and expense, remove or cause to be removed in the
ordinary course of maintenance, service, repair, overhaul or testing, any
Parts, whether or not worn out, lost, stolen, destroyed, seized, confiscated,
damaged beyond repair or permanently rendered unfit for use, provided that the
Lessee, except as otherwise provided in Sections 9.01 or 9.02 hereof, will, at
its own cost and expense, replace such Parts as promptly as practicable. All
replacement parts shall be free and clear of Liens (except for pooling
arrangements to the extent permitted by Section 8.02 hereof and Liens
permitted under Section 6.01 hereof) and shall be in at least as good
operating condition as, and shall have a value and utility at least equal to,
the Parts replaced, and in any event not less than the condition and repair
required to be maintained by the provisions of this Lease.
(b) Title. All Parts at any time removed from the Airframe or any
Engine shall remain the property of the Lessor until such Parts shall be
replaced by parts which have been incorporated or installed in or attached to
the Airframe or such Engine and which meet the requirements for replacement
parts specified in Section 8.01(a) hereof. Immediately upon any replacement
part (other than, to the extent permitted by Section 8.02 hereof, a
replacement part subject to a pooling arrangement) becoming incorporated or
installed in or attached to the Airframe or any Engine, and without further
act:
(i) title to the replaced part shall vest in the Lessee, free and
clear of all rights of the Lessor, and such replaced Part shall no longer
be deemed a Part under this Lease;
(ii) title to such replacement part shall vest in the Lessor free
and clear of all Liens (except for Liens permitted by Section 6.01 hereof)
and shall thereupon be and become a Part; and
(iii) such replacement Part shall become subject to this Lease and to
the Lien of the Indenture, and shall be deemed part of the Airframe or such
Engine for all purposes to the same extent as the Parts originally
incorporated or installed in or attached to the Airframe or such Engine.
Section 8.02. Pooling of Parts. Any Part removed from the
Airframe or any Engine as permitted in Section 8.01(a) hereof may be
subjected by the Lessee to any normal pooling arrangement customary in the
U.S. airline industry and entered into with vendors and other Air Carriers
in the ordinary course of the Lessee's business, provided that the part
replacing such removed Part shall be incorporated or installed in or
attached to the Airframe or such Engine in accordance with Section 8
hereof, as promptly as practicable after the removal of such removed Part.
In addition, any replacement part when incorporated or installed in or
attached to the Airframe or any Engine in accordance with Section 8.01(a)
hereof may be owned by another Air Carrier subject to such normal pooling
arrangement, provided that the Lessee, at its own cost and expense and as
promptly as possible, either:
(a) causes title to such replacement part to vest in the Lessor in
accordance with Section 8.01(b) hereof by the Lessee acquiring title to
such replacement part for the benefit of, and transferring such title to,
the Lessor free and clear of all Liens (other than Liens permitted under
Section 6.01 hereof); or
(b) replaces such replacement part by incorporating or installing
in or attaching to the Airframe or such Engine a further replacement
part owned by the Lessee free and clear of all Liens (other than Liens
permitted under Section 6.01 hereof) and by causing title to such
further replacement part to vest in the Lessor in accordance with
Section 8.01(b) hereof.
All such replacement parts and further replacement parts shall meet
the standards set forth in the last sentence of Section 8.01(a) hereof.
ARTICLE 9
ALTERATIONS, MODIFICATIONS AND ADDITIONS
Section 9.01. Required Alterations and Modifications. The Lessee,
at its own cost and expense, shall make or cause to be made such
alterations and modifications in and additions to the Airframe and each
Engine as may be required from time to time to meet the applicable
requirements of the Aeronautics Authority or any other governmental
authority with jurisdiction over the Lessee's operations and aircraft;
provided, however, that the Lessee or sublessee, as the case may be, may in
good faith contest the validity or application of any such requirements in
any reasonable manner that does not involve any material risk of civil
liabilities (unless indemnified by the Lessee) or any risk of criminal
penalties being imposed on or against the Indenture Trustee, the Owner
Participant or the Lessor, that does not involve any material risk or
danger of loss, forfeiture or sale of the Aircraft or any Engine and that
does not adversely affect the Lessor, its title or interest in the Aircraft
or any Engine, the first and prior perfected Lien and security interest of
the Indenture, or the interests of the Indenture Trustee or the Owner
Participant in the Airframe or any Engine, or in any Operative Agreement
(excluding any interests indemnified for under the Tax Indemnity
Agreement). All such alterations, modifications or additions shall be made
on or before the date mandated therefor, taking into account authorized
postponements resulting from a contest or otherwise and shall be made at
such time and in such a manner so as not to discriminate against the
Aircraft whether by reason of its leased status or otherwise.
Section 9.02. Other Alterations and Modifications. (a) Generally.
The Lessee, at its own cost and expense, may from time to time make such
alterations and modifications in and additions to the Airframe or any Engine
as the Lessee may deem desirable in the proper conduct of its business,
including, without limitation, removal of Obsolete Parts in its usual course
of maintenance, provided that no such alteration, modification, addition or
removal, individually or in the aggregate, shall create any adverse tax
consequences for the Owner Participant not otherwise indemnified for, diminish
the value, remaining useful life, or utility of the Airframe or the value or
utility of any Engine or impair its condition or airworthiness below its
value, remaining useful life (in the case of the Airframe only), utility,
condition and state of airworthiness immediately prior to such alteration,
modification, addition or removal, assuming that the Airframe or such Engine
was then in the condition and airworthiness required to be maintained by the
terms of this Lease, or cause the Airframe or any Engine to become "limited
use property" within the meaning of Revenue Procedure 76-30, 1976-2 C.B. 647,
except that the value (but not the remaining useful life, utility, condition or
airworthiness) of the Aircraft may be reduced by the value, if any, of any such
Obsolete Parts which shall have been removed; provided that in no event shall
the aggregate value of all such Obsolete Parts which shall have been so
removed and not replaced exceed $500,000.
(b) Title to Installed Parts. Title to each part incorporated or
installed in or attached or added to the Airframe or any Engine as the result
of any alteration, modification, removal or addition made pursuant to Section
9.01 or 9.02(a) hereof shall without further act vest in the Lessor and become
subject to this Lease; provided, however, that the Lessee may remove any such
Part at any time during the Term if:
(i) such Part is in addition to, and not in replacement of or
substitution for, any Part originally incorporated or installed in or
attached or added to the Airframe or such Engine on the Delivery Date or
any Part in replacement of, or substitution for, any such Part;
(ii) such Part is not required to be incorporated or installed in or
attached or added to the Airframe or such Engine pursuant to the terms of
Article 7 hereof or the first sentence of Section 9.01 hereof; and
(iii) such Part can be removed from the Airframe or such Engine
without (A) causing material damage to the Airframe or such Engine (it
being understood that the Lessee shall repair any damage caused by a
permitted removal) or diminishing or impairing the value, utility,
condition or airworthiness or remaining useful life of the Airframe
required to be maintained by the terms of this Lease or (B) diminishing the
value, utility or remaining useful life (in the case of the Airframe) or
the value and utility (in the case of such Engine) which the Airframe or
such Engine would have had at such time had such alteration, modification,
removal or addition not occurred, assuming the Airframe or such Engine was
then in the condition required to be maintained by the terms of this Lease.
(c) Title to Removed Parts. Upon the removal by the Lessee of any
such Part as provided in subsection (b) above, title thereto shall, without
further act, vest in the Lessee and such Part shall no longer be deemed a
Part. Any Part not removed by the Lessee as above provided prior to the
return of the Aircraft to the Lessor hereunder shall remain the property of
the Lessor and subject to this Lease.
ARTICLE 10
VOLUNTARY TERMINATION
Section 10.01. Right of Termination upon Obsolescence or Surplus.
(a) Option to Terminate. So long as no Event of Default shall have occurred
and be continuing, the Lessee shall have the right, at its option, on any
Termination Date, on no more than 180 days' and at least 90 days' prior
written notice (which notice shall state the proposed Termination Date (the
"Proposed Termination Date")) to the Lessor and the Owner Participant to
terminate this Lease as of a Termination Date if the Aircraft shall have
become obsolete or surplus to the operations of the Lessee; provided that the
Lessee shall have furnished to the Lessor, the Indenture Trustee and the Owner
Participant a certificate of the Lessee's President, Chief Executive Officer,
Chief Financial Officer, Chief Operating Officer, Treasurer or Assistant
Treasurer stating the determination of the Lessee that the Aircraft is
obsolete or surplus to its needs. Unless the Lessor has elected to retain the
Aircraft as herein provided, the Lessee shall have the right on no more than
two occasions to revoke its notice of termination no later than the Business
Day prior to the day that is 15 days prior to the Proposed Termination Date
whereupon this Lease shall continue in full force and effect. The Lessee
shall reimburse any reasonable expenses incurred by the Owner Participant in
connection with any proposed termination whether or not revoked.
(b) Sale Procedure. During the period from the giving of notice
pursuant to Section 10.01(a) hereof until the Proposed Termination Date, the
Lessee, as non-exclusive agent for the Lessor, shall use its reasonable
efforts to obtain bids for the cash purchase on the Proposed Termination Date
(or such earlier date as shall be consented to in writing by the Lessor) of
the Aircraft. On the Proposed Termination Date, the Engines shall be
installed on the Airframe (provided that the Airframe may be sold with engines
meeting the requirements set forth herein for Replacement Engines in lieu of
the Engines so long as the aggregate number of Engines and Replacement Engines
being sold with the Airframe equals two). The Lessor may, if so directed by
the Owner Participant, seek to obtain such bids. The Owner Participant shall
not inspect any bids received by the Lessee with respect to the Aircraft,
unless the Owner Participant has given to the Lessee binding and irrevocable
notice that neither the Owner Participant nor any of its Affiliates nor any
Person acting for the Owner Participant or such Affiliate will submit a bid
for the purchase of the Aircraft and if such notice has been given, the Lessee
will provide the Lessor with copies of bids received by the Lessee. No bid
may be submitted by the Lessee or any Person affiliated with the Lessee (or
with whom or which there is any arrangement or understanding as to the
subsequent use of the Aircraft by the Lessee or any of its Affiliates) or any
agent or Person acting on behalf of the Lessee. The Lessee may reject any bid
which is less than the sum of the applicable Termination Value, the aggregate
amount of any Make-Whole Premium and all other expenses incurred by the
Lessor, the Owner Participant and the Indenture Trustee in connection with the
sale. Subject to the provisions of Section 10.02 hereof, on the Proposed
Termination Date or such earlier date of sale as shall be consented to in
writing by the Lessor, the Lessee shall deliver the Airframe which shall have
the Engines installed on it (provided that the Airframe may be delivered with
installed engines meeting the requirements set forth herein for Replacement
Engines in lieu of the Engines so long as the aggregate number of Engines and
Replacement Engines being delivered with the Airframe equals two and the
Lessee shall comply with the provisions of Section 11.04 hereof as if an Event
of Loss occurred with regard to the Engines) to the bidder which shall have
submitted the highest cash bid (whether certified to the Lessor by the Lessee
or directly received by the Lessor and certified to the Lessee) in the same
manner as if delivery were made to the Lessor pursuant to Article 12 hereof,
at a location specified by such bidder, and shall duly transfer to the Lessor
title to any such engines not owned by the Lessor, and the Lessor shall, upon
payment in full of the bid price and all amounts due and owing pursuant to
Section 10.01(c) hereof by wire transfer of immediately available funds and
upon discharge of the Lien of the Indenture in accordance with Article XIV
thereof, sell the Airframe and Engines or engines to such bidder without
recourse or warranty (except as to the absence of Lessor's Liens).
(c) Payments to the Lessor. The total selling price realized at a
sale pursuant to Section 10.01(b) hereof net of all expenses of the sale
(including commissions and any sales or transfer taxes) (the "Net Sales
Price") shall be retained by the Lessor (or the Indenture Trustee as long as
the Indenture is in force) and, in addition, on or before the Proposed
Termination Date, the Lessee shall pay to the Lessor (or the Indenture Trustee
as long as the Indenture is in force), by wire transfer of immediately
available funds, the sum of:
(i) the excess, if any, of the Termination Value for the Aircraft
computed as of the Proposed Termination Date over the Net Sales Price; plus
(ii) the installment of Basic Rent due with respect to the
Aircraft on the Proposed Termination Date to the extent payable in
arrears but not to the extent payable in advance; plus
(iii) all other amounts then due and payable by the Lessee
(including, without limitation, the aggregate amount of any Make-Whole
Premium, if the Proposed Termination Date occurs prior to the applicable
Premium Termination Date) under this Lease and any other Operative
Agreement.
(d) Transfer of Uninstalled Engines. Upon payment of the amounts
described in Section 10.01(c) hereof and upon transfer to the Lessor of title
to engines which have been returned in lieu of Engines as provided in Section
10.01(b) hereof, and upon payment of all other amounts then due under this
Lease, the Lessor will transfer to the Lessee, without recourse or warranty
(except as to the absence of Lessor's Liens), all of the Lessor's right, title
and interest in and to any Engines which were replaced with engines pursuant
to Section 10.01(b) hereof, and shall deliver to the Lessee such instrument as
the Lessor shall have received from the Indenture Trustee releasing such
Engines from the Lien of the Indenture.
(e) Limitation on the Lessor's Duties. The Lessor shall be under no
duty to solicit bids, to inquire into the efforts of the Lessee to obtain bids
or otherwise to take any action in connection with any such sale other than to
transfer to the purchaser named in the highest cash bid (determined as
described in Section 10.01(b) above) as referred to above (or to such
purchaser and to the Lessee, as the case may be), without recourse or warranty
(except as to the absence of Lessor's Liens), all of the Lessor's right, title
and interest in and to the Aircraft, against receipt by the Lessor of the
payments provided for in Section 10.01(c) hereof.
(f) Termination of the Lessee's Obligations. Upon the sale of the
Aircraft pursuant to this Section 10.01 and upon compliance by the Lessee with
the further provisions of this Article 10, the obligation of the Lessee to pay
Basic Rent with respect to the Aircraft shall cease for any Rent Payment Date
occurring after the Proposed Termination Date and the Term shall end effective
as of the Proposed Termination Date. If no sale shall have occurred on or
before the Proposed Termination Date, this Lease shall continue in full force
and effect and, for purposes of Section 10.01(a) hereof, it shall be deemed
that the Lessee has rescinded its notice of termination, and the Lessee shall
pay the expenses incurred by the Lessor, the Indenture Trustee and the Owner
Participant in connection with the proposed sale.
Section 10.02. Retention of Aircraft by the Lessor. (a) Generally.
Notwithstanding Section 10.01 hereof, the Lessor may, subject to Section
10.02(b) hereof, elect to retain the Aircraft after receipt of the Lessee's
notice of termination given in accordance with Section 10.01(a) hereof, by
giving the Lessee and the Indenture Trustee written irrevocable notice of such
election not less than sixty (60) days prior to the Proposed Termination Date.
If the Lessor so elects, the Lessee shall pay to the Lessor on the Proposed
Termination Date, by wire transfer of immediately available funds the sum of:
(i) the installment of Basic Rent due with respect to the Aircraft on
the Proposed Termination Date to the extent payable in arrears but not to
the extent payable in advance; plus
(ii) all other amounts then due and payable by the Lessee under this
Lease and any other Operative Agreement, including the aggregate amount of
any Make-Whole Premium (if the Proposed Termination Date occurs prior to
the applicable Premium Termination Date), on or prior to the Payment Date.
(b) Payment of the Certificates. It shall be an absolute condition
precedent to the Lessor's right to retain the Aircraft and to the termination
of the Term pursuant to this Section 10.02 that the Lessor (or the Lessee to
the extent set forth in Section 10.02(a) hereof) shall have paid to the
Holders and such Holders shall have received the entire outstanding principal
amount of, the aggregate amount of any Make-Whole Premium and accrued interest
on the Certificates on the Termination Date and all other sums due and owing
to the Indenture Trustee and the Holders on or prior to the Termination Date
under this Lease, the Indenture or any other Operative Agreement.
(c) Delivery of Aircraft to Lessor; Title to Engines. If the Lessor
elects to retain the Aircraft pursuant to this Section 10.02, the Lessee shall
deliver the Airframe and the Engines (provided that the Airframe may be
delivered with engines meeting the requirements set forth herein for
Replacement Engines in lieu of the Engines so long as the aggregate number of
Engines and engines being delivered with the Airframe equals two and provided
that the other requirements of Section 11.04 hereof are met as if an Event of
Loss has occurred with regard to the Engines) to the Lessor in the same manner
as if delivery were made to the Lessor pursuant to Article 12 hereof, and shall
duly transfer to the Lessor right, title and interest to any such engines not
owned by the Lessor, all in accordance with Article 12 hereof. Upon such
delivery of the Airframe and Engines or engines to the Lessor and payment by
the Lessee of any amounts required to be paid by the Lessee pursuant to
Section 10.02(a) hereof, the Lessor will transfer to the Lessee, without
recourse or warranty (except as to the absence of Lessor's Liens), all of the
Lessor's right, title and interest in and to any Engines which were replaced
by engines pursuant to this Section 10.02(c), and shall deliver to the Lessee
such instrument as the Lessor shall have received from the Indenture Trustee
releasing such Engines from the Lien of the Indenture.
(d) Termination of the Lessee's Obligations. Upon compliance by the
Lessor and the Lessee with the provisions of this Section 10.02 and upon
compliance by the Lessee with the further provisions of this Article 10, the
obligation of the Lessee to pay Basic Rent with respect to the Aircraft shall
cease for any Rent Payment Date occurring after the Termination Date and the
Term shall end effective as of the Termination Date.
Section 10.03. Voluntary Termination as to Engines. The Lessee
shall have the right at its option and at any time, on at least thirty (30)
days' prior written notice to the Lessor, to terminate this Lease with
respect to any Engine not then installed or held for use on the Airframe,
provided that prior to the date of such termination, the Lessee shall
comply with the terms of Section 11.04 hereof to the same extent as if an
Event of Loss had occurred with respect to such Engine.
ARTICLE 11
LOSS, DESTRUCTION, REQUISITION
Section 11.01. Lessee's Election Rights. The Lessee shall notify
the Lessor, the Indenture Trustee and the Owner Participant as soon as
practicable but in no event more than 10 Business Days following the
occurrence of an event which constitutes, or would with the passage of time
constitute, an Event of Loss with respect to the Airframe or with respect
to the Airframe and the Engines or engines then installed on the Airframe.
By written notice to the Lessor, the Indenture Trustee and the Owner
Participant delivered within 60 days of the occurrence of any Event of
Loss, the Lessee shall have the right to elect the alternative set forth in
Section 11.02 hereof or the alternative set forth in Section 11.03 hereof.
The Lessee's failure to make such election within said 60-day period shall
be deemed to be an election of the alternative set forth in Section 11.02
hereof.
Section 11.02. Payment of Stipulated Loss Value. (a) The Lessee
shall, if it has so elected or is deemed to have so elected under Section
11.01 hereof, pay to the Lessor, by wire transfer of immediately available
funds on the earlier of (i) the fifteenth day following receipt in full of
insurance proceeds or requisition proceeds, described in Section 11.05 hereof,
in connection with such Event of Loss and (ii) the 120th day after the
occurrence of such Event of Loss (the earlier of such dates being referred to
herein as the "Loss Payment Date"), the sum of (A) the Stipulated Loss Value
for the Aircraft, determined as of the Stipulated Loss Value Determination
Date next preceding the Loss Payment Date (or, if the Loss Payment Date occurs
on a Stipulated Loss Value Determination Date, determined as of such
Stipulated Loss Value Determination Date) together with interest on such
amount at the Debt Rate from such Stipulated Loss Value Determination Date to
the Loss Payment Date, plus (B) any and all Interim Rent and Basic Rent due
and payable on or prior to the relevant Stipulated Loss Value Determination
Date and unpaid, plus (C) any and all Supplemental Rent due and payable on or
prior to such Loss Payment Date, plus (D) all other amounts owing by the
Lessee or the Owner Trustee to the Indenture Trustee or the Holders under the
Indenture and the other Operative Agreements, plus (E) any reasonable
out-of-pocket expenses incurred in connection with such Event of Loss and the
related prepayment of the Certificates by the Lessor, the Owner Participant
and the Indenture Trustee, minus (F) if the relevant Stipulated Loss Value
Determination Date is a Rent Payment Date, the portion, if any, of the Interim
Rent and Basic Rent installment due and paid by the Lessee on such Stipulated
Loss Value Determination Date pursuant to Section 3.02 hereof to the extent
such Interim Rent and Basic Rent installment (or portion thereof) is
designated on Schedule II hereto as being payable in advance, together with
an imputed interest amount in respect of such advance payment of Interim Rent
and Basic Rent (or portion thereof) at the Debt Rate from the date of payment
of such Interim Rent and Basic Rent installment (or portion thereof) by the
Lessee to the Loss Payment Date; provided that in no event shall there be
subtracted pursuant to clause (F) an amount such that the Holders shall not be
paid in full.
(b) Termination of Lease; Title Transfer. Upon payment in full of
the amounts due pursuant to Section 11.02(a) hereof, the obligation of the
Lessee to pay Interim Rent and Basic Rent on any Rent Payment Date occurring
subsequent to the payment of such amounts shall terminate and the Term shall
end. Further, upon such payment, the Lessor will transfer to the Lessee,
without recourse or warranty (except as to the absence of Lessor's Liens), all
of the Lessor's right, title and interest, if any, in and to the Airframe,
Engines and engines with respect to which such Event of Loss occurred, as well
as all of the Lessor's right, title and interest in and to any Engines
constituting part of the Aircraft but not installed on the Airframe when such
Event of Loss occurred, and will deliver to the Lessee such instrument as the
Lessor shall have received from the Indenture Trustee, releasing such Aircraft
from the Lien of the Indenture.
Section 11.03. Replacement of Airframe and Engines. (a) Generally.
So long as no Payment Default, Bankruptcy Default or Event of Default shall
have occurred and be continuing, and subject to Section 11.01 hereof, if the
Lessee has elected to replace the Airframe and Engines suffering an Event of
Loss pursuant to this Section 11.03, the Lessee shall cause to be duly
conveyed to the Lessor within one hundred twenty (120) days after the
occurrence of such Event of Loss, as replacement for the Airframe and Engines
with respect to which such Event of Loss has occurred, good and marketable
title to an Airbus A300F4-605R airframe manufactured after October 22, 1994
(the "Replacement Airframe") and good and marketable title to a number of
Replacement Engines equal to the number of Engines with respect to which an
Event of Loss has occurred, provided that following compliance with all other
terms of this Section 11.03 each Engine shall be of identical make and model
and manufactured after October 22, 1994 and, in the case of such Replacement
Airframe and each such Replacement Engine, will be owned by the Lessee free
and clear of all Liens not excepted in Section 6.01(a), (b), (c) and (e)
hereof, duly certified as an airworthy aircraft by the Aeronautics Authority,
and having in the case of the Replacement Airframe a value, remaining useful
life and utility, and in the case of the Replacement Engines a value and
utility, at least equal to, and being in as good operating condition as, the
Airframe and Engines with respect to which such Event of Loss occurred,
assuming that the Airframe and Engines were then in the condition and state of
airworthiness required to be maintained by the terms of this Lease immediately
prior to the occurrence of such Event of Loss. In such case and as a
condition to such substitution the Lessee, at its own cost and expense, will
also promptly:
(i) furnish the Indenture Trustee with originals of, and the Lessor
with copies of, full warranty bills of sale, in form and substance
satisfactory to the Lessor and the Indenture Trustee, with respect to such
Replacement Airframe and Replacement Engines together with an assignment in
form and substance satisfactory to the Lessor and the Indenture Trustee of
any and all manufacturer's warranties applicable thereto and a consent
reasonably satisfactory to the Lessor and the Indenture Trustee from such
manufacturer or manufacturers to such assignment;
(ii) cause such Replacement Airframe and Replacement Engines to be
duly registered in the name of the Lessor pursuant to the Transportation
Code or the applicable laws of any other jurisdiction in which the
Aircraft may then be registered in accordance with Section 6.03(b) of
the Participation Agreement;
(iii) cause a Lease Supplement with respect to such Replacement
Airframe and Replacement Engines to be duly executed by the Lessee and
recorded pursuant to the Transportation Code, or the applicable laws, rules
and regulations of any other jurisdiction in which the Aircraft may then be
registered as permitted by Section 6.03(b) of the Participation Agreement;
(iv) furnish the Lessor, the Indenture Trustee and the Owner
Participant with an appraisal or other report of a nationally recognized
aircraft appraiser based on an inspection of such Replacement Airframe and
Replacement Engines reasonably satisfactory to the Indenture Trustee and
the Owner Participant certifying that such Replacement Airframe has a
value, remaining useful life and utility, and such Replacement Engines have
a utility and, in the aggregate, value, at least equal to, and are in as
good operating condition as, the Airframe and Engines replaced, assuming
such Airframe and Engines were in the condition and repair required by the
terms of this Lease immediately prior to the occurrence of such Event of
Loss;
(v) furnish the Lessor, the Indenture Trustee and the Owner
Participant with such evidence as the Lessor or the Indenture Trustee
may reasonably request of compliance with the insurance provisions of
Article 13 hereof with respect to such Replacement Airframe and
Replacement Engines;
(vi) provide the Owner Participant and the Lessor with (A) an
opinion of counsel selected by the Owner Participant and reasonably
acceptable to the Lessee (which opinion shall be reasonably satisfactory
in form and substance to the Owner Participant and the Lessor) that it
will suffer no adverse tax consequence not otherwise indemnified for as
a result of such substitution or (B) an indemnity reasonably acceptable
to the Lessor and the Owner Participant against such consequences;
(vii)comply with the provisions of Section 9.08 of the Indenture;
(viii) cause an Indenture Supplement with respect to such Replacement
Airframe and Replacement Engines to be duly executed by the Lessor and the
Indenture Trustee and recorded pursuant to the Transportation Code, or the
applicable laws, rules and regulations of any other jurisdiction in which
the Aircraft may then be registered as permitted by Section 6.03(b) of the
Participation Agreement in order that the Lien of the Indenture shall
constitute a first and prior perfected Lien and security interest on and in
respect of such Replacement Airframe and Replacement Engines;
(ix) take such other action, including the filing of UCC financing
statements naming the Indenture Trustee as a secured party with the
Secretary of State of Michigan and the filing of a notice with the
Secretary of State of Tennessee, as the Lessor or the Indenture Trustee may
reasonably request in order that such Replacement Airframe and Replacement
Engines shall be duly and properly titled in the Lessor, leased under this
Lease and subjected to the Lien of the Indenture to the same extent as the
replaced Airframe and Engines;
(x) furnish the Indenture Trustee with an opinion (reasonably
satisfactory in form and substance to the Lessor, the Owner Participant and
the Indenture Trustee) of counsel to the Lessee (which may be the Lessee's
General Counsel) addressed to the Indenture Trustee and the Owner
Participant to the effect that (A) the Lessor has good title to such
Replacement Airframe and Replacement Engines, and (B) such Replacement
Airframe and Replacement Engines have been validly subjected to the Lien of
the Indenture (with the effect and result that the Indenture constitutes a
first priority duly perfected security interest and Lien on such
Replacement Airframe and Replacement Engines); and
(xi) cause to be delivered to the Lessor, the Owner Participant
and the Indenture Trustee (a) an opinion of counsel to the Lessee
addressed to the Lessor, the Owner Participant and the Indenture Trustee
as to the due registration of the Aircraft and the due recordation of
the requisite documents or instruments and the validity and perfection
of the Lien in such Replacement Airframe and Replacement Engines and (b)
a certificate signed by the Vice President and Treasurer or any other
duly authorized officer of the Lessee stating that no Payment Default,
Bankruptcy Default or Event of Default has occurred or is continuing.
(b) Title to Replaced Equipment. Upon compliance by the Lessee with
the terms of Section 11.03(a) hereof, the Lessor will transfer to the Lessee
(subject to any insurer's salvage rights), without recourse or warranty
(except as to the absence of Lessor's Liens), all of the Lessor's right, title
and interest, if any, in and to the Airframe and Engines with respect to which
such Event of Loss occurred. In connection with such transfer, the Lessee
shall prepare and the Lessor shall execute or forward to the Indenture Trustee
for execution, as the case may be, all in recordable form, a xxxx of sale
evidencing such transfer, a release of the Airframe and Engines with respect to
which such Event of Loss occurred from the Indenture and such other documents
as the Lessee reasonably requests, all at the Lessee's sole cost and expense.
Any Engine constituting part of the Aircraft, but not installed on the
Airframe when such Event of Loss occurred, shall continue to be property of
the Lessor and leased under this Lease as part of the same equipment as the
Replacement Airframe and Replacement Engines.
(c) Definitions. Each Replacement Airframe and Replacement Engine
shall be deemed part of the property leased under this Lease, each such
Replacement Airframe shall be deemed an "Airframe," each such Replacement
Engine shall be deemed an "Engine" and each such Replacement Airframe and
Replacement Engine shall be deemed part of the same Aircraft as was the
Airframe or Engine replaced.
(d) Rent Adjustments. An Event of Loss covered by this Section
11.03 shall not result in any change in Interim Rent, Basic Rent, Stipulated
Loss Values or Termination Values except as may be provided pursuant to the
Tax Indemnity Agreement and the Participation Agreement.
(e) Time Limitations. If the Lessee has elected to proceed under
this Section 11.03 but has not fully performed its obligations under this
Section 11.03 within 120 days of the occurrence of the applicable Event of
Loss, in the event that any amounts held by the Lessor (or, so long as the
Indenture shall be in effect, the Indenture Trustee) in respect of such Event
of Loss are less than the Stipulated Loss Value thereof, the Lessee will
deposit with the Lessor or the Indenture Trustee, as the case may be, the
amount of any deficiency as security on such 120th day. If the Lessee has
elected to proceed under this Section 11.03 but has not fully performed its
obligations under this Section 11.03 within 180 days of the occurrence of such
Event of Loss, the Lessee shall be deemed to have elected to proceed under
Section 11.02 hereof and shall immediately perform its obligations thereunder,
and the Indenture Trustee, or the Lessor if the Indenture shall have been
discharged, shall apply the amounts held by it pursuant to the preceding
sentence as a credit against such obligations.
Section 11.04. Event of Loss with Respect to an Engine. (a)
Generally. Upon the occurrence of an Event of Loss with respect to an Engine
under circumstances in which there has not occurred an Event of Loss with
respect to the Airframe, the Lessee shall give the Lessor and the Indenture
Trustee prompt written notice thereof and shall, as soon as practicable but in
any event within sixty (60) days after the occurrence of such Event of Loss,
duly convey or cause to be conveyed to the Lessor, a Replacement Engine for
the Engine with respect to which such Event of Loss occurred, good and
marketable title to a Replacement Engine, free and clear of all Liens not
excepted in Section 6.01(a), (b), (c) and (e) hereof and having a value and
utility at least equal to, and being in as good operating condition as, the
Engine with respect to which such Event of Loss occurred, assuming such Engine
was of the value and utility and in the condition and repair required by the
terms of this Lease immediately prior to the occurrence of such Event of Loss,
provided that after any replacement, each Engine shall be of identical make
and model. The standards set forth in this Section with respect to
Replacement Engines shall apply upon any replacement or substitution of an
Engine with a Replacement Engine pursuant to any other provision of this Lease.
(b) Conditions Precedent. Prior to or at the time of any conveyance
of an Engine pursuant to Section 11.04(a) hereof, the Lessee, at its own cost
and expense will:
(i) furnish the Lessor with an original of, and the Indenture Trustee
with a copy of, a full warranty xxxx of sale, in form and substance
satisfactory to the Lessor, with respect to such Replacement Engine
together with an assignment in form and substance satisfactory to the
Lessor and the Indenture Trustee of any and all manufacturer's warranties
applicable thereto and a consent reasonably satisfactory to the Lessor and
the Indenture Trustee from such manufacturer to such assignment;
(ii) cause a Lease Supplement covering such Replacement Engine to be
duly executed by the Lessee and filed for recordation pursuant to the
Transportation Code, or the applicable laws, rules and regulations of any
other jurisdiction in which the Aircraft may then be registered as
permitted by Section 6.03(b) of the Participation Agreement and, if the
Engine being replaced was registered under the applicable laws of the
jurisdiction in which the Aircraft is then registered, the Replacement
Engine shall be registered in the same fashion;
(iii) furnish the Lessor and the Indenture Trustee with a
certificate of a nationally recognized aircraft appraiser reasonably
satisfactory to the Lessor and the Indenture Trustee certifying that
such Replacement Engine has a value and utility at least equal to, and
is in as good operating condition as, the Engine replaced, assuming such
Engine was in at least the condition and repair required by the terms of
this Lease immediately prior to the occurrence of such Event of Loss;
(iv) furnish the Lessor with such evidence of compliance with the
insurance provisions of Article 13 hereof with respect to such Replacement
Engine as the Lessor or the Indenture Trustee may reasonably request;
(v) provide the Owner Participant and the Lessor with (A) an opinion
of counsel selected by the Owner Participant and reasonably acceptable to
the Lessee (which opinion shall be reasonably satisfactory in form and
substance to the Owner Participant and the Lessor) that it will suffer no
adverse tax consequences not otherwise indemnified for as a result of such
substitution or (B) an indemnity reasonably acceptable to the Lessor and
the Owner Participant against such consequences;
(vi) comply with the provisions of Section 9.08 of the Indenture;
(vii) cause an Indenture Supplement with respect to such Replacement
Engine to be duly executed by the Lessor and the Indenture Trustee and
recorded pursuant to the Transportation Code, or the applicable laws, rules
and regulations of any other jurisdiction in which the Aircraft may be
registered as permitted by Section 6.03(b) of the Participation Agreement
in order that the Indenture shall constitute a first priority duly
perfected Lien and security interest on and in respect of such Replacement
Engine;
(viii) take such other action, including the filing of UCC financing
statements naming the Indenture Trustee as Secured Party with the Secretary
of State of Michigan and a notice filing with the Secretary of State of
Tennessee, as the Lessor or the Indenture Trustee may reasonably request in
order that such Replacement Engine be duly and properly titled in the
Lessor, leased under this Lease and subjected to the Lien of the Indenture
to the same extent as the replaced Engine;
(ix) furnish the Lessor, the Owner Participant and the Indenture
Trustee with an opinion (reasonably satisfactory in form and substance to
the Lessor, the Owner Participant and the Indenture Trustee) of counsel to
the Lessee (which may be the Lessee's General Counsel) addressed to the
Indenture Trustee and the Owner Participant to the effect that (A) the
Lessor has good title to such Replacement Engine, and (B) such Replacement
Engine has been validly subjected to the Lien of the Indenture (with the
effect and result that the Indenture constitutes a first priority duly
perfected security interest and Lien on such Replacement Engine); and
(x) take such other action as the Indenture Trustee may reasonably
request in order that such Replacement Engine be duly and properly
subjected to the Lien of the Indenture to the same extent as the replaced
Engine.
(c) Title Transfer. Upon compliance by the Lessee with the terms of
Sections 11.04(a) and (b) hereof, the Lessor will transfer to the Lessee
(subject to any insurer's salvage rights), without recourse or warranty
(except as to the absence of Lessor's Liens), all of the Lessor's right, title
and interest, if any, in and to the Engine with respect to which such Event of
Loss occurred. In connection with such transfer, the Lessee shall prepare and
the Lessor shall execute or forward to the Indenture Trustee for execution, as
the case may be, all in recordable form, a xxxx of sale evidencing such
transfer, a release of the Engine with respect to which such Event of Loss
occurred from the Indenture and such other documents as the Lessee reasonably
requests, all at the Lessee's sole cost and expense. Each Replacement Engine
shall, after such conveyance, be deemed part of the property leased under this
Lease. An Event of Loss covered by this Section 11.04 shall not result in any
change in Interim Rent, Basic Rent, Stipulated Loss Values or Termination
Values, but may result in payments to be made pursuant to the Tax Indemnity
Agreement and the Participation Agreement.
Section 11.05. Application of Payments from the Government or Others.
(a) Generally. Any payments (other than insurance proceeds the application
of which is provided for in Section 13.03 hereof) received at any time by the
Lessor or by the Lessee from any governmental authority or any other party,
foreign or domestic, with respect to an Event of Loss resulting from the
condemnation, confiscation, theft or seizure of, or requisition of title to or
use of, the Airframe or any Engine will be applied, as appropriate, in
accordance with Section 11.05(b) or Section 11.05(c) hereof.
(b) Payments of Stipulated Loss Value. If the payments described in
Section 11.05(a) hereof are received with respect to the Airframe or with
respect to the Airframe and Engines or engines then installed on the Airframe
and the Lessee has elected the alternative set forth in Section 11.02 hereof,
so much of such payments as shall not exceed the payments required to be paid
by the Lessee pursuant to clauses (A) and (B) of Section 11.02(a) hereof shall
be paid to the Lessor (or, if the Lien of the Indenture has not been
discharged, the Indenture Trustee) in reduction of the Lessee's obligations
under clauses (A) and (B) of Section 11.02(a) hereof if not already paid by
the Lessee, or, if such obligations have already been discharged in full by
the Lessee, such payments shall be applied to reimburse the Lessee for its
payment of such Stipulated Loss Value and, if and to the extent specifically
included in such payment, to pay to the Lessee interest on such amount of
Stipulated Loss Value at the rate included in such payment if any, or
otherwise at the applicable Debt Rate, for the period from the date of payment
by the Lessee of the Stipulated Loss Value to the date of reimbursement of the
Lessee under this Section 11.05(b). The excess, if any, remaining after such
application shall be divided between the Lessor and the Lessee as their
respective interests may appear.
(c) Payment if the Lessee Elects Replacement. If the payments
described in Section 11.05(a) hereof are received with respect to the Airframe
or with respect to the Airframe and the Engines or engines then installed on
the Airframe and the Lessee has elected the alternative set forth in Section
11.03 hereof, or if such payments are received with respect to an Engine not
then installed on the Airframe under the circumstances contemplated by Section
11.04 hereof, all such payments shall, subject to Section 11.08 hereof, be
paid over to or retained by the Lessee, provided that the Lessee shall have
fully performed its obligations pursuant to Section 11.03 or Section 11.04
hereof, as the case may be, with respect to the Event of Loss for which such
payments are made.
Section 11.06. Requisition of an Airframe and the Installed Engines
for Use by Government. In the event of the requisition for use by the
Government or any other government of registry of the Aircraft, or any agency
or instrumentality of either (a "Requisitioning Government") of the Airframe
and the Engines or engines then installed on the Airframe during the Term,
which requisition does not constitute an Event of Loss, the Lessee shall
promptly notify the Lessor, the Indenture Trustee and the Owner Participant of
such requisition and all of the Lessee's obligations under this Lease with
respect to such Airframe and Engines or engines shall continue to the same
extent as if such requisition had not occurred except to the extent that any
failure or delay in the performance or observance of such obligations (other
than obligations for the payment of Rent and, subject to Section 7.01(f)
hereof, the maintenance of required insurance) by the Lessee shall have been
caused by such requisition. All payments received by the Lessor, the Lessee
or any permitted sublessee or transferee from the Requisitioning Government
for such use of the Airframe and Engines or engines during the Term (other
than any such requisition which constitutes an Event of Loss, as to which the
provisions of Section 11.05 hereof shall govern) shall, subject to Section
11.08 hereof, be paid over to, or retained by the Lessee or such permitted
sublessee or transferee unless a Payment Default, Bankruptcy Default or Event
of Default shall have occurred and be continuing (in which case such proceeds
shall be held (unless applied) pursuant to Section 23.01 hereof as security
for Lessee's obligations hereunder and under the Participation Agreement).
All payments received by the Lessor, the Lessee or any such permitted
sublessee or transferee from the Requisitioning Government for the use of the
Airframe and Engines or engines after the Term shall be paid over to, or
retained by, the Lessor (or the Lessee if it shall have purchased the Lessor's
interest therein in accordance with the provisions hereof).
Section 11.07. Requisition for Use by Government of an Engine Not
Installed on the Airframe. In the event of the requisition for use by a
Requisitioning Government of registry of the Aircraft or any agency or
instrumentality thereof of any Engine not then installed on the Airframe, the
Lessee shall replace such Engine by complying with the terms of Section 11.04
hereof to the same extent as if an Event of Loss had occurred with respect to
such Engine as of the date of such requisition, and any payments received by
the Lessor or the Lessee from the Requisitioning Government with respect to
such requisition shall, subject to Section 11.08 hereof, be paid over to or
retained by the Lessee, provided that the Lessee shall have fully performed
its obligations under Section 11.04 hereof.
Section 11.08. Application of Payments During Existence of Certain
Defaults. Any amount referred to in Section 11.05, 11.06 or 11.07 hereof
which is payable to the Lessee shall not be paid to the Lessee, or, if it has
been previously paid directly to the Lessee, shall not be retained by the
Lessee, if at the time of such payment a Payment Default, Bankruptcy Default
or Event of Default shall have occurred and be continuing, but shall be paid
to and held by the Lessor (or the Indenture Trustee so long as the Lien of the
Indenture is in effect) as provided in Article 23 hereof as security for the
obligations of the Lessee under this Agreement, and at such time as there
shall not be continuing any such Payment Default, Bankruptcy Default or Event
of Default, such amount to the extent not theretofore applied as provided
herein, shall be paid to the Lessee.
ARTICLE 12
RETURN OF AIRCRAFT
Section 12.01. Return of Aircraft. Unless the Aircraft is purchased
by the Lessee as provided in Section 4.02 hereof, at the end of the Term, or
upon the termination of this Lease pursuant to Article 10 or Article 17 hereof
or otherwise, the Lessee, at its own cost and expense, will return the
Aircraft by delivering it to the Lessor on the last day of the Term or on the
Termination Date, as the case may be, at the Lessee's principal maintenance
facility in Memphis, Tennessee or such other location specified by the Lessee
(and reasonably acceptable to the Owner Participant (or the Lessor so long as
the Lien of the Indenture is in effect)), within the continental United States
(on the Lessee's route structure as in effect on the return date) and the
Airframe shall be fully equipped with two Engines of the same or an improved
make and model as were delivered on the Delivery Date (or Replacement
Engines), free and clear of all Liens (other than Lessor's Liens), including
any rights of third parties under pooling, interchange, overhaul, repair or
similar agreements or arrangements, it being understood that all such Engines
and Replacement Engines so returned shall be of identical make and model and
that any Replacement Engine shall be in at least as good operating condition
and have at least the same value and utility as the Engines being replaced,
assuming such Engines were in the condition required hereunder. The Lessee
will give the Lessor at least 15 days' prior written notice of the place of
such return; provided, however, that if the Lessor shall have made the request
for storage pursuant to Section 12.06 hereof, the Lessee shall return the
Aircraft to the Lessor at the site of the storage.
Section 12.02. Return of Engines. If any engine not owned by the
Lessor shall be delivered with the Airframe as set forth in Section 12.01
hereof, the Lessee, concurrently with such delivery, will, at its own cost and
expense furnish the Lessor with (i) a full warranty xxxx of sale, in form and
substance reasonably satisfactory to the Lessor, with respect to such engine,
(ii) an opinion of the Lessee's counsel to the effect that, upon such return,
the Lessor will acquire full right, title and interest to such engine free and
clear of all Liens (other than Lessor's Liens) and (iii) a certificate as
described in Section 11.04(b)(iii) hereof. The Lessee shall take such other
action as the Lessor may reasonably request in order that such Replacement
Engine shall be duly and properly titled in the Lessor free and clear of all
Liens (other than Lessor's Liens), and the Lessor will then (i) transfer to
the Lessee, without recourse or warranty (except as to the absence of Lessor's
Liens), and subject to the disclaimers provided in Section 5.01 hereof, all
the Lessor's right, title and interest in and to any Engine in lieu of which a
Replacement Engine has been delivered pursuant to Section 12.01 hereof, "as
is, where is" and (ii) deliver to the Lessee such instrument as the Lessor
shall have received from the Indenture Trustee, releasing such Engine from the
Lien of the Indenture.
Section 12.03. Return of Manuals. Upon the return of the Aircraft, the
Lessee shall deliver to the Lessor all original (or photocopied or microfilmed
copies thereof, if then permitted to be maintained in such form under
applicable law) logs, manuals, certificates and technical data, and
inspection, modification and overhaul records pertaining to the Airframe,
Engines or engines, which are required to be maintained under applicable rules
and regulations of the Aeronautics Authority or pursuant to the Lessee's or
any permitted sublessee's Aeronautics Authority-approved maintenance program
and all original (or photocopied or microfilmed copies thereof, if then
permitted to be maintained in such form under applicable law) records required
to be maintained with respect to the Aircraft under the maintenance program
approved by the aeronautical authority of any other country of registry of the
Aircraft. All records shall be returned in the format necessary to allow the
Lessee or any sublessee to comply with Section 12.04(a)(i) hereof.
Section 12.04. Condition of Aircraft. (a) Required Condition. The
Aircraft when returned to the Lessor shall, at the Lessee's own cost and
expense, meet the following requirements:
(i) it shall, unless otherwise requested by the Lessor not less than
90 days prior to the end of the Term to retain the then-existing
registration of the Aircraft, be duly registered in the name of the Lessor
or its designee pursuant to the Transportation Code;
(ii) it shall be clean by airline and cargo handling operating
standards;
(iii) the Airframe shall be returned with the Engines, or any
replacements thereto as herein authorized, provided that the Airframe shall
have an aggregate of two Engines or engines (as herein authorized under
Section 12.02 hereof), both of the same make and model, installed thereon,
together with the equipment, accessories or parts installed thereon on the
Delivery Date or replacements therefor (as herein authorized) and
alterations, modifications and additions thereto made in accordance with
the provisions of this Lease;
(iv) it shall be in the condition required by Section 12.04(b) hereof
and in as good operating condition as when delivered to the Lessor on the
Delivery Date, ordinary wear and tear excepted;
(v) it shall have a currently effective airworthiness certificate
issued by the Aeronautics Authority;
(vi) it shall comply with any then applicable rules and regulations
imposed by the Aeronautics Authority and, without limitation of the
foregoing, terminate all airworthiness directives of, and mandatory
modifications required by, the Aeronautics Authority (or any government or
governmental authority, domestic or foreign, having jurisdiction over the
Aircraft) to be terminated during the Term of the Lease and each Engine
(including any Replacement Engine) shall be serviceable in accordance with
the Lessee's FAA-approved maintenance program;
(vii) it shall be free and clear of all Liens and rights of others
(other than Lessor's Liens) including, without limitation, rights of third
parties under pooling, interchange, overhaul, repair and other similar
agreements or arrangements referred to in Section 7.02(a) hereof; and
(viii) it shall be in a standard cargo configuration.
(b) Remaining Time. If, at the time of return of the Aircraft, the
Airframe is not being maintained under a continuous maintenance program, then
the Airframe shall have remaining until the next scheduled "C" check at least
1,000 hours of operation. If, at the time of return of the Aircraft, the
Airframe is subject to a continuous maintenance program, there will be no
time-before-overhaul requirement. If, at the time of return of the Aircraft,
the Engines are not being maintained under an on-condition maintenance
program, then the average number of hours on such Engines remaining until the
next scheduled engine heavy maintenance visit shall be at least 25% of the
allowable hours between engine heavy maintenance visits permitted under the
Lessee's FAA-approved maintenance program. If, at the time of return of the
Aircraft, the Engines are subject to an on-condition maintenance program,
there will be no time-before-overhaul requirement. With respect to
maintenance under the Lessee's maintenance program approved by the Aeronautics
Authority, the Lessee shall have treated the Aircraft in a nondiscriminatory
manner with other Airbus A300F-600 series aircraft in the Lessee's fleet, and
the Aircraft shall be free and clear of all Liens and rights of others other
than Lessor's Liens and shall be in compliance in every material respect with
the Lessee's maintenance program as if the Term were not ending.
Section 12.05. Delayed Return of Aircraft. (a) If the return of the
Aircraft to the Lessor in compliance with the terms of this Lease shall be
delayed beyond the scheduled end of the Term because of the occurrence of an
event described in clause (iii)(2)(B) of the definition of Event of Loss, this
Lease shall not terminate but shall continue in full force and effect until
the expiration of the six-month period (or, such shorter period referred to in
said clause (iii)(2)(B)) after the scheduled end of the Term, provided that
(i) Stipulated Loss Value and Termination Value during such extension shall be
an amount determined in accordance with Section 4.01(b) hereof, (ii) the
Lessee shall pay on demand, as Basic Rent for each day of such delay and this
Lease shall continue, an amount equal to the daily equivalent of the average
Basic Rent paid during the Basic Term and any then expiring Renewal Term, in
each case with such Basic Rent to include for this purpose the amounts
referred to in Section 3.01 hereof, or such higher compensation being paid by
the Government pursuant to the Civil Reserve Airfleet Program and (iii)
neither the Lessee nor any other Person shall use or operate the Aircraft in
any manner, except pursuant to the activation of such Civil Reserve Airfleet
Program.
(b) In any other situation in which the Aircraft is not returned to
the Lessor upon the expiration of the Term (other than due to a purchase of
the Aircraft by the Lessee pursuant to this Lease or by a purchaser under
Article 10 hereof), the Lessee shall pay on demand as Basic Rent for each day
of such delay an amount equal to the Rent per diem at a rate equal to the Fair
Market Rental and this Lease shall continue for up to six (6) months after the
end of the Term; provided, however, that nothing in this paragraph shall be
deemed (i) to relieve the Lessee in any respect from any Default or Event of
Default or claims with respect thereto arising from the failure to return the
Aircraft at the time or in the condition required by the Operative Agreements
or (ii) to permit the Lessee or any sublessee to operate or use the Aircraft
otherwise than in connection with effecting such return.
Section 12.06. Storage. Upon any expiration or termination of this
Lease, at the written request of the Lessor given at least 45 days prior to
such expiration or termination, the Lessee will arrange, or will cause to be
arranged, at no charge to the Lessor (subject, however, to the last sentence
of this Section 12.06), storage at a ramp storage facility for the Aircraft at
the Lessee's principal maintenance facilities in Memphis, Tennessee or one of
the Lessee's other maintenance facilities or at a location selected by the
Lessee used as a location for the parking or storage of aircraft for a period
of up to 30 days. At the end of such 30 day period, if the Lessor so requests
within 10 days before the end of such period, the Lessee will continue to
provide such ramp storage facility at such facility or location for an
additional 30 days at the Lessor's expense. If the Lessee is required by the
Lessor to move the Aircraft from one storage facility to another, such move
shall be at the risk and expense of the Lessor. The maintenance and risk of
loss of, and responsibility for obtaining insurance on, the Aircraft shall be
the responsibility of the Lessor during any period of storage; provided,
however, the Lessee will, upon written request of the Lessor and at the
Lessor's expense, not to exceed the Lessee's incremental cost of such service,
obtain insurance for such property (including, if possible, coverage through
its fleet policy).
Section 12.07. Special Markings. If requested by the Lessor, the
Lessee shall, at the Lessee's cost, remove or paint over all insignias and
other distinctive markings of the Lessee or any sublessee on the Aircraft and
repaint the stripped down areas in a workmanlike manner to match exterior
colors.
Section 12.08. Lessor's Option to Purchase Parts. At any time after
the Lessee has advised the Lessor that it has determined not to renew this
Lease or purchase the Aircraft, or the Aircraft is otherwise to be returned to
the Lessor, the Lessee shall advise the Lessor of any Part which the Lessee
intends, and is permitted, to remove as provided in Section 9.02(b) above, and
the Lessor may, at its option, upon 30 days' notice to the Lessee, purchase
any or all of such Parts from the Lessee upon the expiration of the Term at
their then Fair Market Value (taking into account the provisions of this
Lease) determined in accordance with the provisions of Section 4.03 hereof.
Upon any return of the Aircraft pursuant to this Article 12, if the Lessor does
not elect to exercise its option under this Section 12.08, the Lessee will, at
its own cost and expense, remove such Parts described in subparagraph (i),
(ii) or (iii) of Section 9.02(b) hereof as the Lessor may request.
ARTICLE 13
INSURANCE
Section 13.01. Comprehensive Airline Liability and Property Damage
Liability Insurance. (a) Comprehensive Airline Liability and Property Damage
Liability Insurance. The Lessee, at its own cost and expense, will maintain
or cause to be maintained with respect to the Aircraft, comprehensive airline
liability insurance including, without limitation, passenger legal liability
and property damage liability insurance and cargo legal liability in such
amounts, against such risks (including, without limitation, contractual
liability and war risk and allied perils liability), with such retentions as
the Lessee customarily maintains with respect to similar aircraft and engines
which comprise the fleet of the Lessee (subject to the limitations set forth in
Section 13.06 hereof), and with such insurers (which shall be insurers of
recognized responsibility), and such insurance against such other risks, as is
usually carried by similar corporations engaged in the same or similar
business and similarly situated as the Lessee and owning or operating aircraft
and engines similar to the Aircraft and Engines; provided that in no event
shall the limits of liability for all comprehensive airline liability
insurance be less than the amount, per occurrence, as set forth on the
insurance certificate delivered on the Delivery Date unless and only so long
as the Aircraft is not operated and appropriate insurance for the Aircraft on
the ground is maintained. The Lessee will also be required to maintain war
risk insurance if the Aircraft is operated in a war zone or, in the Lessee's
reasonable judgment, area of recognized hostilities, if such insurance is
available on commercially reasonable terms and if it is the custom for major
international Air Carriers flying comparable routes to carry such insurance.
(b) Government Indemnification. Notwithstanding Section 13.01(a)
hereof, in the event of the requisition for use by the Government of the
Airframe or the Airframe and the Engines or engines then installed on the
Airframe, the Lessee shall maintain throughout the period of such requisition
such insurance as would otherwise be required under this Section 13.01;
provided that the Lessor shall accept, in lieu of such insurance coverage,
written indemnification or insurance from the Government which is
substantially the same as otherwise required under this Article 13.
(c) Policy Terms. Any policy of insurance carried and maintained in
accordance with this Section 13.01, and any policy taken out in substitution or
replacement for any such policy subject to the terms, conditions and
limitations thereof, shall:
(i) name or be amended to name the Lessor in its individual capacity
and as owner of the Aircraft, the Indenture Trustee in its capacity as
such, the Owner Participant and each of their respective officers and
directors in their respective capacities as such as additional insureds
(hereinafter in this paragraph (c) sometimes referred to as "Additional
Insured");
(ii) provide that, in respect of the interest of any Additional
Insured in such policies, the insurance shall not be invalidated by any
action or inaction of the Lessee or any Additional Insured as defined under
the policy of insurance required under this Section 13.01 (other than any
action or inaction of such Additional Insured) and shall insure each
Additional Insured regardless of any breach or violation of any warranty,
declaration or condition contained in such policies by the Lessee or any
other Additional Insured (other than any breach or violation of any
warranty, declaration or condition by such Additional Insured) as defined
under the policy of insurance required under this Section 13.01;
(iii) provide that if such insurance is cancelled for any reason, or
any substantial change is made in the policies which adversely affect the
scope of the coverage required herein, or if such insurance is allowed to
lapse for nonpayment of premium, such cancellation, change or lapse shall
not be effective as to any Additional Insured for thirty (30) days (except
in the case of war risk coverage in which event the applicable period shall
be seven (7) days or such other period as may be customary) after receipt
by each such Additional Insured of written notice from such insurers or
such insurers' broker of such cancellation, change or lapse;
(iv) provide that the insurers shall waive any rights of subrogation
against each Additional Insured, to the extent that the Lessee has waived
its rights under this Lease and the Participation Agreement; provided that
the exercise by insurers of rights of subrogation derived from rights
retained by the Lessee shall not, in any way, delay payment of any claim
that would otherwise be payable by such insurers but for the existence of
rights of subrogation derived from rights retained by the Lessee;
(v) provide that all of the provisions of such policy shall operate
in the same manner as if there were a separate policy covering each
Additional Insured; provided, that such policies shall not operate to
increase any insurer's limit of liability;
(vi) be primary, without right of contribution from any other
insurance which is carried by any Additional Insured with respect to its
interest in the Aircraft;
(vii) provide that no Additional Insured shall have any obligation or
liability for premiums or other payments, if any, in connection with such
insurance; and
(viii) provide that such insurer shall waive the right of such
insurer to any set-off or counterclaim or any other deduction, whether by
attachment or otherwise, in respect of any liability of any Additional
Insured.
Section 13.02. Insurance Against Loss or Damage to Aircraft and
Engines. (a) Hull Insurance. The Lessee, at its own cost and expense, shall
maintain or cause to be maintained in effect, with insurers of recognized
responsibility, all-risk ground and flight aircraft hull insurance covering
the Aircraft and all-risk coverage with respect to any Engines and Parts while
temporarily removed from the Aircraft and not replaced by similar Engines or
Parts, including in each case war-risk and allied perils, hijacking (air
piracy) and governmental confiscation and expropriation insurance (except in
the country of registry) with such retentions (subject to the limitations set
forth in Section 13.06 hereof) and in such form, upon such terms and
conditions (including coverage for cost of claims), and in amounts as the
Lessee customarily maintains with respect to the aircraft in the Lessee's
fleet of the same type and model and operated on the same routes as the
Aircraft (except that the Lessee shall be required to maintain war-risk,
hijacking (air piracy) and governmental confiscation and expropriation
insurance (except in the country of registry) if the Aircraft is operated on
routes where the custom is for major international Air Carriers flying
comparable routes to carry such insurance), provided that such insurance shall
at all times while the Aircraft is subject to this Lease and the Lien of the
Indenture be on an agreed-value basis for an amount not less than an amount
equal to the Stipulated Loss Value for the relevant period for the Aircraft as
set forth on Schedule III to this Lease.
(b) Policy Terms. Any policies carried and maintained in accordance
with this Section 13.02 and any policies taken out in substitution or
replacement for any such policies subject to the terms, conditions and
limitations thereof shall:
(i) name or be amended to name the Lessor in its individual capacity
and as owner of the Aircraft (or, so long as the Indenture shall not have
been discharged, the Indenture Trustee) as sole loss payee (hereinafter in
this paragraph (b) sometimes referred to as "Loss Payee");
(ii) provide with respect to coverage provided under this Section
13.02, that (i) in the event of a loss involving proceeds in the aggregate
in excess of $6,000,000, the proceeds in respect of such loss up to an
amount equal to the Stipulated Loss Value for the Aircraft shall be payable
to the Lessor (or, so long as the Indenture shall not have been discharged,
the Indenture Trustee), it being understood and agreed that in the case of
any payment to the Lessor (or the Indenture Trustee) otherwise than in
respect of an Event of Loss, the Lessor (or the Indenture Trustee) shall,
unless a Payment Default, a Bankruptcy Default or an Event of Default shall
have occurred and be continuing, upon receipt of evidence satisfactory to
it that the damage giving rise to such payment shall have been repaired or
that such payment shall then be required to pay for repairs then being
made, pay the amount of such payment to the Lessee or its order, and (ii)
the entire amount of any loss involving proceeds in the aggregate of
$6,000,000 or less or the amount of any proceeds of any loss in excess of
the Stipulated Loss Value for the Aircraft shall be paid to the Lessee or
its order unless a Payment Default, a Bankruptcy Default or an Event of
Default shall have occurred and be continuing and the insurers have been
notified thereof by the Lessor or the Indenture Trustee (and if the
insurers have notice of a Payment Default, a Bankruptcy Default or an Event
of Default, such payment shall be made to the Indenture Trustee);
(iii) provide that if such insurance is cancelled for any reason or any
substantial change is made in the policies which adversely affects the
scope of the coverage required herein, or if such insurance is allowed to
lapse for nonpayment of premium, such cancellation, change or lapse shall
not be effective as to the Loss Payee for thirty days (except in the case
of war-risk coverage in which event the applicable period shall be seven
(7) days or such other period as may be customary) after receipt by the
Loss Payee of written notice from such insurer of such cancellation, change
or lapse;
(iv) provide that, in respect of the interest of the Lessor (in its
individual capacity and as the Owner Trustee), the Owner Participant or the
Indenture Trustee (in their respective capacities as such) in such
policies, the insurance shall not be invalidated by any action or inaction
of the Lessee or the Loss Payee (other than any action or inaction of such
Loss Payee) and shall insure the Lessor (in its individual capacity and as
Owner Trustee), the Owner Participant and the Indenture Trustee regardless
of any breach or violation of any warranty, declaration or condition
contained in such policies by the Lessee or the Loss Payee (other than any
breach or violation of any warranty, declaration or condition by the Loss
Payee) as defined under the policy of insurance required under this Section
13.02;
(v) provide that the insurers shall waive any rights of subrogation
against the Lessor (in its individual capacity and as Owner Trustee), the
Owner Participant and the Indenture Trustee to the extent that the Lessee
has waived its rights under this Lease or the Participation Agreement;
provided that the exercise by insurers of rights of subrogation derived
from rights retained by the Lessee shall not, in any way, delay payment of
any claim that would otherwise be payable by such insurers but for the
existence of rights of subrogation derived from rights retained by the
Lessee;
(vi) be primary and without rights of contribution from any other
insurance which is carried by the Loss Payee with respect to its interest
in the Aircraft;
(vii) provide that (except in the case of insurance with respect to
Engines and spare parts that have been removed from the Aircraft and
replaced with other Engines or engines, or spare parts, as the case may be)
such insurer shall waive any right of such insurer to any set-off or
counterclaim or any other deduction, whether by attachment or otherwise, in
respect of any liability of the Loss Payee;
(viii) provide that (except in the case of insurance with respect to
Engines and spare parts that have been removed from the Aircraft and
replaced with other Engines or engines or spare parts, as the case may be)
no Loss Payee shall have any obligation or liability for premiums or other
payments, if any, in connection with such insurance; and
(ix) in the event that separate policies are maintained to cover
all-risk ground and flight aircraft, hull and war risks and allied perils
insurance, include a 50/50 provisional claims settlement clause as
contained in the policies of insurance maintained by the Lessee with
respect to all other aircraft in the Lessee's fleet, and a copy of the
50/50 provisional claims settlement clause in effect on the Delivery Date
shall be attached to the insurance certificate issued on the Delivery Date.
Section 13.03. Application of Insurance Proceeds. (a) Generally. All
insurance proceeds (other than proceeds from policies carried by the Lessor,
the Indenture Trustee or the Owner Participant) received under policies
described in Section 13.02 hereof as the result of the occurrence of an Event
of Loss with respect to the Airframe or an Engine will be applied as follows:
(i) if such proceeds are received with respect to the Airframe or with
respect to the Airframe and the Engines or engines then installed on the
Airframe and the Lessee has elected or is deemed to have elected the
alternative set forth in Section 11.02 hereof, so much of such proceeds as
shall not exceed the amounts required to be paid by the Lessee pursuant to
said Section 11.02 hereof shall be applied in reduction of the Lessee's
obligation to pay such amounts if not already paid by the Lessee, or if
already paid by the Lessee, shall be applied to reimburse the Lessee for
its payment of such amounts, provided that no Payment Default, Bankruptcy
Default or Event of Default shall have occurred and be continuing, and the
balance, if any, of such proceeds remaining will be paid to the order of the
Lessee; if and so long as the foregoing proviso is not satisfied, such
proceeds shall be held (unless applied) pursuant to Section 23.01 hereof as
security for the Lessee's obligations hereunder and under the Participation
Agreement; or
(ii) if such proceeds are received with respect to the Airframe or the
Airframe and the Engines or engines then installed on the Airframe and the
Lessee has elected the alternative set forth in Section 11.03 hereof, or if
such proceeds are received with respect to an Engine not then installed on
the Airframe and not replaced by an Engine or engine under the
circumstances contemplated by Section 11.04 hereof, all such proceeds shall
be paid to the Indenture Trustee (unless the Indenture has been discharged
in which case paid to the Lessor) for disbursement to the order of the
Lessee, after the Lessee shall have fully performed the terms of Sections
11.03 or 11.04 hereof, as applicable, with respect to the Event of Loss for
which such proceeds are paid, provided that no Payment Default, Bankruptcy
Default or Event of Default shall have occurred and be continuing; if and
so long as the foregoing proviso is not satisfied, such proceeds shall be
held (unless applied) pursuant to Section 23.01 hereof as security for the
Lessee's obligations hereunder and under the Participation Agreement.
(b) Payment if no Event of Loss. The insurance proceeds of any
property damage loss not constituting an Event of Loss with respect to the
Airframe or an Engine will be applied in payment (or to reimburse the Lessee)
for repairs or for replacement property in accordance with Articles 7 and 8
hereof, if not already paid for by the Lessee, and any balance remaining after
compliance with said Articles 7 and 8 hereof with respect to such loss shall
be paid to the order of the Lessee, provided that no Payment Default,
Bankruptcy Default or Event of Default shall have occurred and be continuing;
if and so long as the foregoing proviso is not satisfied, such proceeds shall
be held (unless applied) pursuant to Section 23.01 hereof as security for the
Lessee's obligations hereunder and under the Participation Agreement.
(c) Information. If any Additional Insured becomes subject to any
claim covered by any insurance policy maintained pursuant to this Article 13,
the Lessee shall make available any information required by such Additional
Insured in connection with such claim.
Section 13.04. Reports. On or before the Delivery Date and thereafter
annually on or before the scheduled expiration date for such policy during the
Term, the Lessee shall cause an aviation insurance broker to furnish to the
Lessor and the Indenture Trustee a signed report, stating in reasonable detail
the types of coverage and limits carried and maintained on the Aircraft and
certifying that such insurance complies with the terms and conditions of this
Lease. The Lessee will cause its aviation insurance broker to advise the
Lessor and the Indenture Trustee in writing promptly of any default in the
payment of any premium and of any other act or omission on the part of the
Lessee of which it has knowledge and which might invalidate, cause
cancellation of or render unenforceable all or any part of any insurance
carried by the Lessee with respect to the Aircraft. The Lessee will cause
such insurance broker to agree to advise the Lessor, the Indenture Trustee and
the Owner Participant in writing if and when it becomes evident to such broker
that any insurance policy carried and maintained on the Aircraft pursuant to
this Article 13 will not be renewed at the expiration date. If the Lessee
shall fail to maintain insurance as required, the Lessor may, at its option,
provide such insurance, and in such event, the Lessee shall, upon demand,
reimburse the Lessor, as Supplemental Rent, for the cost of such insurance;
provided, however, that no exercise of said option shall affect the provisions
of this Lease, including the provisions that failure by the Lessee to maintain
the prescribed insurance shall constitute an Event of Default or otherwise
constitute a waiver of any other rights the Lessor may have against the Lessee.
Section 13.05. Lessor's Insurance. The Lessor, the Indenture Trustee
or the Owner Participant may insure the Airframe or any Engine at its own cost
and expense, including insuring the Aircraft for amounts in excess of the
Stipulated Loss Value of the Aircraft, provided that any insurance so
maintained by the Lessor, the Indenture Trustee or the Owner Participant shall
not result in a reduction of coverage or amounts payable under insurance
required to be maintained by the Lessee under this Article 13 or increase the
cost to the Lessee of maintaining such insurance; provided further, that any
insurance policies of the Lessor, the Indenture Trustee or the Owner
Participant insuring the Airframe or any Engine shall provide for a release to
the Lessee of any and all salvage rights in and to the Airframe or any Engine.
Section 13.06. Self-Insurance. The Lessee may self-insure the risks
required to be insured against by Sections 13.01 and 13.02 hereof in such
reasonable amounts as are then applicable to other aircraft or engines of the
Lessee of value comparable to the Aircraft, but in no case shall such
self-insurance with respect to all aircraft in the Lessee's fleet in aggregate
exceed for any 12-month policy year an amount equal to the lesser of (i) 50%
of the highest insured value of any single aircraft in the Lessee's fleet and
(ii) 1.5% of the aggregate insured value from time to time of the Lessee's
entire aircraft fleet provided that a standard deductible per occurrence per
aircraft not in excess of the amount customarily allowed as a deductible in
the industry shall be permitted in addition to the above-mentioned
self-insurance. The foregoing shall not permit the Lessee to discriminate as
between insurance coverage on the Aircraft and insurance which the Lessee
maintains with respect to similar aircraft owned or operated by the Lessee
operating on similar routes in similar locations.
ARTICLE 14
INSPECTION
Section 14.01. Right of Inspection. At reasonable times, and upon at
least five (5) Business Days' prior written notice to the Lessee, the Lessor,
the Indenture Trustee or the Owner Participant, or their respective authorized
representatives, may inspect the Aircraft and upon at least ten (10) Business
Days' prior written notice, all Aeronautics Authority required books and
records of the Lessee or any sublessee and all books and records required to
be maintained by the Lessee under its FAA-approved maintenance program (or
books and records required to be maintained by the aeronautical authority of
any other country of registry of the Aircraft) relating to the maintenance of
the Aircraft and such Persons shall keep any information obtained thereby
confidential and shall not disclose the same to any Person, except to a Person
described in Section 18.01 of the Participation Agreement. Any such
inspection of the Aircraft shall be a visual, walk-around inspection of the
interior and exterior of the Aircraft and shall not include opening any panel,
bays or the like without the express consent of the Lessee (except to the
extent any such inspection takes place when any such panel, bays or the like
are open). Notwithstanding the previous sentence, unless a Payment Default,
Bankruptcy Default, material Default relating to maintenance (without giving
effect to the provisos to Section 7.01(b) hereof) or an Event of Default shall
have occurred and be continuing, the Lessor, the Indenture Trustee, the Owner
Participant or their respective authorized representatives shall each be
entitled to inspect the Aircraft only one time during any consecutive
twelve-month period provided, however, that during the final year of the Basic
Term the Lessor shall be entitled to inspect on two (2) occasions. The Lessee
shall make any permitted sublease or transfer permitted under Section 7.02
hereof expressly subject to inspection rights consistent with this Article 14.
Section 14.02. No Obligation to Inspect. None of the Lessor, the
Indenture Trustee or the Owner Participant shall have any duty to make any
inspection pursuant to Section 14.01 hereof and no such party shall incur any
liability or obligation by reason of making or not making any such inspection.
ARTICLE 15
ASSIGNMENT
Section 15.01. Lessee's Right to Assign. The Lessee shall not, and
shall have no authority or power to assign, convey or sublease any of its
rights under this Lease without the prior written consent of the Lessor except
(i) as expressly provided in Section 7.02 hereof, or in the case of any
requisition by the Government referred to in Section 7.01 of this Lease, or
(ii) to a wholly-owned domestic subsidiary of the Lessee which shall be a
certificated U.S. Air Carrier. Any such assignment, conveyance or sublease
shall in no way relieve the Lessee from any obligation hereunder or under any
other Operative Agreement or any written agreement of the Lessee entered into
in connection with the transactions contemplated by the Operative Agreements,
which shall be and remain obligations of the Lessee. The Lessor agrees that
it will not assign or convey its right, title and interest in and to this
Lease or the Aircraft except as contemplated by or provided in this Lease, the
Trust Agreement, the Indenture or the Participation Agreement. The terms and
provisions of this Lease shall be binding upon and inure to the benefit of the
Lessor and the Lessee and their respective successors and permitted assigns,
and shall inure, to the extent expressly provided herein and therein, to the
direct benefit of, and in accordance with the provisions of the Indenture and
the Participation Agreement shall be enforceable by, the Indenture Trustee,
the Lessor and their respective successors and permitted assigns.
Section 15.02. Citizenship. The Lessee will at all times be a duly
certificated U.S. Air Carrier under the Transportation Code.
ARTICLE 16
EVENTS OF DEFAULT
Section 16.01. Events of Default. Each of the following events shall
constitute an Event of Default, whether any such event shall be voluntary or
involuntary or come about or be effected by operation of law or pursuant to or
in compliance with any judgment, decree or order of any court or any order,
rule or regulation of any administrative or governmental body:
(a) the Lessee shall fail to make any payment of Interim Rent, Basic
Rent, Renewal Rent, Stipulated Loss Value or Termination Value, as the case
may be, within ten Business Days after the date when due (except that with
respect to any failure to pay Excepted Payments, such failure shall
constitute an Event of Default at the discretion of the Owner Participant);
or
(b) the Lessee shall fail to make any payment of Supplemental Rent
(other than amounts described in clause (a) above) within 20 days after the
Lessee has received written notice from the Person entitled to receive such
payment stating that such payment is due (except that with respect to any
failure to pay Excepted Payments for such period, such failure shall
constitute an Event of Default at the discretion of the Owner Participant);
or
(c) (i) the Lessee shall fail to procure, carry and maintain
insurance on or in respect of the Aircraft in accordance with the
provisions of Article 13 or such insurance lapses or is cancelled, provided
that no such lapse or cancellation shall constitute an Event of Default
until the earlier of (A) 30 days (or seven days or such shorter time as may
be standard in the industry with respect to war risk coverage) after
receipt by any Additional Insured of written notice of such lapse or
cancellation and (B) the date that such lapse or cancellation is effective
as to any Additional Insured and provided further that such failure shall
not constitute an Event of Default as long as the Aircraft remains grounded
and is insured as required while on the ground and not operated, or (ii)
the Aircraft shall be operated at any time when comprehensive airline
liability insurance required under Section 13.01 hereof shall not be in
effect (it being understood that the Lessee is not required to maintain
such insurance under Section 13.01 hereof while the indemnification or
insurance referred to in the proviso to Section 13.01(b) hereof is in
effect); or
(d) the Lessee shall fail to perform or observe any other covenant,
condition or agreement to be performed or observed by it under any
Operative Agreement (excluding the Tax Indemnity Agreement) or any other
written agreement of the Lessee entered into in connection with the
transactions contemplated by the Operative Agreements and such failure
shall continue unremedied for a period of thirty (30) days after the Lessee
shall have received written notice from the Lessor or the Owner Participant
of such failure, provided, that in the event such failure is curable and so
long as (but for no longer than 150 days after such 30-day period) the
Lessee shall have promptly undertaken such cure after the Lessee receives
notice thereof which undertaking shall be diligently and continuously
pursued using the Lessee's reasonable best efforts, such failure shall not
constitute an Event of Default; provided, further, that failure of the
Lessee to maintain the registration of the Aircraft under the
Transportation Code pursuant to the Lessee's covenants and agreement in
Section 6.03(b) of the Participation Agreement and in Section 7.01(a) of
this Lease, when the lapse of such registration is solely because the Owner
Participant or the Lessor has ceased to be a Citizen of the United States,
shall not constitute a Default or an Event of Default; or
(e) an order for relief shall be entered in respect of the Lessee by
a court having jurisdiction in the premises in an involuntary case under
the federal bankruptcy laws as now or hereafter in effect; or the Lessee
shall consent to the appointment of a custodian, receiver, trustee or
liquidator of itself or of a substantial part of its property; or the
Lessee is not paying, or shall admit in writing its inability to pay, its
debts generally as they come due or shall make a general assignment for the
benefit of creditors; or the Lessee shall file, or the Board of Directors
of the Lessee shall authorize the filing of, or grant one or more persons
authority (at their discretion) to make a filing for, a voluntary petition
in bankruptcy or a voluntary petition or an answer seeking reorganization
in a proceeding under any bankruptcy laws (as now or hereafter in effect)
or an answer admitting the material allegations of a petition filed against
the Lessee in any such proceeding; or the Lessee shall file, or the Board
of Directors of the Lessee shall authorize the Lessee to, or grant one or
more persons authority (at their discretion) to, seek relief by voluntary
petition, answer or consent, under the provisions of any other or future
bankruptcy or other similar law providing for the reorganization or
winding-up of corporations, or providing for an agreement, composition,
extension or adjustment with its creditors; or
(f) an order, judgment or decree shall be entered by any court of
competent jurisdiction appointing, without the consent of the Lessee, a
custodian, receiver, trustee, or liquidator of the Lessee or of any
substantial part of its property, or sequestering any substantial part of
the property of the Lessee, or granting any other relief in respect of the
Lessee under the federal bankruptcy laws or other insolvency laws, and any
such order, judgment or decree of appointment or sequestration shall remain
in force undismissed or unvacated for a period of ninety (90) days after
the date of its entry; or
(g) a petition against the Lessee in a proceeding under the federal
bankruptcy law or other insolvency laws (as now or hereafter in effect)
shall be filed and shall not be withdrawn or dismissed within ninety (90)
days, or under the provisions of any law providing for reorganization or
winding-up of corporations which may apply to the Lessee, any court of
competent jurisdiction shall assume jurisdiction, custody or control of the
Lessee or of any substantial part of its property and such jurisdiction,
custody or control shall remain in force unrelinquished or unterminated for
a period of ninety (90) days; or
(h) any representation or warranty made by the Lessee in this Lease
or in the Participation Agreement or in any document or certificate
furnished by the Lessee in connection with or pursuant to this Lease or the
Participation Agreement (except for the Tax Indemnity Agreement) shall at
any time prove to have been incorrect at the time made in any respect
material to the transactions contemplated by this Lease and, if originally
made by the Lessee in good faith, shall remain material and unremedied for
a period of thirty (30) days after the Lessee shall have received written
notice of such misstatement.
ARTICLE 17
REMEDIES
Section 17.01. Remedies Upon Lessee's Default. (a) Remedies
Generally. Upon the occurrence of any Event of Default and at any time after
such occurrence so long as the same shall be continuing, the Lessor may, at
its option, declare this Lease to be in default (except that no such
declaration shall be required in the case of an Event of Default pursuant to
paragraphs (e), (f) or (g) of Section 16.01 hereof and this Lease shall be
deemed declared in default without any further act or notice), and at any time
thereafter the Lessor may do, and the Lessee shall comply with, one or more
of the following with respect to all or any part of the Airframe and the
Engines, as the Lessor in its sole discretion shall elect, to the extent
permitted by, and subject to compliance with, any mandatory requirements of
applicable law then in effect:
(i) Demand in writing that the Lessee shall, and upon such written
demand the Lessee shall, at the Lessee's own cost and expense, return
promptly to the Lessor all or such part of the Airframe and the Engines as
the Lessor may demand in the manner and condition required by, and
otherwise in accordance with all of the provisions of this Lease (provided
that, unless the Lessor shall require otherwise, the Aircraft shall be
returned within the continental United States), or the Lessor, at its
option, may enter upon the premises where such Airframe or Engines are
located or believed to be located and take immediate possession of and
remove such Airframe and Engines (together with any engine which is not an
Engine but is installed on the Airframe, subject to all of the rights of
the owner, lessor, Lien holder or secured party of such engine) without the
necessity for first instituting proceedings, or by summary proceedings or
otherwise, all without liability of the Lessor to the Lessee for or by
reason of such entry or taking of possession, whether for the restoration
of damage to property caused by such action or otherwise;
(ii) With or without taking possession thereof, sell or otherwise
dispose of the Airframe or any Engine, at public or private sale and with
or without advertisement or notice to the Lessee, as the Lessor may
determine, and the Lessor may hold the Lessee liable for any installment of
Interim Rent, Basic Rent and Renewal Rent due on or before the date of such
sale (and, if Interim Rent, Basic Rent or Renewal Rent is payable in
arrears, the pro rata portion of the installment of Interim Rent, Basic
Rent or Renewal Rent due on the next succeeding Rent Payment Date in
respect of any period commencing on the immediately preceding Rent Payment
Date to the date of such sale), or hold, use, operate, lease to others or
keep idle all or any part of the Airframe or any Engine as the Lessor, in
its sole discretion, may determine, in any such case free and clear of any
rights of the Lessee except as otherwise set forth in this Article 17, and
without any duty to account to the Lessee with respect to such action or
inaction or for any proceeds except to the extent required by Section
17.01(a)(iv) hereof; in the event the Lessor elects to exercise its rights
under said Section, and in connection with any sale of the Aircraft or any
part thereof pursuant to this Article 17, the Lessor, the Indenture
Trustee, the Owner Participant or any Holder may bid for and purchase such
property;
(iii) Whether or not the Lessor shall have exercised or shall later at
any time exercise any of its rights under Section 17.01(a)(i) or
17.01(a)(ii) hereof, the Lessor, by written notice to the Lessee specifying
a payment date not earlier than 10 days from the date of such notice, may
demand that the Lessee pay to the Lessor, and the Lessee shall pay to the
Lessor on the payment date specified in such notice, as liquidated damages
for loss of a bargain and not as a penalty (in lieu of the Interim Rent,
Basic Rent or Renewal Rent due on Rent Payment Dates occurring after the
payment date specified in such notice), any installment of Interim Rent,
Basic Rent, Renewal Rent and any Supplemental Rent due on or before such
payment date (and, to the extent Interim Rent, Basic Rent or Renewal Rent
is payable in arrears, the pro rata portion of the installment of Interim
Rent, Basic Rent or Renewal Rent due on the next succeeding Rent Payment
Date in respect of the period commencing on the Stipulated Loss Value
Determination Date referred to below and ending on the date of such
payment), plus an amount equal to the excess, if any, of the Stipulated
Loss Value for the Aircraft, computed as of the Stipulated Loss Value
Determination Date on or next preceding the payment date specified in such
notice over the Fair Market Value of the Aircraft, computed as of such
Stipulated Loss Value Determination Date, together with (A), if Interim
Rent or Basic Rent is payable in advance, interest, to the extent permitted
by applicable law, at the Debt Rate on the amount of such Stipulated Loss
Value from such Stipulated Loss Value Determination Date to the date for
payment set forth in such notice from the Lessor and (B) in all cases,
interest, to the extent permitted by applicable law at the Past Due Rate on
the excess of such Stipulated Loss Value over such Fair Market Value, from
the date as of which such Stipulated Loss Value is payable to the date of
actual payment of such amount; provided, however, that if (and in any event
prior to the time for payment hereunder) the Lessor is unable within a
reasonable period of time to recover possession of the Aircraft, or any
portion thereof, pursuant to clause (i) above unencumbered by this Lease
and free and clear of all Liens (other than Lessor's Liens), the Fair
Market Value of the Aircraft or such portion shall, at the option of the
Lessor to the extent legally enforceable, be zero and, if the Fair Market
Value of the Aircraft is deemed to be zero, after payment in full by the
Lessee of the amount specified above and all other amounts due from the
Lessee under this Lease and the other Operative Agreements, the Lessor
shall promptly transfer (without recourse or warranty other than as to the
absence of the Lessor's Liens) all of its right, title and interest in the
Aircraft or such portion, to the Lessee;
(iv) In the event the Lessor, pursuant to Section 17.01(a)(ii) hereof,
shall have sold the Airframe and/or any Engine, the Lessor, in lieu of
exercising its rights under Section 17.01(a)(iii) hereof, may, if it shall
so elect, demand that the Lessee pay the Lessor, and the Lessee shall pay
to the Lessor, on the date of such sale, as liquidated damages for loss of
a bargain and not as a penalty (in lieu of the Interim Rent, Basic Rent or
Renewal Rent due after the date on which such sale occurs) any unpaid
Interim Rent, Basic Rent or Renewal Rent due on or before the date on which
such sale occurs (and, to the extent Interim Rent, Basic Rent or Renewal
Rent is payable in arrears, the pro rata portion of the installment of
Interim Rent, Basic Rent or Renewal Rent due on the next succeeding Rent
Payment Date in respect of any period commencing on the Stipulated Loss
Value Determination Date referred to below and ending on the date of such
sale), and any Supplemental Rent due on or before the date on which such
sale occurs, plus an amount equal to the excess, if any, of (A) the
Stipulated Loss Value for the Aircraft, computed as of the Stipulated Loss
Value Determination Date next preceding the sale date, over (B) the net
proceeds of such sale (after deduction of all of the Lessor's costs and
expenses of such sale, including, without limitation, sales or transfer
taxes, costs of storage, overhaul, maintenance, preparation and
transportation of the Aircraft and brokers' and attorneys' fees) together
with (x), if Interim Rent or Basic Rent is payable in advance, interest, to
the extent permitted by applicable law, at the Debt Rate on such Stipulated
Loss Value from such Stipulated Loss Value Determination Date to the date
of such sale and (y) in all cases, interest to the extent permitted by
applicable law at the Past Due Rate, on the amount of such excess from the
date of such sale to the date of actual payment by the Lessee;
(v) Proceed by appropriate court action to enforce the terms of this
Lease or to recover damages for its breach;
(vi) Terminate or rescind this Lease as to the Airframe or any or all
of the Engines; or
(vii) Exercise any other right or remedy which may be available to the
Lessor under applicable law.
(b) Cost of Exercise of Remedies. In addition, the Lessee shall be
liable, except as otherwise provided above, for any and all unpaid Rent due
before, after or during the exercise of any of the Lessor's remedies, for all
amounts payable by the Lessee under the Participation Agreement before or
after any termination hereof, and for all reasonable legal fees and other
costs and expenses incurred by the Lessor, the Indenture Trustee or the Owner
Participant by reason of the occurrence of any Event of Default or the
exercise of the Lessor's remedies, including, without limitation, all costs
and expenses incurred in connection with the return of the Airframe or any
Engine in accordance with the terms of Article 12 hereof or in placing the
Airframe or Engines in the condition and airworthiness required by such
Article or in connection with any inspection, use, operation, maintenance,
insurance, storage, or leasing carried out as part of such exercise.
Section 17.02. Cumulative Remedies. Except as otherwise provided, no
remedy referred to in this Article 17 is intended to be exclusive, but each
shall be cumulative and in addition to any other remedy referred to above or
otherwise available to the Lessor at law or in equity; and the exercise or
beginning of exercise by the Lessor of any one or more of such remedies shall
not preclude the simultaneous or later exercise by the Lessor of any or all of
such other remedies.
Section 17.03. Waiver. No express or implied waiver by the Lessor of
any Event of Default shall in any way be, or be construed to be, a waiver of
any future or subsequent Event of Default. To the extent permitted by
applicable law, the Lessee waives any rights now or in the future conferred by
statute or otherwise which may require the Lessor to sell, lease or otherwise
use the Airframe or any Engine in mitigation of the Lessor's damages or which
may otherwise limit or modify any of the Lessor's rights or remedies under
this Article 17. The Lessor's access to the Aircraft is of the essence and
shall not be impaired.
Section 17.04. Lessor's Right to Perform for Lessee. If the Lessee
fails to make any required payment of Rent or fails to perform or comply with
any of its agreements contained in this Lease, whether or not such failure
shall constitute an Event of Default hereunder, the Lessor may (but shall not
be obligated to) make such payments or perform or comply with such agreement,
and the amount of such payment and the amount of the reasonable costs and
expenses of the Lessor incurred in connection with such payment or the
performance of or compliance with such agreement, together with interest (to
the extent permitted by applicable law) at the Past Due Rate from the date of
the making of such payment or the incurring of such costs and expenses by the
Lessor to the date of payment of such Rent or other amount by the Lessee,
shall be deemed Supplemental Rent payable by the Lessee upon demand. No such
payment or performance by the Lessor shall be deemed to waive any Default or
Event of Default or relieve the Lessee of its obligations hereunder.
ARTICLE 18
COVENANT OF QUIET ENJOYMENT
Section 18.01. Quiet Enjoyment. So long as no Event of Default shall
have occurred and be continuing, the Lessor covenants that neither it nor any
other Person lawfully claiming through it (other than the holder of a Lien
which the Lessee is obligated to discharge pursuant to Article 6 hereof, and
it being understood that the Lessor shall not be liable for any act or
omission of the Indenture Trustee or any other Person claiming through the
Indenture Trustee) shall interfere with the Lessee's right to quietly enjoy
the Aircraft without hindrance or disturbance by it or any such other Person.
ARTICLE 19
FURTHER ASSURANCES
Section 19.01. Further Assurances. Promptly upon the execution and
delivery of this Lease, the Trust Agreement and the Indenture, the Lessee will
cause each of them to be duly filed for recordation in accordance with the
Transportation Code and will maintain the recordation of the Indenture until
the Lien of the Indenture shall have been discharged pursuant to the terms of
the Indenture. In addition, the Lessee will, at the Lessee's own cost and
expense, promptly and duly execute and deliver to the Lessor, the Owner
Participant and the Indenture Trustee such further documents and assurances to
carry out the intent and purpose of this Lease and the Indenture and to
establish and protect the rights and remedies created or intended to be
created in favor of the Lessor under this Lease, and of the Owner Participant
under the Trust Agreement, and of the Indenture Trustee under the Indenture,
including, without limitation, the execution and filing of Uniform Commercial
Code financing and continuation statements, the execution and delivery of
supplements and amendments to this Lease and the Indenture, in recordable
form, subjecting to this Lease and the Indenture any Replacement Airframe
and/or Replacement Engines delivered by the Lessee pursuant to Section 11.03
hereof and any Replacement Engine delivered by the Lessee pursuant to Section
11.04 hereof and the recording and filing of counterparts of this Lease and
the Indenture in accordance with the laws of such jurisdictions as the Lessor
or the Indenture Trustee may from time to time deem advisable. The foregoing
does not impose upon the Lessor any additional liabilities not otherwise
contemplated by this Lease.
ARTICLE 20
NET LEASE
Section 20.01. Nature of Lease. (a) This Lease is a net lease, it
being the intention of the parties hereto that the obligations of the Lessee
to pay all costs and expenses of every character, whether seen or unforeseen,
ordinary or extraordinary, or structural or nonstructural, in connection with
the use, operation, maintenance, repair and reconstruction of the Airframe and
each Engine by the Lessee, including, without limitation, the costs and
expenses particularly set forth in this Lease (unless expressly excluded from
the terms hereof, the costs and expenses of the Lessor and the Owner
Participant shall include the reasonable fees and expenses of their respective
outside counsel), shall be absolute and unconditional, shall be separate and
independent covenants and agreements, and shall continue unaffected unless and
until the covenants have been terminated pursuant to an express provision of
this Lease. The obligation to pay Rent and all amounts payable by the Lessee
under this Lease or the Participation Agreement shall be absolute and
unconditional and (except as otherwise expressly provided with respect to
Supplemental Rent) shall be paid without notice or demand and such obligation
shall not be affected by any circumstance, including, without limitation:
(i) any set-off (except to the extent set forth in Section 3.05
hereof), counterclaim, recoupment, defense or other right which the Lessee
may have against the Lessor, the Owner Participant, any Holder, the
Indenture Trustee or anyone else for any reason (including, without
limitation, any breach by the Lessor or the Owner Participant or the
Indenture Trustee or any Holder of their respective representations,
warranties, agreements or covenants contained in any of the Operative
Agreements);
(ii) any defect in the title, airworthiness, registration, eligibility
for registration under the Transportation Code (and the regulations
thereunder) or under any of the laws or regulations of any other country of
registry of the Aircraft, condition, design, operation, merchantability or
fitness for use of, suitability for a particular purpose of, or any damage
to or loss or destruction of, the Aircraft or any portion thereof, or any
interruption or cessation in the use or possession of the Aircraft by the
Lessee or any sublessee for any reason including, without limitation, by
reason of governmental action or any doctrine of force majeure or
impossibility of performance;
(iii) any insolvency, bankruptcy, reorganization or similar case or
proceedings by or against the Lessor, the Lessee, the Indenture Trustee or
the Owner Participant or any other Person;
(iv) any Liens, encumbrances or rights of any other Person with
respect to the Aircraft, the invalidity or unenforceability or lack of due
authorization or other infirmity of this Lease or any other Operative
Agreement or document or instrument executed pursuant hereto or thereto, or
any lack of right, power or authority of the Lessor or the Lessee or any
sublessee or any other party to any other Operative Agreement to enter into
this Lease or any other Operative Agreement or any such document or
instrument; or
(v) any other circumstance, happening or event whatsoever, whether or
not unforeseen, or similar to any of the foregoing.
(b) To the extent permitted by applicable law, the Lessee waives any
and all rights which it may now have or which at any time it may have
conferred upon it, by statute or otherwise, to suspend performance under,
terminate, cancel, quit, rescind or surrender this Lease, the Airframe, or any
Engine or part thereof, other than in accordance with the terms hereof.
(c) Each payment of Rent made by the Lessee shall be final as to the
Lessor and the Lessee, and the Lessee will not seek to return nor to recover,
xxxxx, suspend, defer or reduce all or any part of any such payment of Rent
from the Lessor or from the Indenture Trustee for any reason, except the
Lessee has the right to the extent provided in Section 3.05 hereof to offset a
portion of payments due from the Lessee to the Lessor pursuant thereto.
ARTICLE 21
SUCCESSOR LESSOR
Section 21.01. Successor Lessor. The Lessee agrees that in the case
of the appointment of any successor trustee for the Lessor pursuant to the
terms of the Participation Agreement, such successor trustee shall, upon
written notice by such successor to the Lessee, succeed to all the rights,
powers and title of the Lessor under this Lease and shall be deemed to be the
Lessor and the owner of the Aircraft for all purposes of this Lease without
the necessity of any consent or approval by the Lessee and without in any way
altering the terms of this Lease or the Lessee's obligations. One such
appointment and designation of a successor trustee shall not exhaust the right
to appoint and designate a further successor trustee pursuant to the
Participation Agreement, but such right may be exercised repeatedly so long as
this Lease shall be in effect.
ARTICLE 22
SECURITY FOR LESSOR'S OBLIGATIONS
Section 22.01. Security for Lessor's Obligations to Holders. In order
to secure the indebtedness evidenced by the Certificates, the Indenture
provides among other things, for the assignment by the Lessor to the Indenture
Trustee of this Lease and the Lease Supplement and for the creation of a first
mortgage and security interest in favor of the Indenture Trustee on the
Aircraft. The Lessee consents to and acknowledges such assignment (subject to
the reservations and conditions therein set forth) and the receipt of a copy
of the Indenture.
Section 22.02. Intentionally Left Blank.
Section 22.03. Consent of Lessee to Assignment of Lease as Security.
The Lessee hereby acknowledges and consents to the Indenture Trustee's rights
pursuant to the terms of the Indenture to receive payments (other than
Excepted Payments) due under this Lease, to transfer or assign title to the
Aircraft subject to this Lease, to make all waivers and agreements except as
otherwise provided in the Indenture, to give all notices, consents and
releases and to take all action upon the happening of a Default or Event of
Default under this Lease (except as otherwise specifically provided in the
Indenture), or to do any and all other things whatsoever which the Lessor is or
may become entitled to do under this Lease (except as otherwise provided in the
Indenture); all or any of which rights, obligations, benefits and interests
may, pursuant to the terms of the Indenture, be reassigned or retransferred by
the Indenture Trustee at any time and from time to time (except as otherwise
provided in the Indenture); provided, however, that the Lessor, except to the
extent, and for such time as, it is unable to do so by virtue of the
Indenture, shall remain liable for the performance of all the terms,
conditions, covenants and provisions for which it is obligated under this
Lease notwithstanding such assignment.
ARTICLE 23
SECURITY FUNDS
Section 23.01. Investment of Security Funds. (a) Any amounts otherwise
payable to the Lessee shall be held by the Lessor as security for, and may be
applied by the Lessor against, the obligations of the Lessee under this Lease
during such time as there shall have occurred and be continuing a Payment
Default, Bankruptcy Default or Event of Default, and, at such times as there
shall not be continuing a Payment Default, Bankruptcy Default or Event of
Default, such amounts, net of any amounts which have been applied by the
Lessor against the Lessee's obligations hereunder, shall be paid to the
Lessee. Any amounts which are held by the Lessor pending payment to the
Lessee shall, until paid to the Lessee or applied against the Lessee's
obligations hereunder, be invested by the Lessor, as directed from time to
time, in writing (and in the absence of a written direction by the Lessee, the
Lessor shall invest such monies in direct obligations of the United States of
America), by the Lessee and at the expense and risk of the Lessee, in the
following securities (which in the case of securities referred to in
subparagraphs (i) through (iv) of this Section 23.01(a) hereof shall mature
within ninety (90) days of the date of purchase):
(i) direct obligations of the United States of America; or
(ii) obligations fully guaranteed by the United States of America; or
(iii) certificates of deposit issued by, or bankers' acceptances of,
or time deposits or a deposit account with, any bank, trust company or
national banking association incorporated or doing business under the laws
of the United States of America or one of its States (which may include the
Owner Trustee or the Indenture Trustee in their respective individual
capacities or any Affiliate thereof), having a combined capital and surplus
of at least $500,000,000 and having a rating of "A" or better from Xxxxx'x
or S&P; or
(iv) commercial paper rated A-1/P-1 by S&P and Xxxxx'x respectively
(or if neither such organization shall rate such commercial paper at any
time, by any nationally recognized statistical rating organization in the
United States of America) equal to the highest rating assigned by such
rating organization (which may include commercial paper issued by the Owner
Trustee or the Indenture Trustee in their respective individual capacities
or any Affiliate thereof).
(b) At any time any invested funds are distributed to the Lessee,
there shall be promptly remitted to the Lessee any gain (including interest
received) realized as the result of any investment pursuant to Section
23.01(a) hereof (net of any fees, commissions and other costs, Taxes and
expenses, if any, incurred by the Lessor or the Owner Participant in
connection with such investment), unless a Payment Default, Bankruptcy Default
or Event of Default shall have occurred and be continuing in which case such
funds shall be applied in the same manner as the principal so invested. The
Lessee shall be responsible for and will promptly pay to the Indenture Trustee
or the Lessor, as the case may be, on demand, the amount of any loss realized
as the result of any such investment (together with any fees, commissions and
other costs, Taxes and expenses, if any, incurred by the Indenture Trustee or
the Lessor or the Owner Participant in connection with such investment), such
amount to be disposed of in accordance with the terms of the Indenture or the
Lease, as the case may be.
ARTICLE 24
CONCERNING THE LESSOR
Section 24.01. Lessor's Entry Into Lease. Except as expressly provided
herein, the Lessor and the Lessee agree that this Lease is executed by NBD not
individually but solely as Owner Trustee under the Trust Agreement in the
exercise of the power and authority conferred and vested in it as such Owner
Trustee, that each and all of the representations, undertakings and agreements
by the Lessor herein are for the purpose and with the intention of binding
only the Lessor's Estate, and that in no case whatsoever shall NBD be
personally liable for any loss in respect of such representations,
undertakings and agreements, that actions to be taken by the Lessor pursuant
to its obligation hereunder may, in certain instances, be taken by the Lessor
only upon specific authority of the Owner Participant and the Indenture
Trustee, that nothing herein contained shall be construed as creating any
liability on NBD, individually or personally, to perform any covenant, either
express or implied, herein, all such liability, if any, being expressly waived
by the Lessee and by each and every Person now or hereafter claiming by,
through or under the Lessee except with respect to the gross negligence or
willful misconduct of NBD, and that so far as NBD, individually or personally
is concerned, the Lessee and any Person claiming by, through or under the
Lessee shall look solely to the Lessor's Estate for the performance by the
Lessor of any of its obligations under this Lease; provided, that nothing in
this Section 24.01 shall be construed to limit in scope or substance those
representations and warranties of NBD in its individual capacity set forth in
the Participation Agreement or the Trust Agreement. The term "Lessor" as used
in this Lease shall include any trustee succeeding NBD as Owner Trustee under
the Trust Agreement. Any obligation of the Lessor hereunder may be performed
by the Owner Participant, and any such performance shall not be construed as
revocation of the trust created by the Trust Agreement. Nothing contained in
this Lease shall restrict the operation of the provisions of the Trust
Agreement with respect to its revocation of the resignation or removal of the
Owner Trustee hereunder.
ARTICLE 25
NOTICES
Section 25.01. Notices. All notices, demands, declarations and other
communications required by this Lease shall be in writing and shall be deemed
received (a) if given by telecopier, when transmitted and the appropriate
telephonic confirmation received if transmitted on a Business Day and during
normal business hours of the recipient, and otherwise on the next Business Day
following transmission, (b) if given by certified mail, return receipt
requested, postage prepaid, five Business Days after being deposited in the
United States mail and (c) if given by FedEx (or, if a Default or Event of
Default shall have occurred and be continuing, by other comparable courier
service), when received or personally delivered, addressed:
(a) If to the Lessee, to its office at 0000 Xxxxxxxxx Xxxxxx,
Xxxxxxx, Xxxxxxxxx 00000, Attention: Senior Vice President and Chief
Financial Officer with a copy to Senior Vice President and General Counsel;
telephone (000) 000-0000, facsimile (000) 000-0000; or at such other
address as the Lessee shall from time to time designate in writing to the
Lessor, the Indenture Trustee and the Owner Participant;
(b) If to the Lessor or Owner Trustee, to its office at 000 Xxxxxxxx
Xxxxxx, Xxxxxxx, Xxxxxxxx 00000, Attention: Corporate Trust Administration
Department; telephone (000) 000-0000, facsimile (000) 000-0000; or to such
other address as the Lessor shall from time to time designate in writing to
the Lessee and the Indenture Trustee, with a copy to Owner Participant at
the Owner Participant's address as provided in subsection (c) below;
(c) If to the Owner Participant, in accordance with the Participation
Agreement; and
(d) If to the Indenture Trustee, to its office at 4 Chase Metrotech
Center, 3rd Floor, Brooklyn, New York 11245, Attention: Corporate Trust
Administration; telephone (000) 000-0000, facsimile (000) 000-0000; or to
such other address as the Indenture Trustee shall from time to time
designate in writing to the Lessor, the Lessee and the Owner Participant.
ARTICLE 26
MISCELLANEOUS
Section 26.01. Section Headings and Captions. All article and section
headings and captions used in this Lease are purely for convenience and shall
not affect the interpretation of this Lease.
Section 26.02. References. Any reference to a specific article or
section number shall be interpreted as a reference to that article or section
of this Lease unless otherwise expressly provided.
Section 26.03. APPLICABLE LAW. THIS LEASE SHALL IN ALL RESPECTS BE
GOVERNED BY, AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW
YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE BUT
WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS, AND IS BEING
DELIVERED IN NEW YORK.
Section 26.04. Severability. Any provision of this Lease which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
Section 26.05. No Oral Modification. The terms and provisions of this
Lease may not be changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought. Any such change, waiver,
discharge or termination is also subject to the provisions of Section 8.01 and
Article XIII of the Indenture.
Section 26.06. Agreement as Chattel Paper. To the extent that this
Lease constitutes chattel paper (as such term is defined in the Uniform
Commercial Code as in effect in any applicable jurisdiction), no security
interest in this Lease may be created through the transfer or possession of
any counterpart other than the original chattel-paper counterpart, which shall
be the counterpart containing the receipt executed by the Indenture Trustee on
its signature page.
Section 26.07. Counterparts. This Lease may be executed in any number
of counterparts, each of which shall be an original (except that only the
counterpart bearing the receipt executed by the Indenture Trustee shall be the
original for purposes of perfecting a security interest therein as chattel
paper under the Uniform Commercial Code), but all of which taken together
shall constitute one and the same instrument and any of the parties hereto may
execute this Lease by signing any such counterpart.
Section 26.08. Public Release of Information. Provided no Event of
Default shall have occurred and be continuing, each party shall in each
instance obtain the prior written approval of each party concerning the exact
text and timing of news releases, articles and other informational releases to
the public media concerning this Lease.
ARTICLE 27
TRUE LEASE
Section 27.01. Intent of the Parties. It is the intent of the parties
to this Lease that for all purposes (including, without limitation, U.S.
Federal income tax purposes) this Lease will be a true lease, and that this
Lease conveys to the Lessee no right, title or interest in the Aircraft except
as a lessee.
Section 27.02. Section 1110 Compliance. Notwithstanding any provision
herein or elsewhere contained to the contrary, it is understood and agreed
among the parties hereto that the transactions contemplated by this Lease and
the other Operative Agreements in respect of the Aircraft are expressly
intended to be, shall be and should be construed so as to be, entitled to the
full benefits of Section 1110 of the Bankruptcy Code and any successor
provision thereof.
Section 27.03. Finance Lease. This Lease is a "finance lease" within
the meaning of Section 2-A-103(g) of the Uniform Commercial Code.
IN WITNESS WHEREOF, the Lessor and the Lessee have each caused this
Lease to be duly executed as of the date first above written.
LESSOR: NBD BANK,
not in its individual capacity,
but solely as Owner Trustee
By: ______________________________________________
Name:
Title:
LESSEE: FEDERAL EXPRESS CORPORATION
By: _______________________________________________
Name:Xxxxxx X. Xxxxxxx
Title:Assistant Treasurer and
Managing Director - Structured Finance
Receipt of this original counterpart of the Lease is hereby
acknowledged on this __ day of October 1995.
Indenture Trustee: THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION),
not in its individual capacity,
but solely as Indenture Trustee
By: _____________________________________________
Name:
Title:
SCHEDULE I
DEFINITIONS
GENERAL PROVISIONS
The following terms shall have the following meanings for all
purposes of the Operative Agreements (other than the Pass Through Agreement
and the Series Supplements) referred to below, unless otherwise defined in an
Operative Agreement or the context thereof shall otherwise require. In the
case of any conflict between the provisions of this Schedule and the
provisions of any Operative Agreement, the provisions of such Operative
Agreement shall control the construction of such Operative Agreement.
Unless the context otherwise requires, (i) references to agreements
shall be deemed to mean and include such agreements as amended and
supplemented from time to time, and (ii) references to parties to agreements
shall be deemed to include the successors and permitted assigns of such
parties.
DEFINED TERMS:
Additional Insureds. As defined in Article 13 of the Lease.
Aeronautics Authority or FAA. As appropriate, the Federal Aviation
Administration and/or the Administrator of the Federal Aviation
Administration, any successor to the former United States Civil Aeronautics
Board, or any Person, governmental department, bureau, commission or agency
located in the United States succeeding to the functions of any of the
foregoing.
Affiliate. With respect to any Person, any other Person directly or
indirectly controlling, controlled by or under common control with such
Person. For the purposes of this definition, "control" (including "controlled
by" and "under common control with") shall mean the power, directly or
indirectly, to direct or cause the direction of the management and policies of
such Person whether through the ownership of voting securities or by contract
or otherwise. In no event shall the Owner Trustee or the Lessor be deemed an
Affiliate of the Owner Participant.
After-Tax Basis. A basis such that any payment received or deemed to
have been received by a Person (the "Original Payment") shall be supplemented
by a further payment to such Person so that the sum of the two payments shall
be equal to the Original Payment, after taking into account (x) all Taxes that
would result from the receipt or accrual of such payments and (y) any
reduction in Taxes that would result from such increased Taxes. In the case
of amounts payable to the Lessor, the Owner Participant, or any corporate
Affiliate of the Owner Participant, it shall be presumed that such Person is
at all times subject to Federal income tax at the maximum marginal rate
generally applicable to corporations from time to time and actual state, local
and foreign income taxes.
Agent. The Chase Manhattan Bank (National Association) and its
successors and permitted assigns as Agent for the Original Loan Participants
pursuant to Article 16 of the Original Participation Agreement.
Air Carrier. Any U.S. Air Carrier and any "foreign air carrier" (as
defined in the Transportation Code) as to which there is in force a permit
granted under Section 41302 of the Transportation Code.
Airbus Guaranty. The Guaranty dated the Delivery Date executed by the
Manufacturer and guaranteeing AVSA's Warranty Xxxx of Sale.
Aircraft. The Airframe (or any permitted substitute airframe)
together with the two Engines (or any Replacement Engine or Engines) whether
or not any of such initial or Replacement Engines may from time to time be
installed on such Airframe or may be installed on any other airframe or on any
other aircraft, including any aircraft substituted pursuant to Section 11.03
of the Lease.
Airframe. The Airbus A300F4-605R aircraft (excluding the Engines or
engines from time to time installed thereon) leased by the Lessor to the Lessee
pursuant to the Lease and the initial Lease Supplement and having the United
States FAA Registration Number and manufacturer's serial number specified in
the initial Lease Supplement, including (i) all Parts in respect thereof and
(ii) any replacement airframe which may be substituted pursuant to Section
11.03 of the Lease.
Amendment No. 1 to the Original Tax Indemnity Agreement. Amendment
No. 1 to the Original Tax Indemnity Agreement, dated as of October 26, 1995.
Ancillary Agreement. Any written agreement of the Lessee to which the
Lessor is a party or to which the Lessor has consented in writing entered into
on the Delivery Date or the Refunding Date or any date thereafter in
connection with the transactions contemplated by the Operative Agreements, as
such agreement may be amended and supplemented from time to time with the
consent of the Lessor and delivered to the Owner Trustee, the Indenture
Trustee, the Pass Through Trustee and the Owner Participant.
Ancillary Agreement I. The Ancillary Agreement I (Federal Express
Corporation Trust No. N660FE), dated September 20, 1995 among the Lessee, the
Owner Trustee, not in its individual capacity, but solely as Owner Trustee,
the Owner Participant and the Indenture Trustee not in its individual
capacity, but solely as Indenture Trustee, as originally executed or as
amended, modified or supplemented with the consent of all the parties thereto.
Appraisal. The report prepared by BK Associates, Inc. and delivered
to the Owner Participant (with a copy of such report to the Lessee) on the
Delivery Date pursuant to Section 4.01(n) of the Original Participation
Agreement.
AVSA. AVSA S.A.R.L., a societe a responsabilite limitee, organized
and existing under the laws of France, and its successors and assigns.
AVSA Consent and Agreement. The Consent and Agreement dated as of
September 1, 1995, executed by AVSA, as the same may be amended, modified or
supplemented from time to time.
AVSA's FAA Xxxx of Sale. The xxxx of sale for the Airframe on AC
Form 8050-2, or such other form as may be approved by the Aeronautics
Authority, executed by AVSA in favor of the Owner Trustee and dated the
Delivery Date.
AVSA's Warranty Xxxx of Sale. The full warranty xxxx of sale
covering the Aircraft (and specifically referring to each Engine) executed by
AVSA as owner of the Aircraft in favor of the Owner Trustee and dated the
Delivery Date.
Bankruptcy Code. The Federal Bankruptcy Code of 1978, as amended, and
any successor thereto.
Bankruptcy Default. An event specified in Section 16.01(e), (f) or
(g) of the Lease which either does or with the giving of notice or lapse of
time or both would constitute an Event of Default.
Basic Rent. The periodic rent payable for the Aircraft throughout
the Basic Term pursuant to Section 3.02 of the Lease, adjusted pursuant to
Article 3 of the Lease.
Basic Term. The period commencing at the beginning of the day on the
Commencement Date and ending at the end of the day on July 2, 2020, or such
earlier date on which the Lease shall be terminated as provided therein.
Beneficial Interest. The interest of the Owner Participant under the
Trust Agreement.
Breakage Costs. Has the meaning specified in Schedule II to the
Original Participation Agreement.
Business Day. Any day on which commercial banks are not authorized or
required to close in New York, New York and Memphis, Tennessee, and after the
Lien of the Indenture is discharged, Detroit, Michigan.
Certificates. The Equipment Trust Certificates (Federal Express
Corporation Trust No. N660FE), issued by the Owner Trustee pursuant to the
Indenture and any certificate issued in exchange therefor or replacement
thereof pursuant to the Indenture.
Change in Tax Rate. Any amendment, modification, deletion, addition,
or change to the Code which is enacted into law after the Delivery Date which
changes the highest marginal statutory rate of Federal income tax applicable
to the Owner Participant (other than a change which is in the nature of a
minimum tax).
Chase. The Chase Manhattan Bank (National Association) and its
successors and permitted assigns.
Citizen of the United States. A citizen of the United States as
defined in Section 40102(a)(15) of the Transportation Code, or any analogous
part of any successor or substituted legislation or regulation at the time in
effect.
Closings. The closing with respect to the acquisition of the Pass
Through Certificates by the Underwriters and the closing with respect to the
refunding of the Original Loan Certificates.
Code. Except as otherwise provided, references to the Code shall
mean the Internal Revenue Code of 1986, as amended from time to time.
Commencement Date. July 2, 1996.
Consent and Agreement. The Consent and Agreement dated as of
September 1, 1995 executed by the Manufacturer, as the same may be amended,
modified or supplemented from time to time.
Consent and Guaranty. The Consent and Guaranty of the Manufacturer
attached to the Purchase Agreement.
Corporate Trust Administration. The principal office of the
Indenture Trustee located at 4 Chase Xxxxxxxxx Xxxxxx, 0xx Xxxxx, Xxxxxxxx,
Xxx Xxxx 00000, or such other office at which the Indenture Trustee's
corporate trust business shall be administered which the Indenture Trustee
shall have specified by notice in writing to the Lessee, the Owner Participant
and the Owner Trustee.
Corporate Trust Department. The principal office of the Owner Trustee
located at 000 Xxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000, or such other office
at which the Owner Trustee's corporate trust business shall be administered
which the Owner Trustee shall have specified by notice in writing to the
Lessee, the Owner Participant and the Indenture Trustee.
Debt Rate. The weighted average (based on Outstanding principal
amount) rate of interest on the Certificates issued pursuant to the Indenture.
Default. Any event or condition which with the lapse of time or the
giving of notice, or both, would constitute an Event of Default.
Delivery Date. September 20, 1995.
EBO Price. Has the meaning set forth in Section 4.02(a)(F) of the
Lease.
Engine. Each of the two General Electric CF6-80C2-A5F engines listed
by its manufacturer's serial number in the initial Lease Supplement and leased
pursuant to the Lease, whether or not from time to time installed on the
Airframe or installed on any other airframe or on any other aircraft, and any
Replacement Engine which may from time to time be substituted for an Engine
pursuant to Section 7.02(a)(vii), 10.03, 11.03, 11.04 or 12.02 of the Lease,
together with all Parts related thereto. Except as otherwise provided, at
such time as a Replacement Engine shall be so substituted and the Engine for
which the substitution is made shall be released from the Lien of the
Indenture, such replaced Engine shall cease to be an "Engine" under the Lease.
The term "Engines" means, as of any date of determination, both Engines then
leased to the Lessee pursuant to the Lease.
Engine Consent. The Engine Consent dated as of September 1, 1995,
executed by the Engine Manufacturer, as the same may be amended, modified or
supplemented from time to time.
Engine Manufacturer. General Electric Company, a New York
corporation.
Engine Warranty Assignment. The Engine Warranty Assignment (Federal
Express Corporation Trust No. N660FE), dated as of September 1, 1995 between
the Lessor and the Lessee, as the same may be amended, modified or
supplemented from time to time.
ERISA. The Employee Retirement Income Security Act of 1974, as
amended.
ERISA Plan. Has the meaning set forth in Section 7.06 of the
Participation Agreement.
Estimated Expense Amount. Has the meaning specified in Section
10.01(a) of the Participation Agreement.
Event of Default. Each of the events specified in Article 16 of the
Lease.
Event of Loss. Any of the following events with respect to the
Aircraft, the Airframe or any Engine: (i) loss of such property or its use (A)
for a period in excess of 90 days due to theft or disappearance or such longer
period, not to exceed 90 days from the end of such initial 90-day period, if
and so long as the location of such property is known to the Lessee and the
Lessee is diligently pursuing recovery of such property, or to the end of the
Term, if less (unless such theft or disappearance constitutes an Event of Loss
pursuant to (i)(B) or (ii) hereof) or (B) for a period in excess of 60 days
due to the destruction, damage beyond economic repair or rendition of such
property permanently unfit for normal use by Lessee for any reason whatsoever;
(ii) any damage to such property which results in an insurance settlement with
respect to such property on the basis of a total loss, or constructive or
compromised total loss; (iii) (1) condemnation, confiscation or seizure of, or
requisition of title to such property by the Government, any foreign
government or purported government or any agency or instrumentality thereof,
or (2) condemnation, confiscation, or seizure of, or requisition or taking of,
use of such property (A) by a foreign government or instrumentality or agency
of any such foreign government, for a period in excess of 180 days (or such
shorter period ending on the earlier of the expiration of the Term or on the
date on which an insurance settlement with respect to such property on the
basis of a total loss or constructive or compromised total loss shall occur)
or (B) by the Government for a period extending beyond the Term, provided that
no Event of Loss shall be deemed to have occurred, and the Term shall be
extended automatically for a period of six months (or the date of return of the
Aircraft, if shorter, so long as the Lessor receives at least six months
notice of such date of return) beyond the end of the Term in the event that
the Aircraft, the Airframe or any Engine as of the end of the Lease Term is
requisitioned by the Government pursuant to an activation as part of the Civil
Reserve Air Fleet Program described in Section 7.02(a)(iv) of the Lease; and
(iv) as a result of any law, rule, regulation, order or other action by the
Aeronautics Authority or other governmental body having jurisdiction, the use
of the Aircraft or Airframe in the normal course of air transportation of
cargo shall have been prohibited by virtue of a condition affecting all Airbus
A300F-600 series aircraft equipped with engines of the same make and model as
the Engines for a period not to exceed six (6) consecutive months, unless the
Lessee, prior to the expiration of such six (6) month period, shall be
diligently carrying forward in a similar manner as are then being carried
forward with respect to other aircraft of the Lessee so as to not discriminate
against the Aircraft by reason of its leased status, all steps which are
necessary or desirable to permit the normal use of the Aircraft or Airframe
or, in any event, if such use of the Aircraft or the Airframe shall have been
prohibited for a period of eighteen (18) consecutive months or until the end
of the Term, if earlier. The date of such Event of Loss shall be (s) the 91st
day or the 180th day, as the case may be, following loss of such property or
its use due to theft or disappearance (or the end of the Term or the Lessee's
abandonment of diligent efforts to recover such property, if earlier); (t) the
61st day following the date of any destruction, damage beyond economic repair
or rendition of such property permanently unfit for normal use; (u) the date
of any insurance settlement on the basis of a total loss or constructive or
compromised total loss; (v) the date of any condemnation, confiscation,
seizure or requisition of title of such property; (w) the 181st day following
condemnation, confiscation, seizure or requisition for use of such property by
a foreign government referred to in clause (iii)(2)(A) above (or the end of
the Term or the date of any insurance settlement described therein, if earlier
than such 181st day); (x) the last day of the Term in the case of requisition
for use of such property by the Government; (y) the last day of the six (6)
month or eighteen (18) month period, referred to in clause (iv) above (or if
earlier, the end of the Term or abandonment of the Lessee's efforts to restore
the normal use of the Aircraft). An Event of Loss with respect to the
Aircraft shall be deemed to have occurred if any Event of Loss occurs with
respect to the Airframe. If an Event of Loss described in any of clauses (i)
(A), (iii) or (iv) above shall occur, Lessor may elect, within 30 days
following the date upon which such Event of Loss is deemed to have occurred,
to waive such Event of Loss and the consequences thereof.
Excepted Payments. Collectively, (i) indemnity or other payments (and
interest thereon to the extent provided in the Operative Agreements) paid or
payable by the Lessee in respect of the Owner Participant, the Owner Trustee
in its individual capacity or any of their respective successors, permitted
assigns, directors, officers, employees, servants and agents or Affiliates,
pursuant to the Participation Agreement or any indemnity hereafter granted to
the Owner Participant or the Owner Trustee in its individual capacity pursuant
to the Lease or the Participation Agreement, (ii) proceeds of public liability
insurance (or government indemnities in lieu thereof) in respect of the
Aircraft payable as a result of insurance claims paid for the benefit of, or
losses suffered by, the Owner Trustee or the Indenture Trustee in their
respective individual capacities or by the Owner Participant, or their
respective successors, permitted assigns or Affiliates, (iii) proceeds of
insurance maintained with respect to the Aircraft by the Owner Participant
(whether directly or through the Owner Trustee) maintained in accordance with
Section 13.05 of the Lease but not required under Section 13 of the Lease,
(iv) payments of Supplemental Rent by the Lessee in respect of any amounts
payable under the Tax Indemnity Agreement, (v) payments constituting increases
in Interim Rent or Basic Rent attributable to payments arising pursuant to
Section 5 of the Tax Indemnity Agreement and (vi) any right to demand, collect
or otherwise receive and enforce the payment of any amount described in
clauses (i) through (v) above.
Expense; Expenses. Have the meaning specified in Section 9.01(a) of
the Participation Agreement.
Fair Market Renewal Term. A term with respect to which the Lessee has
exercised its option to renew the Lease pursuant to the second paragraph of
Section 4.01(a) thereof and with respect to which the conditions set forth in
the second paragraph of Section 4.01(a) are met.
Fair Market Rental. An amount determined on the basis of, and equal
in amount to, the rental which would be obtained in an arm's-length
transaction between an informed and willing lessee and an informed and willing
lessor unaffiliated with such lessee, neither being under any compulsion to
lease the Aircraft. In such determination, it shall be assumed that the
Aircraft is in the condition required under the Lease in the case of return of
the Aircraft pursuant to Article 12 of the Lease. Fair Market Rental shall be
determined in accordance with the provisions of Section 4.03 of the Lease.
Fair Market Value. An amount determined on the basis of, and equal in
amount to, the value which would be obtained in an arm's-length transaction
between an informed and willing purchaser under no compulsion to buy and an
informed and willing seller unaffiliated with such purchaser and under no
compulsion to sell, assuming that the Aircraft (or other property) is
unencumbered by the Lease. In such determination it shall be assumed that the
Aircraft is in the condition required under the Lease in the case of return of
the Aircraft pursuant to Article 12 of the Lease; provided that in connection
with any determination pursuant to or for the purposes of Article 17 of the
Lease, the Aircraft shall be appraised on an "as is, where is" basis. Fair
Market Value shall be determined in accordance with the provisions of Section
4.03 of the Lease.
Federal Aviation Administration; FAA. The United States Federal
Aviation Administration and any successor agency or agencies thereto.
Fixed Renewal Rent. Semi-annual payments during the Fixed Renewal
Term equal to 50% of the average actual semi-annual Basic Rent payable during
the Basic Term.
Fixed Renewal Term. The term with respect to which the Lessee has
exercised its option to renew the Lease pursuant to the first paragraph of
Section 4.01(a) thereof and with respect to which the conditions set forth in
such Section 4.01(a) are met.
French Pledge Agreement. The French Pledge Agreement dated as of
September 1, 1995 between the Owner Trustee and the Indenture Trustee.
Government. The United States of America or an agency or
instrumentality thereof the obligations of which bear the full faith and
credit of the United States of America.
GTA. The General Terms Agreement dated as of July 3, 1991 between the
Engine Manufacturer and the Lessee related to the purchase by the Lessee of the
Engines as originally executed or as modified, amended or supplemented in
accordance with the terms thereof, but only insofar as the General Terms
Agreement relates to the Engines, to the extent assigned to the Owner Trustee
pursuant to the Engine Warranty Assignment.
Holder of a Certificate; Certificate Holder; Holder. As of any
particular time, the Person in whose name a Certificate shall be registered
(but not including the holder of any Pass Through Certificate).
Indemnitee. Each of NBD, in its individual capacity and as Owner
Trustee and Lessor, the Agent (to the extent set forth in Articles 8 and 9 of
the Original Participation Agreement), the Owner Participant, the Original
Loan Participants (to the extent set forth in Articles 8 and 9 of the Original
Participation Agreement), the Indenture Trustee, in its individual capacity
and as trustee, any Owner Participant Guarantor, and any successor (including
any trustee which may succeed to the Lessor's interest under the Lease),
Affiliate, assign, officer, director, employee, agent and servant of any of
the foregoing, the Lessor's Estate and the Trust Indenture Estate.
Indenture. The Trust Indenture and Security Agreement (Federal
Express Corporation Trust No. N660FE) dated as of September 1, 1995, as
amended and restated as of October 26, 1995, between the Lessor and the
Indenture Trustee, as supplemented by the Indenture and Security Agreement
Supplement, and as said Indenture may from time to time be further
supplemented or amended, including any amendment or supplement thereto entered
into from time to time pursuant to the applicable provisions of the Indenture.
Indenture and Security Agreement Supplement. The Indenture and
Security Agreement Supplement No. 1 (Federal Express Corporation Trust No.
N660FE) dated September 20, 1995, as such Indenture and Security Agreement
Supplement shall be amended or supplemented from time to time and any other
supplement to the Indenture, substantially in the form of Exhibit A to the
Indenture.
Indenture Default. Any event or condition which with the lapse of
time or the giving of notice, or both, would constitute an Indenture Event of
Default.
Indenture Documents. Has the meaning specified in the Granting
Clause of the Indenture.
Indenture Event of Default. Each of the events specified in Section
7.01 of the Indenture.
Indenture Trustee. The Chase Manhattan Bank (National Association), a
national banking association, not in its individual capacity but solely as
Indenture Trustee under the Indenture and each other Person which may from
time to time be acting as successor trustee under the Indenture.
Indenture Trustee's Liens. Any Lien on the Trust Indenture Estate
resulting from (i) claims against the Indenture Trustee not related to the
administration of the Trust Indenture Estate or any transactions pursuant to
the Indenture or any document included in the Trust Indenture Estate or (ii)
any act or omission of the Indenture Trustee which is not related to the
transactions contemplated by the Operative Agreements or is in violation of
any of the terms of the Operative Agreements.
Independent Investment Banker. An independent investment banking
institution of national standing appointed by the Lessee that is independent
in fact, does not have any direct financial interests, or any material
indirect financial interest, in the Lessee or any Affiliate of the Lessee, and
is not connected with the Lessee or any Affiliate of the Lessee, as an
officer, employee, promoter, underwriter, trustee, partner, director or Person
performing similar functions; provided, that if the Indenture Trustee shall
not have received written notice of such an appointment at least 10 days prior
to the Prepayment Date, "Independent Investment Banker" shall mean such an
institution appointed by the Indenture Trustee.
Interim Rent. The periodic rent payable for the Aircraft throughout
the Interim Term pursuant to Section 3.02 of the Lease, adjusted pursuant to
Article 3 of the Lease.
Interim Term. The period commencing on the Owner Participant Payment
Date and ending at the end of the day immediately preceding the Commencement
Date.
Invoice. The invoice for the Aircraft given by AVSA to the Lessor.
Lease. The Lease Agreement (Federal Express Corporation Trust No.
N660FE) dated as of September 1, 1995, as amended and restated as of October
26, 1995, entered into by the Lessor and the Lessee concurrently with the
execution and delivery of the Indenture, as said Lease may from time to time
be supplemented or amended, or its terms waived or modified, to the extent
permitted by, and in accordance with, the terms of the Indenture, including,
without limitation, supplementation by one or more Lease Supplements entered
into pursuant to the applicable provisions of the Lease.
Lease Supplement. The Lease Supplement No. 1 (Federal Express
Corporation Trust No. N660FE) dated September 20, 1995, as such Lease
Supplement shall be amended or supplemented from time to time and any other
supplement to the Lease, substantially in the form of Exhibit A to the Lease.
Lease Term. The period commencing on the Delivery Date and ending at
the end of the Basic Term.
Lessee. Federal Express Corporation, a Delaware corporation, and its
successors and permitted assigns.
Lessee Documents. Has the meaning set forth in Section 6.01(b) of the
Participation Agreement.
Lessor. NBD Bank, a Michigan banking corporation, not in its
individual capacity but solely as Owner Trustee under the Trust Agreement, and
its successors and permitted assigns.
Lessor's Estate. All estate, right, title and interest of the Owner
Trustee in and to the Aircraft, the Lease, any Lease Supplement, the
Participation Agreement, AVSA's FAA Xxxx of Sale, AVSA's Warranty Xxxx of
Sale, the Airbus Guaranty, the Purchase Agreement, the Purchase Agreement
Assignment, the Consent and Agreement, the AVSA Consent and Agreement, the
Consent and Guaranty (to the extent assigned by the Purchase Agreement
Assignment), the GTA, the Engine Warranty Assignment, the Engine Consent, any
warranty with respect to the Airframe and the Engines, all amounts of Interim
Rent, Basic Rent and Supplemental Rent, including without limitation,
insurance proceeds (other than insurance proceeds payable to or for the
benefit of the Owner Trustee in its individual capacity, the Owner Participant
or the Indenture Trustee) and requisition, indemnity or other payments of any
kind for or with respect to the Aircraft (except amounts owing to the Owner
Participant, to the Indenture Trustee, to the Owner Trustee in its individual
capacity, or to any of their respective directors, officers, employees and
agents pursuant to Articles 8 and 9 of the Participation Agreement).
Notwithstanding the foregoing, "Lessor's Estate" shall (i) not include any
Excepted Payment and (ii) include all property intended to be subjected to the
Indenture by the Granting Clause thereof.
Lessor's Liens. Liens on the Lessor's Estate or the Trust Indenture
Estate arising as a result of (i) claims against the Lessor, in its individual
capacity or as Owner Trustee, or the Owner Participant, in each case not
related to the transactions contemplated by the Operative Agreements, (ii)
acts or omissions of the Lessor in its individual capacity or as Owner
Trustee, and, in the case of the Lessor in its individual capacity, arising
from its gross negligence or willful misconduct or expressly prohibited under
the Operative Agreements and any act or omission of the Owner Participant
which is in violation of any of the terms of the Operative Agreements, (iii)
Taxes or Expenses imposed against the Lessor, in its individual capacity or as
Owner Trustee, Owner Participant, Lessor's Estate or the trust created by the
Trust Agreement which are not required to be indemnified against by the Lessee
pursuant to the Participation Agreement by reason of Section 8.01(b) or
9.01(b) thereof and which are not required to be indemnified against by the
Lessee pursuant to the Tax Indemnity Agreement, or (iv) claims against the
Lessor or the Owner Participant arising from the voluntary transfer by the
Lessor or the Owner Participant of its interests in the Aircraft other than a
transfer of the Aircraft pursuant to Section 4.02(a) or Article 10 or 11 of the
Lease and other than a transfer pursuant to the exercise of the remedies set
forth in Article 17 of the Lease.
Lien. Any mortgage, pledge, lien, charge, encumbrance, lease or
security interest or other similar interest.
Majority in Interest of Certificate Holders. As of a particular date
of determination, the Holders of more than 50% of the aggregate unpaid
principal amount of all Certificates outstanding as of such date excluding for
purposes of this definition any Certificates held by (i) the Owner Trustee or
the Owner Participant or any interests of the Owner Participant unless all
Certificates then outstanding shall be held by the Owner Participant, (ii) the
Lessee or (iii) any Affiliate of any thereof.
Make-Whole Premium. An amount determined as of the day before the
applicable Prepayment Date (or date of purchase, as the case may be) which an
Independent Investment Banker determines to be equal to the excess, if any, of
(i) the present values of all remaining scheduled payments of such principal
amount or portion thereof and interest thereon (excluding interest accrued
from the immediately preceding Payment Date to such Prepayment Date or date of
purchase, as the case may be) to the Maturity of such Certificate in
accordance with generally accepted financial practices assuming a 360-day year
consisting of twelve 30-day months at a discount rate equal to the Treasury
Yield, all as determined by the Independent Investment Banker over (ii) the
unpaid principal amount of such Certificate.
Manufacturer. Airbus Industrie G.I.E., a groupement d'interet
economique formed under the laws of France, and its successors and assigns.
Maturity. With respect to any Certificate, the date on which the
final principal amount of such Certificate is scheduled to be due and payable.
Moody's. Xxxxx'x Investors Service, Inc.
NBD. NBD Bank, a Michigan banking corporation.
Net Present Value of Rents. The net present value, as of the
Delivery Date, of Interim Rent and Basic Rent set forth in Schedule II of the
Lease, discounted at a rate per semi-annual period equal to the Debt Rate.
Non-U.S. Person. Any Person other than (i) a citizen or resident of
the United States, as defined in Section 7701(a)(30) of the Code, (ii) a
corporation, partnership or other entity created or organized in or under the
laws of the United States or any political subdivision thereof or therein, or
(iii) any estate or trust that is subject to United States federal income
taxation regardless of the source of its income.
Obsolete Parts. Parts which are severable from the Aircraft in
accordance with clauses (ii) and (iii) of the proviso to Section 9.02(b) of
the Lease and the Lessee in good faith determines to be obsolete or no longer
suitable or appropriate for use on the Airframe or any Engine.
Officer's Certificate. When delivered pursuant to the Indenture, a
certificate signed by a Responsible Officer of the Lessee or the Owner
Trustee, as the case may be, and delivered to the Indenture Trustee. Each
such certificate shall include the statements provided for in Section 15.07 of
the Indenture.
Operative Agreements. The Participation Agreement, the Trust
Agreement, AVSA's FAA Xxxx of Sale, AVSA's Warranty Xxxx of Sale, the Airbus
Guaranty, the Purchase Agreement, the Purchase Agreement Assignment, the GTA,
the Engine Warranty Assignment, the French Pledge Agreement, the Lease, the
Lease Supplement, the Owner Participant Guaranty, if any, the Owner Trustee
Guaranty, if any, any Ancillary Agreement entered into by or with the written
consent of the Indenture Trustee, which by its terms is an Operative
Agreement, the Certificates outstanding at the time of reference, the
Indenture, the Indenture and Security Agreement Supplement, the Consent and
Agreement, the AVSA Consent and Agreement, the Consent and Guaranty (to the
extent assigned by the Purchase Agreement Assignment), the Engine Consent and
the Tax Indemnity Agreement, each as amended from time to time.
Opinion of Counsel. When delivered pursuant to the Indenture, a
written opinion of legal counsel, who in the case of counsel (a) for the
Lessee may be (i) an attorney employed by the Lessee who is generally
empowered to deliver such written opinions, (ii) Xxxxx Xxxx & Xxxxxxxx or a
successor firm or (iii) other counsel designated by the Lessee and reasonably
satisfactory to the Indenture Trustee and (b) for the Owner Trustee or the
Indenture Trustee, an attorney selected by such Person and, in the case of the
Owner Trustee, reasonably satisfactory to the Indenture Trustee.
Original Agreements. The documents and instruments delivered on the
Delivery Date in connection with the transactions contemplated by the Original
Participation Agreement.
Original Indenture. The Trust Indenture, Mortgage and Security
Agreement (Federal Express Corporation Trust No. N660FE) dated as of September
1, 1995 between the Owner Trustee and the Indenture Trustee, which together
with the Indenture and Security Agreement Supplement No. 1 (Federal Express
Corporation Trust No. N660FE) dated September 20, 1995 attached thereto was
recorded as one instrument by the FAA on September 21, 1995 and assigned
Conveyance Number 2A267705.
Original Lease. The Lease Agreement (Federal Express Corporation
Trust No. N660FE) dated as of September 1, 1995 between the Owner Trustee as
lessor, and the Lessee, which together with Lease Supplement Xx. 0 (Xxxxxxx
Xxxxxxx Xxxxxxxxxxx Xxxxx Xx. X000XX) dated September 20, 1995 attached
thereto was recorded as one instrument by the FAA on September 21, 1995 and
assigned Conveyance Number 2A267706.
Original Loan Certificates. The loan certificates issued on the
Delivery Date to the Original Loan Participants.
Original Loan Participants. The entities listed on Schedule I to the
Original Participation Agreement and their successors and assigns (other than
any assignees in connection with the Refunding Date).
Original Participation Agreement. The Participation Agreement
(Federal Express Corporation Trust No. N660FE) among the Lessee, the Owner
Participant, the Indenture Trustee, the Owner Trustee and the Original Loan
Participants as it was originally executed as of September 1, 1995.
Original Tax Indemnity Agreement. The Tax Indemnity Agreement
(Federal Express Corporation Trust No. N660FE) between the Lessee and the
Owner Participant as it was originally executed as of September 1, 1995.
Original Trust Agreement. The Trust Agreement (Federal Express
Corporation Trust No. N660FE) between the Owner Participant and the Owner
Trustee as it was originally executed as of September 1, 1995 and filed with
the FAA on September 20, 1995.
Outstanding. When used with respect to Certificates, as of the date
of determination and subject to the provisions of Section 10.04 of the
Indenture, all Certificates theretofore executed and delivered under the
Indenture, with the exception of the following:
(i) Certificates theretofore cancelled by the Indenture Trustee or
delivered to the Indenture Trustee for cancellation pursuant to
Section 2.08 of the Indenture or otherwise;
(ii) Certificates for which prepayment money in the necessary amount
has been theretofore deposited with the Indenture Trustee in trust
for the Holders of such Certificates pursuant to Section 14.01 of the
Indenture; provided, that if such Certificates are to be prepaid,
notice of such prepayment has been duly given pursuant to the
Indenture or provision therefor satisfactory to the Indenture Trustee
has been made; and
(iii) Certificates in exchange for or in lieu of which other
Certificates have been executed and delivered pursuant to Article II
of the Indenture.
Owner Participant. The trustor originally named in the Trust
Agreement and any successor thereto, and any Person to which Owner Participant
transfers, in accordance with the Trust Agreement, its right, title and
interest in and to the Operative Agreements and the Lessor's Estate.
Owner Participant Amount. The amount described in Section 2.03 of the
Participation Agreement and set forth on Schedule II to the Lease.
Owner Participant Guarantor. The provider of an Owner Participant
Guaranty.
Owner Participant Guaranty. Any guaranty delivered in compliance with
Section 7.03(d) of the Participation Agreement.
Owner Participant Payment Date. March 19, 1996.
Owner Trustee. NBD, not in its individual capacity, but solely as
Owner Trustee under the Trust Agreement, and its successors and permitted
assigns.
Owner Trustee Guarantor. The provider of an Owner Trustee Guaranty.
Owner Trustee Guaranty. Any guaranty delivered in compliance with
Section 11.01(b)(ii) of the Participation Agreement.
Owner's Economic Return. The Owner Participant's anticipated net
after-tax book yield and aggregate after-tax cash during the Interim Term and
the Basic Term utilizing the multiple investment sinking fund method of
analysis, computed on the basis of the same methodology and assumptions as
were utilized by the Owner Participant in determining Interim Rent, Basic
Rent, Stipulated Loss Value and Termination Value percentages or the EBO
Price, as the case may be, as such assumptions may be adjusted for events
which have been the basis of adjustments to Rent pursuant to Section 3.04 of
the Lease.
Participation Agreement. The Participation Agreement (Federal Express
Corporation Trust No. N660FE), dated as of September 1, 1995, as amended and
restated as of October 26, 1995, among the Lessee, the Original Loan
Participants, the Owner Trustee not in its individual capacity except as
otherwise expressly provided therein, but solely as owner trustee, the Owner
Participant, the Indenture Trustee not in its individual capacity except as
otherwise expressly provided therein, but solely as indenture trustee and the
Pass Through Trustee not in its individual capacity except as otherwise
expressly provided therein, but solely as pass through trustee, as amended,
modified or supplemented, or the terms thereof waived.
Parts. All appliances, parts, components, instruments, appurtenances,
accessories, furnishings and other equipment of whatever nature (other than
complete Engines or engines) which may from time to time be incorporated or
installed in or attached to the Airframe or any Engine or, prior to
replacement thereof in accordance with the Lease, which may be removed
therefrom.
Pass Through Agreement. The Pass Through Trust Agreement dated as of
February 1, 1993, as amended and restated as of October 1, 1995 between the
Lessee and the Pass Through Trustee, as such Pass Through Agreement may be
modified, supplemented or amended from time to time in accordance with the
provisions thereof.
Pass Through Certificates. Any of the 1995 Pass Through Certificates,
Series B1, 1995 Pass Through Certificates, Series B2 or 1995 Pass Through
Certificates, Series B3, in each case as issued by the related Pass Through
Trust; and "Pass Through Certificates" means all of the Pass Through
Certificates issued by each of the Pass Through Trusts.
Pass Through Closing Date. The Business Day on which the sale of the
Pass Through Certificates to the Underwriters pursuant to the Underwriting
Agreement takes place.
Pass Through Trust. The Federal Express Pass Through Trust, 1995-B1,
Federal Express Pass Through Trust, 1995-B2 or Federal Express Pass Through
Trust, 1995-B3, in each case formed pursuant to the related Series Supplement
in accordance with the Pass Through Agreement; and "Pass Through Trusts" means
all of such Pass Through Trusts.
Pass Through Trustee. The Chase Manhattan Bank (National
Association), a national banking association, in its capacity as Pass Through
Trustee under the Pass Through Agreement and each Pass Through Trust, and its
successors and permitted assigns as Pass Through Trustee thereunder.
Past Due Rate. In respect of (A) any amount payable to the Owner
Participant or the Owner Trustee a rate per annum during the period from and
including the due date to but excluding the date on which such amount is paid
in full equal to 2% plus the Debt Rate and (B) any principal of or interest on
any Certificate or any other amount payable under the Indenture, any
Certificate or any other Operative Agreement that is not paid when due
(whether at Maturity, by acceleration, by optional or mandatory prepayment or
otherwise) to any Holder, the Indenture Trustee or the Pass Through Trustee, a
rate per annum during the period from and including the due date to but
excluding the date on which such amount is paid in full equal to (i) in the
case of any such amount payable to the Holder of any Certificate, 2% plus the
interest rate applicable to such Certificate and (ii) in the case of any other
such amount, 2% plus the Debt Rate.
Payment Date. The Owner Participant Payment Date, and each January 2
and July 2 commencing July 2, 1996.
Payment Default. Any event specified in Section 16.01(a) or 16.01(b)
of the Lease which with the giving of notice or lapse of time or both would
constitute an Event of Default.
Permitted Investments. Those investments enumerated in Section
23.01(a) (i), (ii), (iii) and (iv) of the Lease.
Person. Any individual, sole proprietorship, partnership, joint
venture, joint stock company, trust, unincorporated organization, association,
corporation, institution, entity or government (federal, state, local, foreign
or any agency, instrumentality, division or body thereof).
Preliminary Term. The period commencing on the Delivery Date and
ending at the end of the day on the day immediately preceding the Owner
Participant Payment Date.
Premium Termination Date. With respect to the Certificates having a
Maturity in 2014, November 7, 2007 and with respect to the Certificates having
a Maturity in 2018, October 7, 2017.
Prepayment Date. Has the meaning specified in Section 6.02(b) of the
Indenture.
Prepayment Price. Has the meaning specified in Section 6.02(b) of the
Indenture.
Proposed Termination Date. Has the meaning specified in Section
10.01(a) of the Lease.
Purchase Agreement. The Airbus A300-600R Freighter Purchase Agreement,
dated as of July 3, 1991 between AVSA and the Lessee, including all exhibits,
appendices and letter agreements attached thereto as originally executed or as
modified, amended or supplemented in accordance with the terms thereof, but
only to the extent that the foregoing relates to the Aircraft and to the
extent assigned pursuant to the Purchase Agreement Assignment.
Purchase Agreement Assignment. The Purchase Agreement Assignment
(Federal Express Corporation Trust No. N660FE), dated as of September 1, 1995
between the Lessor and the Lessee, as the same may be amended, modified or
supplemented from time to time.
Purchase Price. Has the meaning specified in Schedule II to the
Original Participation Agreement.
Record Date. With respect to Payment Dates under the Indenture
(except a date for payment of defaulted interest), March 4, 1996 for the Owner
Participant Payment Date, December 18 for January 2 Payment Dates and June 17
for July 2 Payment Dates, whether or not such date is a Business Day.
Recourse Amount. Has the meaning specified in Section 17.10 of the
Participation Agreement.
Refinancing. A non-recourse loan to the Lessor arranged pursuant to
Section 15.01 of the Participation Agreement.
Refunding Date. A Business Day on which the refunding of the
Original Loan Certificates occurs, the expected date thereof having been
specified by the Lessee in a written notice given to the parties to the
Participation Agreement and the Underwriters at least ten (10) Business Days
prior to such expected Refunding Date.
Register. Has the meaning set forth in Section 3.02 of the Indenture.
Registrar. Has the meaning set forth in Section 3.02 of the
Indenture.
Regulation D. Regulation D of the Board of Governors of the Federal
Reserve System (or any successor), as the same may be modified and
supplemented and in effect from time to time.
Remaining Weighted Average Life. For any Certificate, as of any
determination date, the number of years obtained by dividing (a) the sum of the
products obtained by multiplying (i) the amount of each then remaining
mandatory sinking fund redemption payment of principal, including the payment
due on the Maturity of such Certificate, by (ii) the number of years
(calculated to the nearest one-twelfth) which will elapse between such
determination date, and the date on which such payment is scheduled to be
made, by (b) the then outstanding principal amount of such Certificate.
Renewal Rent. The amount payable by the Lessee as rent in accordance
with Section 4.01 of the Lease during any Renewal Term.
Renewal Term. One or more terms with respect to which the Lessee has
exercised its option to renew the Lease pursuant to Section 4.01(a) thereof.
Rent. All payments due from the Lessee under the Lease as Interim
Rent, Basic Rent, Renewal Rent and Supplemental Rent, collectively.
Rent Payment Date. Each January 2 and July 2 commencing July 2, 1996.
Reoptimization Date. Has the meaning specified in Section 15.02(a)
of the Participation Agreement.
Replacement Engine. A General Electric CF6-80C2-A5F engine (or an
engine of the same or another manufacturer) manufactured after October 22,
1994 of the same or of equal or greater value, remaining useful life and
utility as the Engine being replaced, together with all Parts relating to such
engine; provided, however, that if such replacement engine is not a General
Electric CF6-80C2-A5F engine, such replacement engine must then be commonly
used in the commercial aviation industry on Airbus A300-600 airframes.
Responsible Officer. With respect to the Owner Trustee or the
Indenture Trustee, any officer in its Corporate Trust Department or Corporate
Trust Administration, as the case may be, designated by such Person to perform
obligations under the Operative Agreements, with respect to the Owner
Participant, the president or any vice president with direct responsibility
for the transactions contemplated by the Operative Agreements, and with
respect to any other party, any corporate officer or (except in the case of
the Owner Participant) other employee of a party who, in the normal
performance of his or her operational responsibilities, with respect to the
subject matter of any covenant, agreement or obligation of such party pursuant
to any Operative Agreement, would have responsibility for and knowledge of
such matter and the requirements of any Operative Agreement with respect
thereto.
S&P. Standard & Poor's Ratings Group.
SEC. The Securities and Exchange Commission of the United States and
any successor agencies or authorities.
Securities Act. The Securities Act of 1933, as amended.
Series Supplement. The Series Supplement 1995-B1 to be executed and
delivered by the Lessee and the Pass Through Trustee, the Series Supplement
1995-B2 to be executed and delivered by the Lessee and the Pass Through
Trustee or the Series Supplement 1995-B3 to be executed and delivered by the
Lessee and the Pass Through Trustee, in each case as such Series Supplement
may be modified, supplemented or amended from time to time in accordance with
the provisions thereof and "Series Supplements" means all of such Series
Supplements.
Sinking Fund Redemption Date. Has the meaning specified in Section
6.06 of the Indenture.
Sinking Fund Redemption Price. Has the meaning specified in Section
6.06 of the Indenture.
Special Aviation Counsel. Xxxxxxxxx, Xxxxxx & Xxxxxxxx.
Stipulated Loss Value. As of any Stipulated Loss Value Determination
Date during the Term, the amount determined by multiplying the Purchase Price
by the percentage set forth in Schedule III of the Lease under the heading
"Stipulated Loss Value Factor" opposite such date (as such Schedule III may be
adjusted from time to time as provided in Section 3.04 of the Lease), and
during any Renewal Term, the amount determined pursuant to Section 4.01(b) of
the Lease. Notwithstanding any other provisions of the Lease or the
Participation Agreement or the Indenture, each Stipulated Loss Value shall be,
under any circumstances and in any event, an amount, together with so much of
the arrears portion of Interim Rent and Basic Rent due and owing through the
date of payment of Stipulated Loss Value as does not constitute an Excepted
Payment, at least sufficient to pay in full as of such date of payment the
aggregate unpaid principal amount of and accrued interest on the Certificates
outstanding on such date of payment. Subject to the immediately preceding
sentence, it is understood and agreed that the amounts set forth on Schedule
III of the Lease, for dates other than Rent Payment Dates on which arrears
Interim Rent and Basic Rent is due, fully reflect appropriate Interim Rent and
Basic Rent accruals and credits of unearned Interim Rent and Basic Rent and,
accordingly, no further accrual or credit shall be required whenever
Stipulated Loss Value is to be calculated with reference to any such date.
Stipulated Loss Value Determination Date. Each date set forth on
Schedule III of the Lease under the heading "Stipulated Loss Value Date."
Substantial Authority. For Federal income tax purposes, shall have
the meaning applicable for purposes of Section 6662 of the Code and relevant
Treasury regulations.
Supplemental Rent. All amounts, liabilities and obligations which
the Lessee assumes or agrees to perform or pay under the Lease or under the
Participation Agreement or Tax Indemnity Agreement or any Ancillary Agreement
or any other Operative Agreement to the Lessor, the Owner Participant or
others, including, without limitation, payments of Stipulated Loss Value, EBO
Price and amounts calculated by reference to Termination Value and all amounts
required to be paid by Lessee under the agreements, covenants and indemnities
contained in the Lease or in the Participation Agreement or the Tax Indemnity
Agreement or any other Operative Agreement, but excluding Interim Rent and
Basic Rent.
Tax. Shall have the meaning set forth in Section 8.01(a) of the
Participation Agreement.
Tax Indemnity Agreement. The Original Tax Indemnity Agreement as
amended by Amendment No. 1 to the Original Tax Indemnity Agreement, as from
time to time modified, amended or supplemented pursuant to its applicable
provisions.
Term. The Preliminary Term, the Interim Term and the Basic Term of
the lease for the Aircraft under the Lease and, if renewed pursuant to Section
4.01 of the Lease, each Renewal Term for the Aircraft for which the Lease is
renewed, or such earlier date on which the Lease is terminated pursuant to its
terms.
Termination Date. A Rent Payment Date during the Basic Term that is
on or after July 2, 2001 in the case of Article 10 of the Lease, and in the
case of (i) Section 4.02(a)(A) of the Lease, the Rent Payment Date falling on
July 2, 2008 or January 2, 2012, (ii) Section 4.02(a)(D) or (E) of the Lease,
a Rent Payment Date that is on or after the fifth anniversary of the
Commencement Date and (iii) Section 4.02(a)(F) of the Lease, January 2, 2015.
Termination Value. As of any Termination Date, the amount determined
by multiplying the Purchase Price by the percentage set forth in Schedule IV
of the Lease under the heading "Termination Value Factor" opposite such
Termination Date (as such Schedule IV may be adjusted from time to time as
provided in Section 3.04 of the Lease). Notwithstanding any other provisions
of the Lease, the Participation Agreement or the Indenture, each Termination
Value shall be, under any circumstances and in any event, an amount, together
with so much of the arrears portion of Basic Rent due and owing through the
date of payment of any amount calculated by reference to Termination Value as
does not constitute an Excepted Payment, at least sufficient to pay in full as
of such date of payment the aggregate unpaid principal amount of and accrued
interest on the Certificates outstanding on such date of payment. Subject to
the immediately preceding sentence, it is understood and agreed that the
amounts set forth on Schedule IV of the Lease, for dates other than Rent
Payment Dates on which arrears Basic Rent is due, fully reflect appropriate
Basic Rent accruals and credits of unearned Basic Rent and, accordingly, no
further accrual or credit shall be required whenever Termination Value is to
be calculated with reference to any such date.
Transaction Costs. Those costs and expenses set forth in Section
10.01(a) of the Participation Agreement.
Transportation Code. Title 49 of the United States Code (which, among
other things, recodified the Federal Aviation Act of 1958, as amended to the
time of such recodification), as amended and in effect on the date of the
Lease or as subsequently amended, or any successor or substituted legislation
at the time in effect and applicable, and the regulations promulgated pursuant
thereto.
Treasury Yield. (i) In the case of a Certificate having a Maturity
within one year after the Prepayment Date the average yield to maturity on a
government bond equivalent basis of the applicable United States Treasury Xxxx
due the week of Maturity of such Certificate and (ii) in the case of a
Certificate having a Maturity one year or more after the Prepayment Date, the
average yield of the most actively traded United States Treasury Note (as
reported by Cantor Xxxxxxxxxx Securities Corp. on page 5 of Telerate Systems,
Inc., a financial news service, or if such report is not available, a source
deemed comparable by the Independent Investment Banker selected to determine
the Make-Whole Premium and reasonably acceptable to the Lessee) corresponding
in maturity to the Remaining Weighted Average Life of such Certificate (or, if
there is no corresponding maturity, an interpolation of maturities by the
Independent Investment Banker), in each case determined by the Independent
Investment Banker selected to determine the Make-Whole Premium based on the
average of the yields to stated maturity determined from the bid prices as of
10:00 a.m. and 2:00 p.m. New York time, on the second Business Day preceding
the Prepayment Date.
Trust Agreement. The Trust Agreement (Federal Express Corporation
Trust No. N660FE), dated as of September 1, 1995, as amended and restated as
of October 26, 1995, between the Owner Participant and the Owner Trustee in
its individual capacity, as from time to time modified, amended or
supplemented pursuant to its applicable provisions and in accordance with the
Operative Agreements.
Trust Indenture Act. The Trust Indenture Act of 1939, as amended.
Trust Indenture Estate. All estate, right, title and interest of the
Indenture Trustee in and to any of the property, rights, interests and
privileges granted to the Indenture Trustee pursuant to the Granting Clause of
the Indenture, other than Excepted Payments and any and all other rights of
the Owner Trustee or the Owner Participant expressly reserved to the Owner
Trustee or the Owner Participant pursuant to the Indenture.
Underwriters. The several Underwriters named in the Underwriting
Agreement.
Underwriting Agreement. The Underwriting Agreement dated October 26,
1995 among the Lessee, Xxxxxxx Sachs & Co., X.X. Xxxxxx Securities Inc. and
Xxxxxx Xxxxxxx & Co. Incorporated.
United States, U.S. or US. The United States of America.
U.S. Air Carrier. Any United States air carrier as to which there is
in force a certificate issued pursuant to Section 41102(a) or Section 41103 of
the Transportation Code, and as to which there is in force an air carrier
operating certificate issued pursuant to Chapter 447 of the Transportation
Code and Part 121 of the regulations under such Transportation Code, for
aircraft capable of carrying ten (10) or more individuals or 6,000 pounds or
more of cargo, or which may operate as an air carrier by certification or
otherwise under any successor or substitute provision thereof or in absence
thereof.
U.S. Person. A Person described in Section 7701(a)(30) of the Code.
SCHEDULE II
OWNER PARTICIPANT AMOUNT
(As a Percentage of Purchase Price)
Date Amount
March 19, 1996 6.66323108%
INTERIM RENT
(As a Percentage of Purchase Price)
Rent
Payment
Date Advance Arrears
[On each Payment Date, Lessee will pay as Interim Rent an amount that
will be at least sufficient to pay in full, as of such Payment Date,
the aggregate unpaid principal amount of due and unpaid installments
on the Certificates outstanding on such Payment Date, together with
the accrued and unpaid interest thereon.]
BASIC RENT
(As a Percentage of Purchase Price)
Rent
Payment
Date Advance Arrears
[On each Payment Date, Lessee will pay as Basic Rent an amount that
will be at least sufficient to pay in full, as of such Payment Date,
the aggregate unpaid principal amount of due and unpaid installments
on the Certificates outstanding on such Payment Date, together with
the accrued and unpaid interest thereon.]
SCHEDULE III
STIPULATED LOSS VALUES
Stipulated Loss
Date Value Factor
[Stipulated Loss Value will be an amount at least sufficient to pay
in full, as of the date of payment thereof, the aggregate unpaid
principal amount of the Certificates outstanding on such date of
payment, together with the accrued and unpaid interest thereon.]
SCHEDULE IV
TERMINATION VALUES
Termination Termination
Date Value Factor
[Termination Value will be an amount at least sufficient to pay in
full, as of the date of payment thereof, the aggregate unpaid
principal amount of the Certificates outstanding on such date of
payment, together with the accrued and unpaid interest thereon.]
SCHEDULE V
PURCHASE OPTION SCHEDULE
(D) Purchase Option Referred to in Section 4.02(a)(D) of the Lease.
In the event of any Significant Expenditure (as defined below) with respect
to the Aircraft, which the Lessee has certified in a certificate of the
Lessee's President, Chief Executive Officer, Chief Financial Officer, Chief
Operating Officer, Treasurer or Assistant Treasurer furnished to the
Lessor, the Indenture Trustee and the Owner Participant, is (as determined
in the Lessee's sole discretion) necessary, desirable or required to be
made at any time on or after the fifth anniversary of the Commencement
Date, the Lessee may elect to terminate the Lease and purchase the Aircraft
on the first Rent Payment Date occurring at least six months after the
Owner Participant has notified the Lessee that they will not permit such
Significant Expenditure to be financed as contemplated in clause (ii) of
the definition of "Significant Expenditure" below, for, at the Lessee's
option, either (1) the payment to the Lessor in immediately available funds
of an amount equal to the greater of the Fair Market Value of the Aircraft
and the Termination Value for the Aircraft, determined in each case as of
such Rent Payment Date, or (2) the assumption by the Lessee, pursuant to
Section 7.11 of the Participation Agreement and Section 2.12 of the
Indenture, of all of the Lessor's obligations under the Indenture, the
Certificates and Section 7.04 of the Participation Agreement, and the
payment to the Lessor in immediately available funds of an amount equal to
the excess of (A) the greater of (I) the Termination Value for the
Aircraft, and (II) the Fair Market Value of the Aircraft, both computed as
of such Rent Payment Date, over (B) the unpaid principal of the
Certificates outstanding plus accrued interest as of such date; it being
understood that the Fair Market Value for this purpose shall be determined
without regard to any Significant Expenditure not yet made.
For purposes of this paragraph (D) the term "Significant Expenditure"
means a single expenditure or a series of related expenditures in respect
of non-severable improvements (i.e. improvements which cannot by the terms
of Section 9.02(b) of the Lease be removed from the Aircraft) which (i) in
the Lessee's reasonable judgment would exceed $5,000,000, (ii) the Owner
Participant will not permit to be financed on similar terms and conditions
then available for similar transactions through the issuance of additional
non-recourse notes of the Lessor or through additional equity investments
of the Owner Participant or both (it being understood that this Section
4.02(a)(D) shall not impose any obligation on the Owner Participant to
provide such financing) and (iii) are improvements which the Lessee has
performed or is in the process of performing in respect of at least 25% of
the A300-600 series aircraft (including the Aircraft) operated by the
Lessee. The Lessee, prior to notifying the Owner Participant and the
Indenture Trustee in accordance with Paragraph (F) of this Schedule V of
its election to purchase the Aircraft pursuant to Section 4.02(a)(D) of the
Lease, shall notify the Owner Participant of the non-severable improvements
which would satisfy the conditions described in clauses (i) and (iii) of
the preceding sentence, and provide the Owner Participant with a reasonable
opportunity to permit the financing thereof as contemplated in clause (ii)
of such sentence. The Owner Participant shall notify the Lessee of their
decision with respect to such financing within 60 days after the Lessee has
given the notice described in the preceding sentence.
(E) Purchase Option Referred to in Section 4.02(a)(E) of the Lease.
In the event that a Burdensome Indemnity Payment shall occur at any time on
or after the fifth anniversary of the Commencement Date, the Lessee may
elect to terminate the Lease and purchase the Aircraft on the first Rent
Payment Date (the "Burdensome Indemnity Payment Date") following the date
that the Owner Participant provides the Lessee with a written notice of any
Loss (as defined in Section 5 of the Tax Indemnity Agreement) that is a
Burdensome Indemnity Payment for, at the Lessee's option, either (1) the
payment to the Lessor in immediately available funds of an amount equal to
the greater of the Fair Market Value of the Aircraft and the Termination
Value for the Aircraft, determined in each case as of such Burdensome
Indemnity Payment Date, or (2) the assumption by the Lessee, pursuant to
Section 7.11 of the Participation Agreement and Section 2.12 of the
Indenture, of all of the obligations of the Lessor under the Indenture, the
Certificates and Section 7.04 of the Participation Agreement and the
payment to the Lessor in immediately available funds of an amount equal to
the excess of (A) the greater of (I) the Termination Value for the Aircraft
and (II) the Fair Market Value of the Aircraft, both computed as of the
Burdensome Indemnity Payment Date, over (B) the unpaid principal of the
Certificates outstanding plus accrued interest as of such date.
For purposes of this paragraph (E), the term "Burdensome Indemnity
Payment" means a Loss as defined in the Tax Indemnity Agreement which under
the circumstances cannot be commercially reasonably avoided by the Lessee
which causes the aggregate net present value as of the determination date,
discounted semi-annually at the Debt Rate, of all such Losses (but
excluding any Losses for which the Owner Participant shall have waived its
right to payment under the Tax Indemnity Agreement) paid or payable by the
Lessee which can be avoided through a purchase by the Lessee of the
Aircraft, to exceed 2.5% of the Purchase Price.
(F) Notice from the Lessee. The Lessee shall give the Lessor, the
Owner Participant and the Indenture Trustee not more than 180 days nor less
than 90 days prior written notice of its election to purchase pursuant to
Section 4.02(a)(D) or 4.02(a)(E) of the Lease. Such notice shall either
direct the Lessor to prepay the Certificates in full on such Termination
Date pursuant to Section 6.02 of the Indenture or state that the Lessee
shall exercise its option to assume the Certificates pursuant to Section
7.11 of the Participation Agreement and Section 2.12 of the Indenture. The
Lessee's notice pursuant to Section 4.02(a)(D) or 4.02(a)(E) hereof shall
become irrevocable 10 days prior to the applicable purchase date designated
in such notice but if any such notice is revoked, the Lessee shall no
longer be entitled to purchase the Aircraft as a result of the facts and
circumstances originally giving rise to such right and will pay all
reasonable expenses of the Owner Participant, the Owner Trustee and the
Indenture Trustee in connection therewith.
Exhibit A
to
Lease Agreement
THE INTEREST OF LESSOR UNDER THIS LEASE SUPPLEMENT
NO. __ IS SUBJECT TO A SECURITY INTEREST
LEASE SUPPLEMENT NO. __
(Federal Express Corporation Trust No. N660FE)
LEASE SUPPLEMENT NO. __ (Federal Express Corporation Trust No.
N660FE), dated ________ __, ____, between NBD BANK, a Michigan banking
corporation, not in its individual capacity, but solely as Owner Trustee under
the Trust Agreement (Federal Express Corporation Trust No. N660FE) dated as of
September 1, 1995, as amended and restated as of October 26, 1995 (the
"Lessor"), and FEDERAL EXPRESS CORPORATION, a Delaware corporation (the
"Lessee").
W I T N E S S E T H :
WHEREAS, the Lessor and the Lessee have entered into that certain
Lease Agreement (Federal Express Corporation Trust No. N660FE) dated as of
September 1, 1995, as amended and restated as of October 26, 1995 (the
"Lease", the defined terms in the Lease being used in this Lease Supplement
with the same meaning as in the Lease), which provides for the execution and
delivery of a Lease Supplement, substantially in the form of this Lease
Supplement No. __, for the purpose of leasing under the Lease the aircraft and
engines described below ("Aircraft") as and when delivered by the Lessor to
the Lessee in accordance with the terms of the Lease;
WHEREAS, the Lease relates to the Aircraft;
WHEREAS, a counterpart of the Lease is attached to and made a part of
this Lease Supplement, and this Lease Supplement, together with such
attachment, is being filed for recordation on this date with the FAA as one
document.
NOW, THEREFORE, for and in consideration of the premises and other
good and sufficient consideration, the Lessor and the Lessee agree as follows:
Section 1. Delivered Aircraft. The Lessor hereby delivers and
leases to the Lessee under the Lease, and the Lessee hereby accepts and leases
from the Lessor under the Lease, the following described Airbus A300F4-605R
Aircraft (the "Delivered Aircraft"), which Delivered Aircraft as of the date
of this Lease Supplement consists of the following:
(a) Airbus X000X0-000X Xxxxxxxx; U.S. Registration Number ______;
Manufacturer's Serial No. ___; and
(b) Two (2) General Electric CF6-80C2-A5F Engines bearing,
respectively, Manufacturer's Serial Nos. ___-___ and ___-___ (each of which
engines has 750 or more rated takeoff horsepower or the equivalent of such
horsepower).
Section 2. Delivery Date. The Delivery Date of the Delivered
Aircraft is the date of this Lease Supplement.
Section 3. Purchase Price. The Purchase Price of the Delivered
Aircraft shall be the amount set forth in Ancillary Agreement I.
Section 4. Term. The Term for the Delivered Aircraft shall commence
on the Delivery Date, and shall terminate on ______, ____, unless earlier
terminated or extended pursuant to the terms of the Lease.
Section 5. Rent. The Lessee hereby agrees to pay the Lessor Rent
for the Delivered Aircraft throughout the Term thereof in accordance with the
terms and provisions of the Lease.
Section 6. Lessee's Acceptance of Delivered Aircraft. The Lessee
hereby confirms to the Lessor that the Delivered Aircraft has been duly marked
in accordance with Section 7.03 of the Lease and that the Lessee has accepted
the Delivered Aircraft for all purposes hereof and of the Lease, and as being
free and clear of all Liens except Lessor's Liens. Such acceptance by the
Lessee shall be without prejudice to any rights of the Lessor or the Lessee
against AVSA, the Manufacturer, the Engine Manufacturer or any vendor of
equipment included in the Aircraft.
Section 7. Incorporation of Lease By Reference. All the provisions
of the Lease are hereby incorporated by reference in this Lease Supplement to
the same extent as if fully set forth in this Lease Supplement.
Section 8. Governing Law. THIS LEASE SUPPLEMENT SHALL IN ALL
RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE BUT WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS, AND
IS BEING DELIVERED IN THE STATE OF NEW YORK.
Section 9. Agreement as Chattel Paper. To the extent that this Lease
Supplement constitutes chattel paper (as such term is defined in the Uniform
Commercial Code as in effect in any applicable jurisdiction), no security
interest in this Lease Supplement may be created through the transfer or
possession of any counterpart other than the original chattel-paper
counterpart, which shall be the counterpart containing the receipt executed by
the Indenture Trustee on its signature page.
Section 10. Counterparts. This Lease Supplement may be executed in
any number of counterparts, each of which shall be an original (except that
only the counterpart bearing the receipt executed by Indenture Trustee shall
be the original for purposes of perfecting a security interest therein as
chattel paper under the Uniform Commercial Code), but all of which taken
together shall constitute one and the same instrument and any of the parties
hereto may execute this Lease Supplement by signing any such counterpart.
IN WITNESS WHEREOF, the Lessor and the Lessee have caused this Lease
Supplement to be duly executed as of the day and year first above written.
LESSOR: NBD BANK,
not in its individual capacity,
but solely as Owner Trustee
By: ____________________________________________
Name:
Title:
LESSEE: FEDERAL EXPRESS CORPORATION
By: ___________________________________________
Name: Xxxxxx X. Xxxxxxx
Title:Assistant Treasurer and
Managing Director -
Structured Finance
Receipt of this original counterpart of the Lease Supplement is hereby
acknowledged on this __ day of _________ 1995.
Indenture Trustee: THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION),
not in its individual capacity,
but solely as Indenture Trustee
By: _________________________________________
Name:
Title:
LEASE AGREEMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N661FE)
Dated as of October 15, 1995
Amended and Restated as of October 26, 1995
between
NBD BANK,
Not in its Individual Capacity,
but Solely as Owner Trustee,
AS LESSOR
and
FEDERAL EXPRESS CORPORATION,
AS LESSEE
COVERING ONE AIRBUS A300F4-605R AIRCRAFT
SERIAL NO. 760, REGISTRATION NO. N661FE
CERTAIN OF THE RIGHT, TITLE AND INTEREST IN AND TO THIS LEASE
AGREEMENT OF NBD BANK, AS OWNER TRUSTEE, HAS BEEN ASSIGNED TO AND IS
SUBJECT TO A LIEN AND SECURITY INTEREST IN FAVOR OF THE CHASE MANHATTAN
BANK (NATIONAL ASSOCIATION), AS INDENTURE TRUSTEE UNDER THE TRUST INDENTURE
AND SECURITY AGREEMENT (FEDERAL EXPRESS CORPORATION TRUST NO. N661FE)
DATED AS OF OCTOBER 15, 1995, AS AMENDED AND RESTATED AS OF OCTOBER 26,
1995 FOR THE BENEFIT OF THE HOLDERS OF THE CERTIFICATES REFERRED TO IN SUCH
TRUST INDENTURE AND SECURITY AGREEMENT. THIS LEASE AGREEMENT HAS BEEN
EXECUTED IN SEVERAL COUNTERPARTS. ONLY THE CHATTEL-PAPER "ORIGINAL"
COUNTERPART CONTAINS THE RECEIPT THEREFOR EXECUTED BY THE CHASE MANHATTAN
BANK (NATIONAL ASSOCIATION), AS INDENTURE TRUSTEE, ON THE SIGNATURE PAGES
THEREOF.
TABLE OF CONTENTS
Page
Initial Recitals.............................................................1
ARTICLE 1
DEFINITIONS
ARTICLE 2
ACCEPTANCE UNDER THE LEASE
Section 2.01. Affirmation of Acceptance under the Lease................ 2
ARTICLE 3
RENT AND RENT ADJUSTMENT
Section 3.01. Owner Participant Payment................................ 2
Section 3.02. Interim Rent and Basic Rent.............................. 2
Section 3.03. Supplemental Rent........................................ 3
Section 3.04. Adjustments to Interim Rent, Basic Rent, Stipulated Loss
Value, Termination Value and the EBO Price After
the Delivery Date....................................... 3
Section 3.05. Minimum Interim Rent and Basic Rent...................... 5
Section 3.06. Payment to Indenture Trustee............................. 6
Section 3.07. Costs and Expenses....................................... 6
ARTICLE 4
RENEWAL OPTIONS AND PURCHASE OPTIONS
Section 4.01. Renewal Options.......................................... 6
Section 4.02. Purchase Options......................................... 7
Section 4.03. Appraisal Procedures..................................... 9
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
Section 5.01. Disclaimer of Representations and Warranties............. 11
Section 5.02. No Modification of Other Warranties...................... 12
Section 5.03. Certain Agreements of the Lessee......................... 12
ARTICLE 6
LIENS
Section 6.01. Liens.................................................... 12
ARTICLE 7
AIRCRAFT REGISTRATION, MAINTENANCE AND OPERATION
Section 7.01. Registration, Maintenance and Operation.................. 14
Section 7.02. Possession and Permitted Transfer and Sublease........... 16
Section 7.03. Insignia................................................. 20
ARTICLE 8
REPLACEMENT AND POOLING OF PARTS
Section 8.01. Replacement of Parts..................................... 21
Section 8.02. Pooling of Parts......................................... 22
ARTICLE 9
ALTERATIONS, MODIFICATIONS AND ADDITIONS
Section 9.01. Required Alterations and Modifications................... 23
Section 9.02. Other Alterations and Modifications...................... 23
ARTICLE 10
VOLUNTARY TERMINATION
Section 10.01. Right of Termination Upon Obsolescence or Surplus....... 24
Section 10.02. Retention of Aircraft by the Lessor..................... 27
Section 10.03. Voluntary Termination as to Engines..................... 28
ARTICLE 11
LOSS, DESTRUCTION, REQUISITION
Section 11.01. Lessee's Election Rights................................ 28
Section 11.02. Payment of Stipulated Loss Value........................ 29
Section 11.03. Replacement of Airframe and Engines..................... 30
Section 11.04. Event of Loss with Respect to an Engine................. 33
Section 11.05. Application of Payments from the Government or Others... 35
Section 11.06. Requisition of an Airframe and the Installed Engines
for Use by Government ................................. 36
Section 11.07. Requisition for Use by Government of an Engine
Not Installed on the Airframe.......................... 37
Section 11.08. Application of Payments During Existence of Certain
Defaults............................................... 37
ARTICLE 12
RETURN OF AIRCRAFT
Section 12.01. Return of Aircraft...................................... 37
Section 12.02. Return of Engines....................................... 38
Section 12.03. Return of Manuals....................................... 38
Section 12.04. Condition of Aircraft................................... 39
Section 12.05. Delayed Return of Aircraft.............................. 40
Section 12.06. Storage................................................. 41
Section 12.07. Special Markings........................................ 41
Section 12.08. Lessor's Option to Purchase Parts....................... 41
ARTICLE 13
INSURANCE
Section 13.01. Comprehensive Airline Liability and Property Damage
Liability Insurance.................................... 42
Section 13.02. Insurance Against Loss or Damage to Aircraft
and Engines............................................ 44
Section 13.03. Application of Insurance Proceeds....................... 46
Section 13.04. Reports................................................. 47
Section 13.05. Lessor's Insurance...................................... 48
Section 13.06. Self-Insurance.......................................... 48
ARTICLE 14
INSPECTION
Section 14.01. Right of Inspection..................................... 48
Section 14.02. No Obligation to Inspect................................ 49
ARTICLE 15
ASSIGNMENT
Section 15.01. Lessee's Right to Assign................................ 49
Section 15.02. Citizenship............................................. 49
ARTICLE 16
EVENTS OF DEFAULT
Section 16.01. Events of Default....................................... 50
ARTICLE 17
REMEDIES
Section 17.01. Remedies Upon Lessee's Default.......................... 52
Section 17.02. Cumulative Remedies..................................... 55
Section 17.03. Waiver.................................................. 55
Section 17.04. Lessor's Right to Perform for Lessee.................... 55
ARTICLE 18
COVENANT OF QUIET ENJOYMENT
Section 18.01. Quiet Enjoyment......................................... 56
ARTICLE 19
FURTHER ASSURANCES
Section 19.01. Further Assurances...................................... 56
ARTICLE 20
NET LEASE
Section 20.01. Nature of Lease......................................... 57
ARTICLE 21
SUCCESSOR LESSOR
Section 21.01. Successor Lessor........................................ 58
ARTICLE 22
SECURITY FOR LESSOR'S OBLIGATIONS
Section 22.01. Security for Lessor's Obligations to Holders............ 59
Section 22.02. Intentionally Left Blank................................ 59
Section 22.03. Consent of Lessee to Assignment of Lease as Security.... 59
ARTICLE 23
SECURITY FUNDS
Section 23.01. Investment of Security Funds............................ 59
ARTICLE 24
CONCERNING THE LESSOR
Section 24.01. Lessor's Entry Into Lease............................... 61
ARTICLE 25
NOTICES
Section 25.01. Notices................................................. 61
ARTICLE 26
MISCELLANEOUS
Section 26.01. Section Headings and Captions........................... 62
Section 26.02. References.............................................. 62
Section 26.03. APPLICABLE LAW.......................................... 62
Section 26.04. Severability............................................ 63
Section 26.05. No Oral Modification.................................... 63
Section 26.06. Agreement as Chattel Paper.............................. 63
Section 26.07. Counterparts............................................ 63
Section 26.08. Public Release of Information........................... 63
ARTICLE 27
TRUE LEASE
Section 27.01. Intent of the Parties................................... 64
Section 27.02. Section 1110 Compliance................................. 64
Section 27.03. Finance Lease........................................... 64
Schedule I Definitions
Schedule II Owner Participant Amount, Interim Rent and Basic Rent
Schedule III Stipulated Loss Values
Schedule IV Termination Values
Schedule V Purchase Option Schedule
Exhibit A Form of Lease Supplement
LEASE AGREEMENT
(Federal Express Corporation Trust No. N661FE)
Lease Agreement (Federal Express Corporation Trust No. N661FE) dated
as of October 15, 1995, as amended and restated as of October 26, 1995 (this
"Lease"), between NBD BANK, a Michigan banking corporation, not in its
individual capacity but solely as Owner Trustee under the Trust Agreement (as
defined in Article 1 below) (the "Lessor"), and FEDERAL EXPRESS CORPORATION, a
Delaware corporation (the "Lessee").
W I T N E S S E T H :
WHEREAS, the Lessor and the Lessee have heretofore entered into
the Original Lease dated as of October 15, 1995 as supplemented by Lease
Supplement No. 1 dated October 25, 1995.
WHEREAS, the Original Lease was recorded by the FAA on October 25,
1995 and assigned Conveyance Number 2A267995.
WHEREAS, pursuant to Article 15 of the Original Participation
Agreement, the Lessee, the Original Loan Participants, the Owner Participant,
the Indenture Trustee and the Lessor desire to refinance, in full, the
Original Loan Certificates on the Refunding Date; and
WHEREAS, in connection with such refinancing, the Lessee, the Owner
Participant, the Lessor and the Indenture Trustee desire that the Original
Lease be amended and restated in its entirety as provided herein;
NOW, THEREFORE, in consideration of the mutual promises herein, and
other good and valuable consideration, the receipt and adequacy of which is
hereby acknowledged by the parties, the Lessor and the Lessee agree that the
Original Lease be and the same is hereby amended and restated in its entirety
as follows:
ARTICLE 1
DEFINITIONS
Unless otherwise specifically provided herein, the capitalized terms
herein shall have the meanings given in Schedule II to the Participation
Agreement, a copy of which schedule is annexed hereto as Schedule I, for all
purposes of this Lease and shall be equally applicable to both the singular
and the plural forms of the terms defined.
ARTICLE 2
ACCEPTANCE UNDER THE LEASE
Section 2.01. Affirmation of Acceptance under the Lease. The Lessor,
having accepted delivery of the Aircraft from AVSA on the Delivery Date and
having simultaneously leased the Aircraft to the Lessee, and the Lessee,
having leased the Aircraft from the Lessor on the Delivery Date, as evidenced
by the execution by the Lessor and the Lessee of the initial Lease Supplement
(which is incorporated by reference herein), hereby affirm the terms and
conditions of the Original Lease as herein amended and restated and of the
Purchase Agreement Assignment. This Lease shall last for the Term, at all
times during which full legal title to the Aircraft shall remain vested with
the Lessor to the exclusion of the Lessee, notwithstanding the possession and
use thereof by the Lessee or any other Person.
ARTICLE 3
RENT AND RENT ADJUSTMENT
Section 3.01. Owner Participant Payment. The Owner Participant
has agreed, so long as no Event of Default has occurred and is continuing,
to make available to the Lessor funds sufficient to pay to the Indenture
Trustee on the Owner Participant Payment Date an amount equal to the
amounts scheduled to be paid on the Certificates on such date, all in
accordance with the provisions of Section 2.03 of the Participation
Agreement. To the extent such amount is not paid when due on the Owner
Participant Payment Date, the Lessee shall make an advance on behalf of the
Owner Participant as described in Section 3.05 hereof equal to such amount
and, if not otherwise reimbursed, the Lessee shall have the right to offset
such amount pursuant to Section 3.05 hereof.
Section 3.02. Interim Rent and Basic Rent. No Rent (other than
Supplemental Rent, if any) shall be payable for the Preliminary Term. The
Lessee agrees to pay to the Lessor in immediately available funds on the
Commencement Date, Interim Rent in the amount set forth on Schedule II
hereto for such date, subject to increase or decrease as provided in
Section 3.04 hereof, with such Interim Rent being allocated to the Interim
Term. The Lessee agrees to pay to the Lessor in immediately available
funds, on each Rent Payment Date, Basic Rent for the Aircraft during the
Basic Term, each payment being set forth on Schedule II hereto opposite the
applicable Rent Payment Date, subject to increase or decrease as provided
in Sections 3.04 of this Lease. Each payment of Interim Rent and Basic
Rent shall be made in arrears or in advance, all as stated in Schedule II
hereto. Each payment of Basic Rent designated as advance rent shall be
allocated over the six-month period beginning on the Rent Payment Date on
which such advance rent payment is scheduled to be made, and each
installment of Basic Rent that is designated as payable in arrears shall be
accrued over the six-month period ending on and including the day
immediately preceding the Rent Payment Date on which such arrears payment
is scheduled to be made and each installment of Interim Rent that is
designated as payable in arrears shall be accrued over the Interim Term.
Section 3.03. Supplemental Rent. The Lessee agrees to pay or
cause to be paid to the Lessor, or to whomever shall be entitled to it, any
and all Supplemental Rent promptly as the same shall become due. If the
Lessee fails to pay any Supplemental Rent when due, the Lessor shall have
all rights, powers and remedies provided for in this Lease, or by law or
equity or otherwise in the case of nonpayment of Interim Rent or Basic
Rent. The Lessee will also pay to the Person entitled thereto, on demand,
as Supplemental Rent, to the extent permitted by applicable law, an amount
equal to interest at the Past Due Rate on any part of any installment of
Interim Rent or Basic Rent not paid when due, for any period until the same
shall be paid and on any payment of Supplemental Rent not paid when due,
for the period until the same shall be paid. In addition, the Lessee will
pay to the Lessor, as Supplemental Rent, in the case of any prepayment of
the Certificates pursuant to Section 6.02 of the Indenture (except in the
case of an Indenture Event of Default in the absence of any Event of
Default) or any prepayment or purchase of the Certificates pursuant to
clause (ii) of the first sentence of Section 8.02(a) of the Indenture, an
amount equal to the aggregate amount of any Make-Whole Premium payable on
such prepayment or purchase. The expiration or other termination of the
Lessee's obligation to pay Interim Rent or Basic Rent shall not limit or
otherwise modify the obligations of the Lessee with respect to the payment
of Supplemental Rent.
Section 3.04. Adjustments to Interim Rent, Basic Rent, Stipulated
Loss Value, Termination Value and the EBO Price After the Delivery Date.
The percentages for Interim Rent and Basic Rent referred to in Schedule II
hereto and for Stipulated Loss Value and Termination Value in Schedule III
and Schedule IV, respectively, hereto and the EBO Price shall be adjusted
(upward or downward) subject to the minimum value established by Section
3.05 hereof and the definitions of Stipulated Loss Value and Termination
Value to reflect (i) any costs and expenses paid by the Lessor or the Owner
Participant pursuant to Section 10.01 of the Participation Agreement being
greater or less than the Estimated Expense Amount, (ii) any Refinancing
pursuant to Section 15.01 of the Participation Agreement, (iii) any
reoptimization pursuant to Section 15.02 of the Participation Agreement,
(iv) the Owner Participant Amount being different from the amount set forth
on Schedule II hereto or paid, in whole or in part, on a date other than as
set forth on Schedule II hereto or (v) payments pursuant to Section 5 of
the Tax Indemnity Agreement by an adjustment of Interim Rent and Basic
Rent. Each such adjustment pursuant to clause (i), (ii), (iv) or (v) of
the first sentence of this Section 3.04 shall maintain the Owner's Economic
Return (and, while maintaining such Return, minimize the aggregate Net
Present Value of Rents to the Lessee) and shall not cause the EBO Price to
be less than the greater of (i) the Termination Value as of such Rent
Payment Date and (ii) the estimate set forth in the Appraisal of the Fair
Market Value of the Aircraft at the time of exercise of the purchase option
under Section 4.02(a)(F) hereof. In the event of an adjustment pursuant to
clause (iii) of the first sentence of this Section 3.04, the Owner
Participant may recalculate Interim Rent and Basic Rent as set forth in
Schedule II hereto in order to maintain the Owner's Economic Return,
recalculate the Owner Participant Amount set forth in Schedule II hereto
and, subject to the provisions of Section 15.02 of the Participation
Agreement, recalculate the schedule of principal repayments, the Stipulated
Loss Value percentages set forth in Schedule III hereto, the Termination
Value percentages set forth in Schedule IV hereto and the EBO Price in a
manner consistent with such recalculation of Interim Rent and Basic Rent;
provided that any such recalculations may not (A) increase the Net Present
Value of Rents to the Lessee, (B) increase as of any date the sum of (1)
the Net Present Value of Rents to the Lessee payable through such date plus
(2) the present value of the Stipulated Loss Value, the Termination Value
or the EBO Price as of such date, in each case discounted at the Debt Rate,
beyond such net present values prior to such adjustment, or (C) otherwise
result in any adverse impact (including tax consequences) to the Lessee for
which the Owner Participant has not agreed to indemnify the Lessee on terms
reasonably acceptable to the Lessee. The Owner Participant shall promptly
notify the Lessee and the Lessor and the Lessee shall promptly notify the
Owner Participant and the Lessor of the need for any such adjustment. As
promptly as feasible after any such notification, the Lessor shall furnish
the Lessee with a notice setting forth the amount of any such adjustments
together with the calculations upon which the adjustments are based;
provided, however, that the Lessor and the Owner Participant shall not be
required to disclose to the Lessee in such notice any confidential or
proprietary information (including methodology or assumptions) relating to
such calculations. At the request and, subject to the next succeeding
sentence, expense of the Lessee, the accuracy of the calculation of such
adjustments and the consistency of the calculation with the calculation
used to determine Interim Rent, Basic Rent, Stipulated Loss Values,
Termination Values and the EBO Price shall be verified first, by First
Chicago Leasing Corporation or such other financial advisor chosen by the
Lessee and second, if such adjustments are still believed to be in error
and are not reconciled with the Owner Participant within fifteen (15)
Business Days, by a firm of nationally recognized independent public
accountants selected by the Lessee and reasonably acceptable to the Owner
Participant and, in order to enable them to verify such adjustments, the
Owner Participant shall make available to such accountants (for their own
confidential use and not to be disclosed to the Lessee or any other Person
and subject to the execution of a confidentiality agreement reasonably
satisfactory to the Owner Participant) all information reasonably necessary
for such verification, including the name of the lease analysis program
used by the Owner Participant to calculate such adjustments. The Lessee
will pay the reasonable costs and expenses of the verification process
under this Section 3.04 unless as a result of such verification process by
the independent public accountants Interim Rent or Basic Rent is adjusted
and such adjustment causes the Net Present Value of Rents to decline by 10
or more basis points (in which event the Owner Participant shall pay the
reasonable costs and expenses of such verification process). The Lessor
and the Lessee shall execute and deliver an amendment to this Lease to
reflect each adjustment under this Section 3.04.
All adjustments under this Section 3.04 shall be in compliance
with the requirements of Revenue Procedure 75-21, 1975-1 C.B. 715 and
Sections 4.02(5), 4.07(1), 4.07(2) and 4.08(1) of Revenue Procedure 75-28,
1975-1 C.B. 752 and shall be structured so as to not cause the Lease to be
a "disqualified leaseback or long-term agreement" within the meaning of
Section 467 of the Code.
Section 3.05. Minimum Interim Rent and Basic Rent.
Notwithstanding any other provisions of the Operative Agreements to the
contrary, each installment of Interim Rent and Basic Rent due on each Rent
Payment Date and not constituting an Excepted Payment shall be, under any
and all circumstances, an amount at least sufficient to pay in full any
installment of principal of and interest on the Certificates required to be
paid pursuant to the Certificates (other than amounts becoming due on
account of the exercise of remedies pursuant to Article 17 hereof) on such
Rent Payment Date. To the extent that the Owner Participant does not
provide the Lessor with funds on the Owner Participant Payment Date as
referred to in Section 3.01 hereof if and when due, the Lessee shall on
such date advance on behalf of the Owner Participant (and such advance
shall be deemed a demand loan owing to the Lessee from the Owner
Participant bearing interest at the Past Due Rate plus 3%) an amount equal
to the funds not so provided. Unless otherwise reimbursed, the Lessee
shall, in addition to all other rights and remedies under applicable law
but subject to Article 20 hereof, be entitled to offset against any
payments due from the Lessee to the Lessor (including, without limitation,
Interim Rent, Basic Rent and payments due to the Lessor under Article 9 of
the Participation Agreement but not including the fees and expenses payable
to NBD or to the Owner Participant under the Tax Indemnity Agreement and
Excepted Payments), until the Lessee has fully offset such advance plus
interest thereon at the Past Due Rate plus 3% from the date of such advance
until the date of such reimbursement or offset; provided, however, that in
the case of any payment due from the Lessee which is distributable under
the terms of the Indenture, the Lessee's right of offset shall be limited
to the amount distributable to the Lessor thereunder (and shall not include
any amounts distributable to the Indenture Trustee in its individual
capacity or to the Holders of the Certificates or any of them). No such
offset or aggregate combined effect of separate offsets shall reduce the
amount of any installment of Interim Rent and Basic Rent, or the amount of
Stipulated Loss Value, Termination Value or EBO Price, to an amount
insufficient to pay in full the payments then required to be made on
account of the principal of and interest on the Certificates then
Outstanding. If the Owner Participant is not required to provide such
funds under Section 3.01 hereof, the Lessee shall make a payment of
Supplemental Rent in an amount equal to the Owner Participant Amount.
Section 3.06. Payment to Indenture Trustee. All Rent payable by
the Lessee to the Lessor shall be paid to the Lessor at its principal
office at 000 Xxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000, Attention:
Corporate Trust Department, or as the Lessor may otherwise direct, by wire
transfer of immediately available funds in U.S. Dollars with sufficient
information to identify sources and applications of such funds no later
than 10:30 a.m., New York time on the due date of such payment; provided,
however, that so long as the Indenture shall not have been discharged the
Lessor hereby directs, and the Lessee agrees, that all Rent (other than
Excepted Payments, which shall be paid by the Lessee directly to the Person
entitled thereto) (all without set-off or counterclaim as and to the
extent provided in Article 20 hereof) and all amounts referred to in
Section 3.01 hereof shall be paid directly to the Indenture Trustee at its
principal office at 4 Chase Xxxxxxxxx Xxxxxx, 0xx Xxxxx, Xxxxxxxx, Xxx Xxxx
00000, Attention: Corporate Trust Administration, or as the Indenture
Trustee may otherwise direct within the United States by wire transfer of
immediately available funds in U.S. Dollars no later than 10:30 a.m., New
York time, on the due date of such payment. In any case where a scheduled
Rent Payment Date shall not be a Business Day such Rent Payment Date shall
be adjourned to the next succeeding Business Day without interest thereon
for the period of such extension (provided that payment is made on such
next succeeding Business Day).
Section 3.07. Global Costs and Expenses. As between the Lessor
and the Lessee, all obligations under this Lease shall be done, performed
and complied with at the Lessee's cost and expense, whether or not so
expressed, unless otherwise expressly stated to the contrary.
ARTICLE 4
RENEWAL OPTIONS AND PURCHASE OPTIONS
Section 4.01. Renewal Options. (a) Election to Renew or Purchase.
The Lessee shall provide the Lessor with irrevocable written notice (the
"Preliminary Notice") not more than 360 days nor less than 180 days prior
to the end of the Basic Term or the preceding Renewal Term, as the case may
be, whether it will exercise its options either to renew this Lease
pursuant to this Section 4.01 or to purchase the Aircraft pursuant to
Section 4.02(a)(B) hereof or, if a further Renewal Term is available,
pursuant to Section 4.02(a)(C) hereof. If, following delivery of a
Preliminary Notice, the Lessee shall not have notified the Lessor, at least
30 days prior to the end of the Basic Term or a current Renewal Term, that
it is renewing this Lease in accordance with this Section 4.01, the
Lessee's Preliminary Notice shall be deemed an irrevocable notice of
purchase satisfying Section 4.02(a)(B) hereof. Provided that (i) no Event
of Default shall have occurred and be continuing at the time of renewal,
(ii) this Lease has not otherwise expired or terminated, and (iii) the
Lessee shall have timely delivered the respective Preliminary Notice, the
Lessee may, by irrevocable written notice delivered to the Lessor not less
than 30 days prior to the end of the Basic Term, extend the Term for a
Fixed Renewal Term of one (1) or two (2) years commencing on the expiration
of the Basic Term. If the Lessee elects to extend the Term for a Fixed
Renewal Term of one (1) year as described in the preceding sentence and so
elects upon 30 days' written notice to the Lessor prior to the end of such
one-year Fixed Renewal Term, the Lessee may elect to extend the Term for a
further Fixed Renewal Term of one year, provided that the conditions of
clauses (i), (ii) and (iii) of the preceding sentence are met. The Lessee
shall pay the Fixed Renewal Rent during any Fixed Renewal Term.
In addition, provided that (i) no Event of Default shall have
occurred and be continuing at the time of renewal, (ii) this Lease has not
otherwise expired or terminated, and (iii) the Lessee shall have delivered
the Preliminary Notice, the Lessee may, on no more than two occasions, by
written notice delivered to the Lessor not less than 30 days prior to the
end of the Basic Term or the preceding Renewal Term, as the case may be,
elect to extend the Term for a Renewal Term or further Renewal Term
commencing on the expiration of the Basic Term or the preceding Renewal
Term and ending one, two or three years thereafter for a rent equal to the
then-current Fair Market Rental of the Aircraft. The Term may be extended
pursuant to this paragraph for an aggregate of no more than three years
following the Basic Term or any Fixed Renewal Term. The Lessee shall pay
the Fair Market Rental during any Fair Market Renewal Term.
(b) Terms and Conditions. Any such renewal shall be on the same
terms and conditions as provided herein, except that (i) rent for the
Aircraft due during any Renewal Term shall be payable semi-annually in
arrears on the dates corresponding to the Rent Payment Dates during such
Renewal Term, and (ii) during any Renewal Term, the Stipulated Loss Value
for the Aircraft shall as of any Stipulated Loss Value Determination Date
during the Renewal Term be equal to the higher of the Stipulated Loss Value
and the Fair Market Value of the Aircraft as of the end of the Basic Term
or the next preceding Renewal Term, if applicable.
Section 4.02. Purchase Options. (a) Election to Purchase.
Provided that (i) this Lease has not otherwise expired or terminated, (ii)
either no Event of Default shall have occurred and be continuing at the
time of the notice provided below or, if an Event of Default occurs after
such notice has been given, the Lessee shall have provided evidence
reasonably satisfactory to the Lessor and the Owner Participant of its
financial ability to purchase the Aircraft and (iii) the Lessee shall have
previously given the Preliminary Notice under Section 4.01(a) hereof (in
the case of paragraph (B) below or, if a further Renewal Term is available,
paragraph (C) below) or the applicable notice for each other paragraph
below, as the case may be, the Lessee may:
(A) by written notice delivered to the Lessor and the Owner
Participant, not more than 180 nor less than 90 days prior to the
applicable Rent Payment Date, elect to terminate the Lease and purchase
the Aircraft on July 2, 2011 or July 2, 2013, for, at the Lessee's
option, either (1) an amount in immediately available funds equal to the
greater of the Fair Market Value or the Termination Value on such date
or (2)(i) the assumption by the Lessee, pursuant to Section 7.11 of the
Participation Agreement, of all of the obligations of the Lessor under
the Indenture, the Certificates and Section 7.04 of the Participation
Agreement and (ii) the payment to the Lessor of an amount equal to the
excess of (A) the greater of the Fair Market Value or the Termination
Value on such date over (B) the unpaid principal of the Certificates
plus accrued interest as of such date. Such notice (which shall be
revocable by the Lessee upon written notice no later than the Business
Day prior to the date 15 days prior to the applicable Rent Payment Date)
shall either direct the Lessor to prepay the Certificates in full on
such Termination Date pursuant to Section 6.02 of the Indenture or state
that the Lessee shall exercise its option to assume the Certificates
pursuant to Section 7.11 of the Participation Agreement and Section 2.12
of the Indenture; or
(B) by irrevocable written notice delivered to the Lessor and the
Owner Participant not more than 180 nor less than 30 days prior to the
end of the Basic Term (or deemed given pursuant to the second sentence
of Section 4.01(a) hereof), elect to purchase the Aircraft on the last
day of the Basic Term for an amount equal to the Fair Market Value
thereof on such date; or
(C) by irrevocable written notice delivered to the Lessor and the
Owner Participant not more than 270 days nor less than 30 days prior to
the end of any Renewal Term, elect to terminate the Lease and purchase
the Aircraft on the last day of such Renewal Term at a price equal to
the Fair Market Value of the Aircraft on such day; provided, however,
that the Lessee shall have paid all Rent due and payable under this
Lease on or prior to the expiration of any such Renewal Term; or
(D) exercise the purchase option in this Section 4.02(a)(D) which
is more particularly described in Schedule V hereto by reference to this
Section 4.02(a)(D) and which shall be in an amount not less than the
greater of the amount specified in Schedule V hereto and the Fair Market
Value;
(E) exercise the purchase option in this Section 4.02(a)(E) which
is more particularly described in Schedule V hereto by reference to this
Section 4.02(a)(E) and which shall be in an amount not less than the
greater of the amount specified in Schedule V hereto and the Fair Market
Value; or
(F) by irrevocable written notice delivered to the Lessor and the
Owner Participant not more than 180 nor less than 90 days prior to July
2, 2015, elect to terminate this Lease and purchase the Aircraft on such
Rent Payment Date for an amount equal to the percentage of the Purchase
Price set forth in Ancillary Agreement I with respect to this Section
4.02(a)(F) which amount shall not be less than the greater of (i) the
Termination Value as of such Rent Payment Date and (ii) the estimate set
forth in the Appraisal of the Fair Market Value at the time of exercise
of the option under this Section 4.02(a)(F).
The Lessee shall give the Lessor, the Owner Participant and the
Indenture Trustee not more than 180 and not less than 90 days' prior
written notice of its election to purchase pursuant to Section 4.02(a)(D)
or 4.02(a)(E) hereof. Such notice shall be revocable by the
Lessee upon written notice no later than the Business Day prior to the date
15 days prior to the applicable Rent Payment Date and such notice shall
either direct the Lessor to prepay the Certificates in full on such
Termination Date pursuant to Section 6.02 of the Indenture or state that
the Lessee shall exercise its option to assume the Certificates pursuant to
Section 7.11 of the Participation Agreement and Section 2.12 of the
Indenture. In the event that the Lessee shall have given notice to
purchase the Aircraft under Section 4.02(a)(A), 4.02(a)(D) or 4.02(a)(E)
hereof and shall fail to make payment (and, if applicable,
assume the Certificates) on the applicable Termination Date, the Lease
shall continue and the Lessee shall pay to the Owner Trustee any losses,
costs and expenses of the Owner Participant incurred in connection with
such failure.
(b) Terms and Conditions. If the Lessee elects to purchase the
Aircraft pursuant to Section 4.02(a) hereof, the Lessee shall pay to the
Lessor on the applicable Termination Date by wire transfer of immediately
available funds any Basic Rent payable on such Termination Date (to the
extent payable in arrears but not to the extent payable in advance), the
applicable purchase price together with any other amounts past due
hereunder or due on the applicable Termination Date and all other
Supplemental Rent then due under this Lease including, without limitation,
the aggregate amount of any Make-Whole Premium applicable to any
Certificate (if such purchase occurs prior to the Premium Termination Date
for such Certificate) and amounts due under the Participation Agreement and
the Tax Indemnity Agreement, whereupon (and upon discharge of the Lien of
the Indenture in accordance with Section 14.01 thereof) the Lessor will
transfer to the Lessee, without recourse or warranty (except as to the
absence of Lessor's Liens), all of the Lessor's right, title and interest
in and to the Aircraft on an "as-is, where is" basis. In connection with
such transfer, the Lessee shall prepare and the Lessor shall execute or
arrange for the execution of a xxxx of sale evidencing such transfer and
such other documents as the Lessee may reasonably require. In connection
with any termination or proposed termination of this Lease, the Lessee
shall pay, at the time of the applicable Termination Date, all related
reasonable costs and expenses of the Owner Participant, the Lessor and the
Indenture Trustee.
Section 4.03. Appraisal Procedures. (a) Generally. Whenever Fair
Market Rental or Fair Market Value is required to be determined under this
Lease (unless otherwise provided herein), it shall be determined by the
mutual agreement of the Lessor and the Lessee in accordance with the
definitions of such terms in Article 1. If the Lessee and the Lessor
cannot agree by the date 60 days prior to the date for exercise of the
applicable option, such amount shall be determined by independent appraisal
conducted by appraisers selected pursuant to Section 4.03(b) hereof. At
any time prior to final determination of such amount pursuant to Section
4.03(b) hereof, the Lessee and the Lessor shall be entitled to submit to
the appraisers (and shall submit to each other any bids submitted to the
appraisers) any bids from unrelated third parties, and such bids shall be
accorded the weight such appraisers deem appropriate. The Lessor and the
Lessee shall each have an opportunity to comment on any such bids after
receiving a copy thereof.
(b) Selection. If an independent appraisal is required pursuant
to this Lease, the Lessor and the Lessee shall consult for the purpose of
appointing a mutually acceptable, qualified aircraft appraiser. If they
are unable to agree on a single appraiser within ten (10) Business Days,
then the independent appraisal shall be arrived at by mutual agreement of
two nationally recognized, independent aircraft appraisers, one chosen by
the Lessor and one chosen by the Lessee, or, if such appraisers cannot
agree on the amount of such appraisal, their appraisals shall be treated in
the manner described in Section 4.03(c) hereof with an appraisal arrived at
by a third nationally recognized, independent aircraft appraiser chosen by
the mutual consent of such two appraisers; provided, however, that if
either party shall fail to appoint an appraiser within fifteen (15)
Business Days after a written request to do so by the other party, or if
such two appraisers cannot agree on the amount of such appraisal and fail
to appoint a third appraiser within twenty (20) Business Days after the
date of the appointment of the second of such appraisers, then either party
may initiate an arbitration proceeding with the American Arbitration
Association for purposes of appointing a nationally recognized, independent
aircraft appraiser.
(c) Valuation. If one appraiser is chosen, the value determined
by such appraiser shall be final and binding upon the Lessor and the
Lessee. If two appraisers are chosen, one appraiser by the Lessor and one
by the Lessee, and such appraisers agree on the value, such value shall be
final and binding upon the Lessor and the Lessee. If three appraisers
shall be appointed and the difference between the determination which is
farther from the middle determination is more than 125% of the difference
between the middle determination and the third determination, then such
further determination shall be excluded, the remaining two determinations
shall be averaged, and such average shall be final and binding upon the
Lessor and the Lessee. Otherwise, the average of all three determinations
shall be final and binding upon the Lessor and the Lessee.
(d) Rules of Appraisal. Any appraisal pursuant to this Section
4.03 shall be conducted in accordance with the commercial rules of the
American Arbitration Association as then in effect, as modified by this
Section 4.03 and the definitions of Fair Market Value and Fair Market
Rental. All expenses of any independent appraisal shall be borne by the
Lessee, except that each of the Lessee and the Owner Participant (in the
case of the Lessor) shall bear any fees, costs and expenses of its
respective attorneys in connection with such appraisal except in the case
of an Event of Default or in the case of a revocation by the Lessee of its
election to terminate the Lease under Section 4.02 hereof, in which case
such expenses shall be borne by the Lessee.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
Section 5.01. Disclaimer of Representations and Warranties. THE
LESSEE ACKNOWLEDGES AND AGREES THAT (i) THE AIRFRAME AND EACH ENGINE IS OF
A SIZE, DESIGN, AND CAPACITY AND MANUFACTURE SELECTED BY AND ACCEPTABLE TO
THE LESSEE, (ii) THE LESSEE IS SATISFIED THAT THE AIRFRAME AND EACH ENGINE
IS SUITABLE FOR ITS PURPOSES, (iii) NEITHER THE OWNER PARTICIPANT NOR THE
LESSOR IS A MANUFACTURER OR A DEALER IN PROPERTY OF SUCH KIND AND (iv) THE
AIRFRAME AND EACH ENGINE IS LEASED HEREUNDER SUBJECT TO ALL APPLICABLE LAWS
AND GOVERNMENTAL REGULATIONS, NOW IN EFFECT OR HEREAFTER ADOPTED, WITHOUT
REPRESENTATION OR WARRANTY OF ANY KIND BY THE LESSOR (IN ITS INDIVIDUAL
CAPACITY OR AS OWNER TRUSTEE), THE INDENTURE TRUSTEE, THE OWNER PARTICIPANT
OR ANY HOLDER. THE LESSOR LEASES THE AIRFRAME AND EACH ENGINE, AS-IS,
WHERE-IS, AND NEITHER THE LESSOR (IN ITS INDIVIDUAL CAPACITY OR AS OWNER
TRUSTEE), THE INDENTURE TRUSTEE, THE OWNER PARTICIPANT NOR ANY HOLDER
MAKES, HAS MADE OR SHALL BE DEEMED TO HAVE MADE, AND EACH HAS AND WILL HAVE
BEEN DEEMED TO HAVE EXPRESSLY DISCLAIMED, ANY WARRANTY OR REPRESENTATION
EITHER EXPRESS OR IMPLIED, AS TO (A) THE TITLE, AIRWORTHINESS,
WORKMANSHIP, CONDITION, VALUE, FITNESS FOR ANY PARTICULAR USE OR PURPOSE,
DESIGN, OPERATION OR MERCHANTABILITY OF THE AIRFRAME, EACH ENGINE OR ANY
PART THEREOF, (B) THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT
DISCOVERABLE, (C) THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK
OR COPYRIGHT, (D) THE ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN
TORT, (E) THE LESSOR'S TITLE THERETO, (F) THE LESSEE'S OR ANY SUBLESSEE'S
RIGHT TO THE QUIET ENJOYMENT THEREOF (EXCEPT AS PROVIDED IN ARTICLE 18
HEREOF) OR (G) ANY OTHER MATTER WHATSOEVER. IT IS AGREED THAT ALL RISKS
INCIDENT TO THE MATTERS DISCUSSED IN THE PRECEDING SENTENCE, AS AMONG THE
LESSOR, THE INDENTURE TRUSTEE, THE OWNER PARTICIPANT AND THE LESSEE, ARE TO
BE BORNE BY THE LESSEE. The provisions of this Section 5.01 have been
negotiated by the Lessor and the Lessee and, except as provided in Article
7 of the Participation Agreement, are intended to be a complete exclusion
and negation of any representations or warranties of the Lessor, the
Indenture Trustee and the Owner Participant, express or implied, with
respect to the Airframe and each Engine that may arise pursuant to any law
now or hereafter in effect, or otherwise.
Section 5.02. No Modification of Other Warranties. None of the
provisions of this Article 5 or any other provision of this Lease shall be
deemed to amend, modify or otherwise affect the representations, warranties
or other obligations (express or implied) of the Lessee, AVSA, the
Manufacturer or the Engine Manufacturer or any of their respective
subcontractors or suppliers, with respect to the Airframe, the Engines or
any Parts incorporated or installed in or attached to the Airframe or
Engines, or to release the Lessee, AVSA, the Manufacturer or the Engine
Manufacturer or any of their respective subcontractors or suppliers from
any such representation, warranty or obligation. So long as an Event of
Default shall not have occurred and be continuing under this Lease and to
the extent permitted under the applicable warranty, patent indemnity, or
service-life policy, (i) the Lessor shall assign or otherwise make
available to the Lessee such rights as the Lessor may have under any
warranty, patent indemnity, or service-life policy made or given by the
Manufacturer, AVSA or Engine Manufacturer or any of their respective
subcontractors or suppliers, and any other claims against the Manufacturer,
AVSA and Engine Manufacturer or any such subcontractor or supplier with
respect to the Aircraft, including all rights to demand, accept and retain
all rights in and to property (other than the Aircraft), data and services
of any kind which the Manufacturer, AVSA and Engine Manufacturer are
obligated to provide and do provide pursuant to the Purchase Agreement or
the GTA with respect to the Aircraft; and (ii) all payments pursuant to any
manufacturer's or subcontractor's warranty, patent indemnity, or
service-life policy obligation shall be paid to the Lessee; provided that the
Lessee shall apply such payments to the cost of repair or correction of any
condition of the Aircraft which gave rise to such payments.
Section 5.03. Certain Agreements of the Lessee. The Lessee agrees
with the Lessor for the benefit of the Owner Participant that the Lessee
shall perform the agreements, covenants and indemnities of the Lessee set
forth in the Participation Agreement to the extent the same are applicable
to the Owner Participant, as fully and to the same extent and with the same
force and effect as if set forth in full in this Article 5.
ARTICLE 6
LIENS
Section 6.01. Liens. The Lessee will not directly or indirectly
create, incur, assume or suffer to exist, and will promptly, at its own
cost and expense, take such action as may be necessary to discharge, any
Lien on or with respect to the Lessor's Estate or this Lease or the
Aircraft, the Airframe or any Engine or any Part or title thereto or any
interest therein except:
(a) the respective rights of the Lessor and the Lessee as provided
in this Lease, the security interest and Lien of the Indenture and the
rights of the Owner Participant, the Lessor and the Indenture Trustee
under the Trust Agreement, the Indenture and the Participation
Agreement;
(b) the rights of any sublessee or transferee or other Person
under a sublease, transfer, assignment or other such arrangement
expressly permitted by the terms of this Lease;
(c) Lessor's Liens and Indenture Trustee's Liens to the extent
required to be discharged by the Owner Participant, the Lessor or the
Indenture Trustee, as the case may be, in accordance with Section
7.03(b), 7.04(b) or 7.05(b) of the Participation Agreement;
(d) Liens for taxes imposed against the Lessee either not yet due
or being contested in good faith by appropriate proceedings so long as
such Liens or proceedings do not involve any material danger of the
sale, forfeiture or loss of the Lessor's Estate, the Aircraft, the
Airframe or any Engine or any interest therein or any material risk of
civil liabilities (unless the Owner Trustee, the Indenture Trustee and
the Owner Participant shall be indemnified to its satisfaction against
such liabilities by the Lessee) or any risk of the assertion of criminal
charges against the Lessor, the Owner Participant, the Indenture Trustee
or any Holder;
(e) materialmen's, mechanics', workmen's, repairmen's, employees'
or other like Liens arising against the Lessee in the ordinary course of
the Lessee's business for amounts the payment of which is either not yet
due or is being contested in good faith by appropriate proceedings so
long as such Liens or proceedings do not involve any material danger of
the sale, forfeiture or loss of the Lessor's Estate, the Aircraft, the
Airframe or any Engine or any interest therein; and
(f) Liens arising from judgments or awards against the Lessee
with respect to which (i) at the time an appeal or proceeding for review
is being prosecuted in good faith and with respect to which there shall
have been secured a stay of execution pending such appeal or proceeding
for review and then only for the period of such stay and (ii) there is
not, and such proceedings do not involve, any material danger of the
sale, forfeiture or loss of the Lessor's Estate, the Aircraft, Airframe
or any Engine or any interest therein.
ARTICLE 7
AIRCRAFT REGISTRATION, MAINTENANCE AND OPERATION
Section 7.01. Registration, Maintenance and Operation. The Lessee,
at its own cost and expense, shall:
(a) cause the Aircraft to remain at all times duly registered in
the name of the Lessor as owner, pursuant to the Transportation Code
and, subject to the proviso to Section 6.03(b) of the Participation
Agreement, to remain at all times duly registered pursuant to the
Transportation Code and at all times act in accordance with the rules
and regulations of the Aeronautics Authority or the applicable laws,
rules and regulations of any other jurisdiction in which the Aircraft
may then be registered in accordance with Section 6.03(b) of the
Participation Agreement;
(b) maintain, inspect, service, repair, test and overhaul the
Aircraft (or cause the same to be done) so as to keep the Aircraft (and
any engine which is not an Engine but is installed on the Aircraft) in
as good operating condition as when delivered to the Lessor on the
Delivery Date, ordinary wear and tear excepted, and in any event (i) in
accordance with the applicable regulations of the Aeronautics Authority
or of the regulatory agency or body of any other jurisdiction in which
the Aircraft may then be registered pursuant to Section 6.03(b) of the
Participation Agreement and the Lessee's maintenance program approved by
the Aeronautics Authority or such agency or body, (ii) in the same
manner and with the same care used by the Lessee with respect to other
A300-600 series aircraft and CF6-80C2-A5F series engines (or other
engines permitted by the terms of this Lease to be used on the Aircraft)
owned, operated or leased by the Lessee, to the extent that the same
regulations, and the Lessee's FAA-approved maintenance program shall
apply to any such aircraft and related engines, owned or leased by the
Lessee, and utilized in similar circumstances, and without
discriminating against the Aircraft, with respect to its use, operation
or maintenance in contemplation of the expiration or termination of this
Lease other than withdrawal of the Aircraft from use and operation as is
necessary to prepare the Aircraft for return to the Lessor upon such
expiration or termination, and (iii) so as to keep the Aircraft in such
condition as may be necessary to enable its airworthiness certification
to be maintained in good standing at all times under the Transportation
Code or any applicable rule or regulation of the applicable regulatory
agency or body of any other jurisdiction in which the Aircraft may then
be registered;
(c) maintain, or cause to be maintained, all records, logs and
other materials in respect of the Aircraft required by the Aeronautics
Authority, or the applicable regulatory agency or body of any other
jurisdiction in which the Aircraft may then be registered, all such
records and logs to be maintained in the English language, to the extent
required by the Transportation Code (which records, logs and other
materials shall, as between the Lessor and the Lessee and all parties
claiming through the Lessee, be the property of the Lessor but shall
become the property of the Lessee upon purchase by the Lessee of the
Aircraft pursuant to the terms of this Lease or upon the occurrence of
an Event of Loss and the Lessee's compliance with Section 11.03 hereof);
(d) promptly furnish to the Lessor such information within the
Lessee's possession as may be required to enable the Lessor to file any
reports to be filed by the Lessor with any governmental authority because
of the Lessor's ownership of or the Owner Participant's interest in the
Aircraft;
(e) not maintain, service, repair, overhaul, use or operate the
Aircraft or any Engine in violation of any airworthiness certificate or
registration relating thereto, or in violation of any law or any
license, rule, regulation or order of or by any government or
governmental authority having jurisdiction over the Lessee or the
Aircraft or any Engine or for any purpose for which the Aircraft or any
Engine is not designed; provided, however, that the Lessee (or if a
sublease shall then be in effect, the sublessee thereunder) may in good
faith contest the validity or application of any such law, license,
rule, regulation or order in any manner that does not adversely affect
the Lessor, its right, title or interest in the Aircraft or any Engine
or the interests of the Indenture Trustee or the Owner Participant
therein, or in any Operative Agreement (excluding any interests
indemnified for under the Tax Indemnity Agreement) and such contest or
non-compliance will not result in any material risk of loss, forfeiture
or damage to the Aircraft or in any risk of criminal liability to the
Lessor, the Indenture Trustee or the Owner Participant; and if any such
law, license, rule, regulation or order requires alteration of the
Aircraft or any Engine, the Lessee will conform the same therewith at
its own cost and expense and will maintain the Aircraft or any Engine in
compliance with such law, license, rule, regulation or order; and
(f) not operate or locate the Airframe or any Engine, or suffer
the Airframe or any Engine to be operated or located in any area
excluded from coverage by any insurance policy required by the terms of
Article 13 hereof, unless the Lessee has obtained, prior to the
operation or location of the Airframe or any Engine in such area,
indemnification from the Government, or other insurance, against the
risks and in the amounts required by, and in compliance with, Article 13
hereof covering such area (except, in the case of a requisition for use
by the Government and in the absence of indemnities, to the extent that
the Lessee certifies that such insurance is unobtainable after diligent
effort or is obtainable only at unreasonably high rates or on unduly
financially burdensome terms and conditions) (and naming the Lessor, or
so long as this Lease is assigned to the Indenture Trustee, the
Indenture Trustee, as loss payee in respect of indemnification or
insurance payable in respect of casualties to the Aircraft) or unless
the Aircraft is only temporarily located in such area as a result of an
isolated occurrence attributable to a hijacking, medical emergency,
equipment malfunction, weather conditions, navigational error or other
similar unforeseen circumstances and the Lessee is using its good faith
efforts to remove the Aircraft from such area.
The Lessee may, at any time during the Term, install an engine or
engines on the Airframe and operate the Aircraft with such engine or
engines installed thereon and the Lessor shall have no right, title or
interest in and to any such engine until such time, if any, that such
engine is returned to the Lessor under Section 12.02 hereof.
Section 7.02. Possession and Permitted Transfer and Sublease. (a)
Conditions. The Lessee will not, without the prior written consent of the
Lessor, sublease or otherwise in any manner deliver, transfer or relinquish
possession of the Aircraft, the Airframe or any Engine or install any
Engine, or permit any Engine to be installed, on any airframe other than
the Airframe; provided, that, so long as (i) in the case of clause (i)
below, no Event of Default shall have occurred and be continuing, (ii) the
Lien of the Indenture is not impaired thereby, (iii) all applicable
governmental approvals in connection therewith have been obtained and (iv)
the Lessee shall comply with the provisions of Article 13 hereof, the
Lessee may without the prior written consent of the Lessor:
(i) so long as the sublessee is generally meeting its material
obligations as they come due and is not subject to a proceeding or final
order under applicable bankruptcy, insolvency or reorganization laws on
the date the sublease is entered into and with 30 days' prior written
notice to the Lessor and the Owner Participant, (A) sublease the
Aircraft or any Engine to a U.S. Air Carrier, (B) sublease the Aircraft
or any Engine to an Air Carrier which is principally based in and
domiciled in one of the countries listed on Schedule III of the
Participation Agreement, (C) sublease the Aircraft or any Engine to an
Air Carrier that is principally based in and a domiciliary of a country
which is a party to the International Convention on the Recognition of
Rights in Aircraft, or (D) sublease the Aircraft or any Engine to any
other Air Carrier not described in this Section which shall be
reasonably acceptable to the Lessor as evidenced by its prior written
consent; provided, that, with respect to clauses (B) and (C) above, at
the time of any such sublease the United States of America maintains
full diplomatic relations with the country in which such Air Carrier is
principally based and domiciled. In the case of any sublease (x) such
sublease shall include the provisions required by Section 7.02(b) hereof
and expressly require the sublessee to operate and maintain the Aircraft
in compliance with the applicable provisions of this Lease, (y) such
sublease shall provide that such sublessee will not transfer possession
of, or any other rights to, the subleased Airframe or any Engine to any
other Person without the prior written consent of the Lessor (except as
permitted by subparagraphs (ii) through (viii) below and except that, in
the case of subparagraph (iv), possession of the Aircraft may only be
transferred at the direction of the Lessee) and (z) such sublease shall
expire not later than the expiration of the Basic Term or any applicable
Renewal Term hereof. Prior to any sublease to an Air Carrier permitted
under Section 7.02(a)(i)(C) above: (I) the maintenance standards of the
aeronautical authority of the country of domicile or principal operation
of the sublessee taken as a whole shall not be materially less stringent
than those of the FAA or at least comparable to those, taken as a whole,
required by the central civil aviation authority of any of the United
Kingdom, France, Canada, Japan or Germany; (II) the Lessee will provide
opinions of counsel (such counsel and the form and substance of such
opinions to be reasonably satisfactory to the Lessor and the Indenture
Trustee) with respect to (A) the legality, validity and enforceability
of the Operative Agreements and the sublease in such country, (B) that
the laws of such country require fair compensation by the government of
such country payable in a currency freely convertible into U.S. dollars
for the loss of the use of or title to the Aircraft in the event of a
requisition of use or title by such government, (C) the Lessor's title
to the subleased equipment will be recognized, (D) the required
agreement of such foreign air carrier that its rights under the sublease
are subject and subordinate to all the terms of this Lease is
enforceable against such foreign air carrier under applicable law
(subject only to customary exceptions to enforceability), (E) that it is
not necessary for the Owner Participant, the Lessor or the Indenture
Trustee to register or qualify to do business in such country as a
result of the proposed sublease or in order for the Owner Participant,
the Lessor or the Indenture Trustee to enforce the terms and conditions
of the Operative Agreements, (F) there is no tort liability of the owner
of an aircraft not in possession thereof or of Persons lending money to
such an owner for the purchase of an aircraft, under the laws of such
jurisdiction other than tort liability which might have been imposed on
such owner or Persons under the laws of the United States or any state
thereof (it being understood that, in the event that such latter opinion
cannot be given in a form satisfactory to the Lessor, such opinion shall
be waived if insurance reasonably satisfactory to the Lessor is
available to cover such risk to the Owner Participant and is provided at
or before the execution of such a sublease, at the Lessee's cost and
expense), (G) that there exist no possessory rights in favor of such
sublessee under the laws of such country which would, upon bankruptcy or
insolvency of the Lessee (and assuming that at such time such sublessee
is not bankrupt or insolvent) or of the sublessee, prevent the return of
the Aircraft in accordance with the terms of this Lease and (H) all
necessary governmental approvals required for the subleased equipment,
the Airframe or any Engine, as the case may be, to be imported and, to
the extent reasonably obtainable, exported from the applicable country
of domicile upon repossession of such subleased equipment by the Lessor
(and the Lessee as sublessor), shall have been procured at the Lessee's
own cost and expense by the Lessee prior to commencement of any such
sublease; (III) duties and tariffs, if applicable, shall be paid for by
the Lessee and (IV) the Lessee shall effect or cause to be effected at
the Lessee's own cost and expense all recordings and filings that are
required, or reasonably requested by the Lessor, to continue the
Lessor's right, title and interest to the Aircraft and rights under the
Lease (and sublease) and to perfect and maintain the priority of the
Lien of the Indenture;
(ii) subject the Airframe or permit the Airframe to be subjected
to normal interchange agreements or subject the Engines or permit any
Engine to be subjected to normal interchange or pooling agreements or
arrangements, in each case customary in the airline industry, entered
into by the Lessee in the ordinary course of its business with a vendor
domiciled in the United States or in a country with which the United
States maintains full diplomatic relations or (x) any United States air
carrier certificated under Section 41102(a) of the Transportation Code
or any successor provision or (y) any "foreign air carrier" (as such
term is defined in the Transportation Code) as to which there is in
force a permit granted under Section 41302 of the Transportation Code
and which is (I) organized in a country listed on Schedule III to the
Participation Agreement, (II) organized in a country with which the
United States then maintains full diplomatic relations, (III) is a party
to the Convention on the International Recognition of Rights in Aircraft
or (IV) otherwise provides equivalent protection to owners, lessors and
mortgagees of aircraft; provided that no transfer of the registration of
the Airframe or any Engine shall be effected and that throughout the
period that the Airframe or any Engine is subjected to such interchange
or pooling agreement or arrangement the terms of this Lease shall be
observed; and provided, further, that no such agreement or arrangement
contemplates or requires the transfer of title to or registration of the
Airframe or any Engine, and if the Lessor's title to any Engine shall
nonetheless be divested under any such agreement or arrangement, such
divestiture shall be deemed to be an Event of Loss with respect to such
Engine and the Lessee shall comply with Section 11.04 of this Lease in
respect of such Engine;
(iii) deliver or permit the delivery of possession of the Airframe
or any Engine to their respective manufacturers or certified maintenance
providers for testing, service, repair, maintenance or overhaul work or
for alterations or modifications in or additions to the Airframe or any
Engine to the extent required or permitted by the terms of Article 9
hereof;
(iv) transfer or permit the transfer of possession of the Airframe
or any Engine pursuant to a contract or agreement with the Government or
pursuant to the Civil Reserve Air Fleet Program ("CRAF Program")
administered pursuant to Executive Order No. 12056, as amended, or any
similar or substitute programs of the Government, so long as the Lessee
(or any permitted sublessee or transferee pursuant to this Section)
shall promptly notify the Lessor upon such transfer of possession and
provide the Lessor and the Indenture Trustee with the name and address
of the Contracting Officer or representative of the Military Aircraft
Command of the United States Air Force to whom notices must be given in
respect of the Aircraft, provided, that if such transfer of possession
continues beyond the end of the Basic Term or the then-current Renewal
Term, the Basic Term or the Renewal Term, as applicable, shall be
automatically extended (including the obligation to pay Rent per diem at
a rate equal to the Fair Market Rental) for six (6) months after the end
of the Term (or, if shorter, until the date of return of the Aircraft);
(v) install or permit the installation of an Engine on an airframe
which is owned by the Lessee or any permitted sublessee free and clear
of all Liens, except (A) Liens of the type permitted under Section 6.01
hereof, (B) Liens which apply only to the engines (other than an
Engine), appliances, parts, instruments, appurtenances, accessories,
furnishings and other equipment (other than Parts) installed on such
airframe and which do not apply to substantially all of such airframe
and (C) the rights of an Air Carrier under normal interchange or pooling
agreements which are customary in the airline industry and do not
contemplate or require the transfer of title to such airframe or the
engines installed on it;
(vi) install or permit the installation of an Engine on an
airframe leased to the Lessee or any permitted sublessee or transferee
or purchased by the Lessee subject to a conditional sale or other
security agreement, provided that (A) such lease, conditional sale or
other security agreement does not cover the Engine so installed and the
Lessee shall have received from the lessor, conditional vendor or
secured party of such airframe an agreement (which may be the lease or
conditional sale or other security agreement covering such airframe),
whereby such lessor, conditional vendor or secured party expressly
agrees that neither it nor its successors or assigns will acquire or
claim any right, title or interest in any Engine by reason of such
Engine being installed on such airframe at any time, and (B) such
airframe is and remains free and clear of all Liens except the rights of
the parties to the lease or conditional sale or other security agreement
covering such airframe and Liens of the type permitted by subparagraph
(v) of this Section 7.02(a);
(vii) install or permit the installation of an Engine on an
airframe owned by the Lessee, leased to the Lessee or purchased by the
Lessee subject to a conditional sale or other security agreement under
circumstances where neither subparagraph (v) nor subparagraph (vi) of
this Section 7.02(a) is applicable, provided that such installation
shall be deemed an Event of Loss with respect to such Engine and the
Lessee shall comply with Section 11.04 hereof in respect of such Engine,
the Lessor not intending to waive any right, title or interest it may
have to or in such Engine under applicable law until compliance by the
Lessee with such Section 11.04; and
(viii) enter into a wet lease under which the Lessee has effective
control of the Aircraft in the ordinary course of the Lessee's business
which shall not be considered a transfer of possession hereunder,
provided that the Lessee's obligations under this Lease shall continue
in full force and effect notwithstanding any such wet lease.
(b) Rights of Transferee. Notwithstanding the provisions of
Section 7.02(a) hereof, the rights of any transferee who takes possession
of the Aircraft, the Airframe or any Engine by reason of a transfer
permitted by Section 7.02(a) hereof shall be subject and subordinate to,
and any sublease or wet lease permitted by Section 7.02(a) hereof shall be
made expressly subject and subordinate to, all the terms of this Lease,
including, without limitation, the Lessor's right to repossession pursuant
to Article 17 hereof and to avoid such sublease upon such repossession, and
the Lessee shall remain primarily liable for the performance of all the
terms of this Lease to the same extent as if such sublease or transfer had
not occurred. Any such sublease shall include appropriate provisions for
the maintenance, inspection (as required by Section 14.01 hereof),
operation, use and insurance of the Aircraft, the Airframe and each Engine
in accordance with the provisions of this Lease and shall provide
assurances reasonably satisfactory to the Lessor that the sublessee may not
further sublease any of such equipment. The Lessee shall promptly provide
the Lessor, the Owner Participant and the Indenture Trustee a copy of any
sublease (if so requested by the Lessor) and, prior to execution and
delivery of any sublease deliver to Lessor all other documents required
hereunder relating to such sublease or transfer of possession.
(c) No Release of Lessee/Costs of Subleasing. No sublease,
interchange or pooling agreement or other relinquishment of possession
permitted under this Article 7 of any of the Aircraft, the Airframe or any
Engine shall in any way discharge or diminish any of the Lessee's
obligations to the Lessor, the Indenture Trustee or the Owner Participant
under this Lease, the Participation Agreement or the Tax Indemnity
Agreement or constitute a waiver of any of the Lessor's rights and remedies
hereunder or thereunder or extend beyond the end of the Term (except as
provided in Section 7.02(a)(iv) hereof). Subject to the terms and
conditions of this Lease, the Lessee will retain the right to cure any
default by any sublessee permitted pursuant to this Section 7.02 and to
terminate such sublease upon such default. The Lessee shall pay all costs
of the Owner Participant, the Indenture Trustee and the Lessor incurred in
connection with any subleasing or proposed subleasing.
Section 7.03. Insignia. (a) Nameplate. On or prior to the
Delivery Date or as soon thereafter as possible, the Lessee agrees to affix
to and maintain in the cockpit of the Airframe, in a clearly visible
location, and on each Engine, a clearly visible metal nameplate bearing the
inscription "NBD BANK, AS OWNER TRUSTEE, OWNER AND LESSOR," and, so long as
such Airframe or Engines shall be subject to the Lien of the Indenture, the
additional inscription "THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION), AS
INDENTURE TRUSTEE, MORTGAGEE" (such nameplate to be replaced, if necessary,
from time to time with a nameplate reflecting the name of any successor
Lessor or successor Indenture Trustee, in each case as permitted by the
Operative Agreements).
(b) Lessee's Marks. Except as provided in Section 7.03(a)
hereof, the Lessee will not allow the name of any Person to be placed on
the Airframe or any Engine as a designation that might be interpreted as a
claim of ownership; provided, that during the Term, the Lessee may cause
the Aircraft to be lettered "Federal Express Corporation" or may letter,
paint or xxxx it in some other appropriate manner for convenience of
identification of the Lessee's interest or the interest of any permitted
sublessee (including but not limited to the Lessee's or any permitted
sublessee's customary colors and insignia) and to bear insignia plates or
other markings identifying the supplier or manufacturer of the Airframe or
the Engines or any Parts of either.
ARTICLE 8
REPLACEMENT AND POOLING OF PARTS
Section 8.01. Replacement of Parts. (a) Generally. The Lessee,
at its own cost and expense, will replace or cause to be replaced as
promptly as practicable all Parts which may from time to time be
incorporated or installed in or attached to the Airframe or any Engine and
which may from time to time become worn out, lost, stolen, destroyed,
seized, confiscated, damaged beyond repair or permanently rendered unfit
for use for any reason, except as otherwise provided in Section 9.01 or
9.02 hereof. In addition, the Lessee may, at its own cost and expense,
remove or cause to be removed in the ordinary course of maintenance,
service, repair, overhaul or testing, any Parts, whether or not worn out,
lost, stolen, destroyed, seized, confiscated, damaged beyond repair or
permanently rendered unfit for use, provided that the Lessee, except as
otherwise provided in Sections 9.01 or 9.02 hereof, will, at its own cost
and expense, replace such Parts as promptly as practicable. All
replacement parts shall be free and clear of Liens (except for pooling
arrangements to the extent permitted by Section 8.02 hereof and Liens
permitted under Section 6.01 hereof) and shall be in at least as good
operating condition as, and shall have a value and utility at least equal
to, the Parts replaced, and in any event not less than the condition and
repair required to be maintained by the provisions of this Lease.
(b) Title. All Parts at any time removed from the Airframe or
any Engine shall remain the property of the Lessor until such Parts shall
be replaced by parts which have been incorporated or installed in or
attached to the Airframe or such Engine and which meet the requirements for
replacement parts specified in Section 8.01(a) hereof. Immediately upon
any replacement part (other than, to the extent permitted by Section 8.02
hereof, a replacement part subject to a pooling arrangement) becoming
incorporated or installed in or attached to the Airframe or any Engine, and
without further act:
(i) title to the replaced part shall vest in the Lessee, free and
clear of all rights of the Lessor, and such replaced Part shall no longer
be deemed a Part under this Lease;
(ii) title to such replacement part shall vest in the Lessor free
and clear of all Liens (except for Liens permitted by Section 6.01 hereof)
and shall thereupon be and become a Part; and
(iii) such replacement Part shall become subject to this Lease and
to the Lien of the Indenture, and shall be deemed part of the Airframe
or such Engine for all purposes to the same extent as the Parts
originally incorporated or installed in or attached to the Airframe or
such Engine.
Section 8.02. Pooling of Parts. Any Part removed from the Airframe
or any Engine as permitted in Section 8.01(a) hereof may be subjected by
the Lessee to any normal pooling arrangement customary in the U.S. airline
industry and entered into with vendors and other Air Carriers in the
ordinary course of the Lessee's business, provided that the part replacing
such removed Part shall be incorporated or installed in or attached to the
Airframe or such Engine in accordance with Section 8 hereof, as promptly as
practicable after the removal of such removed Part. In addition, any
replacement part when incorporated or installed in or attached to the
Airframe or any Engine in accordance with Section 8.01(a) hereof may be
owned by another Air Carrier subject to such normal pooling arrangement,
provided that the Lessee, at its own cost and expense and as promptly as
possible, either:
(a) causes title to such replacement part to vest in the Lessor in
accordance with Section 8.01(b) hereof by the Lessee acquiring title to
such replacement part for the benefit of, and transferring such title to,
the Lessor free and clear of all Liens (other than Liens permitted under
Section 6.01 hereof); or
(b) replaces such replacement part by incorporating or installing
in or attaching to the Airframe or such Engine a further replacement
part owned by the Lessee free and clear of all Liens (other than Liens
permitted under Section 6.01 hereof) and by causing title to such
further replacement part to vest in the Lessor in accordance with
Section 8.01(b) hereof.
All such replacement parts and further replacement parts shall
meet the standards set forth in the last sentence of Section 8.01(a)
hereof.
ARTICLE 9
ALTERATIONS, MODIFICATIONS AND ADDITIONS
Section 9.01. Required Alterations and Modifications. The Lessee,
at its own cost and expense, shall make or cause to be made such
alterations and modifications in and additions to the Airframe and each
Engine as may be required from time to time to meet the applicable
requirements of the Aeronautics Authority or any other governmental
authority with jurisdiction over the Lessee's operations and aircraft;
provided, however, that the Lessee or sublessee, as the case may be, may in
good faith contest the validity or application of any such requirements in
any reasonable manner that does not involve any material risk of civil
liabilities (unless indemnified by the Lessee) or any risk of criminal
penalties being imposed on or against the Indenture Trustee, the Owner
Participant or the Lessor, that does not involve any material risk or
danger of loss, forfeiture or sale of the Aircraft or any Engine and that
does not adversely affect the Lessor, its title or interest in the Aircraft
or any Engine, the first and prior perfected Lien and security interest of
the Indenture, or the interests of the Indenture Trustee or the Owner
Participant in the Airframe or any Engine, or in any Operative Agreement
(excluding any interests indemnified for under the Tax Indemnity
Agreement). All such alterations, modifications or additions shall be made
on or before the date mandated therefor, taking into account authorized
postponements resulting from a contest or otherwise and shall be made at
such time and in such a manner so as not to discriminate against the
Aircraft whether by reason of its leased status or otherwise.
Section 9.02. Other Alterations and Modifications. (a) Generally.
The Lessee, at its own cost and expense, may from time to time make such
alterations and modifications in and additions to the Airframe or any
Engine as the Lessee may deem desirable in the proper conduct of its
business, including, without limitation, removal of Obsolete Parts in its
usual course of maintenance, provided that no such alteration,
modification, addition or removal, individually or in the aggregate, shall
create any adverse tax consequences for the Owner Participant not otherwise
indemnified for, diminish the value, remaining useful life, or utility of
the Airframe or the value or utility of any Engine or impair its condition
or airworthiness below its value, remaining useful life (in the case of the
Airframe only), utility, condition and state of airworthiness immediately
prior to such alteration, modification, addition or removal, assuming that
the Airframe or such Engine was then in the condition and airworthiness
required to be maintained by the terms of this Lease, or cause the Airframe
or any Engine to become "limited use property" within the meaning of
Revenue Procedure 76-30, 1976-2 C.B. 647, except that the value (but not
the remaining useful life, utility, condition or airworthiness) of the
Aircraft may be reduced by the value, if any, of any such Obsolete Parts
which shall have been removed; provided that in no event shall the
aggregate value of all such Obsolete Parts which shall have been so removed
and not replaced exceed $500,000.
(b) Title to Installed Parts. Title to each part incorporated or
installed in or attached or added to the Airframe or any Engine as the
result of any alteration, modification, removal or addition made pursuant
to Section 9.01 or 9.02(a) hereof shall without further act vest in the
Lessor and become subject to this Lease; provided, however, that the Lessee
may remove any such Part at any time during the Term if:
(i) such Part is in addition to, and not in replacement of or
substitution for, any Part originally incorporated or installed in or
attached or added to the Airframe or such Engine on the Delivery Date or
any Part in replacement of, or substitution for, any such Part;
(ii) such Part is not required to be incorporated or installed in or
attached or added to the Airframe or such Engine pursuant to the terms of
Article 7 hereof or the first sentence of Section 9.01 hereof; and
(iii) such Part can be removed from the Airframe or such Engine
without (A) causing material damage to the Airframe or such Engine (it
being understood that the Lessee shall repair any damage caused by a
permitted removal) or diminishing or impairing the value, utility,
condition or airworthiness or remaining useful life of the Airframe
required to be maintained by the terms of this Lease or (B) diminishing
the value, utility or remaining useful life (in the case of the
Airframe) or the value and utility (in the case of such Engine) which
the Airframe or such Engine would have had at such time had such
alteration, modification, removal or addition not occurred, assuming the
Airframe or such Engine was then in the condition required to be
maintained by the terms of this Lease.
(c) Title to Removed Parts. Upon the removal by the Lessee of any
such Part as provided in subsection (b) above, title thereto shall, without
further act, vest in the Lessee and such Part shall no longer be deemed a
Part. Any Part not removed by the Lessee as above provided prior to the
return of the Aircraft to the Lessor hereunder shall remain the property of
the Lessor and subject to this Lease.
ARTICLE 10
VOLUNTARY TERMINATION
Section 10.01. Right of Termination Upon Obsolescence or Surplus.
(a) Option to Terminate. So long as no Event of Default shall have
occurred and be continuing, the Lessee shall have the right, at its option,
on any Termination Date, on no more than 180 days' and at least 90 days'
prior written notice (which notice shall state the proposed Termination
Date (the "Proposed Termination Date")) to the Lessor and the Owner
Participant to terminate this Lease as of a Termination Date if the
Aircraft shall have become obsolete or surplus to the operations of the
Lessee; provided that the Lessee shall have furnished to the Lessor, the
Indenture Trustee and the Owner Participant a certificate of the Lessee's
President, Chief Executive Officer, Chief Financial Officer, Chief
Operating Officer, Treasurer or Assistant Treasurer stating the
determination of the Lessee that the Aircraft is obsolete or surplus to its
needs. Unless the Lessor has elected to retain the Aircraft as herein
provided, the Lessee shall have the right to revoke its notice of
termination no later than the Business Day prior to the date 15 days prior
to the Proposed Termination Date whereupon this Lease shall continue in
full force and effect and the Lessee shall reimburse the Owner Participant
for reasonable costs and expenses incurred by the Owner Participant in
connection with such proposed termination.
(b) Sale Procedure. During the period from the giving of notice
pursuant to Section 10.01(a) hereof until the Proposed Termination Date,
the Lessee, as non-exclusive agent for the Lessor, shall use its reasonable
efforts to obtain bids for the cash purchase on the Proposed Termination
Date (or such earlier date as shall be consented to in writing by the
Lessor) of the Aircraft. On the Proposed Termination Date, the Engines
shall be installed on the Airframe (provided that the Airframe may be sold
with engines meeting the requirements set forth herein for Replacement
Engines in lieu of the Engines so long as the aggregate number of Engines
and Replacement Engines being sold with the Airframe equals two). The
Lessor may, if so directed by the Owner Participant, seek to obtain such
bids. The Owner Participant shall not inspect any bids received by the
Lessee with respect to the Aircraft, unless the Owner Participant has given
to the Lessee binding and irrevocable notice that neither the Owner
Participant nor any of its Affiliates nor any Person acting for the Owner
Participant or such Affiliate will submit a bid for the purchase of the
Aircraft and if such notice has been given, the Lessee will provide the
Lessor with copies of bids received by the Lessee. No bid may be submitted
by the Lessee or any Person affiliated with the Lessee (or with whom or
which there is any arrangement or understanding as to the subsequent use of
the Aircraft by the Lessee or any of its Affiliates) or any agent or Person
acting on behalf of the Lessee. The Lessee may reject any bid which is
less than the sum of the applicable Termination Value, the aggregate amount
of any Make-Whole Premium and all other expenses incurred by the Lessor,
the Owner Participant and the Indenture Trustee in connection with the
sale. Subject to the provisions of Section 10.02 hereof, on the Proposed
Termination Date or such earlier date of sale as shall be consented to in
writing by the Lessor, the Lessee shall deliver the Airframe which shall
have the Engines installed on it (provided that the Airframe may be
delivered with installed engines meeting the requirements set forth herein
for Replacement Engines in lieu of the Engines so long as the aggregate
number of Engines and Replacement Engines being delivered with the Airframe
equals two and the Lessee shall comply with the provisions of Section 11.04
hereof as if an Event of Loss occurred with regard to the Engines) to the
bidder which shall have submitted the highest cash bid (whether certified
to the Lessor by the Lessee or directly received by the Lessor and
certified to the Lessee) in the same manner as if delivery were made to the
Lessor pursuant to Article 12 hereof, at a location specified by such
bidder, and shall duly transfer to the Lessor title to any such engines not
owned by the Lessor, and the Lessor shall, upon payment in full of the bid
price and all amounts due and owing pursuant to Section 10.01(c) hereof by
wire transfer of immediately available funds and upon discharge of the Lien
of the Indenture in accordance with Article XIV thereof, sell the Airframe
and Engines or engines to such bidder without recourse or warranty (except
as to the absence of Lessor's Liens).
(c) Payments to the Lessor. The total selling price realized at
a sale pursuant to Section 10.01(b) hereof net of all expenses of the sale
(including commissions and any sales or transfer taxes) (the "Net Sales
Price") shall be retained by the Lessor (or the Indenture Trustee as long
as the Indenture is in force) and, in addition, on or before the Proposed
Termination Date, the Lessee shall pay to the Lessor (or the Indenture
Trustee as long as the Indenture is in force), by wire transfer of
immediately available funds, the sum of:
(i) the excess, if any, of the Termination Value for the Aircraft
computed as of the Proposed Termination Date over the Net Sales Price;
plus
(ii) the installment of Basic Rent due with respect to the Aircraft
on the Proposed Termination Date to the extent payable in arrears but
not to the extent payable in advance; plus
(iii) all other amounts then due and payable by the Lessee
(including, without limitation, the aggregate amount of any Make-Whole
Premium, if the Proposed Termination Date occurs prior to the applicable
Premium Termination Date) under this Lease and any other Operative
Agreement.
(d) Transfer of Uninstalled Engines. Upon payment of the amounts
described in Section 10.01(c) hereof and upon transfer to the Lessor of
title to engines which have been returned in lieu of Engines as provided in
Section 10.01(b) hereof, and upon payment of all other amounts then due
under this Lease, the Lessor will transfer to the Lessee, without recourse
or warranty (except as to the absence of Lessor's Liens), all of the
Lessor's right, title and interest in and to any Engines which were
replaced with engines pursuant to Section 10.01(b) hereof, and shall
deliver to the Lessee such instrument as the Lessor shall have received
from the Indenture Trustee releasing such Engines from the Lien of the
Indenture.
(e) Limitation on the Lessor's Duties. The Lessor shall be under
no duty to solicit bids, to inquire into the efforts of the Lessee to
obtain bids or otherwise to take any action in connection with any such
sale other than to transfer to the purchaser named in the highest cash bid
(determined as described in Section 10.01(b) above) as referred to above
(or to such purchaser and to the Lessee, as the case may be), without
recourse or warranty (except as to the absence of Lessor's Liens), all of
the Lessor's right, title and interest in and to the Aircraft, against
receipt by the Lessor of the payments provided for in Section 10.01(c)
hereof.
(f) Termination of the Lessee's Obligations. Upon the sale of
the Aircraft pursuant to this Section 10.01 and upon compliance by the
Lessee with the further provisions of this Article 10, the obligation of
the Lessee to pay Basic Rent with respect to the Aircraft shall cease for
any Rent Payment Date occurring after the Proposed Termination Date and the
Term shall end effective as of the Proposed Termination Date. If no sale
shall have occurred on or before the Proposed Termination Date, this Lease
shall continue in full force and effect and, for purposes of Section
10.01(a) hereof, it shall be deemed that the Lessee has rescinded its
notice of termination, and the Lessee shall pay the expenses incurred by
the Lessor, the Indenture Trustee and the Owner Participant in connection
with the proposed sale.
Section 10.02. Retention of Aircraft by the Lessor. (a)
Generally. Notwithstanding Section 10.01 hereof, the Lessor may, subject
to Section 10.02(b) hereof, elect to retain the Aircraft after receipt of
the Lessee's notice of termination given in accordance with Section
10.01(a) hereof, by giving the Lessee and the Indenture Trustee written
irrevocable notice of such election not less than sixty (60) days prior to
the Proposed Termination Date. If the Lessor so elects, the Lessee shall
pay to the Lessor on the Proposed Termination Date, by wire transfer of
immediately available funds the sum of:
(i) the installment of Basic Rent due with respect to the Aircraft
on the Proposed Termination Date to the extent payable in arrears but
not to the extent payable in advance; plus
(ii) all other amounts then due and payable by the Lessee under
this Lease and any other Operative Agreement, including the aggregate
amount of any Make- Whole Premium (if the Proposed Termination Date
occurs prior to the applicable Premium Termination Date), on or prior to
the Payment Date.
(b) Payment of the Certificates. It shall be an absolute
condition precedent to the Lessor's right to retain the Aircraft and to the
termination of the Term pursuant to this Section 10.02 that the Lessor (or
the Lessee to the extent set forth in Section 10.02(a) hereof) shall have
paid to the Holders and such Holders shall have received the entire
outstanding principal amount of, the aggregate amount of any Make-Whole
Premium and accrued interest on the Certificates on the Termination Date
and all other sums due and owing to the Indenture Trustee and the Holders
on or prior to the Termination Date under this Lease, the Indenture or any
other Operative Agreement.
(c) Delivery of Aircraft to Lessor; Title to Engines. If the
Lessor elects to retain the Aircraft pursuant to this Section 10.02, the
Lessee shall deliver the Airframe and the Engines (provided that the
Airframe may be delivered with engines meeting the requirements set forth
herein for Replacement Engines in lieu of the Engines so long as the
aggregate number of Engines and engines being delivered with the Airframe
equals two and provided that the other requirements of Section 11.04 hereof
are met as if an Event of Loss has occurred with regard to the Engines) to
the Lessor in the same manner as if delivery were made to the Lessor
pursuant to Article 12 hereof, and shall duly transfer to the Lessor right,
title and interest to any such engines not owned by the Lessor, all in
accordance with Article 12 hereof. Upon such delivery of the Airframe and
Engines or engines to the Lessor and payment by the Lessee of any amounts
required to be paid by the Lessee pursuant to Section 10.02(a) hereof, the
Lessor will transfer to the Lessee, without recourse or warranty (except as
to the absence of Lessor's Liens), all of the Lessor's right, title and
interest in and to any Engines which were replaced by engines pursuant to
this Section 10.02(c), and shall deliver to the Lessee such instrument as
the Lessor shall have received from the Indenture Trustee releasing such
Engines from the Lien of the Indenture.
(d) Termination of the Lessee's Obligations. Upon compliance by
the Lessor and the Lessee with the provisions of this Section 10.02 and
upon compliance by the Lessee with the further provisions of this Article
10, the obligation of the Lessee to pay Basic Rent with respect to the
Aircraft shall cease for any Rent Payment Date occurring after the
Termination Date and the Term shall end effective as of the Termination
Date.
Section 10.03. Voluntary Termination as to Engines. The Lessee
shall have the right at its option and at any time, on at least thirty (30)
days' prior written notice to the Lessor, to terminate this Lease with
respect to any Engine not then installed or held for use on the Airframe,
provided that prior to the date of such termination, the Lessee shall
comply with the terms of Section 11.04 hereof to the same extent as if an
Event of Loss had occurred with respect to such Engine.
ARTICLE 11
LOSS, DESTRUCTION, REQUISITION
Section 11.01. Lessee's Election Rights. The Lessee shall notify
the Lessor, the Indenture Trustee and the Owner Participant as soon as
practicable but in no event more than 10 Business Days following the
occurrence of an event which constitutes, or would with the passage of time
constitute, an Event of Loss with respect to the Airframe or with respect
to the Airframe and the Engines or engines then installed on the Airframe.
By written notice to the Lessor, the Indenture Trustee and the Owner
Participant delivered within 60 days of the occurrence of any Event of
Loss, the Lessee shall have the right to elect the alternative set forth in
Section 11.02 hereof or the alternative set forth in Section 11.03 hereof.
The Lessee's failure to make such election within said 60-day period shall
be deemed to be an election of the alternative set forth in Section 11.02
hereof.
Section 11.02. Payment of Stipulated Loss Value. (a) The Lessee
shall, if it has so elected or is deemed to have so elected under Section
11.01 hereof, pay to the Lessor, by wire transfer of immediately available
funds on the earlier of (i) the fifteenth day following receipt in full of
insurance proceeds or requisition proceeds, described in Section 11.05
hereof, in connection with such Event of Loss and (ii) the 120th day after
the occurrence of such Event of Loss (the earlier of such dates being
referred to herein as the "Loss Payment Date"), the sum of (A) the
Stipulated Loss Value for the Aircraft, determined as of the Stipulated
Loss Value Determination Date next preceding the Loss Payment Date (or, if
the Loss Payment Date occurs on a Stipulated Loss Value Determination Date,
determined as of such Stipulated Loss Value Determination Date) together
with interest on such amount at the Debt Rate from such Stipulated Loss
Value Determination Date to the Loss Payment Date, plus (B) any and all
Interim Rent and Basic Rent due and payable on or prior to the relevant
Stipulated Loss Value Determination Date and unpaid, plus (C) any and all
Supplemental Rent due and payable on or prior to such Loss Payment Date,
plus (D) all other amounts owing by the Lessee or the Owner Trustee to the
Indenture Trustee or the Holders under the Indenture and the other
Operative Agreements, plus (E) any reasonable out-of-pocket expenses
incurred in connection with such Event of Loss and the related prepayment
of the Certificates by the Lessor, the Owner Participant and the Indenture
Trustee, minus (F) if the relevant Stipulated Loss Value Determination Date
is a Rent Payment Date, the portion, if any, of the Interim Rent and Basic
Rent installment due and paid by the Lessee on such Stipulated Loss Value
Determination Date pursuant to Section 3.02 hereof to the extent such
Interim Rent and Basic Rent installment (or portion thereof) is designated
on Schedule II hereto as being payable in advance, together with an imputed
interest amount in respect of such advance payment of Interim Rent and
Basic Rent (or portion thereof) at the Debt Rate from the date of payment
of such Interim Rent and Basic Rent installment (or portion thereof) by the
Lessee to the Loss Payment Date; provided that in no event shall there be
subtracted pursuant to clause (F) an amount such that the Holders shall not
be paid in full.
(b) Termination of Lease; Title Transfer. Upon payment in full
of the amounts due pursuant to Section 11.02(a) hereof, the obligation of
the Lessee to pay Interim Rent and Basic Rent on any Rent Payment Date
occurring subsequent to the payment of such amounts shall terminate and the
Term shall end. Further, upon such payment, the Lessor will transfer to
the Lessee, without recourse or warranty (except as to the absence of
Lessor's Liens), all of the Lessor's right, title and interest, if any, in
and to the Airframe, Engines and engines with respect to which such Event
of Loss occurred, as well as all of the Lessor's right, title and interest
in and to any Engines constituting part of the Aircraft but not installed
on the Airframe when such Event of Loss occurred, and will deliver to the
Lessee such instrument as the Lessor shall have received from the Indenture
Trustee, releasing such Aircraft from the Lien of the Indenture.
Section 11.03. Replacement of Airframe and Engines. (a)
Generally. So long as no Payment Default, Bankruptcy Default or Event of
Default shall have occurred and be continuing, and subject to Section 11.01
hereof, if the Lessee has elected to replace the Airframe and Engines
suffering an Event of Loss pursuant to this Section 11.03, the Lessee shall
cause to be duly conveyed to the Lessor within one hundred twenty (120)
days after the occurrence of such Event of Loss, as replacement for the
Airframe and Engines with respect to which such Event of Loss has occurred,
good and marketable title to an Airbus A300F4-605R airframe manufactured
after October 22, 1994 (the "Replacement Airframe") and good and marketable
title to a number of Replacement Engines equal to the number of Engines
with respect to which an Event of Loss has occurred, provided that
following compliance with all other terms of this Section 11.03 each Engine
shall be of identical make and model and manufactured after October 22,
1994 and, in the case of such Replacement Airframe and each such
Replacement Engine, owned by the Lessee free and clear of all Liens not
excepted in Section 6.01(a), (b), (c) and (e) hereof, duly certified as an
airworthy aircraft by the Aeronautics Authority, and having in the case of
the Replacement Airframe a value, remaining useful life and utility, and in
the case of the Replacement Engines a value and utility, at least equal to,
and being in as good operating condition as, the Airframe and Engines with
respect to which such Event of Loss occurred, assuming that the Airframe
and Engines were then in the condition and state of airworthiness required
to be maintained by the terms of this Lease immediately prior to the
occurrence of such Event of Loss. In such case and as a condition to such
substitution the Lessee, at its own cost and expense, will also promptly:
(i) furnish the Indenture Trustee with originals of, and the
Lessor with copies of, full warranty bills of sale, in form and
substance satisfactory to the Lessor and the Indenture Trustee, with
respect to such Replacement Airframe and Replacement Engines together
with an assignment in form and substance satisfactory to the Lessor and
the Indenture Trustee of any and all manufacturer's warranties
applicable thereto and a consent reasonably satisfactory to the Lessor
and the Indenture Trustee from such manufacturer or manufacturers to
such assignment;
(ii) cause such Replacement Airframe and Replacement Engines to be
duly registered in the name of the Lessor pursuant to the Transportation
Code or the applicable laws of any other jurisdiction in which the
Aircraft may then be registered in accordance with Section 6.03(b) of
the Participation Agreement;
(iii) cause a Lease Supplement with respect to such Replacement
Airframe and Replacement Engines to be duly executed by the Lessee and
recorded pursuant to the Transportation Code, or the applicable laws, rules
and regulations of any other jurisdiction in which the Aircraft may then be
registered as permitted by Section 6.03(b) of the Participation Agreement;
(iv) furnish the Lessor, the Indenture Trustee and the Owner
Participant with an appraisal or other report of a nationally recognized
aircraft appraiser based on an inspection of such Replacement Airframe
and Replacement Engines reasonably satisfactory to the Indenture Trustee
and the Owner Participant certifying that such Replacement Airframe has
a value, remaining useful life and utility, and such Replacement Engines
have a utility and, in the aggregate, value, at least equal to, and are
in as good operating condition as, the Airframe and Engines replaced,
assuming such Airframe and Engines were in the condition and repair
required by the terms of this Lease immediately prior to the occurrence
of such Event of Loss;
(v) furnish the Lessor, the Indenture Trustee and the Owner
Participant with such evidence as the Lessor or the Indenture Trustee
may reasonably request of compliance with the insurance provisions of
Article 13 hereof with respect to such Replacement Airframe and
Replacement Engines;
(vi) provide the Owner Participant and the Lessor with (A) an opini
of counsel selected by the Owner Participant and reasonably acceptable to
the Lessee (which opinion shall be reasonably satisfactory in form and
substance to the Owner Participant and the Lessor) that it will suffer no
adverse tax consequence not otherwise indemnified for as of the Delivery
Date as a result of such substitution or (B) an indemnity reasonably
acceptable to the Lessor and the Owner Participant against such
consequences;
(vii) comply with the provisions of Section 9.08 of the Indenture;
(viii) cause an Indenture Supplement with respect to such
Replacement Airframe and Replacement Engines to be duly executed by the
Lessor and the Indenture Trustee and recorded pursuant to the
Transportation Code, or the applicable laws, rules and regulations of
any other jurisdiction in which the Aircraft may then be registered as
permitted by Section 6.03(b) of the Participation Agreement in order
that the Lien of the Indenture shall constitute a first and prior
perfected Lien and security interest on and in respect of such
Replacement Airframe and Replacement Engines;
(ix) take such other action, including the filing of UCC financing
statements naming the Indenture Trustee as a secured party with the
Secretary of State of Michigan and the filing of a notice with the
Secretary of State of Tennessee, as the Lessor or the Indenture Trustee
may reasonably request in order that such Replacement Airframe and
Replacement Engines shall be duly and properly titled in the Lessor,
leased under this Lease and subjected to the Lien of the Indenture to
the same extent as the replaced Airframe and Engines;
(x) furnish the Indenture Trustee with an opinion (reasonably
satisfactory in form and substance to the Lessor, the Owner Participant
and the Indenture Trustee) of counsel to the Lessee (which may be the
Lessee's General Counsel) addressed to the Indenture Trustee and the
Owner Participant to the effect that (A) the Lessor has good title to
such Replacement Airframe and Replacement Engines, and (B) such
Replacement Airframe and Replacement Engines have been validly subjected
to the Lien of the Indenture (with the effect and result that the
Indenture constitutes a first priority duly perfected security interest
and Lien on such Replacement Airframe and Replacement Engines); and
(xi) cause to be delivered to the Lessor, the Owner Participant
and the Indenture Trustee (a) an opinion of counsel to the Lessee
addressed to the Lessor, the Owner Participant and the Indenture Trustee
as to the due registration of the Aircraft and the due recordation of
the requisite documents or instruments and the validity and perfection
of the Lien in such Replacement Airframe and Replacement Engines and (b)
a certificate signed by the Vice President and Treasurer or any other
duly authorized officer of the Lessee stating that no Payment Default,
Bankruptcy Default or Event of Default has occurred or is continuing.
(b) Title to Replaced Equipment. Upon compliance by the Lessee
with the terms of Section 11.03(a) hereof, the Lessor will transfer to the
Lessee (subject to any insurer's salvage rights), without recourse or
warranty (except as to the absence of Lessor's Liens), all of the Lessor's
right, title and interest, if any, in and to the Airframe and Engines with
respect to which such Event of Loss occurred. In connection with such
transfer, the Lessee shall prepare and the Lessor shall execute or forward
to the Indenture Trustee for execution, as the case may be, all in
recordable form, a xxxx of sale evidencing such transfer, a release of the
Airframe and Engines with respect to which such Event of Loss occurred from
the Indenture and such other documents as the Lessee reasonably requests,
all at the Lessee's sole cost and expense. Any Engine constituting part of
the Aircraft, but not installed on the Airframe when such Event of Loss
occurred, shall continue to be property of the Lessor and leased under this
Lease as part of the same equipment as the Replacement Airframe and
Replacement Engines.
(c) Definitions. Each Replacement Airframe and Replacement Engine
shall be deemed part of the property leased under this Lease, each such
Replacement Airframe shall be deemed an "Airframe," each such Replacement
Engine shall be deemed an "Engine" and each such Replacement Airframe and
Replacement Engine shall be deemed part of the same Aircraft as was the
Airframe or Engine replaced.
(d) Rent Adjustments. An Event of Loss covered by this Section
11.03 shall not result in any change in Interim Rent, Basic Rent, Stipulated
Loss Values or Termination Values except as may be provided pursuant to the
Tax Indemnity Agreement and the Participation Agreement.
(e) Time Limitations. If the Lessee has elected to proceed under
this Section 11.03 but has not fully performed its obligations under this
Section 11.03 within 120 days of the occurrence of the applicable Event of
Loss, in the event that any amounts held by the Lessor (or, so long as the
Indenture shall be in effect, the Indenture Trustee) in respect of such
Event of Loss are less than the Stipulated Loss Value thereof, the Lessee
will deposit with the Lessor or the Indenture Trustee, as the case may be,
the amount of any deficiency as security on such 120th day. If the Lessee
has elected to proceed under this Section 11.03 but has not fully performed
its obligations under this Section 11.03 within 180 days of the occurrence
of such Event of Loss, the Lessee shall be deemed to have elected to
proceed under Section 11.02 hereof and shall immediately perform its
obligations thereunder, and the Indenture Trustee, or the Lessor if the
Indenture shall have been discharged, shall apply the amounts held by it
pursuant to the preceding sentence as a credit against such obligations.
Section 11.04. Event of Loss with Respect to an Engine. (a)
Generally. Upon the occurrence of an Event of Loss with respect to an
Engine under circumstances in which there has not occurred an Event of Loss
with respect to the Airframe, the Lessee shall give the Lessor and the
Indenture Trustee prompt written notice thereof and shall, as soon as
practicable but in any event within sixty (60) days after the occurrence of
such Event of Loss, duly convey or cause to be conveyed to the Lessor, a
Replacement Engine for the Engine with respect to which such Event of Loss
occurred, good and marketable title to a Replacement Engine, free and clear
of all Liens not excepted in Section 6.01(a), (b), (c) and (e) hereof and
having a value and utility at least equal to, and being in as good
operating condition as, the Engine with respect to which such Event of Loss
occurred, assuming such Engine was of the value and utility and in the
condition and repair required by the terms of this Lease immediately prior
to the occurrence of such Event of Loss, provided that after any
replacement, each Engine shall be of identical make and model. The
standards set forth in this Section with respect to Replacement Engines
shall apply upon any replacement or substitution of an Engine with a
Replacement Engine pursuant to any other provision of this Lease.
(b) Conditions Precedent. Prior to or at the time of any
conveyance of an Engine pursuant to Section 11.04(a) hereof, the Lessee, at
its own cost and expense will:
(i) furnish the Lessor with an original of, and the Indenture
Trustee with a copy of, a full warranty xxxx of sale, in form and
substance satisfactory to the Lessor, with respect to such Replacement
Engine together with an assignment in form and substance satisfactory to
the Lessor and the Indenture Trustee of any and all manufacturer's
warranties applicable thereto and a consent reasonably satisfactory to
the Lessor and the Indenture Trustee from such manufacturer to such
assignment;
(ii) cause a Lease Supplement covering such Replacement Engine
to be duly executed by the Lessee and filed for recordation pursuant to
the Transportation Code, or the applicable laws, rules and regulations
of any other jurisdiction in which the Aircraft may then be registered
as permitted by Section 6.03(b) of the Participation Agreement and, if
the Engine being replaced was registered under the applicable laws of
the jurisdiction in which the Aircraft is then registered, the
Replacement Engine shall be registered in the same fashion;
(iii) furnish the Lessor and the Indenture Trustee with a
certificate of a nationally recognized aircraft appraiser reasonably
satisfactory to the Lessor and the Indenture Trustee certifying that
such Replacement Engine has a value and utility at least equal to, and
is in as good operating condition as, the Engine replaced, assuming such
Engine was in at least the condition and repair required by the terms of
this Lease immediately prior to the occurrence of such Event of Loss;
(iv) furnish the Lessor with such evidence of compliance with the
insurance provisions of Article 13 hereof with respect to such Replacement
Engine as the Lessor or the Indenture Trustee may reasonably request;
(v) provide the Owner Participant and the Lessor with (A) an
opinion of counsel selected by the Owner Participant and reasonably
acceptable to the Lessee (which opinion shall be reasonably satisfactory
in form and substance to the Owner Participant and the Lessor) that it
will suffer no adverse tax consequences not otherwise indemnified for as
of the Delivery Date as a result of such substitution or (B) an
indemnity reasonably acceptable to the Lessor and the Owner Participant
against such consequences;
(vi) comply with the provisions of Section 9.08 of the Indenture;
(vii) cause an Indenture Supplement with respect to such
Replacement Engine to be duly executed by the Lessor and the Indenture
Trustee and recorded pursuant to the Transportation Code, or the
applicable laws, rules and regulations of any other jurisdiction in
which the Aircraft may be registered as permitted by Section 6.03(b) of
the Participation Agreement in order that the Indenture shall constitute
a first priority duly perfected Lien and security interest on and in
respect of such Replacement Engine;
(viii) take such other action, including the filing of UCC
financing statements naming the Indenture Trustee as Secured Party with
the Secretary of State of Michigan and a notice filing with the
Secretary of State of Tennessee, as the Lessor or the Indenture Trustee
may reasonably request in order that such Replacement Engine be duly and
properly titled in the Lessor, leased under this Lease and subjected to
the Lien of the Indenture to the same extent as the replaced Engine;
(ix) furnish the Lessor, the Owner Participant and the Indenture
Trustee with an opinion (reasonably satisfactory in form and substance
to the Lessor, the Owner Participant and the Indenture Trustee) of
counsel to the Lessee (which may be the Lessee's General Counsel)
addressed to the Indenture Trustee and the Owner Participant to the
effect that (A) the Lessor has good title to such Replacement Engine,
and (B) such Replacement Engine has been validly subjected to the Lien
of the Indenture (with the effect and result that the Indenture
constitutes a first priority duly perfected security interest and Lien
on such Replacement Engine); and
(x) take such other action as the Indenture Trustee may
reasonably request in order that such Replacement Engine be duly and
properly subjected to the Lien of the Indenture to the same extent as
the replaced Engine.
(c) Title Transfer. Upon compliance by the Lessee with the terms
of Sections 11.04(a) and (b) hereof, the Lessor will transfer to the Lessee
(subject to any insurer's salvage rights), without recourse or warranty
(except as to the absence of Lessor's Liens), all of the Lessor's right,
title and interest, if any, in and to the Engine with respect to which such
Event of Loss occurred. In connection with such transfer, the Lessee shall
prepare and the Lessor shall execute or forward to the Indenture Trustee
for execution, as the case may be, all in recordable form, a xxxx of sale
evidencing such transfer, a release of the Engine with respect to which
such Event of Loss occurred from the Indenture and such other documents as
the Lessee reasonably requests, all at the Lessee's sole cost and expense.
Each Replacement Engine shall, after such conveyance, be deemed part of the
property leased under this Lease. An Event of Loss covered by this Section
11.04 shall not result in any change in Interim Rent, Basic Rent,
Stipulated Loss Values or Termination Values, but may result in payments to
be made pursuant to the Tax Indemnity Agreement and the Participation
Agreement.
Section 11.05. Application of Payments from the Government or
Others. (a) Generally. Any payments (other than insurance proceeds the
application of which is provided for in Section 13.03 hereof) received at
any time by the Lessor or by the Lessee from any governmental authority or
any other party, foreign or domestic, with respect to an Event of Loss
resulting from the condemnation, confiscation, theft or seizure of, or
requisition of title to or use of, the Airframe or any Engine will be
applied, as appropriate, in accordance with Section 11.05(b) or Section
11.05(c) hereof.
(b) Payments of Stipulated Loss Value. If the payments described
in Section 11.05(a) hereof are received with respect to the Airframe or
with respect to the Airframe and Engines or engines then installed on the
Airframe and the Lessee has elected the alternative set forth in Section
11.02 hereof, so much of such payments as shall not exceed the payments
required to be paid by the Lessee pursuant to clauses (A) and (B) of
Section 11.02(a) hereof shall be paid to the Lessor (or, if the Lien of the
Indenture has not been discharged, the Indenture Trustee) in reduction of
the Lessee's obligations under clauses (A) and (B) of Section 11.02(a)
hereof if not already paid by the Lessee, or, if such obligations have
already been discharged in full by the Lessee, such payments shall be
applied to reimburse the Lessee for its payment of such Stipulated Loss
Value and, if and to the extent specifically included in such payment, to
pay to the Lessee interest on such amount of Stipulated Loss Value at the
rate included in such payment if any, or otherwise at the applicable Debt
Rate, for the period from the date of payment by the Lessee of the
Stipulated Loss Value to the date of reimbursement of the Lessee under this
Section 11.05(b). The excess, if any, remaining after such application
shall be divided between the Lessor and the Lessee as their respective
interests may appear.
(c) Payment if the Lessee Elects Replacement. If the payments
described in Section 11.05(a) hereof are received with respect to the
Airframe or with respect to the Airframe and the Engines or engines then
installed on the Airframe and the Lessee has elected the alternative set
forth in Section 11.03 hereof, or if such payments are received with
respect to an Engine not then installed on the Airframe under the
circumstances contemplated by Section 11.04 hereof, all such payments
shall, subject to Section 11.08 hereof, be paid over to or retained by the
Lessee, provided that the Lessee shall have fully performed its obligations
pursuant to Section 11.03 or Section 11.04 hereof, as the case may be, with
respect to the Event of Loss for which such payments are made.
Section 11.06. Requisition of an Airframe and the Installed Engines
for Use by Government. In the event of the requisition for use by the
Government or any other government of registry of the Aircraft, or any
agency or instrumentality of either (a "Requisitioning Government") of the
Airframe and the Engines or engines then installed on the Airframe during
the Term, which requisition does not constitute an Event of Loss, the
Lessee shall promptly notify the Lessor, the Indenture Trustee and the
Owner Participant of such requisition and all of the Lessee's obligations
under this Lease with respect to such Airframe and Engines or engines shall
continue to the same extent as if such requisition had not occurred except
to the extent that any failure or delay in the performance or observance of
such obligations (other than obligations for the payment of Rent and,
subject to Section 7.01(f) hereof, the maintenance of required insurance)
by the Lessee shall have been caused by such requisition. All payments
received by the Lessor, the Lessee or any permitted sublessee or transferee
from the Requisitioning Government for such use of the Airframe and Engines
or engines during the Term (other than any such requisition which
constitutes an Event of Loss, as to which the provisions of Section 11.05
hereof shall govern) shall, subject to Section 11.08 hereof, be paid over
to, or retained by the Lessee or such permitted sublessee or transferee
unless a Payment Default, Bankruptcy Default or Event of Default shall have
occurred and be continuing (in which case such proceeds shall be held
(unless applied) pursuant to Section 23.01 hereof as security for Lessee's
obligations hereunder and under the Participation Agreement). All payments
received by the Lessor, the Lessee or any such permitted sublessee or
transferee from the Requisitioning Government for the use of the Airframe
and Engines or engines after the Term shall be paid over to, or retained
by, the Lessor (or the Lessee if it shall have purchased the Lessor's
interest therein in accordance with the provisions hereof).
Section 11.07. Requisition for Use by Government of an Engine Not
Installed on the Airframe. In the event of the requisition for use by a
Requisitioning Government of registry of the Aircraft or any agency or
instrumentality thereof of any Engine not then installed on the Airframe,
the Lessee shall replace such Engine by complying with the terms of Section
11.04 hereof to the same extent as if an Event of Loss had occurred with
respect to such Engine as of the date of such requisition, and any payments
received by the Lessor or the Lessee from the Requisitioning Government
with respect to such requisition shall, subject to Section 11.08 hereof, be
paid over to or retained by the Lessee, provided that the Lessee shall have
fully performed its obligations under Section 11.04 hereof.
Section 11.08. Application of Payments During Existence of Certain
Defaults. Any amount referred to in Section 11.05, 11.06 or 11.07 hereof
which is payable to the Lessee shall not be paid to the Lessee, or, if it
has been previously paid directly to the Lessee, shall not be retained by
the Lessee, if at the time of such payment a Payment Default, Bankruptcy
Default or Event of Default shall have occurred and be continuing, but
shall be paid to and held by the Lessor (or the Indenture Trustee so long
as the Lien of the Indenture is in effect) as provided in Article 23 hereof
as security for the obligations of the Lessee under this Agreement, and at
such time as there shall not be continuing any such Payment Default,
Bankruptcy Default or Event of Default, such amount to the extent not
theretofore applied as provided herein, shall be paid to the Lessee.
ARTICLE 12
RETURN OF AIRCRAFT
Section 12.01. Return of Aircraft. Unless the Aircraft is
purchased by the Lessee as provided in Section 4.02 hereof, at the end of
the Term, or upon the termination of this Lease pursuant to Article 10 or
Article 17 hereof or otherwise, the Lessee, at its own cost and expense,
will return the Aircraft by delivering it to the Lessor on the last day of
the Term or on the Termination Date, as the case may be, at the Lessee's
principal maintenance facility in Memphis, Tennessee or such other location
specified by the Lessee (and reasonably acceptable to the Owner Participant
(or the Lessor so long as the Lien of the Indenture is in effect)), within
or outside of the continental United States (on the Lessee's route
structure as in effect on the return date and provided that the Lessee
shall pay any incremental expenses incurred in connection with a redelivery
outside the United States) and the Airframe shall be fully equipped with
two Engines of the same or an improved make and model as were delivered on
the Delivery Date (or Replacement Engines), free and clear of all Liens
(other than Lessor's Liens), including any rights of third parties under
pooling, interchange, overhaul, repair or similar agreements or
arrangements, it being understood that all such Engines and Replacement
Engines so returned shall be of identical make and model and that any
Replacement Engine shall be in at least as good operating condition and
have at least the same value and utility as the Engines being replaced,
assuming such Engines were in the condition required hereunder. The Lessee
will give the Lessor at least 15 days' prior written notice of the place of
such return; provided, however, that if the Lessor shall have made the
request for storage pursuant to Section 12.06 hereof, the Lessee shall
return the Aircraft to the Lessor at the site of the storage.
Section 12.02. Return of Engines. If any engine not owned by the
Lessor shall be delivered with the Airframe as set forth in Section 12.01
hereof, the Lessee, concurrently with such delivery, will, at its own cost
and expense furnish the Lessor with (i) a full warranty xxxx of sale, in
form and substance reasonably satisfactory to the Lessor, with respect to
such engine, (ii) an opinion of the Lessee's counsel to the effect that,
upon such return, the Lessor will acquire full right, title and interest to
such engine free and clear of all Liens (other than Lessor's Liens) and
(iii) a certificate as described in Section 11.04(b)(iii) hereof. The
Lessee shall take such other action as the Lessor may reasonably request in
order that such Replacement Engine shall be duly and properly titled in the
Lessor free and clear of all Liens (other than Lessor's Liens), and the
Lessor will then (i) transfer to the Lessee, without recourse or warranty
(except as to the absence of Lessor's Liens), and subject to the
disclaimers provided in Section 5.01 hereof, all the Lessor's right, title
and interest in and to any Engine in lieu of which a Replacement Engine has
been delivered pursuant to Section 12.01 hereof, "as is, where is" and (ii)
deliver to the Lessee such instrument as the Lessor shall have received
from the Indenture Trustee, releasing such Engine from the Lien of the
Indenture.
Section 12.03. Return of Manuals. Upon the return of the Aircraft,
the Lessee shall deliver to the Lessor all original (or photocopied or
microfilmed copies thereof, if then permitted to be maintained in such form
under applicable law) logs, manuals, certificates and technical data, and
inspection, modification and overhaul records pertaining to the Airframe,
Engines or engines, which are required to be maintained under applicable
rules and regulations of the Aeronautics Authority or pursuant to the
Lessee's or any permitted sublessee's Aeronautics Authority-approved
maintenance program and all original (or photocopied or microfilmed copies
thereof, if then permitted to be maintained in such form under applicable
law) records required to be maintained with respect to the Aircraft under
the maintenance program approved by the aeronautical authority of any other
country of registry of the Aircraft. All records shall be returned in the
format necessary to allow the Lessee or any sublessee to comply with
Section 12.04(a)(i) hereof.
Section 12.04. Condition of Aircraft. (a) Required Condition. The
Aircraft when returned to the Lessor shall, at the Lessee's own cost and
expense, meet the following requirements:
(i) it shall, unless otherwise requested by the Lessor not less
than 90 days prior to the end of the Term to retain the then-existing
registration of the Aircraft, be duly registered in the name of the
Lessor or its designee pursuant to the Transportation Code;
(ii) it shall be clean by airline and cargo handling operating
standards;
(iii) the Airframe shall be returned with the Engines, or any
replacements thereto as herein authorized, provided that the Airframe
shall have an aggregate of two Engines or engines (as herein authorized
under Section 12.02 hereof), both of the same make and model, installed
thereon, together with the equipment, accessories or parts installed
thereon on the Delivery Date or replacements therefor (as herein
authorized) and alterations, modifications and additions thereto made in
accordance with the provisions of this Lease;
(iv) it shall be in the condition required by Section 12.04(b)
hereof and in as good operating condition as when delivered to the
Lessor on the Delivery Date, ordinary wear and tear excepted;
(v) it shall have a currently effective airworthiness certificate
issued by the Aeronautics Authority;
(vi) it shall comply with any then applicable rules and regulations
imposed by the Aeronautics Authority and, without limitation of the
foregoing, terminate all airworthiness directives of, and mandatory
modifications required by, the Aeronautics Authority (or any government
or governmental authority, domestic or foreign, having jurisdiction over
the Aircraft) to be terminated during the Term of the Lease and each
Engine (including any Replacement Engine) shall be serviceable in
accordance with the Lessee's FAA-approved maintenance program;
(vii) it shall be free and clear of all Liens and rights of others
(other than Lessor's Liens) including, without limitation, rights of third
parties under pooling, interchange, overhaul, repair and other similar
agreements or arrangements referred to in Section 7.02(a) hereof; and
(viii) it shall be in a standard cargo configuration.
(b) Remaining Time. If, at the time of return of the Aircraft,
the Airframe is not being maintained under a continuous maintenance
program, then the Airframe shall have remaining until the next scheduled
"C" check at least 1,000 hours of operation. If, at the time of return of
the Aircraft, the Airframe is subject to a continuous maintenance program,
there will be no time-before-overhaul requirement. If, at the time of
return of the Aircraft, the Engines are not being maintained under an
on-condition maintenance program, then the average number of hours on such
Engines remaining until the next scheduled engine heavy maintenance visit
shall be at least 25% of the allowable hours between engine heavy
maintenance visits permitted under the Lessee's FAA-approved maintenance
program. If, at the time of return of the Aircraft, the Engines are
subject to an on-condition maintenance program, there will be no
time-before-overhaul requirement. With respect to maintenance under the
Lessee's maintenance program approved by the Aeronautics Authority, the
Lessee shall have treated the Aircraft in a nondiscriminatory manner with
other Airbus A300F-600 series aircraft in the Lessee's fleet, and the
Aircraft shall be free and clear of all Liens and rights of others other
than Lessor's Liens and shall be in compliance in every material respect
with the Lessee's maintenance program as if the Term were not ending.
Section 12.05. Delayed Return of Aircraft. (a) If the return of
the Aircraft to the Lessor in compliance with the terms of this Lease shall
be delayed beyond the scheduled end of the Term because of the occurrence
of an event described in clause (iii)(2)(B) of the definition of Event of
Loss, this Lease shall not terminate but shall continue in full force and
effect until the expiration of the six-month period (or, such shorter
period referred to in said clause (iii)(2)(B)) after the scheduled end of
the Term, provided that (i) Stipulated Loss Value and Termination Value
during such extension shall be an amount determined in accordance with
Section 4.01(b) hereof, (ii) the Lessee shall pay on demand, as Basic Rent
for each day of such delay and this Lease shall continue, an amount equal
to the daily equivalent of the average Basic Rent paid during the Basic
Term and any then expiring Renewal Term, in each case with such Basic Rent
to include for this purpose the amounts referred to in Section 3.01 hereof,
or such higher compensation being paid by the Government pursuant to the
Civil Reserve Airfleet Program and (iii) neither the Lessee nor any other
Person shall use or operate the Aircraft in any manner, except pursuant to
the activation of such Civil Reserve Airfleet Program.
(b) In any other situation in which the Aircraft is not returned
to the Lessor upon the expiration of the Term (other than due to a purchase
of the Aircraft by the Lessee pursuant to this Lease or by a purchaser
under Article 10 hereof), the Lessee shall pay on demand as Basic Rent for
each day of such delay an amount equal to the Rent per diem at a rate equal
to the Fair Market Rental and this Lease shall continue for up to six (6)
months after the end of the Term; provided, however, that nothing in this
paragraph shall be deemed (i) to relieve the Lessee in any respect from any
Default or Event of Default or claims with respect thereto arising from the
failure to return the Aircraft at the time or in the condition required by
the Operative Agreements or (ii) to permit the Lessee or any sublessee to
operate or use the Aircraft otherwise than in connection with effecting
such return.
Section 12.06. Storage. Upon any expiration or termination of this
Lease, at the written request of the Lessor given at least 45 days prior to
such expiration or termination, the Lessee will arrange, or will cause to
be arranged, at no charge to the Lessor (subject, however, to the last
sentence of this Section 12.06), storage at a ramp storage facility for the
Aircraft at the Lessee's principal maintenance facilities in Memphis,
Tennessee or one of the Lessee's other maintenance facilities or at a
location selected by the Lessee used as a location for the parking or
storage of aircraft for a period of up to 30 days; provided that if storage
is available at no additional cost or expense to the Lessee at the location
at which the Lessor has specified pursuant to Section 12.01 hereof that
return of the Aircraft shall take place, the Lessee shall provide storage
at such location. At the end of such 30 day period, if the Lessor so
requests within 10 days before the end of such period, the Lessee will
continue to provide such ramp storage facility at such facility or location
for an additional 30 days at the Lessor's expense. If the Lessee is
required to move the Aircraft from one storage facility to another, such
move shall be at the risk and expense of the Lessor. The maintenance and
risk of loss of, and responsibility for obtaining insurance on, the
Aircraft shall be the responsibility of the Lessor during any period of
storage; provided, however, the Lessee will, upon written request of the
Lessor and at the Lessor's expense, not to exceed the Lessee's incremental
cost of such service, obtain insurance for such property (including, if
possible, coverage through its fleet policy).
Section 12.07. Special Markings. If requested by the Lessor, the
Lessee shall, at the Lessee's cost, remove or paint over all insignias and
other distinctive markings of the Lessee or any sublessee on the Aircraft and
repaint the stripped down areas in a workmanlike manner to match exterior
colors.
Section 12.08. Lessor's Option to Purchase Parts. At any time
after the Lessee has advised the Lessor that it has determined not to renew
this Lease or purchase the Aircraft, or the Aircraft is otherwise to be
returned to the Lessor, the Lessee shall advise the Lessor of any Part
which the Lessee intends, and is permitted, to remove as provided in
Section 9.02(b) above, and the Lessor may, at its option, upon 30 days'
notice to the Lessee, purchase any or all of such Parts from the Lessee
upon the expiration of the Term at their then Fair Market Value (taking
into account the provisions of this Lease) determined in accordance with
the provisions of Section 4.03 hereof. Upon any return of the Aircraft
pursuant to this Article 12, if the Lessor does not elect to exercise its
option under this Section 12.08, the Lessee will, at its own cost and
expense, remove such Parts described in subparagraph (i), (ii) or (iii) of
Section 9.02(b) hereof as the Lessor may request.
ARTICLE 13
INSURANCE
Section 13.01. Comprehensive Airline Liability and Property Damage
Liability Insurance. (a) Comprehensive Airline Liability and Property
Damage Liability Insurance. The Lessee, at its own cost and expense, will
maintain or cause to be maintained with respect to the Aircraft,
comprehensive airline liability insurance including, without limitation,
passenger legal liability and property damage liability insurance and cargo
legal liability in such amounts, against such risks (including, without
limitation, contractual liability and war risk and allied perils
liability), with such retentions as the Lessee customarily maintains with
respect to similar aircraft and engines which comprise the fleet of the
Lessee (subject to the limitations set forth in Section 13.06 hereof), and
with such insurers (which shall be insurers of recognized responsibility),
and such insurance against such other risks, as is usually carried by
similar corporations engaged in the same or similar business and similarly
situated as the Lessee and owning or operating aircraft and engines similar
to the Aircraft and Engines; provided that in no event shall the limits of
liability for all comprehensive airline liability insurance be less than
the amount, per occurrence, as set forth on the insurance certificate
delivered on the Delivery Date unless and only so long as the Aircraft is
not operated and appropriate insurance for the Aircraft on the ground is
maintained. The Lessee will also be required to maintain war risk
insurance if the Aircraft is operated in a war zone or, in the Lessee's
reasonable judgment, area of recognized hostilities, if such insurance is
available on commercially reasonable terms and if it is the custom for
major international Air Carriers flying comparable routes to carry such
insurance.
(b) Government Indemnification. Notwithstanding Section 13.01(a)
hereof, in the event of the requisition for use by the Government of the
Airframe or the Airframe and the Engines or engines then installed on the
Airframe, the Lessee shall maintain throughout the period of such requisition
such insurance as would otherwise be required under this Section 13.01;
provided that the Lessor shall accept, in lieu of such insurance coverage,
written indemnification or insurance from the Government which is
substantially the same as otherwise required under this Article 13.
(c) Policy Terms. Any policy of insurance carried and maintained
in accordance with this Section 13.01, and any policy taken out in
substitution or replacement for any such policy subject to the terms,
conditions and limitations thereof, shall:
(i) name or be amended to name the Lessor in its individual capacit
and as owner of the Aircraft, the Indenture Trustee in its capacity as
such, the Owner Participant and each of their respective officers and
directors in their respective capacities as such as additional insureds
(hereinafter in this paragraph (c) sometimes referred to as "Additional
Insured");
(ii) provide that, in respect of the interest of any Additional
Insured in such policies, the insurance shall not be invalidated by any
action or inaction of the Lessee or any Additional Insured as defined
under the policy of insurance required under this Section 13.01 (other
than any action or inaction of such Additional Insured) and shall insure
each Additional Insured regardless of any breach or violation of any
warranty, declaration or condition contained in such policies by the
Lessee or any other Additional Insured (other than any breach or
violation of any warranty, declaration or condition by such Additional
Insured) as defined under the policy of insurance required under this
Section 13.01;
(iii) provide that if such insurance is cancelled for any reason, or
any substantial change is made in the policies which adversely affect the
scope of the coverage required herein, or if such insurance is allowed to
lapse for nonpayment of premium, such cancellation, change or lapse shall
not be effective as to any Additional Insured for thirty (30) days (except
in the case of war risk coverage in which event the applicable period shall
be seven (7) days or such other period as may be customary) after receipt
by each such Additional Insured of written notice from such insurers or
such insurers' broker of such cancellation, change or lapse;
(iv) provide that the insurers shall waive any rights of subrogation
against each Additional Insured, to the extent that the Lessee has waived
its rights under this Lease and the Participation Agreement; provided that
the exercise by insurers of rights of subrogation derived from rights
retained by the Lessee shall not, in any way, delay payment of any claim
that would otherwise be payable by such insurers but for the existence of
rights of subrogation derived from rights retained by the Lessee;
(v) provide that all of the provisions of such policy shall operat
in the same manner as if there were a separate policy covering each
Additional Insured; provided, that such policies shall not operate to
increase any insurer's limit of liability;
(vi) be primary, without right of contribution from any other
insurance which is carried by any Additional Insured with respect to its
interest in the Aircraft;
(vii) provide that no Additional Insured shall have any obligation or
liability for premiums or other payments, if any, in connection with such
insurance; and
(viii) provide that such insurer shall waive the right of such
insurer to any set-off or counterclaim or any other deduction, whether by
attachment or otherwise, in respect of any liability of any Additional
Insured.
Section 13.02. Insurance Against Loss or Damage to Aircraft and
Engines. (a) Hull Insurance. The Lessee, at its own cost and expense, shall
maintain or cause to be maintained in effect, with insurers of recognized
responsibility, all-risk ground and flight aircraft hull insurance covering
the Aircraft and all-risk coverage with respect to any Engines and Parts while
temporarily removed from the Aircraft and not replaced by similar Engines or
Parts, including in each case war-risk and allied perils, hijacking (air
piracy) and governmental confiscation and expropriation insurance (except in
the country of registry) with such retentions (subject to the limitations set
forth in Section 13.06 hereof) and in such form, upon such terms and
conditions (including coverage for cost of claims), and in amounts as the
Lessee customarily maintains with respect to the aircraft in the Lessee's
fleet of the same type and model and operated on the same routes as the
Aircraft (except that the Lessee shall be required to maintain war-risk,
hijacking (air piracy) and governmental confiscation and expropriation
insurance (except in the country of registry) if the Aircraft is operated on
routes where the custom is for major international Air Carriers flying
comparable routes to carry such insurance), provided that such insurance shall
at all times while the Aircraft is subject to this Lease and the Lien of the
Indenture be on an agreed-value basis for an amount not less than an amount
equal to the Stipulated Loss Value for the relevant period for the Aircraft as
set forth on Schedule III to this Lease.
(b) Policy Terms. Any policies carried and maintained in accordance
with this Section 13.02 and any policies taken out in substitution or
replacement for any such policies subject to the terms, conditions and
limitations thereof shall:
(i) name or be amended to name the Lessor in its individual
capacity and as owner of the Aircraft (or, so long as the Indenture
shall not have been discharged, the Indenture Trustee) as sole loss
payee (hereinafter in this paragraph (b) sometimes referred to as "Loss
Payee");
(ii) provide with respect to coverage provided under this Section
13.02, that (i) in the event of a loss involving proceeds in the aggregate
in excess of $6,000,000, the proceeds in respect of such loss up to an
amount equal to the Stipulated Loss Value for the Aircraft shall be payable
to the Lessor (or, so long as the Indenture shall not have been discharged,
the Indenture Trustee), it being understood and agreed that in the case of
any payment to the Lessor (or the Indenture Trustee) otherwise than in
respect of an Event of Loss, the Lessor (or the Indenture Trustee) shall,
unless a Payment Default, a Bankruptcy Default or an Event of Default shall
have occurred and be continuing, upon receipt of evidence satisfactory to
it that the damage giving rise to such payment shall have been repaired or
that such payment shall then be required to pay for repairs then being
made, pay the amount of such payment to the Lessee or its order, and (ii)
the entire amount of any loss involving proceeds in the aggregate of
$6,000,000 or less or the amount of any proceeds of any loss in excess of
the Stipulated Loss Value for the Aircraft shall be paid to the Lessee or
its order unless a Payment Default, a Bankruptcy Default or an Event of
Default shall have occurred and be continuing and the insurers have been
notified thereof by the Lessor or the Indenture Trustee (and if the
insurers have notice of a Payment Default, a Bankruptcy Default or an Event
of Default, such payment shall be made to the Indenture Trustee);
(iii) provide that if such insurance is cancelled for any reason
or any substantial change is made in the policies which adversely
affects the scope of the coverage required herein, or if such insurance
is allowed to lapse for nonpayment of premium, such cancellation, change
or lapse shall not be effective as to the Loss Payee for thirty days
(except in the case of war-risk coverage in which event the applicable
period shall be seven (7) days or such other period as may be customary)
after receipt by the Loss Payee of written notice from such insurer of
such cancellation, change or lapse;
(iv) provide that, in respect of the interest of the Lessor
(in its individual capacity and as the Owner Trustee), the Owner
Participant or the Indenture Trustee (in their respective capacities as
such) in such policies, the insurance shall not be invalidated by any
action or inaction of the Lessee or the Loss Payee (other than any
action or inaction of such Loss Payee) and shall insure the Lessor (in
its individual capacity and as Owner Trustee), the Owner Participant and
the Indenture Trustee regardless of any breach or violation of any
warranty, declaration or condition contained in such policies by the
Lessee or the Loss Payee (other than any breach or violation of any
warranty, declaration or condition by the Loss Payee) as defined under
the policy of insurance required under this Section 13.02;
(v) provide that the insurers shall waive any rights of
subrogation against the Lessor (in its individual capacity and as Owner
Trustee), the Owner Participant and the Indenture Trustee to the extent
that the Lessee has waived its rights under this Lease or the
Participation Agreement; provided that the exercise by insurers of
rights of subrogation derived from rights retained by the Lessee shall
not, in any way, delay payment of any claim that would otherwise be
payable by such insurers but for the existence of rights of subrogation
derived from rights retained by the Lessee;
(vi) be primary and without rights of contribution from any other
insurance which is carried by the Loss Payee with respect to its interest
in the Aircraft;
(vii) provide that (except in the case of insurance with respect to
Engines and spare parts that have been removed from the Aircraft and
replaced with other Engines or engines, or spare parts, as the case may be)
such insurer shall waive any right of such insurer to any set-off or
counterclaim or any other deduction, whether by attachment or otherwise, in
respect of any liability of the Loss Payee;
(viii) provide that (except in the case of insurance with respect to
Engines and spare parts that have been removed from the Aircraft and
replaced with other Engines or engines or spare parts, as the case may be)
no Loss Payee shall have any obligation or liability for premiums or other
payments, if any, in connection with such insurance; and
(ix) in the event that separate policies are maintained to cover
all-risk ground and flight aircraft, hull and war risks and allied perils
insurance, include a 50/50 provisional claims settlement clause as
contained in the policies of insurance maintained by the Lessee with
respect to all other aircraft in the Lessee's fleet, and a copy of the
50/50 provisional claims settlement clause in effect on the Delivery Date
shall be attached to the insurance certificate issued on the Delivery Date.
Section 13.03. Application of Insurance Proceeds. (a)
Generally. All insurance proceeds (other than proceeds from policies
carried by the Lessor, the Indenture Trustee or the Owner Participant)
received under policies described in Section 13.02 hereof as the result of
the occurrence of an Event of Loss with respect to the Airframe or an
Engine will be applied as follows:
(i) if such proceeds are received with respect to the
Airframe or with respect to the Airframe and the Engines or engines then
installed on the Airframe and the Lessee has elected or is deemed to
have elected the alternative set forth in Section 11.02 hereof, so much
of such proceeds as shall not exceed the amounts required to be paid by
the Lessee pursuant to said Section 11.02 hereof shall be applied in
reduction of the Lessee's obligation to pay such amounts if not already
paid by the Lessee, or if already paid by the Lessee, shall be applied
to reimburse the Lessee for its payment of such amounts, provided that
no Payment Default, Bankruptcy Default or Event of Default shall have
occurred and be continuing, and the balance, if any, of such proceeds
remaining will be paid to the order of the Lessee; if and so long as the
foregoing proviso is not satisfied, such proceeds shall be held (unless
applied) pursuant to Section 23.01 hereof as security for the Lessee's
obligations hereunder and under the Participation Agreement; or
(ii) if such proceeds are received with respect to the
Airframe or the Airframe and the Engines or engines then installed on
the Airframe and the Lessee has elected the alternative set forth in
Section 11.03 hereof, or if such proceeds are received with respect to
an Engine not then installed on the Airframe and not replaced by an
Engine or engine under the circumstances contemplated by Section 11.04
hereof, all such proceeds shall be paid to the Indenture Trustee (unless
the Indenture has been discharged in which case paid to the Lessor) for
disbursement to the order of the Lessee, after the Lessee shall have
fully performed the terms of Sections 11.03 or 11.04 hereof, as
applicable, with respect to the Event of Loss for which such proceeds
are paid, provided that no Payment Default, Bankruptcy Default or Event
of Default shall have occurred and be continuing; if and so long as the
foregoing proviso is not satisfied, such proceeds shall be held (unless
applied) pursuant to Section 23.01 hereof as security for the Lessee's
obligations hereunder and under the Participation Agreement.
(b) Payment if no Event of Loss. The insurance proceeds of any
property damage loss not constituting an Event of Loss with respect to the
Airframe or an Engine will be applied in payment (or to reimburse the Lessee)
for repairs or for replacement property in accordance with Articles 7 and 8
hereof, if not already paid for by the Lessee, and any balance remaining after
compliance with said Articles 7 and 8 hereof with respect to such loss shall
be paid to the order of the Lessee, provided that no Payment Default,
Bankruptcy Default or Event of Default shall have occurred and be continuing;
if and so long as the foregoing proviso is not satisfied, such proceeds shall
be held (unless applied) pursuant to Section 23.01 hereof as security for the
Lessee's obligations hereunder and under the Participation Agreement.
(c) Information. If any Additional Insured becomes subject to any
claim covered by any insurance policy maintained pursuant to this Article 13,
the Lessee shall make available any information required by such Additional
Insured in connection with such claim.
Section 13.04. Reports. On or before the Delivery Date and
thereafter annually on or before the scheduled expiration date for such
policy during the Term, the Lessee shall cause an aviation insurance broker
to furnish to the Lessor and the Indenture Trustee a signed report, stating
in reasonable detail the types of coverage and limits carried and
maintained on the Aircraft and certifying that such insurance complies with
the terms and conditions of this Lease. The Lessee will cause its aviation
insurance broker to advise the Lessor and the Indenture Trustee in writing
promptly of any default in the payment of any premium and of any other act
or omission on the part of the Lessee of which it has knowledge and which
might invalidate, cause cancellation of or render unenforceable all or any
part of any insurance carried by the Lessee with respect to the Aircraft.
The Lessee will cause such insurance broker to agree to advise the Lessor,
the Indenture Trustee and the Owner Participant in writing if and when it
becomes evident to such broker that any insurance policy carried and
maintained on the Aircraft pursuant to this Article 13 will not be renewed
at the expiration date. If the Lessee shall fail to maintain insurance as
required, the Lessor may, at its option, provide such insurance, and in
such event, the Lessee shall, upon demand, reimburse the Lessor, as
Supplemental Rent, for the cost of such insurance; provided, however, that
no exercise of said option shall affect the provisions of this Lease,
including the provisions that failure by the Lessee to maintain the
prescribed insurance shall constitute an Event of Default or otherwise
constitute a waiver of any other rights the Lessor may have against the
Lessee.
Section 13.05. Lessor's Insurance. The Lessor, the Indenture
Trustee or the Owner Participant may insure the Airframe or any Engine at
its own cost and expense, including insuring the Aircraft for amounts in
excess of the Stipulated Loss Value of the Aircraft, provided that any
insurance so maintained by the Lessor, the Indenture Trustee or the Owner
Participant shall not result in a reduction of coverage or amounts payable
under insurance required to be maintained by the Lessee under this Article
13 or increase the cost to the Lessee of maintaining such insurance;
provided further, that any insurance policies of the Lessor, the Indenture
Trustee or the Owner Participant insuring the Airframe or any Engine shall
provide for a release to the Lessee of any and all salvage rights in and to
the Airframe or any Engine.
Section 13.06. Self-Insurance. The Lessee may self-insure the
risks required to be insured against by Sections 13.01 and 13.02 hereof in
such reasonable amounts as are then applicable to other aircraft or engines
of the Lessee of value comparable to the Aircraft, but in no case shall
such self-insurance with respect to all aircraft in the Lessee's fleet in
aggregate exceed for any 12-month policy year an amount equal to the lesser
of (i) 50% of the highest insured value of any single aircraft in the
Lessee's fleet and (ii) 1.5% of the aggregate insured value from time to
time of the Lessee's entire aircraft fleet provided that a standard
deductible per occurrence per aircraft not in excess of the amount
customarily allowed as a deductible in the industry shall be permitted in
addition to the above-mentioned self-insurance. The foregoing shall not
permit the Lessee to discriminate as between insurance coverage on the
Aircraft and insurance which the Lessee maintains with respect to similar
aircraft owned or operated by the Lessee operating on similar routes in
similar locations.
ARTICLE 14
INSPECTION
Section 14.01. Right of Inspection. At reasonable times, and upon
at least five (5) Business Days' prior written notice to the Lessee, the
Lessor, the Indenture Trustee or the Owner Participant, or their respective
authorized representatives, may inspect the Aircraft and upon at least ten
(10) Business Days' prior written notice, all Aeronautics Authority
required books and records of the Lessee or any sublessee and all books and
records required to be maintained by the Lessee under its FAA-approved
maintenance program (or books and records required to be maintained by the
aeronautical authority of any other country of registry of the Aircraft)
relating to the maintenance of the Aircraft and such Persons shall keep any
information obtained thereby confidential and shall not disclose the same
to any Person, except to a Person described in Section 18.01 of the
Participation Agreement. Any such inspection of the Aircraft shall be a
visual, walk-around inspection of the interior and exterior of the Aircraft
and shall not include opening any panel, bays or the like without the
express consent of the Lessee (except to the extent any such inspection
takes place when any such panel, bays or the like are open).
Notwithstanding the previous sentence, unless a Payment Default, Bankruptcy
Default, material Default relating to maintenance (without giving effect to
the provisos to Section 7.01(b) hereof) or an Event of Default shall have
occurred and be continuing, the Lessor, the Indenture Trustee, the Owner
Participant or their respective authorized representatives shall each be
entitled to inspect the Aircraft only one time during any consecutive
twelve-month period provided, however, that during the final year of the
Basic Term the Lessor shall be entitled to inspect on two (2) occasions.
The Lessee shall make any permitted sublease or transfer permitted under
Section 7.02 hereof expressly subject to inspection rights consistent with
this Article 14.
Section 14.02. No Obligation to Inspect. None of the Lessor, the
Indenture Trustee or the Owner Participant shall have any duty to make any
inspection pursuant to Section 14.01 hereof and no such party shall incur any
liability or obligation by reason of making or not making any such inspection.
ARTICLE 15
ASSIGNMENT
Section 15.01. Lessee's Right to Assign. The Lessee shall not, and
shall have no authority or power to assign, convey or sublease any of its
rights under this Lease without the prior written consent of the Lessor
except (i) as expressly provided in Section 7.02 hereof, or in the case of
any requisition by the Government referred to in Section 7.01 of this
Lease, or (ii) to a wholly-owned domestic subsidiary of the Lessee which
shall be a certificated U.S. Air Carrier. Any such assignment, conveyance
or sublease shall in no way relieve the Lessee from any obligation
hereunder or under any other Operative Agreement or any written agreement
of the Lessee entered into in connection with the transactions contemplated
by the Operative Agreements, which shall be and remain obligations of the
Lessee. The Lessor agrees that it will not assign or convey its right,
title and interest in and to this Lease or the Aircraft except as
contemplated by or provided in this Lease, the Trust Agreement, the
Indenture or the Participation Agreement. The terms and provisions of this
Lease shall be binding upon and inure to the benefit of the Lessor and the
Lessee and their respective successors and permitted assigns, and shall
inure, to the extent expressly provided herein and therein, to the direct
benefit of, and in accordance with the provisions of the Indenture and the
Participation Agreement shall be enforceable by, the Indenture Trustee, the
Lessor and their respective successors and permitted assigns.
Section 15.02. Citizenship. The Lessee will at all times be a duly
certificated U.S. Air Carrier under the Transportation Code.
ARTICLE 16
EVENTS OF DEFAULT
Section 16.01. Events of Default. Each of the following events
shall constitute an Event of Default, whether any such event shall be
voluntary or involuntary or come about or be effected by operation of law
or pursuant to or in compliance with any judgment, decree or order of any
court or any order, rule or regulation of any administrative or
governmental body:
(a) the Lessee shall fail to make any payment of Interim Rent,
Basic Rent, Renewal Rent, Stipulated Loss Value or Termination Value, as
the case may be, within ten Business Days after the date when due
(except that with respect to any failure to pay Excepted Payments, such
failure shall constitute an Event of Default at the discretion of the
Owner Participant); or
(b) the Lessee shall fail to make any payment of Supplemental Rent
(other than amounts described in clause (a) above) within 30 days after
the Lessee has received written notice from the Person entitled to
receive such payment stating that such payment is due (except that with
respect to any failure to pay Excepted Payments for such period, such
failure shall constitute an Event of Default at the discretion of the
Owner Participant); or
(c) (i) the Lessee shall fail to procure, carry and maintain
insurance on or in respect of the Aircraft at any time in accordance
with the provisions of Article 13 or such insurance lapses or is
cancelled, provided that no such lapse or cancellation shall constitute
an Event of Default until the earlier of (A) 30 days (or seven days or
such shorter time as may be standard in the industry with respect to war
risk coverage) after receipt by any Additional Insured of written notice
of such lapse or cancellation and (B) the date that such lapse or
cancellation is effective as to any Additional Insured and provided
further that such failure shall not constitute an Event of Default as
long as the Aircraft is insured as required while on the ground and not
operated, or (ii) the Aircraft shall be operated at any time when
comprehensive airline liability insurance required under Section 13.01
hereof shall not be in effect (it being understood that the Lessee is
not required to maintain such insurance under Section 13.01 hereof while
the indemnification or insurance referred to in the proviso to Section
13.01(b) hereof is in effect); or
(d) the Lessee shall fail to perform or observe any other
covenant, condition or agreement to be performed or observed by it under
any Operative Agreement (excluding the Tax Indemnity Agreement) or any
other written agreement of the Lessee entered into in connection with
the transactions contemplated by the Operative Agreements and such
failure shall continue unremedied for a period of thirty (30) days after
the Lessee shall have received written notice from the Lessor or the
Owner Participant of such failure, provided, that in the event such
failure is curable and so long as (but for no longer than 150 days after
such 30-day period) the Lessee shall have promptly undertaken such cure
after the Lessee receives notice thereof which undertaking shall be
diligently and continuously pursued using the Lessee's reasonable best
efforts, such failure shall not constitute an Event of Default;
provided, further, that failure of the Lessee to maintain the
registration of the Aircraft under the Transportation Code pursuant to
the Lessee's covenants and agreement in Section 6.03(b) of the
Participation Agreement and in Section 7.01(a) of this Lease, when the
lapse of such registration is solely because the Owner Participant or
the Lessor has ceased to be a Citizen of the United States, shall not
constitute a Default or an Event of Default; or
(e) an order for relief shall be entered in respect of the Lessee
by a court having jurisdiction in the premises in an involuntary case
under the federal bankruptcy laws as now or hereafter in effect; or the
Lessee shall consent to the appointment of a custodian, receiver,
trustee or liquidator of itself or of a substantial part of its
property; or the Lessee is not paying, or shall admit in writing its
inability to pay, its debts generally as they come due or shall make a
general assignment for the benefit of creditors; or the Lessee shall
file, or the Board of Directors of the Lessee shall authorize the filing
of, or grant one or more persons authority (at their discretion) to make
a filing for, a voluntary petition in bankruptcy or a voluntary petition
or an answer seeking reorganization in a proceeding under any bankruptcy
laws (as now or hereafter in effect) or an answer admitting the material
allegations of a petition filed against the Lessee in any such
proceeding; or the Lessee shall file, or the Board of Directors of the
Lessee shall authorize the Lessee to, or grant one or more persons
authority (at their discretion) to, seek relief by voluntary petition,
answer or consent, under the provisions of any other or future
bankruptcy or other similar law providing for the reorganization or
winding-up of corporations, or providing for an agreement, composition,
extension or adjustment with its creditors; or
(f) an order, judgment or decree shall be entered by any court of
competent jurisdiction appointing, without the consent of the Lessee, a
custodian, receiver, trustee, or liquidator of the Lessee or of any
substantial part of its property, or sequestering any substantial part
of the property of the Lessee, or granting any other relief in respect
of the Lessee under the federal bankruptcy laws or other insolvency
laws, and any such order, judgment or decree of appointment or
sequestration shall remain in force undismissed or unvacated for a
period of ninety (90) days after the date of its entry; or
(g) a petition against the Lessee in a proceeding under the
federal bankruptcy law or other insolvency laws (as now or hereafter in
effect) shall be filed and shall not be withdrawn or dismissed within
ninety (90) days, or under the provisions of any law providing for
reorganization or winding-up of corporations which may apply to the
Lessee, any court of competent jurisdiction shall assume jurisdiction,
custody or control of the Lessee or of any substantial part of its
property and such jurisdiction, custody or control shall remain in force
unrelinquished or unterminated for a period of ninety (90) days; or
(h) any representation or warranty made by the Lessee in this
Lease or in the Participation Agreement or in any document or
certificate furnished by the Lessee in connection with or pursuant to
this Lease or the Participation Agreement (except for the Tax Indemnity
Agreement) shall at any time prove to have been incorrect at the time
made in any respect material to the transactions contemplated by this
Lease and, if originally made by the Lessee in good faith, shall remain
material and unremedied for a period of thirty (30) days after a
Responsible Officer of the Lessee shall have actual knowledge or the
Lessee shall have received written notice of such misstatement.
ARTICLE 17
REMEDIES
Section 17.01. Remedies Upon Lessee's Default. (a) Remedies
Generally. Upon the occurrence of any Event of Default and at any time
after such occurrence so long as the same shall be continuing, the Lessor
may, at its option, declare this Lease to be in default (except that no
such declaration shall be required in the case of an Event of Default
pursuant to paragraphs (e), (f) or (g) of Section 16.01 hereof and this
Lease shall be deemed declared in default without any further act or
notice), and at any time thereafter the Lessor may do, and the Lessee shall
comply with, one or more of the following with respect to all or any part
of the Airframe and the Engines, as the Lessor in its sole discretion shall
elect, to the extent permitted by, and subject to compliance with, any
mandatory requirements of applicable law then in effect:
(i) Demand in writing that the Lessee shall, and upon such written
demand the Lessee shall, at the Lessee's own cost and expense, return
promptly to the Lessor all or such part of the Airframe and the Engines as
the Lessor may demand in the manner and condition required by, and
otherwise in accordance with all of the provisions of this Lease (provided
that, unless the Lessor shall require otherwise, the Aircraft shall be
returned within the continental United States), or the Lessor, at its
option, may enter upon the premises where such Airframe or Engines are
located or believed to be located and take immediate possession of and
remove such Airframe and Engines (together with any engine which is not an
Engine but is installed on the Airframe, subject to all of the rights of
the owner, lessor, Lien holder or secured party of such engine) without the
necessity for first instituting proceedings, or by summary proceedings or
otherwise, all without liability of the Lessor to the Lessee for or by
reason of such entry or taking of possession, whether for the restoration
of damage to property caused by such action or otherwise;
(ii) With or without taking possession thereof, sell or otherwise
dispose of the Airframe or any Engine, at public or private sale and
with or without advertisement or notice to the Lessee, as the Lessor may
determine, and the Lessor may hold the Lessee liable for any installment
of Interim Rent, Basic Rent and Renewal Rent due on or before the date
of such sale (and, if Interim Rent, Basic Rent or Renewal Rent is
payable in arrears, the pro rata portion of the installment of Interim
Rent, Basic Rent or Renewal Rent due on the next succeeding Rent Payment
Date in respect of any period commencing on the immediately preceding
Rent Payment Date to the date of such sale), or hold, use, operate,
lease to others or keep idle all or any part of the Airframe or any
Engine as the Lessor, in its sole discretion, may determine, in any such
case free and clear of any rights of the Lessee except as otherwise set
forth in this Article 17, and without any duty to account to the Lessee
with respect to such action or inaction or for any proceeds except to
the extent required by Section 17.01(a)(iv) hereof; in the event the
Lessor elects to exercise its rights under said Section, and in
connection with any sale of the Aircraft or any part thereof pursuant to
this Article 17, the Lessor, the Indenture Trustee, the Owner
Participant or any Holder may bid for and purchase such property;
(iii) Whether or not the Lessor shall have exercised or shall
later at any time exercise any of its rights under Section 17.01(a)(i)
or 17.01(a)(ii) hereof, the Lessor, by written notice to the Lessee
specifying a payment date not earlier than 10 days from the date of such
notice, may demand that the Lessee pay to the Lessor, and the Lessee
shall pay to the Lessor on the payment date specified in such notice, as
liquidated damages for loss of a bargain and not as a penalty (in lieu
of the Interim Rent, Basic Rent or Renewal Rent due on Rent Payment
Dates occurring after the payment date specified in such notice), any
installment of Interim Rent, Basic Rent, Renewal Rent and any
Supplemental Rent due on or before such payment date (and, to the extent
Interim Rent, Basic Rent or Renewal Rent is payable in arrears, the pro
rata portion of the installment of Interim Rent, Basic Rent or Renewal
Rent due on the next succeeding Rent Payment Date in respect of the
period commencing on the Stipulated Loss Value Determination Date
referred to below and ending on the date of such payment), plus an
amount equal to the excess, if any, of the Stipulated Loss Value for the
Aircraft, computed as of the Stipulated Loss Value Determination Date on
or next preceding the payment date specified in such notice over the
Fair Market Value of the Aircraft, computed as of such Stipulated Loss
Value Determination Date, together with (A), if Interim Rent or Basic
Rent is payable in advance, interest, to the extent permitted by
applicable law, at the Debt Rate on the amount of such Stipulated Loss
Value from such Stipulated Loss Value Determination Date to the date for
payment set forth in such notice from the Lessor and (B) in all cases,
interest, to the extent permitted by applicable law at the Past Due Rate
on the excess of such Stipulated Loss Value over such Fair Market Value,
from the date as of which such Stipulated Loss Value is payable to the
date of actual payment of such amount; provided, however, that if (and
in any event prior to the time for payment hereunder) the Lessor is
unable within a reasonable period of time to recover possession of the
Aircraft, or any portion thereof, pursuant to clause (i) above
unencumbered by this Lease and free and clear of all Liens (other than
Lessor's Liens), the Fair Market Value of the Aircraft or such portion
shall, at the option of the Lessor to the extent legally enforceable, be
zero and, if the Fair Market Value of the Aircraft is deemed to be zero,
after payment in full by the Lessee of the amount specified above and
all other amounts due from the Lessee under this Lease and the other
Operative Agreements, the Lessor shall promptly transfer (without
recourse or warranty other than as to the absence of the Lessor's Liens)
all of its right, title and interest in the Aircraft or such portion, to
the Lessee;
(iv) In the event the Lessor, pursuant to Section 17.01(a)(ii)
hereof, shall have sold the Airframe and/or any Engine, the Lessor, in
lieu of exercising its rights under Section 17.01(a)(iii) hereof, may,
if it shall so elect, demand that the Lessee pay the Lessor, and the
Lessee shall pay to the Lessor, on the date of such sale, as liquidated
damages for loss of a bargain and not as a penalty (in lieu of the
Interim Rent, Basic Rent or Renewal Rent due after the date on which
such sale occurs) any unpaid Interim Rent, Basic Rent or Renewal Rent
due on or before the date on which such sale occurs (and, to the extent
Interim Rent, Basic Rent or Renewal Rent is payable in arrears, the pro
rata portion of the installment of Interim Rent, Basic Rent or Renewal
Rent due on the next succeeding Rent Payment Date in respect of any
period commencing on the Stipulated Loss Value Determination Date
referred to below and ending on the date of such sale), and any
Supplemental Rent due on or before the date on which such sale occurs,
plus an amount equal to the excess, if any, of (A) the Stipulated Loss
Value for the Aircraft, computed as of the Stipulated Loss Value
Determination Date next preceding the sale date, over (B) the net
proceeds of such sale (after deduction of all of the Lessor's costs and
expenses of such sale, including, without limitation, sales or transfer
taxes, costs of storage, overhaul, maintenance, preparation and
transportation of the Aircraft and brokers' and attorneys' fees)
together with (x), if Interim Rent or Basic Rent is payable in advance,
interest, to the extent permitted by applicable law, at the Debt Rate on
such Stipulated Loss Value from such Stipulated Loss Value Determination
Date to the date of such sale and (y) in all cases, interest to the
extent permitted by applicable law at the Past Due Rate, on the amount
of such excess from the date of such sale to the date of actual payment
by the Lessee;
(v) Proceed by appropriate court action to enforce the terms of
this Lease or to recover damages for its breach;
(vi) Terminate or rescind this Lease as to the Airframe or any or
all of the Engines; or
(vii) Exercise any other right or remedy which may be available
to the Lessor under applicable law.
(b) Cost of Exercise of Remedies. In addition, the Lessee shall be
liable, except as otherwise provided above, for any and all unpaid Rent due
before, after or during the exercise of any of the Lessor's remedies, for all
amounts payable by the Lessee under the Participation Agreement before or
after any termination hereof, and for all reasonable legal fees and other
costs and expenses incurred by the Lessor, the Indenture Trustee or the Owner
Participant by reason of the occurrence of any Event of Default or the
exercise of the Lessor's remedies, including, without limitation, all costs
and expenses incurred in connection with the return of the Airframe or any
Engine in accordance with the terms of Article 12 hereof or in placing the
Airframe or Engines in the condition and airworthiness required by such
Article or in connection with any inspection, use, operation, maintenance,
insurance, storage, or leasing carried out as part of such exercise.
Section 17.02. Cumulative Remedies. Except as otherwise provided,
no remedy referred to in this Article 17 is intended to be exclusive, but
each shall be cumulative and in addition to any other remedy referred to
above or otherwise available to the Lessor at law or in equity; and the
exercise or beginning of exercise by the Lessor of any one or more of such
remedies shall not preclude the simultaneous or later exercise by the
Lessor of any or all of such other remedies.
Section 17.03. Waiver. No express or implied waiver by the Lessor
of any Event of Default shall in any way be, or be construed to be, a
waiver of any future or subsequent Event of Default. To the extent
permitted by applicable law, the Lessee waives any rights now or in the
future conferred by statute or otherwise which may require the Lessor to
sell, lease or otherwise use the Airframe or any Engine in mitigation of
the Lessor's damages or which may otherwise limit or modify any of the
Lessor's rights or remedies under this Article 17. The Lessor's access to
the Aircraft is of the essence and shall not be impaired.
Section 17.04. Lessor's Right to Perform for Lessee. If the Lessee
fails to make any required payment of Rent or fails to perform or comply
with any of its agreements contained in this Lease, whether or not such
failure shall constitute an Event of Default hereunder, the Lessor may (but
shall not be obligated to) make such payments or perform or comply with
such agreement, and the amount of such payment and the amount of the
reasonable costs and expenses of the Lessor incurred in connection with
such payment or the performance of or compliance with such agreement,
together with interest (to the extent permitted by applicable law) at the
Past Due Rate from the date of the making of such payment or the incurring
of such costs and expenses by the Lessor to the date of payment of such
Rent or other amount by the Lessee, shall be deemed Supplemental Rent
payable by the Lessee upon demand. No such payment or performance by the
Lessor shall be deemed to waive any Default or Event of Default or relieve
the Lessee of its obligations hereunder.
ARTICLE 18
COVENANT OF QUIET ENJOYMENT
Section 18.01. Quiet Enjoyment. So long as no Event of Default
shall have occurred and be continuing, the Lessor covenants that neither it
nor any other Person lawfully claiming through it (other than the holder of
a Lien which the Lessee is obligated to discharge pursuant to Article 6
hereof, and it being understood that the Lessor shall not be liable for any
act or omission of the Indenture Trustee or any other Person claiming
through the Indenture Trustee) shall interfere with the Lessee's right to
quietly enjoy the Aircraft without hindrance or disturbance by it or any
such other Person.
ARTICLE 19
FURTHER ASSURANCES
Section 19.01. Further Assurances. Promptly upon the execution and
delivery of this Lease, the Trust Agreement and the Indenture, the Lessee
will cause each of them to be duly filed for recordation in accordance with
the Transportation Code and will maintain the recordation of the Indenture
until the Lien of the Indenture shall have been discharged pursuant to the
terms of the Indenture. In addition, the Lessee will, at the Lessee's own
cost and expense, promptly and duly execute and deliver to the Lessor, the
Owner Participant and the Indenture Trustee such further documents and
assurances to carry out the intent and purpose of this Lease and the
Indenture and to establish and protect the rights and remedies created or
intended to be created in favor of the Lessor under this Lease, and of the
Owner Participant under the Trust Agreement, and of the Indenture Trustee
under the Indenture, including, without limitation, the execution and
filing of Uniform Commercial Code financing and continuation statements,
the execution and delivery of supplements and amendments to this Lease and
the Indenture, in recordable form, subjecting to this Lease and the
Indenture any Replacement Airframe and/or Replacement Engines delivered by
the Lessee pursuant to Section 11.03 hereof and any Replacement Engine
delivered by the Lessee pursuant to Section 11.04 hereof and the recording
and filing of counterparts of this Lease and the Indenture in accordance
with the laws of such jurisdictions as the Lessor or the Indenture Trustee
may from time to time deem advisable. The foregoing does not impose upon
the Lessor any additional liabilities not otherwise contemplated by this
Lease.
ARTICLE 20
NET LEASE
Section 20.01. Nature of Lease. (a) This Lease is a net lease, it
being the intention of the parties hereto that the obligations of the
Lessee to pay all costs and expenses of every character, whether seen or
unforeseen, ordinary or extraordinary, or structural or nonstructural, in
connection with the use, operation, maintenance, repair and reconstruction
of the Airframe and each Engine by the Lessee, including, without
limitation, the costs and expenses particularly set forth in this Lease
(unless expressly excluded from the terms hereof, the costs and expenses of
the Lessor and the Owner Participant shall include the reasonable fees and
expenses of their respective outside counsel), shall be absolute and
unconditional, shall be separate and independent covenants and agreements,
and shall continue unaffected unless and until the covenants have been
terminated pursuant to an express provision of this Lease. The obligation
to pay Rent and all amounts payable by the Lessee under this Lease or the
Participation Agreement shall be absolute and unconditional and (except as
otherwise expressly provided with respect to Supplemental Rent) shall be
paid without notice or demand and such obligation shall not be affected by
any circumstance, including, without limitation:
(i) any set-off (except to the extent set forth in Section 3.05
hereof), counterclaim, recoupment, defense or other right which the
Lessee may have against the Lessor, the Owner Participant, any Holder,
the Indenture Trustee or anyone else for any reason (including, without
limitation, any breach by the Lessor or the Owner Participant or the
Indenture Trustee or any Holder of their respective representations,
warranties, agreements or covenants contained in any of the Operative
Agreements);
(ii) any defect in the title, airworthiness, registration,
eligibility for registration under the Transportation Code (and the
regulations thereunder) or under any of the laws or regulations of any
other country of registry of the Aircraft, condition, design, operation,
merchantability or fitness for use of, suitability for a particular
purpose of, or any damage to or loss or destruction of, the Aircraft or
any portion thereof, or any interruption or cessation in the use or
possession of the Aircraft by the Lessee or any sublessee for any reason
including, without limitation, by reason of governmental action or any
doctrine of force majeure or impossibility of performance;
(iii) any insolvency, bankruptcy, reorganization or similar case or
proceedings by or against the Lessor, the Lessee, the Indenture Trustee
or the Owner Participant or any other Person;
(iv) any Liens, encumbrances or rights of any other Person with
respect to the Aircraft, the invalidity or unenforceability or lack of
due authorization or other infirmity of this Lease or any other
Operative Agreement or document or instrument executed pursuant hereto
or thereto, or any lack of right, power or authority of the Lessor or
the Lessee or any sublessee or any other party to any other Operative
Agreement to enter into this Lease or any other Operative Agreement or
any such document or instrument; or
(v) any other circumstance, happening or event whatsoever, whether
or not unforeseen, or similar to any of the foregoing.
(b) To the extent permitted by applicable law, the Lessee waives any
and all rights which it may now have or which at any time it may have
conferred upon it, by statute or otherwise, to suspend performance under,
terminate, cancel, quit, rescind or surrender this Lease, the Airframe, or any
Engine or part thereof, other than in accordance with the terms hereof.
(c) Each payment of Rent made by the Lessee shall be final as to the
Lessor and the Lessee, and the Lessee will not seek to return nor to recover,
xxxxx, suspend, defer or reduce all or any part of any such payment of Rent
from the Lessor or from the Indenture Trustee for any reason, except the
Lessee has the right to the extent provided in Section 3.05 hereof to offset a
portion of payments due from the Lessee to the Lessor pursuant thereto.
ARTICLE 21
SUCCESSOR LESSOR
Section 21.01. Successor Lessor. The Lessee agrees that in the
case of the appointment of any successor trustee for the Lessor pursuant to
the terms of the Participation Agreement, such successor trustee shall,
upon written notice by such successor to the Lessee, succeed to all the
rights, powers and title of the Lessor under this Lease and shall be deemed
to be the Lessor and the owner of the Aircraft for all purposes of this
Lease without the necessity of any consent or approval by the Lessee and
without in any way altering the terms of this Lease or the Lessee's
obligations. One such appointment and designation of a successor trustee
shall not exhaust the right to appoint and designate a further successor
trustee pursuant to the Participation Agreement, but such right may be
exercised repeatedly so long as this Lease shall be in effect.
ARTICLE 22
SECURITY FOR LESSOR'S OBLIGATIONS
Section 22.01. Security for Lessor's Obligations to Holders. In
order to secure the indebtedness evidenced by the Certificates, the
Indenture provides among other things, for the assignment by the Lessor to
the Indenture Trustee of this Lease and the Lease Supplement and for the
creation of a first mortgage and security interest in favor of the
Indenture Trustee on the Aircraft. The Lessee consents to and acknowledges
such assignment (subject to the reservations and conditions therein set
forth) and the receipt of a copy of the Indenture.
Section 22.02. Intentionally Left Blank.
Section 22.03. Consent of Lessee to Assignment of Lease as
Security. The Lessee hereby acknowledges and consents to the Indenture
Trustee's rights pursuant to the terms of the Indenture to receive payments
(other than Excepted Payments) due under this Lease, to transfer or assign
title to the Aircraft subject to this Lease, to make all waivers and
agreements except as otherwise provided in the Indenture, to give all
notices, consents and releases and to take all action upon the happening of
a Default or Event of Default under this Lease (except as otherwise
specifically provided in the Indenture), or to do any and all other things
whatsoever which the Lessor is or may become entitled to do under this
Lease (except as otherwise provided in the Indenture); all or any of which
rights, obligations, benefits and interests may, pursuant to the terms of
the Indenture, be reassigned or retransferred by the Indenture Trustee at
any time and from time to time (except as otherwise provided in the
Indenture); provided, however, that the Lessor, except to the extent, and
for such time as, it is unable to do so by virtue of the Indenture, shall
remain liable for the performance of all the terms, conditions, covenants
and provisions for which it is obligated under this Lease notwithstanding
such assignment.
ARTICLE 23
SECURITY FUNDS
Section 23.01. Investment of Security Funds. (a) Any amounts
otherwise payable to the Lessee shall be held by the Lessor as security
for, and may be applied by the Lessor against, the obligations of the
Lessee under this Lease during such time as there shall have occurred and
be continuing a Payment Default, Bankruptcy Default or Event of Default,
and, at such times as there shall not be continuing a Payment Default,
Bankruptcy Default or Event of Default, such amounts, net of any amounts
which have been applied by the Lessor against the Lessee's obligations
hereunder, shall be paid to the Lessee. Any amounts which are held by the
Lessor pending payment to the Lessee shall, until paid to the Lessee or
applied against the Lessee's obligations hereunder, be invested by the
Lessor, as directed from time to time, in writing (and in the absence of a
written direction by the Lessee, the Lessor shall invest such monies in
direct obligations of the United States of America), by the Lessee and at
the expense and risk of the Lessee, in the following securities (which in
the case of securities referred to in subparagraphs (i) through (iv) of
this Section 23.01(a) hereof shall mature within ninety (90) days of the
date of purchase):
(i) direct obligations of the United States of America; or
(ii) obligations fully guaranteed by the United States of America;
(iii) certificates of deposit issued by, or bankers' acceptances of,
or time deposits or a deposit account with, any bank, trust company or
national banking association incorporated or doing business under the laws
of the United States of America or one of its States (which may include the
Owner Trustee or the Indenture Trustee in their respective individual
capacities or any Affiliate thereof), having a combined capital and surplus
of at least $500,000,000 and having a rating of "A" or better from Xxxxx'x
or S&P; or
(iv) commercial paper rated A-1/P-1 by S&P and Xxxxx'x
respectively (or if neither such organization shall rate such commercial
paper at any time, by any nationally recognized statistical rating
organization in the United States of America) equal to the highest
rating assigned by such rating organization (which may include
commercial paper issued by the Owner Trustee or the Indenture Trustee in
their respective individual capacities or any Affiliate thereof).
(b) At any time any invested funds are distributed to the Lessee,
there shall be promptly remitted to the Lessee any gain (including interest
received) realized as the result of any investment pursuant to Section
23.01(a) hereof (net of any fees, commissions and other costs, Taxes and
expenses, if any, incurred by the Lessor or the Owner Participant in
connection with such investment), unless a Payment Default, Bankruptcy
Default or Event of Default shall have occurred and be continuing in which
case such funds shall be applied in the same manner as the principal so
invested. The Lessee shall be responsible for and will promptly pay to the
Indenture Trustee or the Lessor, as the case may be, on demand, the amount
of any loss realized as the result of any such investment (together with
any fees, commissions and other costs, Taxes and expenses, if any, incurred
by the Indenture Trustee or the Lessor or the Owner Participant in
connection with such investment), such amount to be disposed of in
accordance with the terms of the Indenture or the Lease, as the case may
be.
ARTICLE 24
CONCERNING THE LESSOR
Section 24.01. Lessor's Entry Into Lease. Except as expressly
provided herein, the Lessor and the Lessee agree that this Lease is
executed by NBD not individually but solely as Owner Trustee under the
Trust Agreement in the exercise of the power and authority conferred and
vested in it as such Owner Trustee, that each and all of the
representations, undertakings and agreements by the Lessor herein are for
the purpose and with the intention of binding only the Lessor's Estate, and
that in no case whatsoever shall NBD be personally liable for any loss in
respect of such representations, undertakings and agreements, that actions
to be taken by the Lessor pursuant to its obligation hereunder may, in
certain instances, be taken by the Lessor only upon specific authority of
the Owner Participant and the Indenture Trustee, that nothing herein
contained shall be construed as creating any liability on NBD, individually
or personally, to perform any covenant, either express or implied, herein,
all such liability, if any, being expressly waived by the Lessee and by
each and every Person now or hereafter claiming by, through or under the
Lessee except with respect to the gross negligence or willful misconduct of
NBD, and that so far as NBD, individually or personally is concerned, the
Lessee and any Person claiming by, through or under the Lessee shall look
solely to the Lessor's Estate for the performance by the Lessor of any of
its obligations under this Lease; provided, that nothing in this Section
24.01 shall be construed to limit in scope or substance those
representations and warranties of NBD in its individual capacity set forth
in the Participation Agreement or the Trust Agreement. The term "Lessor"
as used in this Lease shall include any trustee succeeding NBD as Owner
Trustee under the Trust Agreement. Any obligation of the Lessor hereunder
may be performed by the Owner Participant, and any such performance shall
not be construed as revocation of the trust created by the Trust Agreement.
Nothing contained in this Lease shall restrict the operation of the
provisions of the Trust Agreement with respect to its revocation of the
resignation or removal of the Owner Trustee hereunder.
ARTICLE 25
NOTICES
Section 25.01. Notices. All notices, demands, declarations and
other communications required by this Lease shall be in writing and shall
be deemed received (a) if given by telecopier, when transmitted and the
appropriate telephonic confirmation received if transmitted on a Business
Day and during normal business hours of the recipient, and otherwise on the
next Business Day following transmission, (b) if given by certified mail,
return receipt requested, postage prepaid, five Business Days after being
deposited in the United States mail and (c) if given by FedEx (or, if a
Default or Event of Default shall have occurred and be continuing, by other
comparable courier service), when received or personally delivered,
addressed:
(a) If to the Lessee, to its office at 0000 Xxxxxxxxx Xxxxxx,
Xxxxxxx, Xxxxxxxxx 00000, Attention: Senior Vice President and Chief
Financial Officer with a copy to Senior Vice President and General
Counsel; telephone (000) 000-0000, facsimile (000) 000-0000; or at such
other address as the Lessee shall from time to time designate in writing
to the Lessor, the Indenture Trustee and the Owner Participant;
(b) If to the Lessor or Owner Trustee, to its office at 000
Xxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000, Attention: Corporate Trust
Administration Department; telephone (000) 000-0000, facsimile (313)
225-3420; or to such other address as the Lessor shall from time to time
designate in writing to the Lessee and the Indenture Trustee, with a
copy to Owner Participant at the Owner Participant's address as provided
in subsection (c) below;
(c) If to the Owner Participant, in accordance with the
Participation Agreement; and
(d) If to the Indenture Trustee, to its office at 4 Chase
Metrotech Center, 3rd Floor, Brooklyn, New York 11245, Attention:
Corporate Trust Administration; telephone (000) 000-0000, facsimile
(000) 000-0000; or to such other address as the Indenture Trustee shall
from time to time designate in writing to the Lessor, the Lessee and the
Owner Participant.
ARTICLE 26
MISCELLANEOUS
Section 26.01. Section Headings and Captions. All article and
section headings and captions used in this Lease are purely for convenience
and shall not affect the interpretation of this Lease.
Section 26.02. References. Any reference to a specific article or
section number shall be interpreted as a reference to that article or
section of this Lease unless otherwise expressly provided.
Section 26.03. APPLICABLE LAW. THIS LEASE SHALL IN ALL RESPECTS BE
GOVERNED BY, AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE
BUT WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS, AND IS BEING
DELIVERED IN NEW YORK.
Section 26.04. Severability. Any provision of this Lease which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction.
Section 26.05. No Oral Modification. The terms and provisions of
this Lease may not be changed, waived, discharged or terminated orally, but
only by an instrument in writing signed by the party against which
enforcement of the change, waiver, discharge or termination is sought. Any
such change, waiver, discharge or termination is also subject to the
provisions of Section 8.01 and Article XIII of the Indenture.
Section 26.06. Agreement as Chattel Paper. To the extent that this
Lease constitutes chattel paper (as such term is defined in the Uniform
Commercial Code as in effect in any applicable jurisdiction), no security
interest in this Lease may be created through the transfer or possession of
any counterpart other than the original chattel-paper counterpart, which
shall be the counterpart containing the receipt executed by the Indenture
Trustee on its signature page.
Section 26.07. Counterparts. This Lease may be executed in any
number of counterparts, each of which shall be an original (except that only
the counterpart bearing the receipt executed by the Indenture Trustee shall be
the original for purposes of perfecting a security interest therein as chattel
paper under the Uniform Commercial Code), but all of which taken together
shall constitute one and the same instrument and any of the parties hereto may
execute this Lease by signing any such counterpart.
Section 26.08. Public Release of Information. Provided no Event of
Default shall have occurred and be continuing, each party shall in each
instance obtain the prior written approval of each party concerning the exact
text and timing of news releases, articles and other informational releases to
the public media concerning this Lease.
ARTICLE 27
TRUE LEASE
Section 27.01. Intent of the Parties. It is the intent of the
parties to this Lease that for all purposes (including, without limitation,
U.S. Federal income tax purposes) this Lease will be a true lease, and
that this Lease conveys to the Lessee no right, title or interest in the
Aircraft except as a lessee.
Section 27.02. Section 1110 Compliance. Notwithstanding any provisio
herein or elsewhere contained to the contrary, it is understood and agreed
among the parties hereto that the transactions contemplated by this Lease and
the other Operative Agreements in respect of the Aircraft are expressly
intended to be, shall be and should be construed so as to be, entitled to the
full benefits of Section 1110 of the Bankruptcy Code and any successor
provision thereof.
Section 27.03. Finance Lease. This Lease is a "finance lease"
within the meaning of Section 2-A-103(g) of the Uniform Commercial Code.
IN WITNESS WHEREOF, the Lessor and the Lessee have each caused this
Lease to be duly executed as of the date first above written.
LESSOR: NBD BANK,
not in its individual capacity,
but solely as Owner Trustee
By: ______________________________________________
Name:
Title:
LESSEE: FEDERAL EXPRESS CORPORATION
By: _______________________________________________
Name: Xxxxxx X. Xxxxxxx
Title: Assistant Treasurer and
Managing Director - Structured Finance
Receipt of this original counterpart of the Lease is hereby
acknowledged on this __ day of October 1995.
Indenture Trustee: THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION),
not in its individual capacity,
but solely as Indenture Trustee
By: _____________________________________________
Name:
Title:
SCHEDULE I
DEFINITIONS
GENERAL PROVISIONS
The following terms shall have the following meanings for all
purposes of the Operative Agreements (other than the Pass Through Agreement
and the Series Supplements) referred to below, unless otherwise defined in an
Operative Agreement or the context thereof shall otherwise require. In the
case of any conflict between the provisions of this Schedule and the
provisions of any Operative Agreement, the provisions of such Operative
Agreement shall control the construction of such Operative Agreement.
Unless the context otherwise requires, (i) references to agreements
shall be deemed to mean and include such agreements as amended and
supplemented from time to time, and (ii) references to parties to agreements
shall be deemed to include the successors and permitted assigns of such
parties.
DEFINED TERMS:
Additional Insureds. As defined in Article 13 of the Lease.
Aeronautics Authority or FAA. As appropriate, the Federal
Aviation Administration and/or the Administrator of the Federal Aviation
Administration, any successor to the former United States Civil Aeronautics
Board, or any Person, governmental department, bureau, commission or agency
located in the United States succeeding to the functions of any of the
foregoing.
Affiliate. With respect to any Person, any other Person directly
or indirectly controlling, controlled by or under common control with such
Person. For the purposes of this definition, "control" (including
"controlled by" and "under common control with") shall mean the power,
directly or indirectly, to direct or cause the direction of the management
and policies of such Person whether through the ownership of voting
securities or by contract or otherwise. In no event shall the Owner
Trustee or the Lessor be deemed an Affiliate of the Owner Participant.
After-Tax Basis. A basis such that any payment received or deemed
to have been received by a Person (the "Original Payment") shall be
supplemented by a further payment to such Person so that the sum of the two
payments shall be equal to the Original Payment, after taking into account
(x) all Taxes that would result from the receipt or accrual of such
payments and (y) any reduction in Taxes that would result from such
increased Taxes. In the case of amounts payable to the Lessor, the Owner
Participant, or any corporate Affiliate of the Owner Participant, it shall
be presumed that such Person is at all times subject to Federal income tax
at the maximum marginal rate generally applicable to corporations from time
to time and actual state, local and foreign income taxes.
Agent. The Chase Manhattan Bank (National Association) and its
successors and permitted assigns as Agent for the Original Loan
Participants pursuant to Article 16 of the Original Participation
Agreement.
Air Carrier. Any U.S. Air Carrier and any "foreign air carrier"
(as defined in the Transportation Code) as to which there is in force a
permit granted under Section 41302 of the Transportation Code.
Airbus Guaranty. The Guaranty dated the Delivery Date executed by
the Manufacturer and guaranteeing AVSA's Warranty Xxxx of Sale.
Aircraft. The Airframe (or any permitted substitute airframe)
together with the two Engines (or any Replacement Engine or Engines)
whether or not any of such initial or Replacement Engines may from time to
time be installed on such Airframe or may be installed on any other
airframe or on any other aircraft, including any aircraft substituted
pursuant to Section 11.03 of the Lease.
Airframe. The Airbus A300F4-605R aircraft (excluding the Engines
or engines from time to time installed thereon) leased by the Lessor to the
Lessee pursuant to the Lease and the initial Lease Supplement and having
the United States FAA Registration Number and manufacturer's serial number
specified in the initial Lease Supplement, including (i) all Parts in
respect thereof and (ii) any replacement airframe which may be substituted
pursuant to Section 11.03 of the Lease.
Amendment No. 1 to the Original Tax Indemnity Agreement.
Amendment No. 1 to the Original Tax Indemnity Agreement, dated as of
October 26, 1995.
Ancillary Agreement. Any written agreement of the Lessee to which
the Lessor is a party or to which the Lessor has consented in
writing entered into on the Delivery Date or the Refunding Date or
any date thereafter in connection with the transactions
contemplated by the Operative Agreements, as such agreement may be
amended and supplemented from time to time with the consent of the
Lessor and delivered to the Owner Trustee, the Indenture Trustee,
the Pass Through Trustee and the Owner Participant.
Ancillary Agreement I. The Ancillary Agreement I (Federal Express
Corporation Trust No. N661FE), dated October 25, 1995 among the Lessee, the
Owner Trustee, not in its individual capacity, but solely as Owner Trustee,
the Owner Participant and the Indenture Trustee not in its individual
capacity, but solely as Indenture Trustee, as originally executed or as
amended, modified or supplemented with the consent of all the parties thereto.
Appraisal. The report prepared by BK Associates, Inc. and delivered
to the Owner Participant (with a copy of such report to the Lessee) on the
Delivery Date pursuant to Section 4.01(n) of the Original Participation
Agreement.
AVSA. AVSA S.A.R.L., a societe a responsabilite limitee, organized
and existing under the laws of France, and its successors and assigns.
AVSA Consent and Agreement. The Consent and Agreement dated as of
October 15, 1995, executed by AVSA, as the same may be amended, modified or
supplemented from time to time.
AVSA's FAA Xxxx of Sale. The xxxx of sale for the Airframe on AC
Form 8050-2, or such other form as may be approved by the Aeronautics
Authority, executed by AVSA in favor of the Owner Trustee and dated the
Delivery Date.
AVSA's Warranty Xxxx of Sale. The full warranty xxxx of sale
covering the Aircraft (and specifically referring to each Engine) executed by
AVSA as owner of the Aircraft in favor of the Owner Trustee and dated the
Delivery Date.
Bankruptcy Code. The Federal Bankruptcy Code of 1978, as amended,
and any successor thereto.
Bankruptcy Default. An event specified in Section 16.01(e), (f) or
(g) of the Lease which either does or with the giving of notice or lapse of
time or both would constitute an Event of Default.
Basic Rent. The periodic rent payable for the Aircraft throughout
the Basic Term pursuant to Section 3.02 of the Lease, adjusted pursuant to
Article 3 of the Lease.
Basic Term. The period commencing at the beginning of the day on the
Commencement Date and ending at the end of the day on July 2, 2020, or such
earlier date on which the Lease shall be terminated as provided therein.
Beneficial Interest. The interest of the Owner Participant under the
Trust Agreement.
Breakage Costs. Has the meaning specified in Schedule II to the
Original Participation Agreement.
Business Day. Any day on which commercial banks are not
authorized or required to close in New York, New York and Memphis,
Tennessee, and after the Lien of the Indenture is discharged, Detroit,
Michigan.
Certificates. The Equipment Trust Certificates (Federal Express
Corporation Trust No. N661FE), issued by the Owner Trustee pursuant to the
Indenture and any certificate issued in exchange therefor or replacement
thereof pursuant to the Indenture.
Change in Tax Rate. Any amendment, modification, deletion, addition,
or change to the Code which is enacted into law after the Delivery Date which
changes the highest marginal statutory rate of Federal income tax applicable
to the Owner Participant (other than a change which is in the nature of a
minimum tax).
Chase. The Chase Manhattan Bank (National Association) and its
successors and permitted assigns.
Citizen of the United States. A citizen of the United States as
defined in Section 40102(a)(15) of the Transportation Code, or any analogous
part of any successor or substituted legislation or regulation at the time in
effect.
Closings. The closing with respect to the acquisition of the Pass
Through Certificates by the Underwriters and the closing with respect to the
refunding of the Original Loan Certificates.
Code. Except as otherwise provided, references to the Code shall
mean the Internal Revenue Code of 1986, as amended from time to time.
Commencement Date. July 2, 1996.
Consent and Agreement. The Consent and Agreement dated as of October
15, 1995 executed by the Manufacturer, as the same may be amended, modified or
supplemented from time to time.
Consent and Guaranty. The Consent and Guaranty of the Manufacturer
attached to the Purchase Agreement.
Corporate Trust Administration. The principal office of the
Indenture Trustee located at 4 Chase Xxxxxxxxx Xxxxxx, 0xx Xxxxx, Xxxxxxxx,
Xxx Xxxx 00000, or such other office at which the Indenture Trustee's
corporate trust business shall be administered which the Indenture Trustee
shall have specified by notice in writing to the Lessee, the Owner Participant
and the Owner Trustee.
Corporate Trust Department. The principal office of the Owner
Trustee located at 000 Xxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000, or such
other office at which the Owner Trustee's corporate trust business shall be
administered which the Owner Trustee shall have specified by notice in
writing to the Lessee, the Owner Participant and the Indenture Trustee.
Debt Rate. The weighted average (based on Outstanding principal
amount) rate of interest on the Certificates issued pursuant to the Indenture.
Default. Any event or condition which with the lapse of time or the
giving of notice, or both, would constitute an Event of Default.
Delivery Date. October 25, 1995.
EBO Price. Has the meaning set forth in Section 4.02(a)(F) of the
Lease.
Engine. Each of the two General Electric CF6-80C2-A5F engines listed
by its manufacturer's serial number in the initial Lease Supplement and leased
pursuant to the Lease, whether or not from time to time installed on the
Airframe or installed on any other airframe or on any other aircraft, and any
Replacement Engine which may from time to time be substituted for an Engine
pursuant to Section 7.02(a)(vii), 10.03, 11.03, 11.04 or 12.02 of the Lease,
together with all Parts related thereto. Except as otherwise provided, at
such time as a Replacement Engine shall be so substituted and the Engine for
which the substitution is made shall be released from the Lien of the
Indenture, such replaced Engine shall cease to be an "Engine" under the Lease.
The term "Engines" means, as of any date of determination, both Engines then
leased to the Lessee pursuant to the Lease.
Engine Consent. The Engine Consent dated as of October 15, 1995,
executed by the Engine Manufacturer, as the same may be amended, modified or
supplemented from time to time.
Engine Manufacturer. General Electric Company, a New York
corporation.
Engine Warranty Assignment. The Engine Warranty Assignment
(Federal Express Corporation Trust No. N661FE), dated as of October 15,
1995 between the Lessor and the Lessee, as the same may be amended,
modified or supplemented from time to time.
ERISA. The Employee Retirement Income Security Act of 1974, as
amended.
ERISA Plan. Has the meaning set forth in Section 7.06 of the
Participation Agreement.
Estimated Expense Amount. Has the meaning specified in Section
10.01(a) of the Participation Agreement.
Event of Default. Each of the events specified in Article 16 of the
Lease.
Event of Loss. Any of the following events with respect to the
Aircraft, the Airframe or any Engine: (i) loss of such property or its use
(A) for a period in excess of 60 days due to theft or disappearance or such
longer period, not to exceed 180 days from the end of such initial 60-day
period, if and so long as the location of such property is known to the
Lessee and the Lessee is diligently pursuing recovery of such property, or
to the end of the Term, if less (unless such theft or disappearance
constitutes an Event of Loss pursuant to (i)(B) or (ii) hereof) or (B) for
a period in excess of 60 days due to the destruction, damage beyond
economic repair or rendition of such property permanently unfit for normal
use by Lessee for any reason whatsoever; (ii) any damage to such property
which results in an insurance settlement with respect to such property on
the basis of a total loss, or constructive or compromised total loss;
(iii) (1) condemnation, confiscation or seizure of, or requisition of
title to such property by the Government, any foreign government or
purported government or any agency or instrumentality thereof, or (2)
condemnation, confiscation, or seizure of, or requisition or taking of, use
of such property (A) by a foreign government or instrumentality or agency
of any such foreign government, for a period in excess of 180 days (or such
shorter period ending on the earlier of the expiration of the Term or on
the date on which an insurance settlement with respect to such property on
the basis of a total loss or constructive or compromised total loss shall
occur) or (B) by the Government for a period extending beyond the Term,
provided that no Event of Loss shall be deemed to have occurred, and the
Term shall be extended automatically for a period of six months (or the
date of return of the Aircraft, if shorter, so long as the Lessor receives
at least six months notice of such date of return) beyond the end of the
Term in the event that the Aircraft, the Airframe or any Engine as of the
end of the Lease Term is requisitioned by the Government pursuant to an
activation as part of the Civil Reserve Air Fleet Program described in
Section 7.02(a)(iv) of the Lease; and (iv) as a result of any law, rule,
regulation, order or other action by the Aeronautics Authority or other
governmental body having jurisdiction, the use of the Aircraft or Airframe
in the normal course of air transportation of cargo shall have been
prohibited by virtue of a condition affecting all Airbus A300F-600 series
aircraft equipped with engines of the same make and model as the Engines
for a period of twelve (12) consecutive months, unless the Lessee, prior to
the expiration of such twelve (12) month period, shall be diligently
carrying forward all steps which are necessary or desirable to permit the
normal use of the Aircraft or Airframe or, in any event, if such use of the
Aircraft or the Airframe shall have been prohibited for a period of
twenty-four (24) consecutive months or until the end of the Term, if
earlier. The date of such Event of Loss shall be (s) the 61st day or the
241st day, as the case may be, following loss of such property or its use
due to theft or disappearance (or the end of the Term or the Lessee's
abandonment of diligent efforts to recover such property, if earlier); (t)
the 61st day following the date of any destruction, damage beyond economic
repair or rendition of such property permanently unfit for normal use; (u)
the date of any insurance settlement on the basis of a total loss or
constructive or compromised total loss; (v) the date of any condemnation,
confiscation, seizure or requisition of title of such property; (w) the
181st day following condemnation, confiscation, seizure or requisition for
use of such property by a foreign government referred to in clause
(iii)(2)(A) above (or the end of the Term or the date of any insurance
settlement described therein, if earlier than such 181st day); (x) the
last day of the Term in the case of requisition for use of such property by
the Government; (y) the last day of the 12 month or 24 month period,
referred to in clause (iv) above (or if earlier, the end of the Term or
abandonment of the Lessee's efforts to restore the normal use of the
Aircraft). An Event of Loss with respect to the Aircraft shall be deemed
to have occurred if any Event of Loss occurs with respect to the Airframe.
If an Event of Loss described in any of clauses (i) (A), (iii) or (iv)
above shall occur, Lessor may elect, within 30 days following the date upon
which such Event of Loss is deemed to have occurred, to waive such Event of
Loss and the consequences thereof.
Excepted Payments. Collectively, (i) indemnity or other payments
(and interest thereon to the extent provided in the Operative Agreements)
paid or payable by the Lessee in respect of the Owner Participant, the
Owner Trustee in its individual capacity or any of their respective
successors, permitted assigns, directors, officers, employees, servants and
agents or Affiliates, pursuant to the Participation Agreement or any
indemnity hereafter granted to the Owner Participant or the Owner Trustee
in its individual capacity pursuant to the Lease or the Participation
Agreement, (ii) proceeds of public liability insurance (or government
indemnities in lieu thereof) in respect of the Aircraft payable as a result
of insurance claims paid for the benefit of, or losses suffered by, the
Owner Trustee or the Indenture Trustee in their respective individual
capacities or by the Owner Participant, or their respective successors,
permitted assigns or Affiliates, (iii) proceeds of insurance maintained
with respect to the Aircraft by the Owner Participant (whether directly or
through the Owner Trustee) maintained in accordance with Section 13.05 of
the Lease but not required under Section 13 of the Lease, (iv) payments of
Supplemental Rent by the Lessee in respect of any amounts payable under the
Tax Indemnity Agreement, (v) payments constituting increases in Interim
Rent or Basic Rent attributable to payments arising pursuant to Section 5
of the Tax Indemnity Agreement and (vi) any right to demand, collect or
otherwise receive and enforce the payment of any amount described in
clauses (i) through (v) above.
Expense; Expenses. Have the meaning specified in Section 9.01(a) of
the Participation Agreement.
Fair Market Renewal Term. A term with respect to which the Lessee
has exercised its option to renew the Lease pursuant to the second
paragraph of Section 4.01(a) thereof and with respect to which the
conditions set forth in the second paragraph of Section 4.01(a) are met.
Fair Market Rental. An amount determined on the basis of, and
equal in amount to, the rental which would be obtained in an arm's-length
transaction between an informed and willing lessee and an informed and
willing lessor unaffiliated with such lessee, neither being under any
compulsion to lease the Aircraft. In such determination, it shall be
assumed that the Aircraft is in the condition required under the Lease in
the case of return of the Aircraft pursuant to Article 12 of the Lease.
Fair Market Rental shall be determined in accordance with the provisions of
Section 4.03 of the Lease.
Fair Market Value. An amount determined on the basis of, and
equal in amount to, the value which would be obtained in an arm's-length
transaction between an informed and willing purchaser under no compulsion
to buy and an informed and willing seller unaffiliated with such purchaser
and under no compulsion to sell, assuming that the Aircraft (or other
property) is unencumbered by the Lease. Unless otherwise provided in the
applicable provisions of any Operative Agreement, in such determination it
shall be assumed that the Aircraft is in the condition required under the
Lease in the case of return of the Aircraft pursuant to Article 12 of the
Lease; provided that in connection with any determination pursuant to or
for the purposes of Article 17 of the Lease, the Aircraft shall be
appraised on an "as is, where is" basis. Fair Market Value shall be
determined in accordance with the provisions of Section 4.03 of the Lease.
Federal Aviation Administration; FAA. The United States Federal
Aviation Administration and any successor agency or agencies thereto.
Fixed Renewal Rent. Semi-annual payments during the Fixed Renewal
Term equal to 50% of the average actual semi-annual Basic Rent payable during
the Basic Term.
Fixed Renewal Term. The term with respect to which the Lessee has
exercised its option to renew the Lease pursuant to the first paragraph of
Section 4.01(a) thereof and with respect to which the conditions set forth in
such Section 4.01(a) are met.
French Pledge Agreement. The French Pledge Agreement dated as of
October 15, 1995 between the Owner Trustee and the Indenture Trustee.
Government. The United States of America or an agency or
instrumentality thereof the obligations of which bear the full faith and
credit of the United States of America.
GTA. The General Terms Agreement dated as of July 3, 1991 between
the Engine Manufacturer and the Lessee related to the purchase by the
Lessee of the Engines as originally executed or as modified, amended or
supplemented in accordance with the terms thereof, but only insofar as the
General Terms Agreement relates to the Engines, to the extent assigned to
the Owner Trustee pursuant to the Engine Warranty Assignment.
Holder of a Certificate; Certificate Holder; Holder. As of any
particular time, the Person in whose name a Certificate shall be registered
(but not including the holder of any Pass Through Certificate).
Indemnitee. Each of NBD, in its individual capacity and as Owner
Trustee and Lessor, the Agent (to the extent set forth in Articles 8 and 9 of
the Original Participation Agreement), the Owner Participant, the Original
Loan Participants (to the extent set forth in Articles 8 and 9 of the Original
Participation Agreement), the Indenture Trustee, in its individual capacity
and as trustee, any Owner Participant Guarantor, and any successor (including
any trustee which may succeed to the Lessor's interest under the Lease),
Affiliate, assign, officer, director, employee, agent and servant of any of
the foregoing, the Lessor's Estate and the Trust Indenture Estate.
Indenture. The Trust Indenture and Security Agreement (Federal
Express Corporation Trust No. N661FE) dated as of October 15, 1995, as amended
and restated as of October 26, 1995, between the Lessor and the Indenture
Trustee, as supplemented by the Indenture and Security Agreement Supplement,
and as said Indenture may from time to time be further supplemented or
amended, including any amendment or supplement thereto entered into from time
to time pursuant to the applicable provisions of the Indenture.
Indenture and Security Agreement Supplement. The Indenture and
Security Agreement Supplement No. 1 (Federal Express Corporation Trust No.
N661FE) dated October 25, 1995, as such Indenture and Security Agreement
Supplement shall be amended or supplemented from time to time and any other
supplement to the Indenture, substantially in the form of Exhibit A to the
Indenture.
Indenture Default. Any event or condition which with the lapse of
time or the giving of notice, or both, would constitute an Indenture Event of
Default.
Indenture Documents. Has the meaning specified in the Granting
Clause of the Indenture.
Indenture Event of Default. Each of the events specified in Section
7.01 of the Indenture.
Indenture Trustee. The Chase Manhattan Bank (National
Association), a national banking association, not in its individual
capacity but solely as Indenture Trustee under the Indenture and each other
Person which may from time to time be acting as successor trustee under the
Indenture.
Indenture Trustee's Liens. Any Lien on the Trust Indenture Estate
resulting from (i) claims against the Indenture Trustee not related to the
administration of the Trust Indenture Estate or any transactions pursuant to
the Indenture or any document included in the Trust Indenture Estate or (ii)
any act or omission of the Indenture Trustee which is not related to the
transactions contemplated by the Operative Agreements or is in violation of
any of the terms of the Operative Agreements.
Independent Investment Banker. An independent investment banking
institution of national standing appointed by the Lessee that is independent
in fact, does not have any direct financial interests, or any material
indirect financial interest, in the Lessee or any Affiliate of the Lessee, and
is not connected with the Lessee or any Affiliate of the Lessee, as an
officer, employee, promoter, underwriter, trustee, partner, director or Person
performing similar functions; provided, that if the Indenture Trustee shall
not have received written notice of such an appointment at least 10 days prior
to the Prepayment Date, "Independent Investment Banker" shall mean such an
institution appointed by the Indenture Trustee.
Interim Rent. The periodic rent payable for the Aircraft throughout
the Interim Term pursuant to Section 3.02 of the Lease, adjusted pursuant to
Article 3 of the Lease.
Interim Term. The period commencing on the Owner Participant Payment
Date and ending at the end of the day immediately preceding the Commencement
Date.
Invoice. The invoice for the Aircraft given by AVSA to the Lessor.
Lease. The Lease Agreement (Federal Express Corporation Trust No.
N661FE) dated as of October 15, 1995, as amended and restated as of October
26, 1995, entered into by the Lessor and the Lessee concurrently with the
execution and delivery of the Indenture, as said Lease may from time to
time be supplemented or amended, or its terms waived or modified, to the
extent permitted by, and in accordance with, the terms of the Indenture,
including, without limitation, supplementation by one or more Lease
Supplements entered into pursuant to the applicable provisions of the
Lease.
Lease Supplement. The Lease Supplement No. 1 (Federal Express
Corporation Trust No. N661FE) dated October 25, 1995, as such Lease Supplement
shall be amended or supplemented from time to time and any other supplement to
the Lease, substantially in the form of Exhibit A to the Lease.
Lease Term. The period commencing on the Delivery Date and ending at
the end of the Basic Term.
Lessee. Federal Express Corporation, a Delaware corporation, and its
successors and permitted assigns.
Lessee Documents. Has the meaning set forth in Section 6.01(b) of
the Participation Agreement.
Lessor. NBD Bank, a Michigan banking corporation, not in its
individual capacity but solely as Owner Trustee under the Trust Agreement, and
its successors and permitted assigns.
Lessor's Estate. All estate, right, title and interest of the
Owner Trustee in and to the Aircraft, the Lease, any Lease Supplement, the
Participation Agreement, AVSA's FAA Xxxx of Sale, AVSA's Warranty Xxxx of
Sale, the Airbus Guaranty, the Purchase Agreement, the Purchase Agreement
Assignment, the Consent and Agreement, the AVSA Consent and Agreement, the
Consent and Guaranty (to the extent assigned by the Purchase Agreement
Assignment), the GTA, the Engine Warranty Assignment, the Engine Consent,
any warranty with respect to the Airframe and the Engines, all amounts of
Interim Rent, Basic Rent and Supplemental Rent, including without
limitation, insurance proceeds (other than insurance proceeds payable to or
for the benefit of the Owner Trustee in its individual capacity, the Owner
Participant or the Indenture Trustee) and requisition, indemnity or other
payments of any kind for or with respect to the Aircraft (except amounts
owing to the Owner Participant, to the Indenture Trustee, to the Owner
Trustee in its individual capacity, or to any of their respective
directors, officers, employees and agents pursuant to Articles 8 and 9 of
the Participation Agreement). Notwithstanding the foregoing, "Lessor's
Estate" shall (i) not include any Excepted Payment and (ii) include all
property intended to be subjected to the Indenture by the Granting Clause
thereof.
Lessor's Liens. Liens on the Lessor's Estate or the Trust
Indenture Estate arising as a result of (i) claims against the Lessor, in
its individual capacity or as Owner Trustee, or the Owner Participant, in
each case not related to the transactions contemplated by the Operative
Agreements, (ii) acts or omissions of the Lessor in its individual capacity
or as Owner Trustee, and, in the case of the Lessor in its individual
capacity, arising from its gross negligence or willful misconduct or
expressly prohibited under the Operative Agreements and any act or omission
of the Owner Participant which is in violation of any of the terms of the
Operative Agreements, (iii) Taxes or Expenses imposed against the Lessor,
in its individual capacity or as Owner Trustee, Owner Participant, Lessor's
Estate or the trust created by the Trust Agreement which are not required
to be indemnified against by the Lessee pursuant to the Participation
Agreement by reason of Section 8.01(b) or 9.01(b) thereof and which are not
required to be indemnified against by the Lessee pursuant to the Tax
Indemnity Agreement, or (iv) claims against the Lessor or the Owner
Participant arising from the voluntary transfer by the Lessor or the Owner
Participant of its interests in the Aircraft other than a transfer of the
Aircraft pursuant to Section 4.02(a) or Article 10 or 11 of the Lease and
other than a transfer pursuant to the exercise of the remedies set forth in
Article 17 of the Lease.
Lien. Any mortgage, pledge, lien, charge, encumbrance, lease or
security interest or other similar interest.
Majority in Interest of Certificate Holders. As of a particular
date of determination, the Holders of more than 50% of the aggregate unpaid
principal amount of all Certificates outstanding as of such date excluding
for purposes of this definition any Certificates held by (i) the Owner
Trustee or the Owner Participant or any interests of the Owner Participant
unless all Certificates then outstanding shall be held by the Owner
Participant, (ii) the Lessee or (iii) any Affiliate of any thereof.
Make-Whole Premium. An amount determined as of the day before the
applicable Prepayment Date (or date of purchase, as the case may be) which
an Independent Investment Banker determines to be equal to the excess, if
any, of (i) the present values of all remaining scheduled payments of such
principal amount or portion thereof and interest thereon (excluding
interest accrued from the immediately preceding Payment Date to such
Prepayment Date or date of purchase, as the case may be) to the Maturity of
such Certificate in accordance with generally accepted financial practices
assuming a 360-day year consisting of twelve 30-day months at a discount
rate equal to the Treasury Yield, all as determined by the Independent
Investment Banker over (ii) the unpaid principal amount of such
Certificate.
Manufacturer. Airbus Industrie G.I.E., a groupement d'interet
economique formed under the laws of France, and its successors and assigns.
Maturity. With respect to any Certificate, the date on which the
final principal amount of such Certificate is scheduled to be due and payable.
Moody's. Xxxxx'x Investors Service, Inc.
NBD. NBD Bank, a Michigan banking corporation.
Net Present Value of Rents. The net present value, as of the
Delivery Date, of Interim Rent and Basic Rent set forth in Schedule II of the
Lease, discounted at a rate per semi-annual period equal to the Debt Rate.
Non-U.S. Person. Any Person other than (i) a citizen or resident of
the United States, as defined in Section 7701(a)(30) of the Code, (ii) a
corporation, partnership or other entity created or organized in or under the
laws of the United States or any political subdivision thereof or therein, or
(iii) any estate or trust that is subject to United States federal income
taxation regardless of the source of its income.
Obsolete Parts. Parts which are severable from the Aircraft in
accordance with clauses (ii) and (iii) of the proviso to Section 9.02(b) of
the Lease and the Lessee in good faith determines to be obsolete or no longer
suitable or appropriate for use on the Airframe or any Engine.
Officer's Certificate. When delivered pursuant to the Indenture, a
certificate signed by a Responsible Officer of the Lessee or the Owner
Trustee, as the case may be, and delivered to the Indenture Trustee. Each
such certificate shall include the statements provided for in Section 15.07 of
the Indenture.
Operative Agreements. The Participation Agreement, the Trust
Agreement, AVSA's FAA Xxxx of Sale, AVSA's Warranty Xxxx of Sale, the Airbus
Guaranty, the Purchase Agreement, the Purchase Agreement Assignment, the GTA,
the Engine Warranty Assignment, the French Pledge Agreement, the Lease, the
Lease Supplement, the Owner Participant Guaranty, if any, the Owner Trustee
Guaranty, if any, any Ancillary Agreement entered into by or with the written
consent of the Indenture Trustee, which by its terms is an Operative
Agreement, the Certificates outstanding at the time of reference, the
Indenture, the Indenture and Security Agreement Supplement, the Consent and
Agreement, the AVSA Consent and Agreement, the Consent and Guaranty (to the
extent assigned by the Purchase Agreement Assignment), the Engine Consent and
the Tax Indemnity Agreement, each as amended from time to time.
Opinion of Counsel. When delivered pursuant to the Indenture, a
written opinion of legal counsel, who in the case of counsel (a) for the
Lessee may be (i) an attorney employed by the Lessee who is generally
empowered to deliver such written opinions, (ii) Xxxxx Xxxx & Xxxxxxxx or a
successor firm or (iii) other counsel designated by the Lessee and reasonably
satisfactory to the Indenture Trustee and (b) for the Owner Trustee or the
Indenture Trustee, an attorney selected by such Person and, in the case of the
Owner Trustee, reasonably satisfactory to the Indenture Trustee.
Original Agreements. The documents and instruments delivered on the
Delivery Date in connection with the transactions contemplated by the Original
Participation Agreement.
Original Indenture. The Trust Indenture, Mortgage and Security
Agreement (Federal Express Corporation Trust No. N661FE) dated as of October
15, 1995 between the Owner Trustee and the Indenture Trustee, which together
with the Indenture and Security Agreement Supplement No. 1 (Federal Express
Corporation Trust No. N661FE) dated October 25, 1995 attached thereto was
recorded as one instrument by the FAA on October 25, 1995 and assigned
Conveyance Number 2A267994.
Original Lease. The Lease Agreement (Federal Express Corporation
Trust No. N661FE) dated as of October 15, 1995 between the Owner Trustee as
lessor, and the Lessee, which together with Lease Supplement Xx. 0 (Xxxxxxx
Xxxxxxx Xxxxxxxxxxx Xxxxx Xx. X000XX) dated October 25, 1995 attached thereto
was recorded as one instrument by the FAA on October 25, 1995 and assigned
Conveyance Number 2A267995.
Original Loan Certificates. The loan certificates issued on the
Delivery Date to the Original Loan Participants.
Original Loan Participants. The entities listed on Schedule I to the
Original Participation Agreement and their successors and assigns (other than
any assignees in connection with the Refunding Date).
Original Participation Agreement. The Participation Agreement
(Federal Express Corporation Trust No. N661FE) among the Lessee, the Owner
Participant, the Indenture Trustee, the Owner Trustee and the Original Loan
Participants as it was originally executed as of October 1, 1995.
Original Tax Indemnity Agreement. The Tax Indemnity Agreement
(Federal Express Corporation Trust No. N661FE) between the Lessee and the
Owner Participant as it was originally executed as of October 15, 1995.
Original Trust Agreement. The Trust Agreement (Federal Express
Corporation Trust No. N661FE) between the Owner Participant and the Owner
Trustee as it was originally executed as of October 1, 1995 and filed with the
FAA on October 25, 1995.
Outstanding. When used with respect to Certificates, as of the date
of determination and subject to the provisions of Section 10.04 of the
Indenture, all Certificates theretofore executed and delivered under the
Indenture, with the exception of the following:
(i) Certificates theretofore cancelled by the Indenture Trustee or
delivered to the Indenture Trustee for cancellation pursuant to
Section 2.08 of the Indenture or otherwise;
(ii) Certificates for which prepayment money in the necessary amount
has been theretofore deposited with the Indenture Trustee in trust
for the Holders of such Certificates pursuant to Section 14.01 of the
Indenture; provided, that if such Certificates are to be prepaid,
notice of such prepayment has been duly given pursuant to the
Indenture or provision therefor satisfactory to the Indenture Trustee
has been made; and
(iii) Certificates in exchange for or in lieu of which other
Certificates have been executed and delivered pursuant to Article II
of the Indenture.
Owner Participant. The trustor originally named in the Trust
Agreement and any successor thereto, and any Person to which Owner Participant
transfers, in accordance with the Trust Agreement, its right, title and
interest in and to the Operative Agreements and the Lessor's Estate.
Owner Participant Amount. The amount described in Section 2.03 of
the Participation Agreement and set forth on Schedule II to the Lease.
Owner Participant Guarantor. The provider of an Owner Participant
Guaranty.
Owner Participant Guaranty. Any guaranty delivered in compliance
with Section 7.03(d) of the Participation Agreement.
Owner Participant Payment Date. March 19, 1996.
Owner Trustee. NBD, not in its individual capacity, but solely as
Owner Trustee under the Trust Agreement, and its successors and permitted
assigns.
Owner Trustee Guarantor. The provider of an Owner Trustee Guaranty.
Owner Trustee Guaranty. Any guaranty delivered in compliance with
Section 11.01(b)(ii) of the Participation Agreement.
Owner's Economic Return. The Owner Participant's anticipated net
after-tax book yield and aggregate after-tax cash during the Interim Term
and the Basic Term utilizing the multiple investment sinking fund method of
analysis, computed on the basis of the same methodology and assumptions as
were utilized by the Owner Participant in determining Interim Rent, Basic
Rent, Stipulated Loss Value and Termination Value percentages or the EBO
Price, as the case may be, as such assumptions may be adjusted for events
which have been the basis of adjustments to Rent pursuant to Section 3.04
of the Lease.
Participation Agreement. The Participation Agreement (Federal
Express Corporation Trust No. N661FE), dated as of October 1, 1995, as
amended and restated as of October 26, 1995, among the Lessee, the Original
Loan Participants, the Owner Trustee not in its individual capacity except
as otherwise expressly provided therein, but solely as owner trustee, the
Owner Participant, the Indenture Trustee not in its individual capacity
except as otherwise expressly provided therein, but solely as indenture
trustee and the Pass Through Trustee not in its individual capacity except
as otherwise expressly provided therein, but solely as pass through
trustee, as amended, modified or supplemented, or the terms thereof waived.
Parts. All appliances, parts, components, instruments,
appurtenances, accessories, furnishings and other equipment of whatever
nature (other than complete Engines or engines) which may from time to time
be incorporated or installed in or attached to the Airframe or any Engine
or, prior to replacement thereof in accordance with the Lease, which may be
removed therefrom.
Pass Through Agreement. The Pass Through Trust Agreement dated as
of February 1, 1993, as amended and restated as of October 1, 1995 between
the Lessee and the Pass Through Trustee, as such Pass Through Agreement may
be modified, supplemented or amended from time to time in accordance with
the provisions thereof.
Pass Through Certificates. Any of the 1995 Pass Through
Certificates, Series B1, 1995 Pass Through Certificates, Series B2 or 1995
Pass Through Certificates, Series B3, in each case as issued by the related
Pass Through Trust; and "Pass Through Certificates" means all of the Pass
Through Certificates issued by each of the Pass Through Trusts.
Pass Through Closing Date. The Business Day on which the sale of the
Pass Through Certificates to the Underwriters pursuant to the Underwriting
Agreement takes place.
Pass Through Trust. The Federal Express Pass Through Trust,
1995-B1, Federal Express Pass Through Trust, 1995-B2 or Federal Express Pass
Through Trust, 1995-B3, in each case formed pursuant to the related Series
Supplement in accordance with the Pass Through Agreement; and "Pass Through
Trusts" means all of such Pass Through Trusts.
Pass Through Trustee. The Chase Manhattan Bank (National
Association), a national banking association, in its capacity as Pass Through
Trustee under the Pass Through Agreement and each Pass Through Trust, and its
successors and permitted assigns as Pass Through Trustee thereunder.
Past Due Rate. In respect of (A) any amount payable to the Owner
Participant or the Owner Trustee a rate per annum during the period from
and including the due date to but excluding the date on which such amount
is paid in full equal to 2% plus the Debt Rate and (B) any principal of or
interest on any Certificate or any other amount payable under the
Indenture, any Certificate or any other Operative Agreement that is not
paid when due (whether at Maturity, by acceleration, by optional or
mandatory prepayment or otherwise) to any Holder, the Indenture Trustee or
the Pass Through Trustee, a rate per annum during the period from and
including the due date to but excluding the date on which such amount is
paid in full equal to (i) in the case of any such amount payable to the
Holder of any Certificate, 2% plus the interest rate applicable to such
Certificate and (ii) in the case of any other such amount, 2% plus the Debt
Rate.
Payment Date. The Owner Participant Payment Date, and each January 2
and July 2 commencing July 2, 1996.
Payment Default. Any event specified in Section 16.01(a) or 16.01(b)
of the Lease which with the giving of notice or lapse of time or both would
constitute an Event of Default.
Permitted Investments. Those investments enumerated in Section
23.01(a) (i), (ii), (iii) and (iv) of the Lease.
Person. Any individual, sole proprietorship, partnership, joint
venture, joint stock company, trust, unincorporated organization, association,
corporation, institution, entity or government (federal, state, local, foreign
or any agency, instrumentality, division or body thereof).
Preliminary Term. The period commencing on the Delivery Date and
ending at the end of the day on the day immediately preceding the Owner
Participant Payment Date.
Premium Termination Date. With respect to the Certificates having a
Maturity in 2014, November 7, 2007 and with respect to the Certificates having
a Maturity in 2019, October 7, 2017.
Prepayment Date. Has the meaning specified in Section 6.02(b) of the
Indenture.
Prepayment Price. Has the meaning specified in Section 6.02(b) of
the Indenture.
Proposed Termination Date. Has the meaning specified in Section
10.01(a) of the Lease.
Purchase Agreement. The Airbus A300-600R Freighter Purchase
Agreement, dated as of July 3, 1991 between AVSA and the Lessee, including
all exhibits, appendices and letter agreements attached thereto as
originally executed or as modified, amended or supplemented in accordance
with the terms thereof, but only to the extent that the foregoing relates
to the Aircraft and to the extent assigned pursuant to the Purchase
Agreement Assignment.
Purchase Agreement Assignment. The Purchase Agreement Assignment
(Federal Express Corporation Trust No. N661FE), dated as of October 15, 1995
between the Lessor and the Lessee, as the same may be amended, modified or
supplemented from time to time.
Purchase Price. Has the meaning specified in Schedule II to the
Original Participation Agreement.
Record Date. With respect to Payment Dates under the Indenture
(except a date for payment of defaulted interest), March 4, 1996 for the Owner
Participant Payment Date, December 18 for January 2 Payment Dates and June 17
for July 2 Payment Dates, whether or not such date is a Business Day.
Recourse Amount. Has the meaning specified in Section 17.10 of the
Participation Agreement.
Refinancing. A non-recourse loan to the Lessor arranged pursuant to
Section 15.01 of the Participation Agreement.
Refunding Date. A Business Day on which the refunding of the
Original Loan Certificates occurs, the expected date thereof having been
specified by the Lessee in a written notice given to the parties to the
Participation Agreement and the Underwriters at least three (3) Business Days
prior to such expected Refunding Date.
Register. Has the meaning set forth in Section 3.02 of the
Indenture.
Registrar. Has the meaning set forth in Section 3.02 of the
Indenture.
Regulation D. Regulation D of the Board of Governors of the Federal
Reserve System (or any successor), as the same may be modified and
supplemented and in effect from time to time.
Remaining Weighted Average Life. For any Certificate, as of any
determination date, the number of years obtained by dividing (a) the sum of
the products obtained by multiplying (i) the amount of each then remaining
mandatory sinking fund redemption payment of principal, including the
payment due on the Maturity of such Certificate, by (ii) the number of
years (calculated to the nearest one-twelfth) which will elapse between
such determination date, and the date on which such payment is scheduled to
be made, by (b) the then outstanding principal amount of such Certificate.
Renewal Rent. The amount payable by the Lessee as rent in accordance
with Section 4.01 of the Lease during any Renewal Term.
Renewal Term. One or more terms with respect to which the Lessee has
exercised its option to renew the Lease pursuant to Section 4.01(a) thereof.
Rent. All payments due from the Lessee under the Lease as Interim
Rent, Basic Rent, Renewal Rent and Supplemental Rent, collectively.
Rent Payment Date. Each January 2 and July 2 commencing July 2,
1996.
Reoptimization Date. Has the meaning specified in Section 15.02(a)
of the Participation Agreement.
Replacement Engine. A General Electric CF6-80C2-A5F engine (or an
engine of the same or another manufacturer) manufactured after October 22,
1994 of the same or of equal or greater value, remaining useful life and
utility as the Engine being replaced, together with all Parts relating to such
engine; provided, however, that if such replacement engine is not a General
Electric CF6-80C2-A5F engine, such replacement engine must then be commonly
used in the commercial aviation industry on Airbus A300-600 airframes.
Responsible Officer. With respect to the Owner Trustee or the
Indenture Trustee, any officer in its Corporate Trust Department or Corporate
Trust Administration, as the case may be, designated by such Person to perform
obligations under the Operative Agreements, with respect to the Owner
Participant, the president or any vice president with direct responsibility
for the transactions contemplated by the Operative Agreements, and with
respect to any other party, any corporate officer or (except in the case of
the Owner Participant) other employee of a party who, in the normal
performance of his or her operational responsibilities, with respect to the
subject matter of any covenant, agreement or obligation of such party pursuant
to any Operative Agreement, would have responsibility for and knowledge of
such matter and the requirements of any Operative Agreement with respect
thereto.
S&P. Standard & Poor's Ratings Group.
SEC. The Securities and Exchange Commission of the United States and
any successor agencies or authorities.
Securities Act. The Securities Act of 1933, as amended.
Series Supplement. The Series Supplement 1995-B1 to be executed and
delivered by the Lessee and the Pass Through Trustee, the Series Supplement
1995-B2 to be executed and delivered by the Lessee and the Pass Through
Trustee or the Series Supplement 1995-B3 to be executed and delivered by the
Lessee and the Pass Through Trustee, in each case as such Series Supplement
may be modified, supplemented or amended from time to time in accordance with
the provisions thereof and "Series Supplements" means all of such Series
Supplements.
Sinking Fund Redemption Date. Has the meaning specified in Section
6.06 of the Indenture.
Sinking Fund Redemption Price. Has the meaning specified in Section
6.06 of the Indenture.
Special Aviation Counsel. Xxxxxxxxx, Xxxxxx & Xxxxxxxx.
Stipulated Loss Value. As of any Stipulated Loss Value
Determination Date during the Term, the amount determined by multiplying
the Purchase Price by the percentage set forth in Schedule III of the Lease
under the heading "Stipulated Loss Value Factor" opposite such date (as
such Schedule III may be adjusted from time to time as provided in Section
3.04 of the Lease), and during any Renewal Term, the amount determined
pursuant to Section 4.01(b) of the Lease. Notwithstanding any other
provisions of the Lease or the Participation Agreement or the Indenture,
each Stipulated Loss Value shall be, under any circumstances and in any
event, an amount, together with so much of the arrears portion of Interim
Rent and Basic Rent due and owing through the date of payment of Stipulated
Loss Value as does not constitute an Excepted Payment, at least sufficient
to pay in full as of such date of payment the aggregate unpaid principal
amount of and accrued interest on the Certificates outstanding on such date
of payment. Subject to the immediately preceding sentence, it is
understood and agreed that the amounts set forth on Schedule III of the
Lease, for dates other than Rent Payment Dates on which arrears Interim
Rent and Basic Rent is due, fully reflect appropriate Interim Rent and
Basic Rent accruals and credits of unearned Interim Rent and Basic Rent
and, accordingly, no further accrual or credit shall be required whenever
Stipulated Loss Value is to be calculated with reference to any such date.
Stipulated Loss Value Determination Date. Each date set forth on
Schedule III of the Lease under the heading "Stipulated Loss Value Date."
Substantial Authority. For Federal income tax purposes, shall have
the meaning applicable for purposes of Section 6662 of the Code and relevant
Treasury regulations.
Supplemental Rent. All amounts, liabilities and obligations which
the Lessee assumes or agrees to perform or pay under the Lease or under the
Participation Agreement or Tax Indemnity Agreement or any Ancillary Agreement
or any other Operative Agreement to the Lessor, the Owner Participant or
others, including, without limitation, payments of Stipulated Loss Value, EBO
Price and amounts calculated by reference to Termination Value and all amounts
required to be paid by Lessee under the agreements, covenants and indemnities
contained in the Lease or in the Participation Agreement or the Tax Indemnity
Agreement or any other Operative Agreement, but excluding Interim Rent and
Basic Rent.
Tax. Shall have the meaning set forth in Section 8.01(a) of the
Participation Agreement.
Tax Indemnity Agreement. The Original Tax Indemnity Agreement as
amended by Amendment No. 1 to the Original Tax Indemnity Agreement, as from
time to time modified, amended or supplemented pursuant to its applicable
provisions.
Term. The Preliminary Term, the Interim Term and the Basic Term of
the lease for the Aircraft under the Lease and, if renewed pursuant to Section
4.01 of the Lease, each Renewal Term for the Aircraft for which the Lease is
renewed, or such earlier date on which the Lease is terminated pursuant to its
terms.
Termination Date. A Rent Payment Date during the Basic Term that is
on or after July 2, 2001 in the case of Article 10 of the Lease, and in the
case of (i) Section 4.02(a)(A) of the Lease, the Rent Payment Date falling on
July 2, 2011 or July 2, 2013, (ii) Section 4.02(a)(D) or (E) of the Lease, a
Rent Payment Date that is on or after the fifth anniversary of the
Commencement Date and (iii) Section 4.02(a)(F) of the Lease, July 2, 2015.
Termination Value. As of any Termination Date, the amount determined
by multiplying the Purchase Price by the percentage set forth in Schedule IV
of the Lease under the heading "Termination Value Factor" opposite such
Termination Date (as such Schedule IV may be adjusted from time to time as
provided in Section 3.04 of the Lease). Notwithstanding any other provisions
of the Lease, the Participation Agreement or the Indenture, each Termination
Value shall be, under any circumstances and in any event, an amount, together
with so much of the arrears portion of Basic Rent due and owing through the
date of payment of any amount calculated by reference to Termination Value as
does not constitute an Excepted Payment, at least sufficient to pay in full as
of such date of payment the aggregate unpaid principal amount of and accrued
interest on the Certificates outstanding on such date of payment. Subject to
the immediately preceding sentence, it is understood and agreed that the
amounts set forth on Schedule IV of the Lease, for dates other than Rent
Payment Dates on which arrears Basic Rent is due, fully reflect appropriate
Basic Rent accruals and credits of unearned Basic Rent and, accordingly, no
further accrual or credit shall be required whenever Termination Value is to
be calculated with reference to any such date.
Transaction Costs. Those costs and expenses set forth in Section
10.01(a) of the Participation Agreement.
Transportation Code. Title 49 of the United States Code (which,
among other things, recodified the Federal Aviation Act of 1958, as amended
to the time of such recodification), as amended and in effect on the date
of the Lease or as subsequently amended, or any successor or substituted
legislation at the time in effect and applicable, and the regulations
promulgated pursuant thereto.
Treasury Yield. (i) In the case of a Certificate having a Maturity
within one year after the Prepayment Date the average yield to maturity on a
government bond equivalent basis of the applicable United States Treasury Xxxx
due the week of Maturity of such Certificate and (ii) in the case of a
Certificate having a Maturity one year or more after the Prepayment Date, the
average yield of the most actively traded United States Treasury Note (as
reported by Cantor Xxxxxxxxxx Securities Corp. on page 5 of Telerate Systems,
Inc., a financial news service, or if such report is not available, a source
deemed comparable by the Independent Investment Banker selected to determine
the Make-Whole Premium and reasonably acceptable to the Lessee) corresponding
in maturity to the Remaining Weighted Average Life of such Certificate (or, if
there is no corresponding maturity, an interpolation of maturities by the
Independent Investment Banker), in each case determined by the Independent
Investment Banker selected to determine the Make-Whole Premium based on the
average of the yields to stated maturity determined from the bid prices as of
10:00 a.m. and 2:00 p.m. New York time, on the second Business Day preceding
the Prepayment Date.
Trust Agreement. The Trust Agreement (Federal Express Corporation
Trust No. N661FE), dated as of October 1, 1995, as amended and restated as of
October 26, 1995, between the Owner Participant and the Owner Trustee in its
individual capacity, as from time to time modified, amended or supplemented
pursuant to its applicable provisions and in accordance with the Operative
Agreements.
Trust Indenture Act. The Trust Indenture Act of 1939, as amended.
Trust Indenture Estate. All estate, right, title and interest of the
Indenture Trustee in and to any of the property, rights, interests and
privileges granted to the Indenture Trustee pursuant to the Granting Clause of
the Indenture, other than Excepted Payments and any and all other rights of
the Owner Trustee or the Owner Participant expressly reserved to the Owner
Trustee or the Owner Participant pursuant to the Indenture.
Underwriters. The several Underwriters named in the Underwriting
Agreement.
Underwriting Agreement. The Underwriting Agreement dated October 26,
1995 among the Lessee, Xxxxxxx Sachs & Co., X.X. Xxxxxx Securities Inc. and
Xxxxxx Xxxxxxx & Co. Incorporated.
United States, U.S. or US. The United States of America.
U.S. Air Carrier. Any United States air carrier as to which there is
in force a certificate issued pursuant to Section 41102(a) or Section 41103 of
the Transportation Code, and as to which there is in force an air carrier
operating certificate issued pursuant to Chapter 447 of the Transportation
Code and Part 121 of the regulations under such Transportation Code, for
aircraft capable of carrying ten (10) or more individuals or 6,000 pounds or
more of cargo, or which may operate as an air carrier by certification or
otherwise under any successor or substitute provision thereof or in absence
thereof.
U.S. Person. A Person described in Section 7701(a)(30) of the Code.
SCHEDULE II
OWNER PARTICIPANT AMOUNT
(As a Percentage of Purchase Price)
Date Amount
---- ------
March 19, 1996 2.12964039%
INTERIM RENT
(As a Percentage of Purchase Price)
Rent
Payment
Date Advance Arrears
------- ------- -------
[On each Payment Date, Lessee will pay as Interim Rent an amount that
will be at least sufficient to pay in full, as of such Payment Date,
the aggregate unpaid principal amount of due and unpaid installments
on the Certificates outstanding on such Payment Date, together with
the accrued and unpaid interest thereon.]
BASIC RENT
(As a Percentage of Purchase Price)
Rent
Payment
Date Advance Arrears
------- ------- -------
[On each Payment Date, Lessee will pay as Basic Rent an amount that
will be at least sufficient to pay in full, as of such Payment Date,
the aggregate unpaid principal amount of due and unpaid installments
on the Certificates outstanding on such Payment Date, together with
the accrued and unpaid interest thereon.]
SCHEDULE III
STIPULATED LOSS VALUES
Stipulated Loss
Date Value Factor
---- ---------------
[Stipulated Loss Value will be an amount at least sufficient to pay
in full, as of the date of payment thereof, the aggregate unpaid
principal amount of the Certificates outstanding on such date of
payment, together with the accrued and unpaid interest thereon.]
SCHEDULE IV
TERMINATION VALUES
Termination Termination
Date Value Factor
----------- ------------
[Termination Value will be an amount at least sufficient to pay in
full, as of the date of payment thereof, the aggregate unpaid
principal amount of the Certificates outstanding on such date of
payment, together with the accrued and unpaid interest thereon.]
SCHEDULE V
PURCHASE OPTION SCHEDULE
(D) Purchase Option Referred to in Section 4.02(a)(D) of the
Lease. In the event of any Significant Expenditure (as defined below)
with respect to the Aircraft, which the Lessee has certified in a
certificate of the Lessee's President, Chief Executive Officer, Chief
Financial Officer, Chief Operating Officer, Treasurer or Assistant
Treasurer furnished to the Lessor, the Indenture Trustee and the Owner
Participant, is (as determined in the Lessee's sole discretion)
necessary, desirable or required to be made at any time on or after the
fifth anniversary of the Commencement Date, the Lessee may elect to
terminate the Lease and purchase the Aircraft on the first Rent Payment
Date occurring at least six months after the Owner Participant has
notified the Lessee that they will not permit such Significant
Expenditure to be financed as contemplated in clause (ii) of the
definition of "Significant Expenditure" below, for, at the Lessee's
option, either (1) the payment to the Lessor in immediately available
funds of an amount equal to the greater of the Fair Market Value of the
Aircraft and the Termination Value for the Aircraft, determined in each
case as of such Rent Payment Date, or (2) the assumption by the Lessee,
pursuant to Section 7.11 of the Participation Agreement and Section 2.12
of the Indenture, of all of the Lessor's obligations under the
Indenture, the Certificates and Section 7.04 of the Participation
Agreement, and the payment to the Lessor in immediately available funds
of an amount equal to the excess of (A) the greater of (I) the
Termination Value for the Aircraft, and (II) the Fair Market Value of
the Aircraft, both computed as of such Rent Payment Date, over (B) the
unpaid principal of the Certificates outstanding plus accrued interest
as of such date; it being understood that the Fair Market Value for this
purpose shall be determined without regard to any Significant
Expenditure not yet made.
For purposes of this paragraph (D) the term "Significant
Expenditure" means a single expenditure or a series of related
expenditures in respect of non-severable improvements (i.e. improvements
which cannot by the terms of Section 9.02(b) of the Lease be removed
from the Aircraft) which (i) in the Lessee's reasonable judgment would
exceed $5,000,000, (ii) the Owner Participant will not permit to be
financed on similar terms and conditions then available for similar
transactions through the issuance of additional non-recourse notes of
the Lessor or through additional equity investments of the Owner
Participant or both (it being understood that this Section 4.02(a)(D)
shall not impose any obligation on the Owner Participant to provide such
financing) and (iii) are improvements which the Lessee has performed or
is in the process of performing in respect of at least 25% of the
A300-600 series aircraft (including the Aircraft) operated by the Lessee.
The Lessee, prior to notifying the Owner Participant and the Indenture
Trustee in accordance with Paragraph (F) of this Schedule V of its
election to purchase the Aircraft pursuant to Section 4.02(a)(D) of the
Lease, shall notify the Owner Participant of the non-severable
improvements which would satisfy the conditions described in clauses (i)
and (iii) of the preceding sentence, and provide the Owner Participant
with a reasonable opportunity to permit the financing thereof as
contemplated in clause (ii) of such sentence. The Owner Participant
shall notify the Lessee of their decision with respect to such financing
within 60 days after the Lessee has given the notice described in the
preceding sentence.
(E) Purchase Option Referred to in Section 4.02(a)(E) of the
Lease. In the event that a Burdensome Indemnity Payment shall occur at
any time on or after the fifth anniversary of the Commencement Date, the
Lessee may elect to terminate the Lease and purchase the Aircraft on the
first Rent Payment Date (the "Burdensome Indemnity Payment Date")
following the date that the Owner Participant provides the Lessee with a
written notice of any Loss (as defined in Section 5 of the Tax Indemnity
Agreement) that is a Burdensome Indemnity Payment for, at the Lessee's
option, either (1) the payment to the Lessor in immediately available
funds of an amount equal to the greater of the Fair Market Value of the
Aircraft and the Termination Value for the Aircraft, determined in each
case as of such Burdensome Indemnity Payment Date, or (2) the assumption
by the Lessee, pursuant to Section 7.11 of the Participation Agreement
and Section 2.12 of the Indenture, of all of the obligations of the
Lessor under the Indenture, the Certificates and Section 7.04 of the
Participation Agreement and the payment to the Lessor in immediately
available funds of an amount equal to the excess of (A) the greater of
(I) the Termination Value for the Aircraft and (II) the Fair Market
Value of the Aircraft, both computed as of the Burdensome Indemnity
Payment Date, over (B) the unpaid principal of the Certificates
outstanding plus accrued interest as of such date.
For purposes of this paragraph (E), the term "Burdensome Indemnity
Payment" means a Loss as defined in the Tax Indemnity Agreement which
under the circumstances cannot be commercially reasonably avoided by the
Lessee which causes the aggregate net present value as of the
determination date, discounted semi-annually at the Debt Rate, of all
such Losses (but excluding any Losses for which the Owner Participant
shall have waived its right to payment under the Tax Indemnity
Agreement) paid or payable by the Lessee which can be avoided through a
purchase by the Lessee of the Aircraft, to exceed 2.5% of the Purchase
Price.
(F) Notice from the Lessee. The Lessee shall give the Lessor,
the Owner Participant and the Indenture Trustee not more than 180 days
nor less than 90 days prior written notice of its election to purchase
pursuant to Section 4.02(a)(D) or 4.02(a)(E) of the Lease. Such notice
shall either direct the Lessor to prepay the Certificates in full on
such Termination Date pursuant to Section 6.02 of the Indenture or state
that the Lessee shall exercise its option to assume the Certificates
pursuant to Section 7.11 of the Participation Agreement and Section 2.12
of the Indenture. The Lessee's notice pursuant to Section 4.02(a)(D) or
4.02(a)(E) hereof shall become irrevocable 10 days prior to the
applicable purchase date designated in such notice but if any such
notice is revoked, the Lessee shall no longer be entitled to purchase
the Aircraft as a result of the facts and circumstances originally
giving rise to such right and will pay all reasonable expenses of the
Owner Participant, the Owner Trustee and the Indenture Trustee in
connection therewith.
Exhibit A
to
Lease Agreement
THE INTEREST OF LESSOR UNDER THIS LEASE SUPPLEMENT
NO. __ IS SUBJECT TO A SECURITY INTEREST
LEASE SUPPLEMENT NO. __
(Federal Express Corporation Trust No. N661FE)
LEASE SUPPLEMENT NO. __ (Federal Express Corporation Trust No.
N661FE), dated ________ __, ____, between NBD BANK, a Michigan banking
corporation, not in its individual capacity, but solely as Owner Trustee
under the Trust Agreement (Federal Express Corporation Trust No. N661FE)
dated as of October 1, 1995, as amended and restated as of October 26, 1995
(the "Lessor"), and FEDERAL EXPRESS CORPORATION, a Delaware corporation
(the "Lessee").
W I T N E S S E T H :
WHEREAS, the Lessor and the Lessee have entered into that certain
Lease Agreement (Federal Express Corporation Trust No. N661FE) dated as of
October 15, 1995, as amended and restated as of October 26, 1995 (the
"Lease", the defined terms in the Lease being used in this Lease Supplement
with the same meaning as in the Lease), which provides for the execution
and delivery of a Lease Supplement, substantially in the form of this Lease
Supplement No. __, for the purpose of leasing under the Lease the aircraft
and engines described below ("Aircraft") as and when delivered by the
Lessor to the Lessee in accordance with the terms of the Lease;
WHEREAS, the Lease relates to the Aircraft;
WHEREAS, a counterpart of the Lease is attached to and made a part
of this Lease Supplement, and this Lease Supplement, together with such
attachment, is being filed for recordation on this date with the FAA as one
document.
NOW, THEREFORE, for and in consideration of the premises and other
good and sufficient consideration, the Lessor and the Lessee agree as
follows:
Section 1. Delivered Aircraft. The Lessor hereby delivers and
leases to the Lessee under the Lease, and the Lessee hereby accepts and
leases from the Lessor under the Lease, the following described Airbus
A300F4-605R Aircraft (the "Delivered Aircraft"), which Delivered Aircraft
as of the date of this Lease Supplement consists of the following:
(a) Airbus X000X0-000X Xxxxxxxx; U.S. Registration Number ______;
Manufacturer's Serial No. ___; and
(b) Two (2) General Electric CF6-80C2-A5F Engines bearing,
respectively, Manufacturer's Serial Nos. ___-___ and ___-___ (each of
which engines has 750 or more rated takeoff horsepower or the equivalent
of such horsepower).
Section 2. Delivery Date. The Delivery Date of the Delivered
Aircraft is the date of this Lease Supplement.
Section 3. Purchase Price. The Purchase Price of the Delivered
Aircraft shall be the amount set forth in Ancillary Agreement I.
Section 4. Term. The Term for the Delivered Aircraft shall
commence on the Delivery Date, and shall terminate on ______, ____, unless
earlier terminated or extended pursuant to the terms of the Lease.
Section 5. Rent. The Lessee hereby agrees to pay the Lessor Rent
for the Delivered Aircraft throughout the Term thereof in accordance with
the terms and provisions of the Lease.
Section 6. Lessee's Acceptance of Delivered Aircraft. The Lessee
hereby confirms to the Lessor that the Delivered Aircraft has been duly
marked in accordance with Section 7.03 of the Lease and that the Lessee has
accepted the Delivered Aircraft for all purposes hereof and of the Lease,
and as being free and clear of all Liens except Lessor's Liens. Such
acceptance by the Lessee shall be without prejudice to any rights of the
Lessor or the Lessee against AVSA, the Manufacturer, the Engine
Manufacturer or any vendor of equipment included in the Aircraft.
Section 7. Incorporation of Lease By Reference. All the
provisions of the Lease are hereby incorporated by reference in this Lease
Supplement to the same extent as if fully set forth in this Lease
Supplement.
Section 8. Governing Law. THIS LEASE SUPPLEMENT SHALL IN ALL
RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE BUT WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS, AND
IS BEING DELIVERED IN THE STATE OF NEW YORK.
Section 9. Agreement as Chattel Paper. To the extent that this
Lease Supplement constitutes chattel paper (as such term is defined in the
Uniform Commercial Code as in effect in any applicable jurisdiction), no
security interest in this Lease Supplement may be created through the
transfer or possession of any counterpart other than the original
chattel-paper counterpart, which shall be the counterpart containing the
receipt executed by the Indenture Trustee on its signature page.
Section 10. Counterparts. This Lease Supplement may be executed
in any number of counterparts, each of which shall be an original (except
that only the counterpart bearing the receipt executed by Indenture Trustee
shall be the original for purposes of perfecting a security interest
therein as chattel paper under the Uniform Commercial Code), but all of
which taken together shall constitute one and the same instrument and any
of the parties hereto may execute this Lease Supplement by signing any such
counterpart.
IN WITNESS WHEREOF, the Lessor and the Lessee have caused this Lease
Supplement to be duly executed as of the day and year first above written.
LESSOR: NBD BANK,
not in its individual capacity,
but solely as Owner Trustee
By: ________________________________________
Name:
Title:
LESSEE: FEDERAL EXPRESS CORPORATION
By: ________________________________________
Name: Xxxxxx X. Xxxxxxx
Title: Assistant Treasurer and
Managing Director -
Structured Finance
Receipt of this original counterpart of the Lease Supplement is
hereby acknowledged on this __ day of _________ 1995.
Indenture Trustee: THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION),
not in its individual capacity,
but solely as Indenture Trustee
By: ________________________________________
Name:
Title:
LEASE AGREEMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N663FE)
Dated as of October 26, 1995
between
NBD BANK,
Not in its Individual Capacity,
but Solely as Owner Trustee,
AS LESSOR
and
FEDERAL EXPRESS CORPORATION,
AS LESSEE
COVERING ONE AIRBUS A300F4-605R AIRCRAFT
SERIAL NO. 766, REGISTRATION NO. N663FE
CERTAIN OF THE RIGHT, TITLE AND INTEREST IN AND TO THIS LEASE
AGREEMENT OF NBD BANK, AS OWNER TRUSTEE, HAS BEEN ASSIGNED TO AND IS SUBJECT
TO A LIEN AND SECURITY INTEREST IN FAVOR OF THE CHASE MANHATTAN BANK (NATIONAL
ASSOCIATION), AS INDENTURE TRUSTEE UNDER THE TRUST INDENTURE AND SECURITY
AGREEMENT (FEDERAL EXPRESS CORPORATION TRUST NO. N663FE) DATED AS OF OCTOBER
26, 1995 FOR THE BENEFIT OF THE HOLDERS OF THE CERTIFICATES REFERRED TO IN
SUCH TRUST INDENTURE AND SECURITY AGREEMENT. THIS LEASE AGREEMENT HAS BEEN
EXECUTED IN SEVERAL COUNTERPARTS. ONLY THE CHATTEL-PAPER "ORIGINAL"
COUNTERPART CONTAINS THE RECEIPT THEREFOR EXECUTED BY THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION), AS INDENTURE TRUSTEE, ON THE SIGNATURE PAGES THEREOF.
TABLE OF CONTENTS
Page
ARTICLE 1
DEFINITIONS
ARTICLE 2
ACCEPTANCE UNDER THE LEASE
Section 2.01. Sale and Lease of Aircraft; Term.................... 1
ARTICLE 3
RENT AND RENT ADJUSTMENT
Section 3.01. Owner Participant Payment........................... 2
Section 3.02. Interim Rent and Basic Rent......................... 2
Section 3.03. Supplemental Rent................................... 3
Section 3.04. Adjustments to Interim Rent, Basic Rent, Stipulated
Loss Value, Termination Value and the EBO Price
After the Delivery Date........................... 3
Section 3.05. Minimum Interim Rent and Basic Rent................. 5
Section 3.06. Payment to Indenture Trustee........................ 6
Section 3.07. Costs and Expenses.................................. 6
ARTICLE 4
RENEWAL OPTIONS AND PURCHASE OPTIONS
Section 4.01. Renewal Options..................................... 6
Section 4.02. Purchase Options.................................... 7
Section 4.03. Appraisal Procedures................................ 9
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
Section 5.01. Disclaimer of Representations and Warranties........ 11
Section 5.02. No Modification of Other Warranties................. 11
Section 5.03. Certain Agreements of the Lessee.................... 12
ARTICLE 6
LIENS
Section 6.01. Liens............................................... 12
ARTICLE 7
AIRCRAFT REGISTRATION, MAINTENANCE AND OPERATION
Section 7.01. Registration, Maintenance and Operation............. 14
Section 7.02. Possession and Permitted Transfer and Sublease...... 16
Section 7.03. Insignia............................................ 20
ARTICLE 8
REPLACEMENT AND POOLING OF PARTS
Section 8.01. Replacement of Parts................................ 21
Section 8.02. Pooling of Parts.................................... 22
ARTICLE 9
ALTERATIONS, MODIFICATIONS AND ADDITIONS
Section 9.01. Required Alterations and Modifications.............. 23
Section 9.02. Other Alterations and Modifications................. 23
ARTICLE 10
VOLUNTARY TERMINATION
Section 10.01. Right of Termination upon Obsolescence or Surplus... 24
Section 10.02. Retention of Aircraft by the Lessor................. 27
Section 10.03. Voluntary Termination as to Engines................. 28
ARTICLE 11
LOSS, DESTRUCTION, REQUISITION
Section 11.01. Lessee's Election Rights............................ 28
Section 11.02. Payment of Stipulated Loss Value.................... 29
Section 11.03. Replacement of Airframe and Engines................. 30
Section 11.04. Event of Loss with Respect to an Engine............. 33
Section 11.05. Application of Payments from the Government or
Others............................................ 35
Section 11.06. Requisition of an Airframe and the Installed Engines
for Use by Government............................. 36
Section 11.07. Requisition for Use by Government of an Engine Not
Installed on the Airframe......................... 37
Section 11.08. Application of Payments During Existence of Certain
Defaults.......................................... 37
ARTICLE 12
RETURN OF AIRCRAFT
Section 12.01. Return of Aircraft.................................. 37
Section 12.02. Return of Engines................................... 38
Section 12.03. Return of Manuals................................... 38
Section 12.04. Condition of Aircraft............................... 39
Section 12.05. Delayed Return of Aircraft.......................... 40
Section 12.06. Storage............................................. 41
Section 12.07. Special Markings.................................... 41
Section 12.08. Lessor's Option to Purchase Parts................... 41
ARTICLE 13
INSURANCE
Section 13.01. Comprehensive Airline Liability and Property Damage
Liability Insurance............................... 42
Section 13.02. Insurance against Loss or Damage to Aircraft and
Engines........................................... 44
Section 13.03. Application of Insurance Proceeds................... 46
Section 13.04. Reports............................................. 47
Section 13.05. Lessor's Insurance.................................. 48
Section 13.06. Self-Insurance...................................... 48
ARTICLE 14
INSPECTION
Section 14.01. Right of Inspection................................. 48
Section 14.02. No Obligation to Inspect............................ 49
ARTICLE 15
ASSIGNMENT
Section 15.01. Lessee's Right to Assign............................ 49
Section 15.02. Citizenship......................................... 49
ARTICLE 16
EVENTS OF DEFAULT
Section 16.01. Events of Default................................... 50
ARTICLE 17
REMEDIES
Section 17.01. Remedies upon Lessee's Default...................... 52
Section 17.02. Cumulative Remedies................................. 55
Section 17.03. Waiver.............................................. 55
Section 17.04. Lessor's Right to Perform for Lessee................ 55
ARTICLE 18
COVENANT OF QUIET ENJOYMENT
Section 18.01. Quiet Enjoyment..................................... 56
ARTICLE 19
FURTHER ASSURANCES
Section 19.01. Further Assurances.................................. 56
ARTICLE 20
NET LEASE
Section 20.01. Nature of Lease..................................... 57
ARTICLE 21
SUCCESSOR LESSOR
Section 21.01. Successor Lessor.................................... 58
ARTICLE 22
SECURITY FOR LESSOR'S OBLIGATIONS
Section 22.01. Security for Lessor's Obligations to Holders........ 59
Section 22.02. Intentionally Left Blank............................ 59
Section 22.03. Consent of Lessee to Assignment of Lease as
Security.......................................... 59
ARTICLE 23
SECURITY FUNDS
Section 23.01. Investment of Security Funds........................ 59
ARTICLE 24
CONCERNING THE LESSOR
Section 24.01. Lessor's Entry into Lease........................... 61
ARTICLE 25
NOTICES
Section 25.01. Notices............................................. 61
ARTICLE 26
MISCELLANEOUS
Section 26.01. Section Headings and Captions....................... 62
Section 26.02. References.......................................... 62
Section 26.03. APPLICABLE LAW...................................... 62
Section 26.04. Severability........................................ 63
Section 26.05. No Oral Modification................................ 63
Section 26.06. Agreement as Chattel Paper.......................... 63
Section 26.07. Counterparts........................................ 63
Section 26.08. Public Release of Information....................... 63
ARTICLE 27
TRUE LEASE
Section 27.01. Intent of the Parties............................... 64
Section 27.02. Section 1110 Compliance............................. 64
Section 27.03. Finance Lease....................................... 64
Schedule I Definitions
Schedule II Owner Participant Amount, Interim Rent and Basic Rent
Schedule III Stipulated Loss Values
Schedule IV Termination Values
Schedule V Purchase Option Schedule
Exhibit A Form of Lease Supplement
Exhibit B Form of Purchase Agreement Assignment, Consent and
Agreement and AVSA Consent and Agreement
Exhibit C Form of Engine Warranty Assignment and Engine Consent
LEASE AGREEMENT
(Federal Express Corporation Trust No. N663FE)
Lease Agreement (Federal Express Corporation Trust No. N663FE) dated
as of October 26, 1995 (this "Lease"), between NBD BANK, a Michigan banking
corporation, not in its individual capacity but solely as Owner Trustee under
the Trust Agreement (as defined in Article 1 below) (the "Lessor"), and
FEDERAL EXPRESS CORPORATION, a Delaware corporation (the "Lessee").
W I T N E S S E T H :
WHEREAS, subject to the terms and conditions set forth in the
Participation Agreement (as hereinafter defined), the Lessee desires on the
Delivery Date (as hereinafter defined) to lease from the Lessor and the Lessor
is willing to lease to the Lessee the Aircraft (as hereinafter defined) in
accordance with the terms and conditions set forth in this Lease.
NOW, THEREFORE, in consideration of the mutual promises herein, and
other good and valuable consideration, the receipt and adequacy of which is
hereby acknowledged by the parties, the Lessor and the Lessee agree as follows:
ARTICLE 1
DEFINITIONS
Unless otherwise specifically provided herein, the capitalized terms
herein shall have the meanings given in Schedule II to the Participation
Agreement, a copy of which schedule is annexed hereto as Schedule I, for all
purposes of this Lease and shall be equally applicable to both the singular
and the plural forms of the terms defined.
ARTICLE 2
ACCEPTANCE UNDER THE LEASE
Section 2.01. Sale and Lease of Aircraft; Term. The Lessor,
subject to satisfaction or waiver of the conditions set forth in this Lease
and in the Participation Agreement, hereby agrees to purchase the Aircraft
from AVSA on the Delivery Date and agrees immediately thereafter to lease
the Aircraft to the Lessee pursuant to this Lease, and the Lessee hereby
agrees to lease the Aircraft from the Lessor, such lease to be evidenced by
the execution by the Lessor and the Lessee of a Lease Supplement leasing
the Aircraft hereunder. Such lease shall last for the Term, at all times
during which full legal title to the Aircraft shall remain vested with the
Lessor to the exclusion of the Lessee, notwithstanding the possession and
use thereof by the Lessee or any other Person. The Lessee agrees that the
Lessor will authorize one or more employees of the Lessee, designated by
the Lessee in writing, as the authorized representative or representatives
of the Lessor to accept delivery of the Aircraft pursuant to the sale of
the Aircraft described in the Participation Agreement. The Lessee hereby
agrees that in the event delivery of the Aircraft shall be accepted by an
employee or employees of the Lessee pursuant to such authorization by the
Lessor, such acceptance of delivery by such employee or employees on behalf
of the Lessor shall, without further act, irrevocably constitute acceptance
by the Lessee of the Aircraft for all purposes of this Lease.
ARTICLE 3
RENT AND RENT ADJUSTMENT
Section 3.01. Owner Participant Payment. The Owner Participant has
agreed, so long as no Event of Default has occurred and is continuing, to make
available to the Lessor funds sufficient to pay to the Indenture Trustee on
the Owner Participant Payment Date an amount equal to the difference between
the amounts scheduled to be paid on the Certificates on such date and the
amount required to be paid by the Lessee on such date pursuant to Section
17.02(b) of the Participation Agreement (without regard to Section 3.05
hereof), all in accordance with the provisions of Section 3.07 of the
Participation Agreement. To the extent such amount is not paid when due on
the Owner Participant Payment Date, the Lessee shall make an advance on behalf
of the Owner Participant as described in Section 3.05 hereof equal to such
amount and, if not otherwise reimbursed, the Lessee shall have the right to
offset such amount pursuant to Section 3.05 hereof.
Section 3.02. Interim Rent and Basic Rent. No Rent (other than
Supplemental Rent, if any) shall be payable for the Preliminary Term. The
Lessee agrees to pay to the Lessor in immediately available funds on the
Commencement Date, Interim Rent in the amount set forth on Schedule II hereto
for such date, subject to increase or decrease as provided in Section 3.04
hereof, with such Interim Rent being allocated to the Interim Term. The
Lessee agrees to pay to the Lessor in immediately available funds, on each
Rent Payment Date, Basic Rent for the Aircraft during the Basic Term, each
payment being set forth on Schedule II hereto opposite the applicable Rent
Payment Date, subject to increase or decrease as provided in Sections 3.04 of
this Lease. Each payment of Interim Rent and Basic Rent shall be made in
arrears or in advance, all as stated in Schedule II hereto. Each payment of
Basic Rent designated as advance rent shall be allocated over the six-month
period beginning on the Rent Payment Date on which such advance rent payment is
scheduled to be made, and each installment of Basic Rent that is designated as
payable in arrears shall be accrued over the six-month period ending on and
including the day immediately preceding the Rent Payment Date on which such
arrears payment is scheduled to be made and each installment of Interim Rent
that is designated as payable in arrears shall be accrued over the Interim
Term.
Section 3.03. Supplemental Rent. The Lessee agrees to pay or cause to
be paid to the Lessor, or to whomever shall be entitled to it, any and all
Supplemental Rent promptly as the same shall become due. If the Lessee fails
to pay any Supplemental Rent when due, the Lessor shall have all rights,
powers and remedies provided for in this Lease, or by law or equity or
otherwise in the case of nonpayment of Interim Rent or Basic Rent. The Lessee
will also pay to the Person entitled thereto, on demand, as Supplemental Rent,
to the extent permitted by applicable law, an amount equal to interest at the
Past Due Rate on any part of any installment of Interim Rent or Basic Rent not
paid when due, for any period until the same shall be paid and on any payment
of Supplemental Rent not paid when due, for the period until the same shall be
paid. In addition, the Lessee will pay to the Lessor, as Supplemental Rent, in
the case of any prepayment of the Certificates pursuant to Section 6.02 of the
Indenture (except in the case of an Indenture Event of Default in the absence
of any Event of Default) or any prepayment or purchase of the Certificates
pursuant to clause (ii) of the first sentence of Section 8.02(a) of the
Indenture, an amount equal to the aggregate amount of any Make-Whole Premium
payable on such prepayment or purchase. The expiration or other termination
of the Lessee's obligation to pay Interim Rent or Basic Rent shall not limit
or otherwise modify the obligations of the Lessee with respect to the payment
of Supplemental Rent.
Section 3.04. Adjustments to Interim Rent, Basic Rent, Stipulated Loss
Value, Termination Value and the EBO Price After the Delivery Date. The
percentages for Interim Rent and Basic Rent referred to in Schedule II hereto
and for Stipulated Loss Value and Termination Value in Schedule III and
Schedule IV, respectively, hereto and the EBO Price shall be adjusted (upward
or downward) subject to the minimum value established by Section 3.05 hereof
and the definitions of Stipulated Loss Value and Termination Value to reflect
(i) any costs and expenses paid by the Lessor or the Owner Participant
pursuant to Section 10.01 of the Participation Agreement being greater or less
than the Estimated Expense Amount, (ii) any Refinancing pursuant to Section
15.01 of the Participation Agreement, (iii) any reoptimization pursuant to
Section 15.02 of the Participation Agreement, (iv) the Owner Participant
Amount being different from the amount set forth on Schedule II hereto or
paid, in whole or in part, on a date other than as set forth on Schedule II
hereto, (v) payments pursuant to Section 5 of the Tax Indemnity Agreement by
an adjustment of Interim Rent and Basic Rent or (vi) the Delivery Date being
other than November 20, 1995. Each such adjustment pursuant to clause (i),
(ii), (iv), (v) or (vi) of the first sentence of this Section 3.04 shall
maintain the Owner's Economic Return (and, while maintaining such Return,
minimize the aggregate Net Present Value of Rents to the Lessee) and shall not
cause the EBO Price to be less than the greater of (i) the Termination Value
as of such Rent Payment Date and (ii) the estimate set forth in the Appraisal
of the Fair Market Value of the Aircraft at the time of exercise of the
purchase option under Section 4.02(a)(F) hereof. In the event of an
adjustment pursuant to clause (iii) of the first sentence of this Section
3.04, the Owner Participant may recalculate Interim Rent and Basic Rent as set
forth in Schedule II hereto in order to maintain the Owner's Economic Return,
recalculate the Owner Participant Amount set forth in Schedule II hereto and,
subject to the provisions of Section 15.02 of the Participation Agreement,
recalculate the schedule of principal repayments, the Stipulated Loss Value
percentages set forth in Schedule III hereto, the Termination Value
percentages set forth in Schedule IV hereto and the EBO Price in a manner
consistent with such recalculation of Interim Rent and Basic Rent; provided
that any such recalculations may not (A) increase the Net Present Value of
Rents to the Lessee, (B) increase as of any date the sum of (1) the Net
Present Value of Rents to the Lessee payable through such date plus (2) the
present value of the Stipulated Loss Value, the Termination Value or the EBO
Price as of such date, in each case discounted at the Debt Rate, beyond such
net present values prior to such adjustment, or (C) otherwise result in any
adverse impact (including tax consequences) to the Lessee for which the Owner
Participant has not agreed to indemnify the Lessee on terms reasonably
acceptable to the Lessee. The Owner Participant shall promptly notify the
Lessee and the Lessor and the Lessee shall promptly notify the Owner
Participant and the Lessor of the need for any such adjustment. As promptly
as feasible after any such notification, the Lessor shall furnish the Lessee
with a notice setting forth the amount of any such adjustments together with
the calculations upon which the adjustments are based; provided, however, that
the Lessor and the Owner Participant shall not be required to disclose to the
Lessee in such notice any confidential or proprietary information (including
methodology or assumptions) relating to such calculations. At the request and,
subject to the next succeeding sentence, expense of the Lessee, the accuracy
of the calculation of such adjustments and the consistency of the calculation
with the calculation used to determine Interim Rent, Basic Rent, Stipulated
Loss Values, Termination Values and the EBO Price shall be verified first, by
First Chicago Leasing Corporation or such other financial advisor chosen by
the Lessee and second, if such adjustments are still believed to be in error
and are not reconciled with the Owner Participant within fifteen (15)
Business Days, by a firm of nationally recognized independent public
accountants selected by the Lessee and reasonably acceptable to the Owner
Participant and, in order to enable them to verify such adjustments, the Owner
Participant shall make available to such accountants (for their own
confidential use and not to be disclosed to the Lessee or any other Person and
subject to the execution of a confidentiality agreement reasonably
satisfactory to the Owner Participant) all information reasonably necessary
for such verification, including the name of the lease analysis program used
by the Owner Participant to calculate such adjustments. The Lessee will pay
the reasonable costs and expenses of the verification process under this
Section 3.04 unless as a result of such verification process by the
independent public accountants Interim Rent or Basic Rent is adjusted and such
adjustment causes the Net Present Value of Rents to decline by 10 or more
basis points (in which event the Owner Participant shall pay the reasonable
costs and expenses of such verification process). The Lessor and the Lessee
shall execute and deliver an amendment to this Lease to reflect each
adjustment under this Section 3.04.
All adjustments under this Section 3.04 shall be in compliance with
the requirements of Revenue Procedure 75-21, 1975-1 C.B. 715 and Sections
4.02(5), 4.07(1), 4.07(2) and 4.08(1) of Revenue Procedure 75-28, 1975-1 C.B.
752 and shall be structured so as to not cause the Lease to be a "disqualified
leaseback or long-term agreement" within the meaning of Section 467 of the
Code.
Section 3.05. Minimum Interim Rent and Basic Rent.
Notwithstanding any other provisions of the Operative Agreements to the
contrary, each installment of Interim Rent and Basic Rent due on each Rent
Payment Date and not constituting an Excepted Payment shall be, under any
and all circumstances, an amount at least sufficient to pay in full any
installment of principal of and interest on the Certificates required to be
paid pursuant to the Certificates (other than amounts becoming due on
account of the exercise of remedies pursuant to Article 17 hereof) on such
Rent Payment Date. To the extent that the Owner Participant does not
provide the Lessor with funds on the Owner Participant Payment Date as
referred to in Section 3.01 hereof if and when due, the Lessee shall on
such date advance on behalf of the Owner Participant (and such advance
shall be deemed a demand loan owing to the Lessee from the Owner
Participant bearing interest at the Past Due Rate plus 3%) an amount equal
to the funds not so provided. Unless otherwise reimbursed, the Lessee
shall, in addition to all other rights and remedies under applicable law
but subject to Article 20 hereof, be entitled to offset against any
payments due from the Lessee to the Lessor (including, without limitation,
Interim Rent, Basic Rent and payments due to the Lessor under Article 9 of
the Participation Agreement but not including the fees and expenses payable
to NBD or to the Owner Participant under the Tax Indemnity Agreement and
Excepted Payments), until the Lessee has fully offset such advance plus
interest thereon at the Past Due Rate plus 3% from the date of such advance
until the date of such reimbursement or offset; provided, however, that in
the case of any payment due from the Lessee which is distributable under
the terms of the Indenture, the Lessee's right of offset shall be limited
to the amount distributable to the Lessor thereunder (and shall not include
any amounts distributable to the Indenture Trustee in its individual
capacity or to the Holders of the Certificates or any of them). No such
offset or aggregate combined effect of separate offsets shall reduce the
amount of any installment of Interim Rent and Basic Rent, or the amount of
Stipulated Loss Value, Termination Value or EBO Price, to an amount
insufficient to pay in full the payments then required to be made on
account of the principal of and interest on the Certificates then
Outstanding. If the Owner Participant is not required to provide such
funds under Section 3.01 hereof, the Lessee shall make a payment of
Supplemental Rent in an amount equal to the Owner Participant Amount.
Section 3.06. Payment to Indenture Trustee. All Rent payable by the
Lessee to the Lessor shall be paid to the Lessor at its principal office at
000 Xxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000, Attention: Corporate Trust
Department, or as the Lessor may otherwise direct, by wire transfer of
immediately available funds in U.S. Dollars with sufficient information to
identify sources and applications of such funds no later than 10:30 a.m., New
York time on the due date of such payment; provided, however, that so long as
the Indenture shall not have been discharged the Lessor hereby directs, and
the Lessee agrees, that all Rent (other than Excepted Payments, which shall be
paid by the Lessee directly to the Person entitled thereto) (all without
set-off or counterclaim as and to the extent provided in Article 20 hereof)
and all amounts referred to in Section 3.01 hereof shall be paid directly to
the Indenture Trustee at its principal office at 4 Chase Xxxxxxxxx Xxxxxx, 0xx
Xxxxx, Xxxxxxxx, Xxx Xxxx 00000, Attention: Corporate Trust Administration, or
as the Indenture Trustee may otherwise direct within the United States by wire
transfer of immediately available funds in U.S. Dollars no later than 10:30
a.m., New York time, on the due date of such payment. In any case where a
scheduled Rent Payment Date shall not be a Business Day such Rent Payment Date
shall be adjourned to the next succeeding Business Day without interest
thereon for the period of such extension (provided that payment is made on
such next succeeding Business Day).
Section 3.07. Costs and Expenses. As between the Lessor and the
Lessee, all obligations under this Lease shall be done, performed and complied
with at the Lessee's cost and expense, whether or not so expressed, unless
otherwise expressly stated to the contrary.
ARTICLE 4
RENEWAL OPTIONS AND PURCHASE OPTIONS
Section 4.01. Renewal Options. (a) Election to Renew or Purchase.
The Lessee shall provide the Lessor with irrevocable written notice (the
"Preliminary Notice") not more than 360 days nor less than 180 days prior to
the end of the Basic Term or the preceding Renewal Term, as the case may be,
whether it will exercise its options either to renew this Lease pursuant to
this Section 4.01 or to purchase the Aircraft pursuant to Section 4.02(a)(B)
hereof or, if a further Renewal Term is available, pursuant to Section
4.02(a)(C) hereof. If, following delivery of a Preliminary Notice, the Lessee
shall not have notified the Lessor, at least 30 days prior to the end of the
Basic Term or a current Renewal Term, that it is renewing this Lease in
accordance with this Section 4.01, the Lessee's Preliminary Notice shall be
deemed an irrevocable notice of purchase satisfying Section 4.02(a)(B) hereof.
Provided that (i) no Event of Default shall have occurred and be continuing at
the time of renewal, (ii) this Lease has not otherwise expired or terminated,
and (iii) the Lessee shall have timely delivered the respective Preliminary
Notice, the Lessee may, by irrevocable written notice delivered to the Lessor
not less than 30 days prior to the end of the Basic Term, extend the Term for
a single Fixed Renewal Term of not less than one (1) nor more than three (3)
years commencing on the expiration of the Basic Term. The Lessee shall pay
the Fixed Renewal Rent during any Fixed Renewal Term.
In addition, provided that (i) no Event of Default shall have
occurred and be continuing at the time of renewal, (ii) this Lease has not
otherwise expired or terminated, and (iii) the Lessee shall have delivered the
Preliminary Notice, the Lessee may by written notice delivered to the Lessor
not less than 30 days prior to the end of the Basic Term or the preceding
Renewal Term, as the case may be, elect to extend the Term for a Renewal Term
or further Renewal Term commencing on the expiration of the Basic Term or the
preceding Renewal Term and ending one or more years thereafter for a rent
equal to the then-current Fair Market Rental of the Aircraft. The Lessee
shall pay the Fair Market Rental during any Fair Market Renewal Term.
(b) Terms and Conditions. Any such renewal shall be on the same
terms and conditions as provided herein, except that (i) rent for the Aircraft
due during any Renewal Term shall be payable semi-annually in arrears on the
dates corresponding to the Rent Payment Dates during such Renewal Term, and
(ii) during any Renewal Term, the Stipulated Loss Value for the Aircraft shall
as of any Stipulated Loss Value Determination Date during the Renewal Term be
equal to the higher of the Stipulated Loss Value and the Fair Market Value of
the Aircraft as of the end of the Basic Term or the next preceding Renewal
Term, if applicable.
Section 4.02. Purchase Options. (a) Election to Purchase. Provided
that (i) this Lease has not otherwise expired or terminated, (ii) either no
Event of Default shall have occurred and be continuing at the time of the
notice provided below or, if an Event of Default occurs after such notice has
been given, the Lessee shall have provided evidence reasonably satisfactory to
the Lessor and the Owner Participant of its financial ability to purchase the
Aircraft and (iii) the Lessee shall have previously given the Preliminary
Notice under Section 4.01(a) hereof (in the case of paragraph (B) below or, if
a further Renewal Term is available, paragraph (C) below) or the applicable
notice for each other paragraph below, as the case may be, the Lessee may:
(A) by written notice delivered to the Lessor and the Owner
Participant, not more than 180 nor less than 90 days prior to July 2, 2009
or July 2, 2012, as the case may be, elect to terminate the Lease and
purchase the Aircraft on July 2, 2009 or July 2, 2012, for, at the Lessee's
option, either (1) an amount in immediately available funds equal to the
greater of the Fair Market Value or the Termination Value on such date or
(2)(i) the assumption by the Lessee, pursuant to Section 7.11 of the
Participation Agreement, of all of the obligations of the Lessor under the
Indenture, the Certificates and Section 7.04 of the Participation Agreement
and (ii) the payment to the Lessor of an amount equal to the excess of (A)
the greater of the Fair Market Value or the Termination Value on such date
over (B) the unpaid principal of the Certificates plus accrued interest as
of such date. Such notice (which shall be revocable by the Lessee upon
written notice no later than the Business Day prior to the date 15 days
prior to the applicable Rent Payment Date) shall either direct the Lessor
to prepay the Certificates in full on such Termination Date pursuant to
Section 6.02 of the Indenture or state that the Lessee shall exercise its
option to assume the Certificates pursuant to Section 7.11 of the
Participation Agreement and Section 2.12 of the Indenture; or
(B) by irrevocable written notice delivered to the Lessor and the
Owner Participant not more than 180 nor less than 30 days prior to the end
of the Basic Term (or deemed given pursuant to the second sentence of
Section 4.01(a) hereof), elect to purchase the Aircraft on the last day of
the Basic Term for an amount equal to the Fair Market Value thereof on such
date; or
(C) by irrevocable written notice delivered to the Lessor and the
Owner Participant not more than 180 days nor less than 30 days prior to the
end of any Renewal Term, elect to purchase the Aircraft on the last day of
such Renewal Term at a price equal to the Fair Market Value of the Aircraft
on such day; provided, however, that the Lessee shall have paid all Rent
due and payable under this Lease on or prior to the expiration of any such
Renewal Term; or
(D) exercise the purchase option in this Section 4.02(a)(D) which is
more particularly described in Schedule V hereto by reference to this
Section 4.02(a)(D) and which shall be in an amount not less than the
greater of the amount specified in Schedule V hereto and the Fair Market
Value;
(E) exercise the purchase option in this Section 4.02(a)(E) which is
more particularly described in Schedule V hereto by reference to this
Section 4.02(a)(E) and which shall be in an amount not less than the
greater of the amount specified in Schedule V hereto and the Fair Market
Value; or
(F) by irrevocable written notice delivered to the Lessor and the
Owner Participant not more than 180 nor less than 90 days prior to January
2, 2015, elect to terminate this Lease and purchase the Aircraft on such
Rent Payment Date for an amount specified in Ancillary Agreement I (the
"EBO Price") with respect to this Section 4.02(a)(F) which amount shall not
be less than the greater of (i) the Termination Value as of such Rent
Payment Date and (ii) the estimate set forth in the Appraisal of the Fair
Market Value at the time of exercise of the option under this Section
4.02(a)(F).
The Lessee shall give the Lessor, the Owner Participant and the
Indenture Trustee not more than 180 and not less than 90 days' prior written
notice of its election to purchase pursuant to Section 4.02(a)(D) or
or 4.02(a)(E) hereof. Such notice shall be revocable by the Lessee upon
written notice no later than the Business Day prior to the date 15 days prior
to the applicable Rent Payment Date and such notice shall either direct the
Lessor to prepay the Certificates in full on such Termination Date pursuant to
Section 6.02 of the Indenture or state that the Lessee shall exercise its
option to assume the Certificates pursuant to Section 7.11 of the
Participation Agreement and Section 2.12 of the Indenture. In the event that
the Lessee shall have given notice to purchase the Aircraft under Section
4.02(a)(A), 4.02(a)(D) or 4.02(a)(E) hereof and shall fail to
make payment (and, if applicable, assume the Certificates) on the applicable
Termination Date, the Lease shall continue and the Lessee shall pay to the
Owner Trustee any losses, costs and expenses of the Owner Participant incurred
in connection with such failure.
(b) Terms and Conditions. If the Lessee elects to purchase the
Aircraft pursuant to Section 4.02(a) hereof, the Lessee shall pay to the
Lessor on the applicable Termination Date by wire transfer of immediately
available funds any Basic Rent payable on such Termination Date (to the extent
payable in arrears but not to the extent payable in advance), the applicable
purchase price together with any other amounts past due hereunder or due on
the applicable Termination Date and all other Supplemental Rent then due under
this Lease including, without limitation, the aggregate amount of any
Make-Whole Premium applicable to any Certificate (if such purchase occurs
prior to the Premium Termination Date for such Certificate) and amounts due
under the Participation Agreement and the Tax Indemnity Agreement, whereupon
(and upon discharge of the Lien of the Indenture in accordance with Section
14.01 thereof) the Lessor will transfer to the Lessee, without recourse or
warranty (except as to the absence of Lessor's Liens), all of the Lessor's
right, title and interest in and to the Aircraft on an "as-is, where is"
basis. In connection with such transfer, the Lessee shall prepare and the
Lessor shall execute or arrange for the execution of a xxxx of sale evidencing
such transfer and such other documents as the Lessee may reasonably require.
In connection with any termination or proposed termination of this Lease, the
Lessee shall pay, at the time of the applicable Termination Date, all related
reasonable costs and expenses of the Owner Participant, the Lessor and the
Indenture Trustee.
Section 4.03. Appraisal Procedures. (a) Generally. Whenever Fair
Market Rental or Fair Market Value is required to be determined under this
Lease (unless otherwise provided herein), it shall be determined by the mutual
agreement of the Lessor and the Lessee in accordance with the definitions of
such terms in Article 1. If the Lessee and the Lessor cannot agree by the
date 60 days prior to the date for exercise of the applicable option, such
amount shall be determined by independent appraisal conducted by appraisers
selected pursuant to Section 4.03(b) hereof. At any time prior to final
determination of such amount pursuant to Section 4.03(b) hereof, the Lessee
and the Lessor shall be entitled to submit to the appraisers (and shall submit
to each other any bids submitted to the appraisers) any bids from unrelated
third parties, and such bids shall be accorded the weight such appraisers deem
appropriate. The Lessor and the Lessee shall each have an opportunity to
comment on any such bids after receiving a copy thereof.
(b) Selection. If an independent appraisal is required pursuant to
this Lease, the Lessor and the Lessee shall consult for the purpose of
appointing a mutually acceptable, qualified aircraft appraiser. If they are
unable to agree on a single appraiser within ten (10) Business Days, then the
independent appraisal shall be arrived at by mutual agreement of two
nationally recognized, independent aircraft appraisers, one chosen by the
Lessor and one chosen by the Lessee, or, if such appraisers cannot agree on
the amount of such appraisal, their appraisals shall be treated in the manner
described in Section 4.03(c) hereof with an appraisal arrived at by a third
nationally recognized, independent aircraft appraiser chosen by the mutual
consent of such two appraisers; provided, however, that if either party shall
fail to appoint an appraiser within fifteen (15) Business Days after a written
request to do so by the other party, or if such two appraisers cannot agree on
the amount of such appraisal and fail to appoint a third appraiser within
twenty (20) Business Days after the date of the appointment of the second of
such appraisers, then either party may initiate an arbitration proceeding with
the American Arbitration Association for purposes of appointing a nationally
recognized, independent aircraft appraiser.
(c) Valuation. If one appraiser is chosen, the value determined by
such appraiser shall be final and binding upon the Lessor and the Lessee. If
two appraisers are chosen, one appraiser by the Lessor and one by the Lessee,
and such appraisers agree on the value, such value shall be final and binding
upon the Lessor and the Lessee. If three appraisers shall be appointed and
the difference between the determination which is farther from the middle
determination is more than 125% of the difference between the middle
determination and the third determination, then such further determination
shall be excluded, the remaining two determinations shall be averaged, and
such average shall be final and binding upon the Lessor and the Lessee.
Otherwise, the average of all three determinations shall be final and binding
upon the Lessor and the Lessee.
(d) Rules of Appraisal. Any appraisal pursuant to this Section 4.03
shall be conducted in accordance with the commercial rules of the American
Arbitration Association as then in effect, as modified by this Section 4.03
and the definitions of Fair Market Value and Fair Market Rental. All expenses
of any independent appraisal shall be borne by the Lessee, except that each of
the Lessee and the Owner Participant (in the case of the Lessor) shall bear
any fees, costs and expenses of its respective attorneys in connection with
such appraisal except in the case of an Event of Default or in the case of a
revocation by the Lessee of its election to terminate the Lease under Section
4.02 hereof, in which case such expenses shall be borne by the Lessee.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
Section 5.01. Disclaimer of Representations and Warranties. THE LESSEE
ACKNOWLEDGES AND AGREES THAT (i) THE AIRFRAME AND EACH ENGINE IS OF A SIZE,
DESIGN, AND CAPACITY AND MANUFACTURE SELECTED BY AND ACCEPTABLE TO THE LESSEE,
(ii) THE LESSEE IS SATISFIED THAT THE AIRFRAME AND EACH ENGINE IS SUITABLE FOR
ITS PURPOSES, (iii) NEITHER THE OWNER PARTICIPANT NOR THE LESSOR IS A
MANUFACTURER OR A DEALER IN PROPERTY OF SUCH KIND AND (iv) THE AIRFRAME AND
EACH ENGINE IS LEASED HEREUNDER SUBJECT TO ALL APPLICABLE LAWS AND
GOVERNMENTAL REGULATIONS, NOW IN EFFECT OR HEREAFTER ADOPTED, WITHOUT
REPRESENTATION OR WARRANTY OF ANY KIND BY THE LESSOR (IN ITS INDIVIDUAL
CAPACITY OR AS OWNER TRUSTEE), THE INDENTURE TRUSTEE, THE OWNER PARTICIPANT OR
ANY HOLDER. THE LESSOR LEASES THE AIRFRAME AND EACH ENGINE, AS-IS, WHERE-IS,
AND NEITHER THE LESSOR (IN ITS INDIVIDUAL CAPACITY OR AS OWNER TRUSTEE), THE
INDENTURE TRUSTEE, THE OWNER PARTICIPANT NOR ANY HOLDER MAKES, HAS MADE OR
SHALL BE DEEMED TO HAVE MADE, AND EACH HAS AND WILL HAVE BEEN DEEMED TO HAVE
EXPRESSLY DISCLAIMED, ANY WARRANTY OR REPRESENTATION EITHER EXPRESS OR
IMPLIED, AS TO (A) THE TITLE, AIRWORTHINESS, WORKMANSHIP, CONDITION, VALUE,
FITNESS FOR ANY PARTICULAR USE OR PURPOSE, DESIGN, OPERATION OR
MERCHANTABILITY OF THE AIRFRAME, EACH ENGINE OR ANY PART THEREOF, (B) THE
ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, (C) THE
ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR COPYRIGHT, (D) THE
ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN TORT, (E) THE LESSOR'S
TITLE THERETO, (F) THE LESSEE'S OR ANY SUBLESSEE'S RIGHT TO THE QUIET
ENJOYMENT THEREOF (EXCEPT AS PROVIDED IN ARTICLE 18 HEREOF) OR (G) ANY OTHER
MATTER WHATSOEVER. IT IS AGREED THAT ALL RISKS INCIDENT TO THE MATTERS
DISCUSSED IN THE PRECEDING SENTENCE, AS AMONG THE LESSOR, THE INDENTURE
TRUSTEE, THE OWNER PARTICIPANT AND THE LESSEE, ARE TO BE BORNE BY THE LESSEE.
The provisions of this Section 5.01 have been negotiated by the Lessor and the
Lessee and, except as provided in Article 7 of the Participation Agreement,
are intended to be a complete exclusion and negation of any representations or
warranties of the Lessor, the Indenture Trustee and the Owner Participant,
express or implied, with respect to the Airframe and each Engine that may
arise pursuant to any law now or hereafter in effect, or otherwise.
Section 5.02. No Modification of Other Warranties. None of the
provisions of this Article 5 or any other provision of this Lease shall be
deemed to amend, modify or otherwise affect the representations, warranties or
other obligations (express or implied) of the Lessee, AVSA, the Manufacturer
or the Engine Manufacturer or any of their respective subcontractors or
suppliers, with respect to the Airframe, the Engines or any Parts incorporated
or installed in or attached to the Airframe or Engines, or to release the
Lessee, AVSA, the Manufacturer or the Engine Manufacturer or any of their
respective subcontractors or suppliers from any such representation, warranty
or obligation. So long as an Event of Default shall not have occurred and be
continuing under this Lease and to the extent permitted under the applicable
warranty, patent indemnity, or service-life policy, (i) the Lessor shall
assign or otherwise make available to the Lessee such rights as the Lessor may
have under any warranty, patent indemnity, or service-life policy made or
given by the Manufacturer, AVSA or Engine Manufacturer or any of their
respective subcontractors or suppliers, and any other claims against the
Manufacturer, AVSA and Engine Manufacturer or any such subcontractor or
supplier with respect to the Aircraft, including all rights to demand, accept
and retain all rights in and to property (other than the Aircraft), data and
services of any kind which the Manufacturer, AVSA and Engine Manufacturer are
obligated to provide and do provide pursuant to the Purchase Agreement or the
GTA with respect to the Aircraft; and (ii) all payments pursuant to any
manufacturer's or subcontractor's warranty, patent indemnity, or service-life
policy obligation shall be paid to the Lessee; provided that the Lessee shall
apply such payments to the cost of repair or correction of any condition of
the Aircraft which gave rise to such payments.
Section 5.03. Certain Agreements of the Lessee. The Lessee agrees with
the Lessor for the benefit of the Owner Participant that the Lessee shall
perform the agreements, covenants and indemnities of the Lessee set forth in
the Participation Agreement to the extent the same are applicable to the Owner
Participant, as fully and to the same extent and with the same force and
effect as if set forth in full in this Article 5.
ARTICLE 6
LIENS
Section 6.01. Liens. The Lessee will not directly or indirectly
create, incur, assume or suffer to exist, and will promptly, at its own cost
and expense, take such action as may be necessary to discharge, any Lien on or
with respect to the Lessor's Estate or this Lease or the Aircraft, the
Airframe or any Engine or any Part or title thereto or any interest therein
except:
(a) the respective rights of the Lessor and the Lessee as provided
in this Lease, the security interest and Lien of the Indenture and the
rights of the Owner Participant, the Lessor and the Indenture Trustee under
the Trust Agreement, the Indenture and the Participation Agreement;
(b) the rights of any sublessee or transferee or other Person under a
sublease, transfer, assignment or other such arrangement expressly
permitted by the terms of this Lease;
(c) Lessor's Liens and Indenture Trustee's Liens to the extent
required to be discharged by the Owner Participant, the Lessor or the
Indenture Trustee, as the case may be, in accordance with Section 7.03(b),
7.04(b) or 7.05(b) of the Participation Agreement;
(d) Liens for taxes imposed against the Lessee either not yet due or
being contested in good faith by appropriate proceedings so long as such
Liens or proceedings do not involve any material danger of the sale,
forfeiture or loss of the Lessor's Estate, the Aircraft, the Airframe or
any Engine or any interest therein or any material risk of civil
liabilities (unless the Owner Trustee, the Indenture Trustee and the Owner
Participant shall be indemnified to its satisfaction against such
liabilities by the Lessee) or any risk of the assertion of criminal charges
against the Lessor, the Owner Participant, the Indenture Trustee or any
Holder;
(e) materialmen's, mechanics', workmen's, repairmen's, employees' or
other like Liens arising against the Lessee in the ordinary course of the
Lessee's business for amounts the payment of which is either not yet due or
is being contested in good faith by appropriate proceedings so long as such
Liens or proceedings do not involve any material danger of the sale,
forfeiture or loss of the Lessor's Estate, the Aircraft, the Airframe or
any Engine or any interest therein; and
(f) Liens arising from judgments or awards against the Lessee with
respect to which (i) at the time an appeal or proceeding for review is
being prosecuted in good faith and with respect to which there shall have
been secured a stay of execution pending such appeal or proceeding for
review and then only for the period of such stay and (ii) there is not, and
such proceedings do not involve, any material danger of the sale,
forfeiture or loss of the Lessor's Estate, the Aircraft, Airframe or any
Engine or any interest therein.
ARTICLE 7
AIRCRAFT REGISTRATION, MAINTENANCE AND OPERATION
Section 7.01. Registration, Maintenance and Operation. The Lessee,
at its own cost and expense, shall:
(a) upon payment by the Lessor of the Purchase Price on the Delivery
Date, cause the Aircraft to be duly registered in the name of the Lessor as
owner, pursuant to the Transportation Code and, subject to the proviso to
Section 6.03(b) of the Participation Agreement, to remain at all times duly
registered pursuant to the Transportation Code and at all times act in
accordance with the rules and regulations of the Aeronautics Authority or
the applicable laws, rules and regulations of any other jurisdiction in
which the Aircraft may then be registered in accordance with Section
6.03(b) of the Participation Agreement;
(b) maintain, inspect, service, repair, test and overhaul the
Aircraft (or cause the same to be done) so as to keep the Aircraft (and any
engine which is not an Engine but is installed on the Aircraft) in as good
operating condition as when delivered to the Lessor on the Delivery Date,
ordinary wear and tear excepted, and in any event (i) in accordance with
the applicable regulations of the Aeronautics Authority or of the
regulatory agency or body of any other jurisdiction in which the Aircraft
may then be registered pursuant to Section 6.03(b) of the Participation
Agreement and the Lessee's maintenance program approved by the Aeronautics
Authority or such agency or body, (ii) in the same manner and with the same
care used by the Lessee with respect to other A300-600 series aircraft and
CF6-80C2-A5F series engines (or other engines permitted by the terms of
this Lease to be used on the Aircraft) owned, operated or leased by the
Lessee, to the extent that the same regulations, and the Lessee's
FAA-approved maintenance program shall apply to any such aircraft and
related engines, owned or leased by the Lessee, and utilized in similar
circumstances, and without discriminating against the Aircraft, with
respect to its use, operation or maintenance in contemplation of the
expiration or termination of this Lease other than withdrawal of the
Aircraft from use and operation as is necessary to prepare the Aircraft for
return to the Lessor upon such expiration or termination, and (iii) so as
to keep the Aircraft in such condition as may be necessary to enable its
airworthiness certification to be maintained in good standing at all times
under the Transportation Code or any applicable rule or regulation of the
applicable regulatory agency or body of any other jurisdiction in which the
Aircraft may then be registered;
(c) maintain, or cause to be maintained, all records, logs and other
materials in respect of the Aircraft required by the Aeronautics Authority,
or the applicable regulatory agency or body of any other jurisdiction in
which the Aircraft may then be registered, all such records and logs to be
maintained in the English language, to the extent required by the
Transportation Code (which records, logs and other materials shall, as
between the Lessor and the Lessee and all parties claiming through the
Lessee, be the property of the Lessor but shall become the property of the
Lessee upon purchase by the Lessee of the Aircraft pursuant to the terms of
this Lease or upon the occurrence of an Event of Loss and the Lessee's
compliance with Section 11.03 hereof);
(d) promptly furnish to the Lessor such information within the
Lessee's possession as may be required to enable the Lessor to file any
reports to be filed by the Lessor with any governmental authority because
of the Lessor's ownership of or the Owner Participant's interest in the
Aircraft;
(e) not maintain, service, repair, overhaul, use or operate the
Aircraft or any Engine in violation of any airworthiness certificate or
registration relating thereto, or in violation of any law or any license,
rule, regulation or order of or by any government or governmental authority
having jurisdiction over the Lessee or the Aircraft or any Engine or for
any purpose for which the Aircraft or any Engine is not designed; provided,
however, that the Lessee (or if a sublease shall then be in effect, the
sublessee thereunder) may in good faith contest the validity or application
of any such law, license, rule, regulation or order in any manner that does
not adversely affect the Lessor, its right, title or interest in the
Aircraft or any Engine or the interests of the Indenture Trustee or the
Owner Participant therein, or in any Operative Agreement (excluding any
interests indemnified for under the Tax Indemnity Agreement) and such
contest or non-compliance will not result in any material risk of loss,
forfeiture or damage to the Aircraft or in any risk of criminal liability
to the Lessor, the Indenture Trustee or the Owner Participant; and if any
such law, license, rule, regulation or order requires alteration of the
Aircraft or any Engine, the Lessee will conform the same therewith at its
own cost and expense and will maintain the Aircraft or any Engine in
compliance with such law, license, rule, regulation or order; and
(f) not operate or locate the Airframe or any Engine, or suffer the
Airframe or any Engine to be operated or located in any area excluded from
coverage by any insurance policy required by the terms of Article 13
hereof, unless the Lessee has obtained, prior to the operation or location
of the Airframe or any Engine in such area, indemnification or other
insurance from the Government, or other insurance acceptable to the Lessor
in its sole discretion, against the risks and in the amounts required by,
and in compliance with, Article 13 hereof covering such area (and naming
the Lessor, or so long as this Lease is assigned to the Indenture Trustee,
the Indenture Trustee, as loss payee in respect of indemnification or
insurance payable in respect of casualties to the Aircraft) or unless the
Aircraft is only temporarily located in such area as a result of an
isolated occurrence attributable to a hijacking, medical emergency,
equipment malfunction, weather conditions, navigational error or other
similar unforeseen circumstances and the Lessee is using its good faith
efforts to remove the Aircraft from such area.
The Lessee may, at any time during the Term, install an engine or
engines on the Airframe and operate the Aircraft with such engine or engines
installed thereon and the Lessor shall have no right, title or interest in and
to any such engine until such time, if any, that such engine is returned to
the Lessor under Section 12.02 hereof.
Section 7.02. Possession and Permitted Transfer and Sublease. (a)
Conditions. The Lessee will not, without the prior written consent of the
Lessor, sublease or otherwise in any manner deliver, transfer or relinquish
possession of the Aircraft, the Airframe or any Engine or install any Engine,
or permit any Engine to be installed, on any airframe other than the Airframe;
provided, that, so long as (i) in the case of clause (i) below, no Event of
Default shall have occurred and be continuing, (ii) the Lien of the Indenture
is not impaired thereby, (iii) all applicable governmental approvals in
connection therewith have been obtained and (iv) the Lessee shall comply with
the provisions of Article 13 hereof, the Lessee may without the prior written
consent of the Lessor:
(i) so long as the sublessee is generally meeting its material
obligations as they come due and is not subject to a proceeding or final
order under applicable bankruptcy, insolvency or reorganization laws on the
date the sublease is entered into, (A) sublease the Aircraft or any Engine
to a U.S. Air Carrier, (B) sublease the Aircraft or any Engine to an Air
Carrier which is principally based in and domiciled in one of the countries
listed on Schedule III of the Participation Agreement, (C) sublease the
Aircraft or any Engine to an Air Carrier that is principally based in and
a domiciliary of a country which is a party to the International Convention
on the Recognition of Rights in Aircraft, or (D) sublease the Aircraft or
any Engine to any other Air Carrier not described in this Section which
shall be reasonably acceptable to the Lessor as evidenced by its prior
written consent; provided, that, with respect to clauses (B) and (C) above,
at all times during any such sublease the United States of America
maintains normal diplomatic relations with the country in which such Air
Carrier is principally based and domiciled. In the case of any sublease (x)
such sublease shall include the provisions required by Section 7.02(b)
hereof and expressly require the sublessee to operate and maintain the
Aircraft in compliance with the applicable provisions of this Lease, (y)
such sublease shall provide that such sublessee will not transfer
possession of, or any other rights to, the subleased Airframe or any Engine
to any other Person without the prior written consent of the Lessor (except
as permitted by subparagraphs (ii) through (viii) below and except that, in
the case of subparagraph (iv), possession of the Aircraft may only be
transferred at the direction of the Lessee) and (z) such sublease shall
expire not later than the expiration of the Basic Term or any applicable
Renewal Term hereof. Prior to any sublease to an Air Carrier permitted
under Section 7.02(a)(i)(B) or (C) above: (I) the maintenance standards of
the aeronautical authority of the country of domicile or principal
operation of the sublessee taken as a whole shall not be materially less
stringent than those of the FAA or at least comparable to those, taken as a
whole, required by the central civil aviation authority of any of the
United Kingdom, France, Canada, Japan or Germany; (II) the Lessee will
provide opinions of counsel (such counsel and the form and substance of
such opinions to be reasonably satisfactory to the Lessor and the Indenture
Trustee) with respect to (A) the legality, validity and enforceability of
the Operative Agreements and the sublease in such country, (B) that the
laws of such country require fair compensation by the government of such
country payable in a currency freely convertible into U.S. dollars for the
loss of the use of or title to the Aircraft in the event of a requisition
of use or title by such government, (C) the Lessor's title to the subleased
equipment will be recognized, (D) the required agreement of such foreign
air carrier that its rights under the sublease are subject and subordinate
to all the terms of this Lease is enforceable against such foreign air
carrier under applicable law (subject only to customary exceptions to
enforceability), (E) that it is not necessary for the Owner Participant,
the Lessor or the Indenture Trustee to register or qualify to do business
in such country as a result of the proposed sublease or in order for the
Owner Participant, the Lessor or the Indenture Trustee to enforce the terms
and conditions of the Operative Agreements, (F) there is no tort liability
of the owner of an aircraft not in possession thereof or of Persons lending
money to such an owner for the purchase of an aircraft, under the laws of
such jurisdiction other than tort liability which might have been imposed
on such owner or Persons under the laws of the United States or any state
thereof (it being understood that, in the event that such latter opinion
cannot be given in a form satisfactory to the Lessor, such opinion shall be
waived if insurance reasonably satisfactory to the Lessor is available to
cover such risk to the Owner Participant and is provided at or before the
execution of such a sublease, at the Lessee's cost and expense), (G) that
there exist no possessory rights in favor of such sublessee under the laws
of such country which would, upon bankruptcy or insolvency of the Lessee
(and assuming that at such time such sublessee is not bankrupt or
insolvent) or of the sublessee, prevent the return of the Aircraft in
accordance with the terms of this Lease and (H) all necessary governmental
approvals required for the subleased equipment, the Airframe or any Engine,
as the case may be, to be imported and, to the extent reasonably
obtainable, exported from the applicable country of domicile upon
repossession of such subleased equipment by the Lessor (and the Lessee as
sublessor), shall have been procured at the Lessee's own cost and expense
by the Lessee prior to commencement of any such sublease; (III) duties and
tariffs, if applicable, shall be paid for by the Lessee and (IV) the Lessee
shall effect or cause to be effected at the Lessee's own cost and expense
all recordings and filings that are required, or reasonably requested by
the Lessor, to continue the Lessor's right, title and interest to the
Aircraft and rights under the Lease (and sublease) and to perfect and
maintain the priority of the Lien of the Indenture;
(ii) subject the Airframe or permit the Airframe to be subjected to
normal interchange agreements or subject the Engines or permit any Engine
to be subjected to normal interchange or pooling agreements or
arrangements, in each case customary in the airline industry, entered into
by the Lessee in the ordinary course of its business with a vendor
domiciled in the United States or in a country with which the United States
maintains normal diplomatic relations or (x) any United States air carrier
certificated under Section 41102(a) of the Transportation Code or any
successor provision or (y) any "foreign air carrier" (as such term is
defined in the Transportation Code) as to which there is in force a permit
granted under Section 41302 of the Transportation Code and which is (I)
organized in a country listed on Schedule III to the Participation
Agreement, (II) organized in a country with which the United States then
maintains normal diplomatic relations, (III) is a party to the Convention
on the International Recognition of Rights in Aircraft or (IV) otherwise
provides equivalent protection to owners, lessors and mortgagees of
aircraft; provided that no transfer of the registration of the Airframe or
any Engine shall be effected and that throughout the period that the
Airframe or any Engine is subjected to such interchange or pooling
agreement or arrangement the terms of this Lease shall be observed; and
provided, further, that no such agreement or arrangement contemplates or
requires the transfer of title to or registration of the Airframe or any
Engine, and if the Lessor's title to any Engine shall nonetheless be
divested under any such agreement or arrangement, such divestiture shall be
deemed to be an Event of Loss with respect to such Engine and the Lessee
shall comply with Section 11.04 of this Lease in respect of such Engine;
(iii) deliver or permit the delivery of possession of the Airframe or
any Engine to their respective manufacturers or certified maintenance
providers for testing, service, repair, maintenance or overhaul work or for
alterations or modifications in or additions to the Airframe or any Engine
to the extent required or permitted by the terms of Article 9 hereof;
(iv) transfer or permit the transfer of possession of the Airframe
or any Engine pursuant to a contract or agreement with the Government or
pursuant to the Civil Reserve Air Fleet Program ("CRAF Program")
administered pursuant to Executive Order No. 12056, as amended, or any
similar or substitute programs of the Government, so long as the Lessee (or
any permitted sublessee or transferee pursuant to this Section) shall
promptly notify the Lessor upon such transfer of possession and provide the
Lessor and the Indenture Trustee with the name and address of the
Contracting Officer or representative of the Military Aircraft Command of
the United States Air Force to whom notices must be given in respect of the
Aircraft, provided, that if such transfer of possession continues beyond the
end of the Basic Term or the then-current Renewal Term, the Basic Term or
the Renewal Term, as applicable, shall be automatically extended (including
the obligation to pay Rent per diem at a rate equal to the Fair Market
Rental) for six (6) months after the end of the Term (or, if shorter, until
the date of return of the Aircraft);
(v) install or permit the installation of an Engine on an airframe
which is owned by the Lessee or any permitted sublessee free and clear of
all Liens, except (A) Liens of the type permitted under Section 6.01
hereof, (B) Liens which apply only to the engines (other than an Engine),
appliances, parts, instruments, appurtenances, accessories, furnishings and
other equipment (other than Parts) installed on such airframe and which do
not apply to substantially all of such airframe and (C) the rights of an
Air Carrier under normal interchange or pooling agreements which are
customary in the airline industry and do not contemplate or require the
transfer of title to such airframe or the engines installed on it;
(vi) install or permit the installation of an Engine on an airframe
leased to the Lessee or any permitted sublessee or transferee or purchased
by the Lessee subject to a conditional sale or other security agreement,
provided that (A) such lease, conditional sale or other security agreement
does not cover the Engine so installed and the Lessee shall have received
from the lessor, conditional vendor or secured party of such airframe an
agreement (which may be the lease or conditional sale or other security
agreement covering such airframe), whereby such lessor, conditional vendor
or secured party expressly agrees that neither it nor its successors or
assigns will acquire or claim any right, title or interest in any Engine
by reason of such Engine being installed on such airframe at any time, and
(B) such airframe is and remains free and clear of all Liens except the
rights of the parties to the lease or conditional sale or other security
agreement covering such airframe and Liens of the type permitted by
subparagraph (v) of this Section 7.02(a);
(vii) install or permit the installation of an Engine on an airframe
owned by the Lessee, leased to the Lessee or purchased by the Lessee
subject to a conditional sale or other security agreement under
circumstances where neither subparagraph (v) nor subparagraph (vi) of this
Section 7.02(a) is applicable, provided that such installation shall be
deemed an Event of Loss with respect to such Engine and the Lessee shall
comply with Section 11.04 hereof in respect of such Engine, the Lessor not
intending to waive any right, title or interest it may have to or in such
Engine under applicable law until compliance by the Lessee with such
Section 11.04; and
(viii) enter into a wet lease under which the Lessee has effective
control of the Aircraft in the ordinary course of the Lessee's business
which shall not be considered a transfer of possession hereunder, provided
that the Lessee's obligations under this Lease shall continue in full force
and effect notwithstanding any such wet lease.
(b) Rights of Transferee. Notwithstanding the provisions of Section
7.02(a) hereof, the rights of any transferee who takes possession of the
Aircraft, the Airframe or any Engine by reason of a transfer permitted by
Section 7.02(a) hereof shall be subject and subordinate to, and any sublease
or wet lease permitted by Section 7.02(a) hereof shall be made expressly
subject and subordinate to, all the terms of this Lease, including, without
limitation, the Lessor's right to repossession pursuant to Article 17 hereof
and to avoid such sublease upon such repossession, and the Lessee shall remain
primarily liable for the performance of all the terms of this Lease to the
same extent as if such sublease or transfer had not occurred. Any such
sublease shall be for a term shorter than the Lease (as such Lease shall have
been extended in accordance with its terms) and shall include appropriate
provisions for the maintenance, inspection (as required by Section 14.01
hereof), operation, use and insurance of the Aircraft, the Airframe and each
Engine in accordance with the provisions of this Lease and shall provide
assurances reasonably satisfactory to the Lessor that the sublessee may not
further sublease any of such equipment. The Lessee shall notify the Lessor
within ten (10) Business Days after the consummation of any sublease which has
a term greater than one year. The Lessee shall promptly provide the Lessor,
the Owner Participant and the Indenture Trustee a copy of any sublease (if so
requested by the Lessor) and, prior to execution and delivery of any sublease
deliver to Lessor all other documents required hereunder relating to such
sublease or transfer of possession.
(c) No Release of Lessee/Costs of Subleasing. No sublease,
interchange or pooling agreement or other relinquishment of possession
permitted under this Article 7 of any of the Aircraft, the Airframe or any
Engine shall in any way discharge or diminish any of the Lessee's obligations
to the Lessor, the Indenture Trustee or the Owner Participant under this
Lease, the Participation Agreement or the Tax Indemnity Agreement or
constitute a waiver of any of the Lessor's rights and remedies hereunder or
thereunder or extend beyond the end of the Term (except as provided in Section
7.02(a)(iv) hereof). Subject to the terms and conditions of this Lease, the
Lessee will retain the right to cure any default by any sublessee permitted
pursuant to this Section 7.02 and to terminate such sublease upon such
default. The Lessee shall pay all costs of the Owner Participant, the
Indenture Trustee and the Lessor incurred in connection with any subleasing or
proposed subleasing.
Section 7.03. Insignia. (a) Nameplate. On or prior to the Delivery
Date or as soon thereafter as possible, the Lessee agrees to affix to and
maintain in the cockpit of the Airframe, in a clearly visible location, and on
each Engine, a clearly visible metal nameplate bearing the inscription "NBD
BANK, AS OWNER TRUSTEE, OWNER AND LESSOR," and, so long as such Airframe or
Engines shall be subject to the Lien of the Indenture, the additional
inscription "THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION), AS INDENTURE
TRUSTEE, MORTGAGEE" (such nameplate to be replaced, if necessary, from time to
time with a nameplate reflecting the name of any successor Lessor or successor
Indenture Trustee, in each case as permitted by the Operative Agreements).
(b) Lessee's Marks. Except as provided in Section 7.03(a) hereof,
the Lessee will not allow the name of any Person to be placed on the Airframe
or any Engine as a designation that might be interpreted as a claim of
ownership; provided, that during the Term, the Lessee may cause the Aircraft
to be lettered "Federal Express Corporation" or may letter, paint or xxxx it
in some other appropriate manner for convenience of identification of the
Lessee's interest or the interest of any permitted sublessee (including but
not limited to the Lessee's or any permitted sublessee's customary colors and
insignia) and to bear insignia plates or other markings identifying the
supplier or manufacturer of the Airframe or the Engines or any Parts of either.
ARTICLE 8
REPLACEMENT AND POOLING OF PARTS
Section 8.01. Replacement of Parts. (a) Generally. The Lessee, at
its own cost and expense, will replace or cause to be replaced as promptly as
practicable all Parts which may from time to time be incorporated or installed
in or attached to the Airframe or any Engine and which may from time to time
become worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond
repair or permanently rendered unfit for use for any reason, except as
otherwise provided in Section 9.01 or 9.02 hereof. In addition, the Lessee
may, at its own cost and expense, remove or cause to be removed in the
ordinary course of maintenance, service, repair, overhaul or testing, any
Parts, whether or not worn out, lost, stolen, destroyed, seized, confiscated,
damaged beyond repair or permanently rendered unfit for use, provided that the
Lessee, except as otherwise provided in Sections 9.01 or 9.02 hereof, will, at
its own cost and expense, replace such Parts as promptly as practicable. All
replacement parts shall be free and clear of Liens (except for pooling
arrangements to the extent permitted by Section 8.02 hereof and Liens
permitted under Section 6.01 hereof) and shall be in at least as good
operating condition as, and shall have a value and utility at least equal to,
the Parts replaced, and in any event not less than the condition and repair
required to be maintained by the provisions of this Lease.
(b) Title. All Parts at any time removed from the Airframe or any
Engine shall remain the property of the Lessor until such Parts shall be
replaced by parts which have been incorporated or installed in or attached to
the Airframe or such Engine and which meet the requirements for replacement
parts specified in Section 8.01(a) hereof. Immediately upon any replacement
part (other than, to the extent permitted by Section 8.02 hereof, a
replacement part subject to a pooling arrangement) becoming incorporated or
installed in or attached to the Airframe or any Engine, and without further
act:
(i) title to the replaced part shall vest in the Lessee, free and
clear of all rights of the Lessor, and such replaced Part shall no longer
be deemed a Part under this Lease;
(ii) title to such replacement part shall vest in the Lessor free
and clear of all Liens (except for Liens permitted by Section 6.01 hereof)
and shall thereupon be and become a Part; and
(iii) such replacement Part shall become subject to this Lease and to
the Lien of the Indenture, and shall be deemed part of the Airframe or such
Engine for all purposes to the same extent as the Parts originally
incorporated or installed in or attached to the Airframe or such Engine.
Section 8.02. Pooling of Parts. Any Part removed from the Airframe
or any Engine as permitted in Section 8.01(a) hereof may be subjected by the
Lessee to any normal pooling arrangement customary in the U.S. airline
industry and entered into with vendors and other Air Carriers in the ordinary
course of the Lessee's business, provided that the part replacing such removed
Part shall be incorporated or installed in or attached to the Airframe or such
Engine in accordance with Section 8 hereof, as promptly as practicable after
the removal of such removed Part. In addition, any replacement part when
incorporated or installed in or attached to the Airframe or any Engine in
accordance with Section 8.01(a) hereof may be owned by another Air Carrier
subject to such normal pooling arrangement, provided that the Lessee, at its
own cost and expense and as promptly as possible, either:
(a) causes title to such replacement part to vest in the Lessor in
accordance with Section 8.01(b) hereof by the Lessee acquiring title to
such replacement part for the benefit of, and transferring such title to,
the Lessor free and clear of all Liens (other than Liens permitted under
Section 6.01 hereof); or
(b) replaces such replacement part by incorporating or installing in
or attaching to the Airframe or such Engine a further replacement part
owned by the Lessee free and clear of all Liens (other than Liens permitted
under Section 6.01 hereof) and by causing title to such further replacement
part to vest in the Lessor in accordance with Section 8.01(b) hereof.
All such replacement parts and further replacement parts shall meet
the standards set forth in the last sentence of Section 8.01(a) hereof.
ARTICLE 9
ALTERATIONS, MODIFICATIONS AND ADDITIONS
Section 9.01. Required Alterations and Modifications. The Lessee, at
its own cost and expense, shall make or cause to be made such alterations and
modifications in and additions to the Airframe and each Engine as may be
required from time to time to meet the applicable requirements of the
Aeronautics Authority or any other governmental authority with jurisdiction
over the Lessee's operations and aircraft; provided, however, that the Lessee
or sublessee, as the case may be, may in good faith contest the validity or
application of any such requirements in any reasonable manner that does not
involve any material risk of civil liabilities (unless indemnified by the
Lessee) or any risk of criminal penalties being imposed on or against the
Indenture Trustee, the Owner Participant or the Lessor, that does not involve
any material risk or danger of loss, forfeiture or sale of the Aircraft or any
Engine and that does not adversely affect the Lessor, its title or interest in
the Aircraft or any Engine, the first and prior perfected Lien and security
interest of the Indenture, or the interests of the Indenture Trustee or the
Owner Participant in the Airframe or any Engine, or in any Operative Agreement
(excluding any interests indemnified for under the Tax Indemnity Agreement).
All such alterations, modifications or additions shall be made on or before
the date mandated therefor, taking into account authorized postponements
resulting from a contest or otherwise and shall be made at such time and in
such a manner so as not to discriminate against the Aircraft whether by reason
of its leased status or otherwise.
Section 9.02. Other Alterations and Modifications. (a) Generally.
The Lessee, at its own cost and expense, may from time to time make such
alterations and modifications in and additions to the Airframe or any Engine
as the Lessee may deem desirable in the proper conduct of its business,
including, without limitation, removal of Obsolete Parts in its usual course
of maintenance, provided that no such alteration, modification, addition or
removal, individually or in the aggregate, shall create any adverse tax
consequences for the Owner Participant not otherwise indemnified for, diminish
the value, remaining useful life, or utility of the Airframe or the value or
utility of any Engine or impair its condition or airworthiness below its
value, remaining useful life (in the case of the Airframe only), utility,
condition and state of airworthiness immediately prior to such alteration,
modification, addition or removal, assuming that the Airframe or such Engine
was then in the condition and airworthiness required to be maintained by the
terms of this Lease, or cause the Airframe or any Engine to become "limited
use property" within the meaning of Revenue Procedure 76-30, 1976-2 C.B. 647,
except that the value (but not the remaining useful life, utility, condition
or airworthiness) of the Aircraft may be reduced by the value, if any, of any
such Obsolete Parts which shall have been removed; provided that in no event
shall the aggregate value of all such Obsolete Parts which shall have been so
removed and not replaced exceed $500,000.
(b) Title to Installed Parts. Title to each part incorporated or
installed in or attached or added to the Airframe or any Engine as the result
of any alteration, modification, removal or addition made pursuant to Section
9.01 or 9.02(a) hereof shall without further act vest in the Lessor and become
subject to this Lease; provided, however, that the Lessee may remove any such
Part at any time during the Term if:
(i) such Part is in addition to, and not in replacement of or
substitution for, any Part originally incorporated or installed in or
attached or added to the Airframe or such Engine on the Delivery Date or
any Part in replacement of, or substitution for, any such Part;
(ii) such Part is not required to be incorporated or installed in or
attached or added to the Airframe or such Engine pursuant to the terms of
Article 7 hereof or the first sentence of Section 9.01 hereof; and
(iii) such Part can be removed from the Airframe or such Engine
without (A) causing material damage to the Airframe or such Engine (it
being understood that the Lessee shall repair any damage caused by a
permitted removal) or diminishing or impairing the value, utility,
condition or airworthiness or remaining useful life of the Airframe
required to be maintained by the terms of this Lease or (B) diminishing the
value, utility or remaining useful life (in the case of the Airframe) or
the value and utility (in the case of such Engine) which the Airframe or
such Engine would have had at such time had such alteration, modification,
removal or addition not occurred, assuming the Airframe or such Engine was
then in the condition required to be maintained by the terms of this Lease.
(c) Title to Removed Parts. Upon the removal by the Lessee of any
such Part as provided in subsection (b) above, title thereto shall, without
further act, vest in the Lessee and such Part shall no longer be deemed a
Part. Any Part not removed by the Lessee as above provided prior to the
return of the Aircraft to the Lessor hereunder shall remain the property of
the Lessor and subject to this Lease.
ARTICLE 10
VOLUNTARY TERMINATION
Section 10.01. Right of Termination upon Obsolescence or Surplus.
(a) Option to Terminate. So long as no Event of Default shall have occurred
and be continuing, the Lessee shall have the right, at its option, on any
Termination Date, on no more than 180 days' and at least 90 days' prior
written notice (which notice shall state the proposed Termination Date (the
"Proposed Termination Date")) to the Lessor and the Owner Participant to
terminate this Lease as of a Termination Date if the Aircraft shall have
become obsolete or surplus to the operations of the Lessee; provided that
the Lessee shall have furnished to the Lessor, the Indenture Trustee and
the Owner Participant a certificate of the Lessee's President, Chief
Executive Officer, Chief Financial Officer, Chief Operating Officer,
Treasurer or Assistant Treasurer stating the determination of the Lessee
that the Aircraft is obsolete or surplus to its needs. Unless the Lessor
has elected to retain the Aircraft as herein provided, the Lessee shall
have the right on no more than two occasions to revoke its notice of
termination no later than the Business Day prior to the day that is 15 days
prior to the Proposed Termination Date whereupon this Lease shall continue
in full force and effect. The Lessee shall reimburse any reasonable
expenses incurred by the Owner Participant in connection with any proposed
termination whether or not revoked.
(b) Sale Procedure. During the period from the giving of notice
pursuant to Section 10.01(a) hereof until the Proposed Termination Date, the
Lessee, as non-exclusive agent for the Lessor, shall use its reasonable
efforts to obtain bids for the cash purchase on the Proposed Termination Date
(or such earlier date as shall be consented to in writing by the Lessor) of
the Aircraft. On the Proposed Termination Date, the Engines shall be
installed on the Airframe (provided that the Airframe may be sold with engines
meeting the requirements set forth herein for Replacement Engines in lieu of
the Engines so long as the aggregate number of Engines and Replacement Engines
being sold with the Airframe equals two). The Lessor may, if so directed by
the Owner Participant, seek to obtain such bids. The Owner Participant shall
not inspect any bids received by the Lessee with respect to the Aircraft,
unless the Owner Participant has given to the Lessee binding and irrevocable
notice that neither the Owner Participant nor any of its Affiliates nor any
Person acting for the Owner Participant or such Affiliate will submit a bid
for the purchase of the Aircraft and if such notice has been given, the Lessee
will provide the Lessor with copies of bids received by the Lessee. No bid
may be submitted by the Lessee or any Person affiliated with the Lessee (or
with whom or which there is any arrangement or understanding as to the
subsequent use of the Aircraft by the Lessee or any of its Affiliates) or any
agent or Person acting on behalf of the Lessee. The Lessee may reject any bid
which is less than the sum of the applicable Termination Value, the aggregate
amount of any Make-Whole Premium and all other expenses incurred by the
Lessor, the Owner Participant and the Indenture Trustee in connection with the
sale. Subject to the provisions of Section 10.02 hereof, on the Proposed
Termination Date or such earlier date of sale as shall be consented to in
writing by the Lessor, the Lessee shall deliver the Airframe which shall have
the Engines installed on it (provided that the Airframe may be delivered with
installed engines meeting the requirements set forth herein for Replacement
Engines in lieu of the Engines so long as the aggregate number of Engines and
Replacement Engines being delivered with the Airframe equals two and the
Lessee shall comply with the provisions of Section 11.04 hereof as if an Event
of Loss occurred with regard to the Engines) to the bidder which shall have
submitted the highest cash bid (whether certified to the Lessor by the Lessee
or directly received by the Lessor and certified to the Lessee) in the same
manner as if delivery were made to the Lessor pursuant to Article 12 hereof,
at a location specified by such bidder, and shall duly transfer to the Lessor
title to any such engines not owned by the Lessor, and the Lessor shall, upon
payment in full of the bid price and all amounts due and owing pursuant to
Section 10.01(c) hereof by wire transfer of immediately available funds and
upon discharge of the Lien of the Indenture in accordance with Article XIV
thereof, sell the Airframe and Engines or engines to such bidder without
recourse or warranty (except as to the absence of Lessor's Liens).
(c) Payments to the Lessor. The total selling price realized at a
sale pursuant to Section 10.01(b) hereof net of all expenses of the sale
(including commissions and any sales or transfer taxes) (the "Net Sales
Price") shall be retained by the Lessor (or the Indenture Trustee as long as
the Indenture is in force) and, in addition, on or before the Proposed
Termination Date, the Lessee shall pay to the Lessor (or the Indenture Trustee
as long as the Indenture is in force), by wire transfer of immediately
available funds, the sum of:
(i) the excess, if any, of the Termination Value for the Aircraft
computed as of the Proposed Termination Date over the Net Sales Price; plus
(ii) the installment of Basic Rent due with respect to the Aircraft on
the Proposed Termination Date to the extent payable in arrears but not to
the extent payable in advance; plus
(iii) all other amounts then due and payable by the Lessee (including,
without limitation, the aggregate amount of any Make-Whole Premium, if the
Proposed Termination Date occurs prior to the applicable Premium Termination
Date) under this Lease and any other Operative Agreement.
(d) Transfer of Uninstalled Engines. Upon payment of the amounts
described in Section 10.01(c) hereof and upon transfer to the Lessor of title
to engines which have been returned in lieu of Engines as provided in Section
10.01(b) hereof, and upon payment of all other amounts then due under this
Lease, the Lessor will transfer to the Lessee, without recourse or warranty
(except as to the absence of Lessor's Liens), all of the Lessor's right, title
and interest in and to any Engines which were replaced with engines pursuant
to Section 10.01(b) hereof, and shall deliver to the Lessee such instrument as
the Lessor shall have received from the Indenture Trustee releasing such
Engines from the Lien of the Indenture.
(e) Limitation on the Lessor's Duties. The Lessor shall be under no
duty to solicit bids, to inquire into the efforts of the Lessee to obtain bids
or otherwise to take any action in connection with any such sale other than to
transfer to the purchaser named in the highest cash bid (determined as
described in Section 10.01(b) above) as referred to above (or to such
purchaser and to the Lessee, as the case may be), without recourse or warranty
(except as to the absence of Lessor's Liens), all of the Lessor's right, title
and interest in and to the Aircraft, against receipt by the Lessor of the
payments provided for in Section 10.01(c) hereof.
(f) Termination of the Lessee's Obligations. Upon the sale of the
Aircraft pursuant to this Section 10.01 and upon compliance by the Lessee with
the further provisions of this Article 10, the obligation of the Lessee to pay
Basic Rent with respect to the Aircraft shall cease for any Rent Payment Date
occurring after the Proposed Termination Date and the Term shall end effective
as of the Proposed Termination Date. If no sale shall have occurred on or
before the Proposed Termination Date, this Lease shall continue in full force
and effect and, for purposes of Section 10.01(a) hereof, it shall be deemed
that the Lessee has rescinded its notice of termination, and the Lessee shall
pay the expenses incurred by the Lessor, the Indenture Trustee and the Owner
Participant in connection with the proposed sale.
Section 10.02. Retention of Aircraft by the Lessor. (a) Generally.
Notwithstanding Section 10.01 hereof, the Lessor may, subject to Section
10.02(b) hereof, elect to retain the Aircraft after receipt of the Lessee's
notice of termination given in accordance with Section 10.01(a) hereof, by
giving the Lessee and the Indenture Trustee written irrevocable notice of such
election not less than sixty (60) days prior to the Proposed Termination Date.
If the Lessor so elects, the Lessee shall pay to the Lessor on the Proposed
Termination Date, by wire transfer of immediately available funds the sum of:
(i) the installment of Basic Rent due with respect to the Aircraft on
the Proposed Termination Date to the extent payable in arrears but not to
the extent payable in advance; plus
(ii) all other amounts then due and payable by the Lessee under this
Lease and any other Operative Agreement, including the aggregate amount of
any Make- Whole Premium (if the Proposed Termination Date occurs prior to
the applicable Premium Termination Date), on or prior to the Payment Date.
(b) Payment of the Certificates. It shall be an absolute condition
precedent to the Lessor's right to retain the Aircraft and to the termination
of the Term pursuant to this Section 10.02 that the Lessor (or the Lessee to
the extent set forth in Section 10.02(a) hereof) shall have paid to the
Holders and such Holders shall have received the entire outstanding principal
amount of, the aggregate amount of any Make-Whole Premium and accrued interest
on the Certificates on the Termination Date and all other sums due and owing
to the Indenture Trustee and the Holders on or prior to the Termination Date
under this Lease, the Indenture or any other Operative Agreement.
(c) Delivery of Aircraft to Lessor; Title to Engines. If the Lessor
elects to retain the Aircraft pursuant to this Section 10.02, the Lessee shall
deliver the Airframe and the Engines (provided that the Airframe may be
delivered with engines meeting the requirements set forth herein for
Replacement Engines in lieu of the Engines so long as the aggregate number of
Engines and engines being delivered with the Airframe equals two and provided
that the other requirements of Section 11.04 hereof are met as if an Event of
Loss has occurred with regard to the Engines) to the Lessor in the same manner
as if delivery were made to the Lessor pursuant to Article 12 hereof, and
shall duly transfer to the Lessor right, title and interest to any such
engines not owned by the Lessor, all in accordance with Article 12 hereof.
Upon such delivery of the Airframe and Engines or engines to the Lessor and
payment by the Lessee of any amounts required to be paid by the Lessee
pursuant to Section 10.02(a) hereof, the Lessor will transfer to the
Lessee, without recourse or warranty (except as to the absence of Lessor's
Liens), all of the Lessor's right, title and interest in and to any Engines
which were replaced by engines pursuant to this Section 10.02(c), and shall
deliver to the Lessee such instrument as the Lessor shall have received
from the Indenture Trustee releasing such Engines from the Lien of the
Indenture.
(d) Termination of the Lessee's Obligations. Upon compliance by
the Lessor and the Lessee with the provisions of this Section 10.02 and upon
compliance by the Lessee with the further provisions of this Article 10, the
obligation of the Lessee to pay Basic Rent with respect to the Aircraft shall
cease for any Rent Payment Date occurring after the Termination Date and the
Term shall end effective as of the Termination Date.
Section 10.03. Voluntary Termination as to Engines. The Lessee shall
have the right at its option and at any time, on at least thirty (30) days'
prior written notice to the Lessor, to terminate this Lease with respect to
any Engine not then installed or held for use on the Airframe, provided that
prior to the date of such termination, the Lessee shall comply with the terms
of Section 11.04 hereof to the same extent as if an Event of Loss had occurred
with respect to such Engine.
ARTICLE 11
LOSS, DESTRUCTION, REQUISITION
Section 11.01. Lessee's Election Rights. The Lessee shall notify the
Lessor, the Indenture Trustee and the Owner Participant as soon as practicable
but in no event more than 10 Business Days following the occurrence of an
event which constitutes, or would with the passage of time constitute, an
Event of Loss with respect to the Airframe or with respect to the Airframe and
the Engines or engines then installed on the Airframe. By written notice to
the Lessor, the Indenture Trustee and the Owner Participant delivered within
60 days of the occurrence of any Event of Loss, the Lessee shall have the
right to elect the alternative set forth in Section 11.02 hereof or the
alternative set forth in Section 11.03 hereof. The Lessee's failure to make
such election within said 60-day period shall be deemed to be an election of
the alternative set forth in Section 11.02 hereof.
Section 11.02. Payment of Stipulated Loss Value. (a) The Lessee
shall, if it has so elected or is deemed to have so elected under Section
11.01 hereof, pay to the Lessor, by wire transfer of immediately available
funds on the earlier of (i) the fifteenth day following receipt in full of
insurance proceeds or requisition proceeds, described in Section 11.05 hereof,
in connection with such Event of Loss and (ii) the 120th day after the
occurrence of such Event of Loss (the earlier of such dates being referred to
herein as the "Loss Payment Date"), the sum of (A) the Stipulated Loss Value
for the Aircraft, determined as of the Stipulated Loss Value Determination
Date next preceding the Loss Payment Date (or, if the Loss Payment Date occurs
on a Stipulated Loss Value Determination Date, determined as of such
Stipulated Loss Value Determination Date) together with interest on such
amount at the Debt Rate from such Stipulated Loss Value Determination Date to
the Loss Payment Date, plus (B) any and all Interim Rent and Basic Rent due
and payable on or prior to the relevant Stipulated Loss Value Determination
Date and unpaid, plus (C) any and all Supplemental Rent due and payable on or
prior to such Loss Payment Date, plus (D) all other amounts owing by the
Lessee or the Owner Trustee to the Indenture Trustee or the Holders under the
Indenture and the other Operative Agreements, plus (E) any reasonable
out-of-pocket expenses incurred in connection with such Event of Loss and the
related prepayment of the Certificates by the Lessor, the Owner Participant
and the Indenture Trustee, minus (F) if the relevant Stipulated Loss Value
Determination Date is a Rent Payment Date, the portion, if any, of the Interim
Rent and Basic Rent installment due and paid by the Lessee on such Stipulated
Loss Value Determination Date pursuant to Section 3.02 hereof to the extent
such Interim Rent and Basic Rent installment (or portion thereof) is
designated on Schedule II hereto as being payable in advance, together with
an imputed interest amount in respect of such advance payment of Interim Rent
and Basic Rent (or portion thereof) at the Debt Rate from the date of payment
of such Interim Rent and Basic Rent installment (or portion thereof) by the
Lessee to the Loss Payment Date; provided that in no event shall there be
subtracted pursuant to clause (F) an amount such that the Holders shall not be
paid in full.
(b) Termination of Lease; Title Transfer. Upon payment in full of
the amounts due pursuant to Section 11.02(a) hereof, the obligation of the
Lessee to pay Interim Rent and Basic Rent on any Rent Payment Date occurring
subsequent to the payment of such amounts shall terminate and the Term shall
end. Further, upon such payment, the Lessor will transfer to the Lessee,
without recourse or warranty (except as to the absence of Lessor's Liens), all
of the Lessor's right, title and interest, if any, in and to the Airframe,
Engines and engines with respect to which such Event of Loss occurred, as well
as all of the Lessor's right, title and interest in and to any Engines
constituting part of the Aircraft but not installed on the Airframe when such
Event of Loss occurred, and will deliver to the Lessee such instrument as the
Lessor shall have received from the Indenture Trustee, releasing such Aircraft
from the Lien of the Indenture.
Section 11.03. Replacement of Airframe and Engines. (a) Generally.
So long as no Payment Default, Bankruptcy Default or Event of Default shall
have occurred and be continuing, and subject to Section 11.01 hereof, if the
Lessee has elected to replace the Airframe and Engines suffering an Event of
Loss pursuant to this Section 11.03, the Lessee shall cause to be duly
conveyed to the Lessor within one hundred twenty (120) days after the
occurrence of such Event of Loss, as replacement for the Airframe and Engines
with respect to which such Event of Loss has occurred, good and marketable
title to an Airbus A300F4-605R airframe manufactured after October 22, 1994
(the "Replacement Airframe") and good and marketable title to a number of
Replacement Engines equal to the number of Engines with respect to which an
Event of Loss has occurred, provided that following compliance with all other
terms of this Section 11.03 each Engine shall be of identical make and model
and manufactured after October 22, 1994 and, in the case of such Replacement
Airframe and each such Replacement Engine, will be owned by the Lessee free
and clear of all Liens not excepted in Section 6.01(a), (b), (c) and (e)
hereof, duly certified as an airworthy aircraft by the Aeronautics Authority,
and having in the case of the Replacement Airframe a value, remaining useful
life and utility, and in the case of the Replacement Engines a value and
utility, at least equal to, and being in as good operating condition as, the
Airframe and Engines with respect to which such Event of Loss occurred,
assuming that the Airframe and Engines were then in the condition and state of
airworthiness required to be maintained by the terms of this Lease immediately
prior to the occurrence of such Event of Loss. In such case and as a
condition to such substitution the Lessee, at its own cost and expense, will
also promptly:
(i) furnish the Indenture Trustee with originals of, and the Lessor
with copies of, full warranty bills of sale, in form and substance
satisfactory to the Lessor and the Indenture Trustee, with respect to such
Replacement Airframe and Replacement Engines together with an assignment in
form and substance satisfactory to the Lessor and the Indenture Trustee of
any and all manufacturer's warranties applicable thereto and a consent
reasonably satisfactory to the Lessor and the Indenture Trustee from such
manufacturer or manufacturers to such assignment;
(ii) cause such Replacement Airframe and Replacement Engines to be duly
registered in the name of the Lessor pursuant to the Transportation Code or
the applicable laws of any other jurisdiction in which the Aircraft may
then be registered in accordance with Section 6.03(b) of the Participation
Agreement;
(iii) cause a Lease Supplement with respect to such Replacement
Airframe and Replacement Engines to be duly executed by the Lessee and
recorded pursuant to the Transportation Code, or the applicable laws, rules
and regulations of any other jurisdiction in which the Aircraft may then be
registered as permitted by Section 6.03(b) of the Participation Agreement;
(iv) furnish the Lessor, the Indenture Trustee and the Owner
Participant with an appraisal or other report of a nationally recognized
aircraft appraiser based on an inspection of such Replacement Airframe and
Replacement Engines reasonably satisfactory to the Indenture Trustee and
the Owner Participant certifying that such Replacement Airframe has a
value, remaining useful life and utility, and such Replacement Engines have
a utility and, in the aggregate, value, at least equal to, and are in as
good operating condition as, the Airframe and Engines replaced, assuming
such Airframe and Engines were in the condition and repair required by the
terms of this Lease immediately prior to the occurrence of such Event of
Loss;
(v) furnish the Lessor, the Indenture Trustee and the Owner
Participant with such evidence as the Lessor or the Indenture Trustee may
reasonably request of compliance with the insurance provisions of Article
13 hereof with respect to such Replacement Airframe and Replacement Engines;
(vi) provide the Owner Participant and the Lessor with (A) an opinion
of counsel selected by the Owner Participant and reasonably acceptable to
the Lessee (which opinion shall be reasonably satisfactory in form and
substance to the Owner Participant and the Lessor) that it will suffer no
adverse tax consequence not otherwise indemnified for as a result of such
substitution or (B) an indemnity reasonably acceptable to the Lessor and
the Owner Participant against such consequences;
(vii) comply with the provisions of Section 9.08 of the Indenture;
(viii) cause an Indenture Supplement with respect to such Replacement
Airframe and Replacement Engines to be duly executed by the Lessor and the
Indenture Trustee and recorded pursuant to the Transportation Code, or the
applicable laws, rules and regulations of any other jurisdiction in which
the Aircraft may then be registered as permitted by Section 6.03(b) of the
Participation Agreement in order that the Lien of the Indenture shall
constitute a first and prior perfected Lien and security interest on and in
respect of such Replacement Airframe and Replacement Engines;
(ix) take such other action, including the filing of UCC financing
statements naming the Indenture Trustee as a secured party with the
Secretary of State of Michigan and the filing of a notice with the
Secretary of State of Tennessee, as the Lessor or the Indenture Trustee may
reasonably request in order that such Replacement Airframe and Replacement
Engines shall be duly and properly titled in the Lessor, leased under this
Lease and subjected to the Lien of the Indenture to the same extent as the
replaced Airframe and Engines;
(x) furnish the Indenture Trustee with an opinion (reasonably
satisfactory in form and substance to the Lessor, the Owner Participant and
the Indenture Trustee) of counsel to the Lessee (which may be the Lessee's
General Counsel) addressed to the Indenture Trustee and the Owner
Participant to the effect that (A) the Lessor has good title to such
Replacement Airframe and Replacement Engines, and (B) such Replacement
Airframe and Replacement Engines have been validly subjected to the Lien of
the Indenture (with the effect and result that the Indenture constitutes a
first priority duly perfected security interest and Lien on such
Replacement Airframe and Replacement Engines); and
(xi) cause to be delivered to the Lessor, the Owner Participant and the
Indenture Trustee (a) an opinion of counsel to the Lessee addressed to the
Lessor, the Owner Participant and the Indenture Trustee as to the due
registration of the Aircraft and the due recordation of the requisite
documents or instruments and the validity and perfection of the Lien in
such Replacement Airframe and Replacement Engines and (b) a certificate
signed by the Vice President and Treasurer or any other duly authorized
officer of the Lessee stating that no Payment Default, Bankruptcy Default
or Event of Default has occurred or is continuing.
(b) Title to Replaced Equipment. Upon compliance by the Lessee with
the terms of Section 11.03(a) hereof, the Lessor will transfer to the Lessee
(subject to any insurer's salvage rights), without recourse or warranty
(except as to the absence of Lessor's Liens), all of the Lessor's right, title
and interest, if any, in and to the Airframe and Engines with respect to which
such Event of Loss occurred. In connection with such transfer, the Lessee
shall prepare and the Lessor shall execute or forward to the Indenture Trustee
for execution, as the case may be, all in recordable form, a xxxx of sale
evidencing such transfer, a release of the Airframe and Engines with respect
to which such Event of Loss occurred from the Indenture and such other
documents as the Lessee reasonably requests, all at the Lessee's sole cost and
expense. Any Engine constituting part of the Aircraft, but not installed on
the Airframe when such Event of Loss occurred, shall continue to be property
of the Lessor and leased under this Lease as part of the same equipment as the
Replacement Airframe and Replacement Engines.
(c) Definitions. Each Replacement Airframe and Replacement Engine
shall be deemed part of the property leased under this Lease, each such
Replacement Airframe shall be deemed an "Airframe," each such Replacement
Engine shall be deemed an "Engine" and each such Replacement Airframe and
Replacement Engine shall be deemed part of the same Aircraft as was the
Airframe or Engine replaced.
(d) Rent Adjustments. An Event of Loss covered by this Section
11.03 shall not result in any change in Interim Rent, Basic Rent, Stipulated
Loss Values or Termination Values except as may be provided pursuant to the
Tax Indemnity Agreement and the Participation Agreement.
(e) Time Limitations. If the Lessee has elected to proceed under
this Section 11.03 but has not fully performed its obligations under this
Section 11.03 within 120 days of the occurrence of the applicable Event of
Loss, in the event that any amounts held by the Lessor (or, so long as the
Indenture shall be in effect, the Indenture Trustee) in respect of such Event
of Loss are less than the Stipulated Loss Value thereof, the Lessee will
deposit with the Lessor or the Indenture Trustee, as the case may be, the
amount of any deficiency as security on such 120th day. If the Lessee has
elected to proceed under this Section 11.03 but has not fully performed its
obligations under this Section 11.03 within 180 days of the occurrence of such
Event of Loss, the Lessee shall be deemed to have elected to proceed under
Section 11.02 hereof and shall immediately perform its obligations thereunder,
and the Indenture Trustee, or the Lessor if the Indenture shall have been
discharged, shall apply the amounts held by it pursuant to the preceding
sentence as a credit against such obligations.
Section 11.04. Event of Loss with Respect to an Engine. (a)
Generally. Upon the occurrence of an Event of Loss with respect to an Engine
under circumstances in which there has not occurred an Event of Loss with
respect to the Airframe, the Lessee shall give the Lessor and the Indenture
Trustee prompt written notice thereof and shall, as soon as practicable but in
any event within sixty (60) days after the occurrence of such Event of Loss,
duly convey or cause to be conveyed to the Lessor, a Replacement Engine for
the Engine with respect to which such Event of Loss occurred, good and
marketable title to a Replacement Engine, free and clear of all Liens not
excepted in Section 6.01(a), (b), (c) and (e) hereof and having a value and
utility at least equal to, and being in as good operating condition as, the
Engine with respect to which such Event of Loss occurred, assuming such Engine
was of the value and utility and in the condition and repair required by the
terms of this Lease immediately prior to the occurrence of such Event of Loss,
provided that after any replacement, each Engine shall be of identical make
and model. The standards set forth in this Section with respect to
Replacement Engines shall apply upon any replacement or substitution of an
Engine with a Replacement Engine pursuant to any other provision of this
Lease.
(b) Conditions Precedent. Prior to or at the time of any conveyance
of an Engine pursuant to Section 11.04(a) hereof, the Lessee, at its own cost
and expense will:
(i) furnish the Lessor with an original of, and the Indenture Trustee
with a copy of, a full warranty xxxx of sale, in form and substance
satisfactory to the Lessor, with respect to such Replacement Engine
together with an assignment in form and substance satisfactory to the
Lessor and the Indenture Trustee of any and all manufacturer's warranties
applicable thereto and a consent reasonably satisfactory to the Lessor and
the Indenture Trustee from such manufacturer to such assignment;
(ii) cause a Lease Supplement covering such Replacement Engine to be
duly executed by the Lessee and filed for recordation pursuant to the
Transportation Code, or the applicable laws, rules and regulations of any
other jurisdiction in which the Aircraft may then be registered as
permitted by Section 6.03(b) of the Participation Agreement and, if the
Engine being replaced was registered under the applicable laws of the
jurisdiction in which the Aircraft is then registered, the Replacement
Engine shall be registered in the same fashion;
(iii) furnish the Lessor and the Indenture Trustee with a certificate
of a nationally recognized aircraft appraiser reasonably satisfactory to
the Lessor and the Indenture Trustee certifying that such Replacement
Engine has a value and utility at least equal to, and is in as good
operating condition as, the Engine replaced, assuming such Engine was in at
least the condition and repair required by the terms of this Lease
immediately prior to the occurrence of such Event of Loss;
(iv) furnish the Lessor with such evidence of compliance with the
insurance provisions of Article 13 hereof with respect to such Replacement
Engine as the Lessor or the Indenture Trustee may reasonably request;
(v) provide the Owner Participant and the Lessor with (A) an opinion
of counsel selected by the Owner Participant and reasonably acceptable to
the Lessee (which opinion shall be reasonably satisfactory in form and
substance to the Owner Participant and the Lessor) that it will suffer no
adverse tax consequences not otherwise indemnified for as a result of such
substitution or (B) an indemnity reasonably acceptable to the Lessor and
the Owner Participant against such consequences;
(vi) comply with the provisions of Section 9.08 of the Indenture;
(vii) cause an Indenture Supplement with respect to such Replacement
Engine to be duly executed by the Lessor and the Indenture Trustee and
recorded pursuant to the Transportation Code, or the applicable laws, rules
and regulations of any other jurisdiction in which the Aircraft may be
registered as permitted by Section 6.03(b) of the Participation Agreement
in order that the Indenture shall constitute a first priority duly
perfected Lien and security interest on and in respect of such Replacement
Engine;
(viii) take such other action, including the filing of UCC financing
statements naming the Indenture Trustee as Secured Party with the Secretary
of State of Michigan and a notice filing with the Secretary of State of
Tennessee, as the Lessor or the Indenture Trustee may reasonably request in
order that such Replacement Engine be duly and properly titled in the
Lessor, leased under this Lease and subjected to the Lien of the Indenture
to the same extent as the replaced Engine;
(ix) furnish the Lessor, the Owner Participant and the Indenture
Trustee with an opinion (reasonably satisfactory in form and substance to
the Lessor, the Owner Participant and the Indenture Trustee) of counsel to
the Lessee (which may be the Lessee's General Counsel) addressed to the
Indenture Trustee and the Owner Participant to the effect that (A) the
Lessor has good title to such Replacement Engine, and (B) such Replacement
Engine has been validly subjected to the Lien of the Indenture (with the
effect and result that the Indenture constitutes a first priority duly
perfected security interest and Lien on such Replacement Engine); and
(x) take such other action as the Indenture Trustee may reasonably
request in order that such Replacement Engine be duly and properly
subjected to the Lien of the Indenture to the same extent as the replaced
Engine.
(c) Title Transfer. Upon compliance by the Lessee with the terms of
Sections 11.04(a) and (b) hereof, the Lessor will transfer to the Lessee
(subject to any insurer's salvage rights), without recourse or warranty
(except as to the absence of Lessor's Liens), all of the Lessor's right, title
and interest, if any, in and to the Engine with respect to which such Event of
Loss occurred. In connection with such transfer, the Lessee shall prepare and
the Lessor shall execute or forward to the Indenture Trustee for execution, as
the case may be, all in recordable form, a xxxx of sale evidencing such
transfer, a release of the Engine with respect to which such Event of Loss
occurred from the Indenture and such other documents as the Lessee reasonably
requests, all at the Lessee's sole cost and expense. Each Replacement Engine
shall, after such conveyance, be deemed part of the property leased under this
Lease. An Event of Loss covered by this Section 11.04 shall not result in any
change in Interim Rent, Basic Rent, Stipulated Loss Values or Termination
Values, but may result in payments to be made pursuant to the Tax Indemnity
Agreement and the Participation Agreement.
Section 11.05. Application of Payments from the Government or Others.
(a) Generally. Any payments (other than insurance proceeds the application
of which is provided for in Section 13.03 hereof) received at any time by the
Lessor or by the Lessee from any governmental authority or any other party,
foreign or domestic, with respect to an Event of Loss resulting from the
condemnation, confiscation, theft or seizure of, or requisition of title to or
use of, the Airframe or any Engine will be applied, as appropriate, in
accordance with Section 11.05(b) or Section 11.05(c) hereof.
(b) Payments of Stipulated Loss Value. If the payments described in
Section 11.05(a) hereof are received with respect to the Airframe or with
respect to the Airframe and Engines or engines then installed on the Airframe
and the Lessee has elected the alternative set forth in Section 11.02 hereof,
so much of such payments as shall not exceed the payments required to be paid
by the Lessee pursuant to clauses (A) and (B) of Section 11.02(a) hereof shall
be paid to the Lessor (or, if the Lien of the Indenture has not been
discharged, the Indenture Trustee) in reduction of the Lessee's obligations
under clauses (A) and (B) of Section 11.02(a) hereof if not already paid by
the Lessee, or, if such obligations have already been discharged in full by
the Lessee, such payments shall be applied to reimburse the Lessee for its
payment of such Stipulated Loss Value and, if and to the extent specifically
included in such payment, to pay to the Lessee interest on such amount of
Stipulated Loss Value at the rate included in such payment if any, or
otherwise at the applicable Debt Rate, for the period from the date of payment
by the Lessee of the Stipulated Loss Value to the date of reimbursement of the
Lessee under this Section 11.05(b). The excess, if any, remaining after such
application shall be divided between the Lessor and the Lessee as their
respective interests may appear.
(c) Payment if the Lessee Elects Replacement. If the payments
described in Section 11.05(a) hereof are received with respect to the Airframe
or with respect to the Airframe and the Engines or engines then installed on
the Airframe and the Lessee has elected the alternative set forth in Section
11.03 hereof, or if such payments are received with respect to an Engine not
then installed on the Airframe under the circumstances contemplated by Section
11.04 hereof, all such payments shall, subject to Section 11.08 hereof, be
paid over to or retained by the Lessee, provided that the Lessee shall have
fully performed its obligations pursuant to Section 11.03 or Section 11.04
hereof, as the case may be, with respect to the Event of Loss for which such
payments are made.
Section 11.06. Requisition of an Airframe and the Installed Engines
for Use by Government. In the event of the requisition for use by the
Government or any other government of registry of the Aircraft, or any agency
or instrumentality of either (a "Requisitioning Government") of the Airframe
and the Engines or engines then installed on the Airframe during the Term,
which requisition does not constitute an Event of Loss, the Lessee shall
promptly notify the Lessor, the Indenture Trustee and the Owner Participant of
such requisition and all of the Lessee's obligations under this Lease with
respect to such Airframe and Engines or engines shall continue to the same
extent as if such requisition had not occurred except to the extent that any
failure or delay in the performance or observance of such obligations (other
than obligations for the payment of Rent and, subject to Section 7.01(f)
hereof, the maintenance of required insurance) by the Lessee shall have been
caused by such requisition. All payments received by the Lessor, the Lessee
or any permitted sublessee or transferee from the Requisitioning Government
for such use of the Airframe and Engines or engines during the Term (other
than any such requisition which constitutes an Event of Loss, as to which the
provisions of Section 11.05 hereof shall govern) shall, subject to Section
11.08 hereof, be paid over to, or retained by the Lessee or such permitted
sublessee or transferee unless a Payment Default, Bankruptcy Default or Event
of Default shall have occurred and be continuing (in which case such proceeds
shall be held (unless applied) pursuant to Section 23.01 hereof as security
for Lessee's obligations hereunder and under the Participation Agreement).
All payments received by the Lessor, the Lessee or any such permitted
sublessee or transferee from the Requisitioning Government for the use of the
Airframe and Engines or engines after the Term shall be paid over to, or
retained by, the Lessor (or the Lessee if it shall have purchased the Lessor's
interest therein in accordance with the provisions hereof).
Section 11.07. Requisition for Use by Government of an Engine Not
Installed on the Airframe. In the event of the requisition for use by a
Requisitioning Government of registry of the Aircraft or any agency or
instrumentality thereof of any Engine not then installed on the Airframe, the
Lessee shall replace such Engine by complying with the terms of Section 11.04
hereof to the same extent as if an Event of Loss had occurred with respect to
such Engine as of the date of such requisition, and any payments received by
the Lessor or the Lessee from the Requisitioning Government with respect to
such requisition shall, subject to Section 11.08 hereof, be paid over to or
retained by the Lessee, provided that the Lessee shall have fully performed
its obligations under Section 11.04 hereof.
Section 11.08. Application of Payments During Existence of Certain
Defaults. Any amount referred to in Section 11.05, 11.06 or 11.07 hereof
which is payable to the Lessee shall not be paid to the Lessee, or, if it has
been previously paid directly to the Lessee, shall not be retained by the
Lessee, if at the time of such payment a Payment Default, Bankruptcy Default
or Event of Default shall have occurred and be continuing, but shall be paid
to and held by the Lessor (or the Indenture Trustee so long as the Lien of the
Indenture is in effect) as provided in Article 23 hereof as security for the
obligations of the Lessee under this Agreement, and at such time as there
shall not be continuing any such Payment Default, Bankruptcy Default or Event
of Default, such amount to the extent not theretofore applied as provided
herein, shall be paid to the Lessee.
ARTICLE 12
RETURN OF AIRCRAFT
Section 12.01. Return of Aircraft. Unless the Aircraft is purchased
by the Lessee as provided in Section 4.02 hereof, at the end of the Term, or
upon the termination of this Lease pursuant to Article 10 or Article 17 hereof
or otherwise, the Lessee, at its own cost and expense, will return the
Aircraft by delivering it to the Lessor on the last day of the Term or on the
Termination Date, as the case may be, at the Lessee's principal maintenance
facility in Memphis, Tennessee or such other location specified by the Lessee
(and reasonably acceptable to the Owner Participant (or the Lessor so long as
the Lien of the Indenture is in effect)), within the continental United States
(on the Lessee's route structure as in effect on the return date) and the
Airframe shall be fully equipped with two Engines of the same or an improved
make and model as were delivered on the Delivery Date (or Replacement
Engines), free and clear of all Liens (other than Lessor's Liens), including
any rights of third parties under pooling, interchange, overhaul, repair or
similar agreements or arrangements, it being understood that all such Engines
and Replacement Engines so returned shall be of identical make and model and
that any Replacement Engine shall be in at least as good operating condition
and have at least the same value and utility as the Engines being replaced,
assuming such Engines were in the condition required hereunder. The Lessee
will give the Lessor at least 15 days' prior written notice of the place of
such return; provided, however, that if the Lessor shall have made the request
for storage pursuant to Section 12.06 hereof, the Lessee shall return the
Aircraft to the Lessor at the site of the storage.
Section 12.02. Return of Engines. If any engine not owned by the
Lessor shall be delivered with the Airframe as set forth in Section 12.01
hereof, the Lessee, concurrently with such delivery, will, at its own cost and
expense furnish the Lessor with (i) a full warranty xxxx of sale, in form and
substance reasonably satisfactory to the Lessor, with respect to such engine,
(ii) an opinion of the Lessee's counsel to the effect that, upon such return,
the Lessor will acquire full right, title and interest to such engine free and
clear of all Liens (other than Lessor's Liens) and (iii) a certificate as
described in Section 11.04(b)(iii) hereof. The Lessee shall take such other
action as the Lessor may reasonably request in order that such Replacement
Engine shall be duly and properly titled in the Lessor free and clear of all
Liens (other than Lessor's Liens), and the Lessor will then (i) transfer to
the Lessee, without recourse or warranty (except as to the absence of Lessor's
Liens), and subject to the disclaimers provided in Section 5.01 hereof, all
the Lessor's right, title and interest in and to any Engine in lieu of which a
Replacement Engine has been delivered pursuant to Section 12.01 hereof, "as
is, where is" and (ii) deliver to the Lessee such instrument as the Lessor
shall have received from the Indenture Trustee, releasing such Engine from the
Lien of the Indenture.
Section 12.03. Return of Manuals. Upon the return of the Aircraft,
the Lessee shall deliver to the Lessor all original (or photocopied or
microfilmed copies thereof, if then permitted to be maintained in such form
under applicable law) logs, manuals, certificates and technical data, and
inspection, modification and overhaul records pertaining to the Airframe,
Engines or engines, which are required to be maintained under applicable rules
and regulations of the Aeronautics Authority or pursuant to the Lessee's or
any permitted sublessee's Aeronautics Authority-approved maintenance program
and all original (or photocopied or microfilmed copies thereof, if then
permitted to be maintained in such form under applicable law) records required
to be maintained with respect to the Aircraft under the maintenance program
approved by the aeronautical authority of any other country of registry of the
Aircraft. All records shall be returned in the format necessary to allow the
Lessee or any sublessee to comply with Section 12.04(a)(i) hereof.
Section 12.04. Condition of Aircraft. (a) Required Condition. The
Aircraft when returned to the Lessor shall, at the Lessee's own cost and
expense, meet the following requirements:
(i) it shall, unless otherwise requested by the Lessor not less than
90 days prior to the end of the Term to retain the then-existing
registration of the Aircraft, be duly registered in the name of the Lessor
or its designee pursuant to the Transportation Code;
(ii) it shall be clean by airline and cargo handling operating
standards;
(iii) the Airframe shall be returned with the Engines, or any
replacements thereto as herein authorized, provided that the Airframe shall
have an aggregate of two Engines or engines (as herein authorized under
Section 12.02 hereof), both of the same make and model, installed thereon,
together with the equipment, accessories or parts installed thereon on the
Delivery Date or replacements therefor (as herein authorized) and
alterations, modifications and additions thereto made in accordance with
the provisions of this Lease;
(iv) it shall be in the condition required by Section 12.04(b) hereof
and in as good operating condition as when delivered to the Lessor on the
Delivery Date, ordinary wear and tear excepted;
(v) it shall have a currently effective airworthiness certificate
issued by the Aeronautics Authority;
(vi) it shall comply with any then applicable rules and regulations
imposed by the Aeronautics Authority and, without limitation of the
foregoing, terminate all airworthiness directives of, and mandatory
modifications required by, the Aeronautics Authority (or any government or
governmental authority, domestic or foreign, having jurisdiction over the
Aircraft) to be terminated during the Term of the Lease and each Engine
(including any Replacement Engine) shall be serviceable in accordance with
the Lessee's FAA-approved maintenance program;
(vii) it shall be free and clear of all Liens and rights of others
(other than Lessor's Liens) including, without limitation, rights of third
parties under pooling, interchange, overhaul, repair and other similar
agreements or arrangements referred to in Section 7.02(a) hereof; and
(viii) it shall be in a standard cargo configuration.
(b) Remaining Time. If, at the time of return of the Aircraft, the
Airframe is not being maintained under a continuous maintenance program, then
the Airframe shall have remaining until the next scheduled "C" check at least
1,000 hours of operation. If, at the time of return of the Aircraft, the
Airframe is subject to a continuous maintenance program, there will be no
time-before-overhaul requirement. If, at the time of return of the Aircraft,
the Engines are not being maintained under an on-condition maintenance
program, then the average number of hours on such Engines remaining until the
next scheduled engine heavy maintenance visit shall be at least 25% of the
allowable hours between engine heavy maintenance visits permitted under the
Lessee's FAA-approved maintenance program. If, at the time of return of the
Aircraft, the Engines are subject to an on-condition maintenance program,
there will be no time-before-overhaul requirement. With respect to
maintenance under the Lessee's maintenance program approved by the Aeronautics
Authority, the Lessee shall have treated the Aircraft in a nondiscriminatory
manner with other Airbus A300F-600 series aircraft in the Lessee's fleet, and
the Aircraft shall be free and clear of all Liens and rights of others other
than Lessor's Liens and shall be in compliance in every material respect with
the Lessee's maintenance program as if the Term were not ending.
Section 12.05. Delayed Return of Aircraft. (a) If the return of the
Aircraft to the Lessor in compliance with the terms of this Lease shall be
delayed beyond the scheduled end of the Term because of the occurrence of an
event described in clause (iii)(2)(B) of the definition of Event of Loss, this
Lease shall not terminate but shall continue in full force and effect until
the expiration of the six-month period (or, such shorter period referred to in
said clause (iii)(2)(B)) after the scheduled end of the Term, provided that
(i) Stipulated Loss Value and Termination Value during such extension shall be
an amount determined in accordance with Section 4.01(b) hereof, (ii) the
Lessee shall pay on demand, as Basic Rent for each day of such delay and this
Lease shall continue, an amount equal to the daily equivalent of the average
Basic Rent paid during the Basic Term and any then expiring Renewal Term, in
each case with such Basic Rent to include for this purpose the amounts
referred to in Section 3.01 hereof, or such higher compensation being paid by
the Government pursuant to the Civil Reserve Airfleet Program and (iii)
neither the Lessee nor any other Person shall use or operate the Aircraft in
any manner, except pursuant to the activation of such Civil Reserve Airfleet
Program.
(b) In any other situation in which the Aircraft is not returned to
the Lessor upon the expiration of the Term (other than due to a purchase of
the Aircraft by the Lessee pursuant to this Lease or by a purchaser under
Article 10 hereof), the Lessee shall pay on demand as Basic Rent for each day
of such delay an amount equal to the Rent per diem at a rate equal to the Fair
Market Rental and this Lease shall continue for up to six (6) months after the
end of the Term; provided, however, that nothing in this paragraph shall be
deemed (i) to relieve the Lessee in any respect from any Default or Event of
Default or claims with respect thereto arising from the failure to return the
Aircraft at the time or in the condition required by the Operative Agreements
or (ii) to permit the Lessee or any sublessee to operate or use the Aircraft
otherwise than in connection with effecting such return.
Section 12.06. Storage. Upon any expiration or termination of this
Lease, at the written request of the Lessor given at least 45 days prior to
such expiration or termination, the Lessee will arrange, or will cause to be
arranged, at no charge to the Lessor (subject, however, to the last sentence
of this Section 12.06), storage at a ramp storage facility for the Aircraft at
the Lessee's principal maintenance facilities in Memphis, Tennessee or one of
the Lessee's other maintenance facilities or at a location selected by the
Lessee used as a location for the parking or storage of aircraft for a period
of up to 30 days. At the end of such 30 day period, if the Lessor so requests
within 10 days before the end of such period, the Lessee will continue to
provide such ramp storage facility at such facility or location for an
additional 30 days at the Lessor's expense. If the Lessee is required by the
Lessor to move the Aircraft from one storage facility to another, such move
shall be at the risk and expense of the Lessor. The maintenance and risk of
loss of, and responsibility for obtaining insurance on, the Aircraft shall be
the responsibility of the Lessor during any period of storage; provided,
however, the Lessee will, upon written request of the Lessor and at the
Lessor's expense, not to exceed the Lessee's incremental cost of such service,
obtain insurance for such property (including, if possible, coverage through
its fleet policy).
Section 12.07. Special Markings. If requested by the Lessor, the
Lessee shall, at the Lessee's cost, remove or paint over all insignias and
other distinctive markings of the Lessee or any sublessee on the Aircraft and
repaint the stripped down areas in a workmanlike manner to match exterior
colors.
Section 12.08. Lessor's Option to Purchase Parts. At any time after
the Lessee has advised the Lessor that it has determined not to renew this
Lease or purchase the Aircraft, or the Aircraft is otherwise to be returned to
the Lessor, the Lessee shall advise the Lessor of any Part which the Lessee
intends, and is permitted, to remove as provided in Section 9.02(b) above, and
the Lessor may, at its option, upon 30 days' notice to the Lessee, purchase
any or all of such Parts from the Lessee upon the expiration of the Term at
their then Fair Market Value (taking into account the provisions of this
Lease) determined in accordance with the provisions of Section 4.03 hereof.
Upon any return of the Aircraft pursuant to this Article 12, if the Lessor does
not elect to exercise its option under this Section 12.08, the Lessee will, at
its own cost and expense, remove such Parts described in subparagraph (i),
(ii) or (iii) of Section 9.02(b) hereof as the Lessor may request.
ARTICLE 13
INSURANCE
Section 13.01. Comprehensive Airline Liability and Property Damage
Liability Insurance. (a) Comprehensive Airline Liability and Property Damage
Liability Insurance. The Lessee, at its own cost and expense, will maintain
or cause to be maintained with respect to the Aircraft, comprehensive airline
liability insurance including, without limitation, passenger legal liability
and property damage liability insurance and cargo legal liability in such
amounts, against such risks (including, without limitation, contractual
liability and war risk and allied perils liability), with such retentions as
the Lessee customarily maintains with respect to similar aircraft and engines
which comprise the fleet of the Lessee (subject to the limitations set forth in
Section 13.06 hereof), and with such insurers (which shall be insurers of
recognized responsibility), and such insurance against such other risks, as is
usually carried by similar corporations engaged in the same or similar
business and similarly situated as the Lessee and owning or operating aircraft
and engines similar to the Aircraft and Engines; provided that in no event
shall the limits of liability for all comprehensive airline liability
insurance be less than the amount, per occurrence, as set forth on the
insurance certificate delivered on the Delivery Date unless and only so long
as the Aircraft is not operated and appropriate insurance for the Aircraft on
the ground is maintained. The Lessee will also be required to maintain war
risk insurance if the Aircraft is operated in a war zone or, in the Lessee's
reasonable judgment, area of recognized hostilities, if such insurance is
available on commercially reasonable terms and if it is the custom for major
international Air Carriers flying comparable routes to carry such insurance.
(b) Government Indemnification. Notwithstanding Section 13.01(a)
hereof, in the event of the requisition for use by the Government of the
Airframe or the Airframe and the Engines or engines then installed on the
Airframe, the Lessee shall maintain throughout the period of such requisition
such insurance as would otherwise be required under this Section 13.01;
provided that the Lessor shall accept, in lieu of such insurance coverage,
written indemnification or insurance from the Government which is
substantially the same as otherwise required under this Article 13.
(c) Policy Terms. Any policy of insurance carried and maintained in
accordance with this Section 13.01, and any policy taken out in substitution
or replacement for any such policy subject to the terms, conditions and
limitations thereof, shall:
(i) name or be amended to name the Lessor in its individual capacity
and as owner of the Aircraft, the Indenture Trustee in its capacity as
such, the Owner Participant and each of their respective officers and
directors in their respective capacities as such as additional insureds
(hereinafter in this paragraph (c) sometimes referred to as "Additional
Insured");
(ii) provide that, in respect of the interest of any Additional
Insured in such policies, the insurance shall not be invalidated by any
action or inaction of the Lessee or any Additional Insured as defined under
the policy of insurance required under this Section 13.01 (other than any
action or inaction of such Additional Insured) and shall insure each
Additional Insured regardless of any breach or violation of any warranty,
declaration or condition contained in such policies by the Lessee or any
other Additional Insured (other than any breach or violation of any
warranty, declaration or condition by such Additional Insured) as defined
under the policy of insurance required under this Section 13.01;
(iii) provide that if such insurance is cancelled for any reason, or
any substantial change is made in the policies which adversely affect the
scope of the coverage required herein, or if such insurance is allowed to
lapse for nonpayment of premium, such cancellation, change or lapse shall
not be effective as to any Additional Insured for thirty (30) days (except
in the case of war risk coverage in which event the applicable period shall
be seven (7) days or such other period as may be customary) after receipt
by each such Additional Insured of written notice from such insurers or
such insurers' broker of such cancellation, change or lapse;
(iv) provide that the insurers shall waive any rights of subrogation
against each Additional Insured, to the extent that the Lessee has waived
its rights under this Lease and the Participation Agreement; provided that
the exercise by insurers of rights of subrogation derived from rights
retained by the Lessee shall not, in any way, delay payment of any claim
that would otherwise be payable by such insurers but for the existence of
rights of subrogation derived from rights retained by the Lessee;
(v) provide that all of the provisions of such policy shall operate
in the same manner as if there were a separate policy covering each
Additional Insured; provided, that such policies shall not operate to
increase any insurer's limit of liability;
(vi) be primary, without right of contribution from any other
insurance which is carried by any Additional Insured with respect to its
interest in the Aircraft;
(vii) provide that no Additional Insured shall have any obligation or
liability for premiums or other payments, if any, in connection with such
insurance; and
(viii) provide that such insurer shall waive the right of such
insurer to any set-off or counterclaim or any other deduction, whether by
attachment or otherwise, in respect of any liability of any Additional
Insured.
Section 13.02. Insurance Against Loss or Damage to Aircraft and
Engines. (a) Hull Insurance. The Lessee, at its own cost and expense, shall
maintain or cause to be maintained in effect, with insurers of recognized
responsibility, all-risk ground and flight aircraft hull insurance covering
the Aircraft and all-risk coverage with respect to any Engines and Parts while
temporarily removed from the Aircraft and not replaced by similar Engines or
Parts, including in each case war-risk and allied perils, hijacking (air
piracy) and governmental confiscation and expropriation insurance (except in
the country of registry) with such retentions (subject to the limitations set
forth in Section 13.06 hereof) and in such form, upon such terms and
conditions (including coverage for cost of claims), and in amounts as the
Lessee customarily maintains with respect to the aircraft in the Lessee's
fleet of the same type and model and operated on the same routes as the
Aircraft (except that the Lessee shall be required to maintain war-risk,
hijacking (air piracy) and governmental confiscation and expropriation
insurance (except in the country of registry) if the Aircraft is operated on
routes where the custom is for major international Air Carriers flying
comparable routes to carry such insurance), provided that such insurance shall
at all times while the Aircraft is subject to this Lease and the Lien of the
Indenture be on an agreed-value basis for an amount not less than an amount
equal to the Stipulated Loss Value for the relevant period for the Aircraft as
set forth on Schedule III to this Lease.
(b) Policy Terms. Any policies carried and maintained in accordance
with this Section 13.02 and any policies taken out in substitution or
replacement for any such policies subject to the terms, conditions and
limitations thereof shall:
(i) name or be amended to name the Lessor in its individual capacity
and as owner of the Aircraft (or, so long as the Indenture shall not have
been discharged, the Indenture Trustee) as sole loss payee (hereinafter in
this paragraph (b) sometimes referred to as "Loss Payee");
(ii) provide with respect to coverage provided under this Section
13.02, that (i) in the event of a loss involving proceeds in the aggregate
in excess of $6,000,000, the proceeds in respect of such loss up to an
amount equal to the Stipulated Loss Value for the Aircraft shall be payable
to the Lessor (or, so long as the Indenture shall not have been discharged,
the Indenture Trustee), it being understood and agreed that in the case of
any payment to the Lessor (or the Indenture Trustee) otherwise than in
respect of an Event of Loss, the Lessor (or the Indenture Trustee) shall,
unless a Payment Default, a Bankruptcy Default or an Event of Default shall
have occurred and be continuing, upon receipt of evidence satisfactory to
it that the damage giving rise to such payment shall have been repaired or
that such payment shall then be required to pay for repairs then being
made, pay the amount of such payment to the Lessee or its order, and (ii)
the entire amount of any loss involving proceeds in the aggregate of
$6,000,000 or less or the amount of any proceeds of any loss in excess of
the Stipulated Loss Value for the Aircraft shall be paid to the Lessee or
its order unless a Payment Default, a Bankruptcy Default or an Event of
Default shall have occurred and be continuing and the insurers have been
notified thereof by the Lessor or the Indenture Trustee (and if the
insurers have notice of a Payment Default, a Bankruptcy Default or an Event
of Default, such payment shall be made to the Indenture Trustee);
(iii) provide that if such insurance is cancelled for any reason or any
substantial change is made in the policies which adversely affects the
scope of the coverage required herein, or if such insurance is allowed to
lapse for nonpayment of premium, such cancellation, change or lapse shall
not be effective as to the Loss Payee for thirty days (except in the case
of war-risk coverage in which event the applicable period shall be seven
(7) days or such other period as may be customary) after receipt by the
Loss Payee of written notice from such insurer of such cancellation, change
or lapse;
(iv) provide that, in respect of the interest of the Lessor (in its
individual capacity and as the Owner Trustee), the Owner Participant or the
Indenture Trustee (in their respective capacities as such) in such
policies, the insurance shall not be invalidated by any action or inaction
of the Lessee or the Loss Payee (other than any action or inaction of such
Loss Payee) and shall insure the Lessor (in its individual capacity and as
Owner Trustee), the Owner Participant and the Indenture Trustee regardless
of any breach or violation of any warranty, declaration or condition
contained in such policies by the Lessee or the Loss Payee (other than any
breach or violation of any warranty, declaration or condition by the Loss
Payee) as defined under the policy of insurance required under this Section
13.02;
(v) provide that the insurers shall waive any rights of subrogation
against the Lessor (in its individual capacity and as Owner Trustee), the
Owner Participant and the Indenture Trustee to the extent that the Lessee
has waived its rights under this Lease or the Participation Agreement;
provided that the exercise by insurers of rights of subrogation derived
from rights retained by the Lessee shall not, in any way, delay payment of
any claim that would otherwise be payable by such insurers but for the
existence of rights of subrogation derived from rights retained by the
Lessee;
(vi) be primary and without rights of contribution from any other
insurance which is carried by the Loss Payee with respect to its interest
in the Aircraft;
(vii) provide that (except in the case of insurance with respect to
Engines and spare parts that have been removed from the Aircraft and
replaced with other Engines or engines, or spare parts, as the case may be)
such insurer shall waive any right of such insurer to any set-off or
counterclaim or any other deduction, whether by attachment or otherwise, in
respect of any liability of the Loss Payee;
(viii) provide that (except in the case of insurance with respect to
Engines and spare parts that have been removed from the Aircraft and
replaced with other Engines or engines or spare parts, as the case may be)
no Loss Payee shall have any obligation or liability for premiums or other
payments, if any, in connection with such insurance; and
(ix) in the event that separate policies are maintained to cover
all-risk ground and flight aircraft, hull and war risks and allied perils
insurance, include a 50/50 provisional claims settlement clause as
contained in the policies of insurance maintained by the Lessee with
respect to all other aircraft in the Lessee's fleet, and a copy of the
50/50 provisional claims settlement clause in effect on the Delivery Date
shall be attached to the insurance certificate issued on the Delivery Date.
Section 13.03. Application of Insurance Proceeds. (a) Generally.
All insurance proceeds (other than proceeds from policies carried by the
Lessor, the Indenture Trustee or the Owner Participant) received under
policies described in Section 13.02 hereof as the result of the occurrence of
an Event of Loss with respect to the Airframe or an Engine will be applied as
follows:
(i) if such proceeds are received with respect to the Airframe or
with respect to the Airframe and the Engines or engines then installed on
the Airframe and the Lessee has elected or is deemed to have elected the
alternative set forth in Section 11.02 hereof, so much of such proceeds as
shall not exceed the amounts required to be paid by the Lessee pursuant to
said Section 11.02 hereof shall be applied in reduction of the Lessee's
obligation to pay such amounts if not already paid by the Lessee, or if
already paid by the Lessee, shall be applied to reimburse the Lessee for
its payment of such amounts, provided that no Payment Default, Bankruptcy
Default or Event of Default shall have occurred and be continuing, and the
balance, if any, of such proceeds remaining will be paid to the order of the
Lessee; if and so long as the foregoing proviso is not satisfied, such
proceeds shall be held (unless applied) pursuant to Section 23.01 hereof as
security for the Lessee's obligations hereunder and under the Participation
Agreement; or
(ii) if such proceeds are received with respect to the Airframe or the
Airframe and the Engines or engines then installed on the Airframe and the
Lessee has elected the alternative set forth in Section 11.03 hereof, or if
such proceeds are received with respect to an Engine not then installed on
the Airframe and not replaced by an Engine or engine under the
circumstances contemplated by Section 11.04 hereof, all such proceeds shall
be paid to the Indenture Trustee (unless the Indenture has been discharged
in which case paid to the Lessor) for disbursement to the order of the
Lessee, after the Lessee shall have fully performed the terms of Sections
11.03 or 11.04 hereof, as applicable, with respect to the Event of Loss for
which such proceeds are paid, provided that no Payment Default, Bankruptcy
Default or Event of Default shall have occurred and be continuing; if and
so long as the foregoing proviso is not satisfied, such proceeds shall be
held (unless applied) pursuant to Section 23.01 hereof as security for the
Lessee's obligations hereunder and under the Participation Agreement.
(b) Payment if No Event of Loss. The insurance proceeds of any
property damage loss not constituting an Event of Loss with respect to the
Airframe or an Engine will be applied in payment (or to reimburse the Lessee)
for repairs or for replacement property in accordance with Articles 7 and 8
hereof, if not already paid for by the Lessee, and any balance remaining after
compliance with said Articles 7 and 8 hereof with respect to such loss shall
be paid to the order of the Lessee, provided that no Payment Default,
Bankruptcy Default or Event of Default shall have occurred and be continuing;
if and so long as the foregoing proviso is not satisfied, such proceeds shall
be held (unless applied) pursuant to Section 23.01 hereof as security for the
Lessee's obligations hereunder and under the Participation Agreement.
(c) Information. If any Additional Insured becomes subject to any
claim covered by any insurance policy maintained pursuant to this Article 13,
the Lessee shall make available any information required by such Additional
Insured in connection with such claim.
Section 13.04. Reports. On or before the Delivery Date and thereafter
annually on or before the scheduled expiration date for such policy during the
Term, the Lessee shall cause an aviation insurance broker to furnish to the
Lessor and the Indenture Trustee a signed report, stating in reasonable detail
the types of coverage and limits carried and maintained on the Aircraft and
certifying that such insurance complies with the terms and conditions of this
Lease. The Lessee will cause its aviation insurance broker to advise the
Lessor and the Indenture Trustee in writing promptly of any default in the
payment of any premium and of any other act or omission on the part of the
Lessee of which it has knowledge and which might invalidate, cause
cancellation of or render unenforceable all or any part of any insurance
carried by the Lessee with respect to the Aircraft. The Lessee will cause
such insurance broker to agree to advise the Lessor, the Indenture Trustee and
the Owner Participant in writing if and when it becomes evident to such broker
that any insurance policy carried and maintained on the Aircraft pursuant to
this Article 13 will not be renewed at the expiration date. If the Lessee
shall fail to maintain insurance as required, the Lessor may, at its option,
provide such insurance, and in such event, the Lessee shall, upon demand,
reimburse the Lessor, as Supplemental Rent, for the cost of such insurance;
provided, however, that no exercise of said option shall affect the provisions
of this Lease, including the provisions that failure by the Lessee to maintain
the prescribed insurance shall constitute an Event of Default or otherwise
constitute a waiver of any other rights the Lessor may have against the
Lessee.
Section 13.05. Lessor's Insurance. The Lessor, the Indenture Trustee
or the Owner Participant may insure the Airframe or any Engine at its own cost
and expense, including insuring the Aircraft for amounts in excess of the
Stipulated Loss Value of the Aircraft, provided that any insurance so
maintained by the Lessor, the Indenture Trustee or the Owner Participant shall
not result in a reduction of coverage or amounts payable under insurance
required to be maintained by the Lessee under this Article 13 or increase the
cost to the Lessee of maintaining such insurance; provided further, that any
insurance policies of the Lessor, the Indenture Trustee or the Owner
Participant insuring the Airframe or any Engine shall provide for a release to
the Lessee of any and all salvage rights in and to the Airframe or any Engine.
Section 13.06. Self-Insurance. The Lessee may self-insure the risks
required to be insured against by Sections 13.01 and 13.02 hereof in such
reasonable amounts as are then applicable to other aircraft or engines of the
Lessee of value comparable to the Aircraft, but in no case shall such
self-insurance with respect to all aircraft in the Lessee's fleet in aggregate
exceed for any 12-month policy year an amount equal to the lesser of (i) 50%
of the highest insured value of any single aircraft in the Lessee's fleet and
(ii) 1.5% of the aggregate insured value from time to time of the Lessee's
entire aircraft fleet provided that a standard deductible per occurrence per
aircraft not in excess of the amount customarily allowed as a deductible in
the industry shall be permitted in addition to the above-mentioned
self-insurance. The foregoing shall not permit the Lessee to discriminate as
between insurance coverage on the Aircraft and insurance which the Lessee
maintains with respect to similar aircraft owned or operated by the Lessee
operating on similar routes in similar locations.
ARTICLE 14
INSPECTION
Section 14.01. Right of Inspection. At reasonable times, and upon at
least five (5) Business Days' prior written notice to the Lessee, the Lessor,
the Indenture Trustee or the Owner Participant, or their respective authorized
representatives, may inspect the Aircraft and upon at least ten (10) Business
Days' prior written notice, all Aeronautics Authority required books and
records of the Lessee or any sublessee and all books and records required to
be maintained by the Lessee under its FAA-approved maintenance program (or
books and records required to be maintained by the aeronautical authority of
any other country of registry of the Aircraft) relating to the maintenance of
the Aircraft and such Persons shall keep any information obtained thereby
confidential and shall not disclose the same to any Person, except to a Person
described in Section 18.01 of the Participation Agreement. Any such
inspection of the Aircraft shall be a visual, walk-around inspection of the
interior and exterior of the Aircraft and shall not include opening any panel,
bays or the like without the express consent of the Lessee (except to the
extent any such inspection takes place when any such panel, bays or the like
are open). Notwithstanding the previous sentence, unless a Payment Default,
Bankruptcy Default, material Default relating to maintenance (without giving
effect to the provisos to Section 7.01(b) hereof) or an Event of Default shall
have occurred and be continuing, the Lessor, the Indenture Trustee, the Owner
Participant or their respective authorized representatives shall each be
entitled to inspect the Aircraft only one time during any consecutive
twelve-month period provided, however, that during the final year of the Basic
Term the Lessor shall be entitled to inspect on two (2) occasions. The Lessee
shall make any permitted sublease or transfer permitted under Section 7.02
hereof expressly subject to inspection rights consistent with this Article 14.
Section 14.02. No Obligation to Inspect. None of the Lessor, the
Indenture Trustee or the Owner Participant shall have any duty to make any
inspection pursuant to Section 14.01 hereof and no such party shall incur any
liability or obligation by reason of making or not making any such inspection.
ARTICLE 15
ASSIGNMENT
Section 15.01. Lessee's Right to Assign. The Lessee shall not, and
shall have no authority or power to assign, convey or sublease any of its
rights under this Lease without the prior written consent of the Lessor except
(i) as expressly provided in Section 7.02 hereof, or in the case of any
requisition by the Government referred to in Section 7.01 of this Lease, or
(ii) to a wholly-owned domestic subsidiary of the Lessee which shall be a
certificated U.S. Air Carrier. Any such assignment, conveyance or sublease
shall in no way relieve the Lessee from any obligation hereunder or under any
other Operative Agreement or any written agreement of the Lessee entered into
in connection with the transactions contemplated by the Operative Agreements,
which shall be and remain obligations of the Lessee. The Lessor agrees that
it will not assign or convey its right, title and interest in and to this
Lease or the Aircraft except as contemplated by or provided in this Lease, the
Trust Agreement, the Indenture or the Participation Agreement. The terms and
provisions of this Lease shall be binding upon and inure to the benefit of the
Lessor and the Lessee and their respective successors and permitted assigns,
and shall inure, to the extent expressly provided herein and therein, to the
direct benefit of, and in accordance with the provisions of the Indenture and
the Participation Agreement shall be enforceable by, the Indenture Trustee,
the Lessor and their respective successors and permitted assigns.
Section 15.02. Citizenship. The Lessee will at all times be a duly
certificated U.S. Air Carrier under the Transportation Code.
ARTICLE 16
EVENTS OF DEFAULT
Section 16.01. Events of Default. Each of the following events shall
constitute an Event of Default, whether any such event shall be voluntary or
involuntary or come about or be effected by operation of law or pursuant to or
in compliance with any judgment, decree or order of any court or any order,
rule or regulation of any administrative or governmental body:
(a) the Lessee shall fail to make any payment of Interim Rent, Basic
Rent, Renewal Rent, Stipulated Loss Value or Termination Value, as the case
may be, or any payment pursuant to Section 17.02 of the Participation
Agreement, within ten Business Days after the date when due (except that
with respect to any failure to pay Excepted Payments, such failure shall
constitute an Event of Default at the discretion of the Owner Participant);
or
(b) the Lessee shall fail to make any payment of Supplemental Rent
(other than amounts described in clause (a) above) within 20 days after the
Lessee has received written notice from the Person entitled to receive such
payment stating that such payment is due (except that with respect to any
failure to pay Excepted Payments for such period, such failure shall
constitute an Event of Default at the discretion of the Owner Participant);
or
(c) (i) the Lessee shall fail to procure, carry and maintain
insurance on or in respect of the Aircraft in accordance with the
provisions of Article 13 or such insurance lapses or is cancelled, provided
that no such lapse or cancellation shall constitute an Event of Default
until the earlier of (A) 30 days (or seven days or such shorter time as may
be standard in the industry with respect to war risk coverage) after
receipt by any Additional Insured of written notice of such lapse or
cancellation and (B) the date that such lapse or cancellation is effective
as to any Additional Insured and provided further that such failure shall
not constitute an Event of Default as long as the Aircraft remains grounded
and is insured as required while on the ground and not operated, or (ii)
the Aircraft shall be operated at any time when comprehensive airline
liability insurance required under Section 13.01 hereof shall not be in
effect (it being understood that the Lessee is not required to maintain
such insurance under Section 13.01 hereof while the indemnification or
insurance referred to in the proviso to Section 13.01(b) hereof is in
effect); or
(d) the Lessee shall fail to perform or observe any other covenant,
condition or agreement to be performed or observed by it under any
Operative Agreement (excluding the Tax Indemnity Agreement) or any other
written agreement of the Lessee entered into in connection with the
transactions contemplated by the Operative Agreements and such failure
shall continue unremedied for a period of thirty (30) days after the Lessee
shall have received written notice from the Lessor or the Owner Participant
of such failure, provided, that in the event such failure is curable and so
long as (but for no longer than 150 days after such 30-day period) the
Lessee shall have promptly undertaken such cure after the Lessee receives
notice thereof which undertaking shall be diligently and continuously
pursued using the Lessee's reasonable best efforts, such failure shall not
constitute an Event of Default; provided, further, that failure of the
Lessee to maintain the registration of the Aircraft under the
Transportation Code pursuant to the Lessee's covenants and agreement in
Section 6.03(b) of the Participation Agreement and in Section 7.01(a) of
this Lease, when the lapse of such registration is solely because the Owner
Participant or the Lessor has ceased to be a Citizen of the United States,
shall not constitute a Default or an Event of Default; or
(e) an order for relief shall be entered in respect of the Lessee by
a court having jurisdiction in the premises in an involuntary case under
the federal bankruptcy laws as now or hereafter in effect; or the Lessee
shall consent to the appointment of a custodian, receiver, trustee or
liquidator of itself or of a substantial part of its property; or the
Lessee is not paying, or shall admit in writing its inability to pay, its
debts generally as they come due or shall make a general assignment for the
benefit of creditors; or the Lessee shall file, or the Board of Directors
of the Lessee shall authorize the filing of, or grant one or more persons
authority (at their discretion) to make a filing for, a voluntary petition
in bankruptcy or a voluntary petition or an answer seeking reorganization
in a proceeding under any bankruptcy laws (as now or hereafter in effect)
or an answer admitting the material allegations of a petition filed against
the Lessee in any such proceeding; or the Lessee shall file, or the Board
of Directors of the Lessee shall authorize the Lessee to, or grant one or
more persons authority (at their discretion) to, seek relief by voluntary
petition, answer or consent, under the provisions of any other or future
bankruptcy or other similar law providing for the reorganization or
winding-up of corporations, or providing for an agreement, composition,
extension or adjustment with its creditors; or
(f) an order, judgment or decree shall be entered by any court of
competent jurisdiction appointing, without the consent of the Lessee, a
custodian, receiver, trustee, or liquidator of the Lessee or of any
substantial part of its property, or sequestering any substantial part of
the property of the Lessee, or granting any other relief in respect of the
Lessee under the federal bankruptcy laws or other insolvency laws, and any
such order, judgment or decree of appointment or sequestration shall remain
in force undismissed or unvacated for a period of ninety (90) days after
the date of its entry; or
(g) a petition against the Lessee in a proceeding under the federal
bankruptcy law or other insolvency laws (as now or hereafter in effect)
shall be filed and shall not be withdrawn or dismissed within ninety (90)
days, or under the provisions of any law providing for reorganization or
winding-up of corporations which may apply to the Lessee, any court of
competent jurisdiction shall assume jurisdiction, custody or control of the
Lessee or of any substantial part of its property and such jurisdiction,
custody or control shall remain in force unrelinquished or unterminated for
a period of ninety (90) days; or
(h) any representation or warranty made by the Lessee in this Lease
or in the Participation Agreement or in any document or certificate
furnished by the Lessee in connection with or pursuant to this Lease or the
Participation Agreement (except for the Tax Indemnity Agreement) shall at
any time prove to have been incorrect at the time made in any respect
material to the transactions contemplated by this Lease and, if originally
made by the Lessee in good faith, shall remain material and unremedied for
a period of thirty (30) days after the Lessee shall have received written
notice of such misstatement.
ARTICLE 17
REMEDIES
Section 17.01. Remedies upon Lessee's Default. (a) Remedies
Generally. Upon the occurrence of any Event of Default and at any time after
such occurrence so long as the same shall be continuing, the Lessor may, at
its option, declare this Lease to be in default (except that no such
declaration shall be required in the case of an Event of Default pursuant to
paragraphs (e), (f) or (g) of Section 16.01 hereof and this Lease shall be
deemed declared in default without any further act or notice), and at any time
thereafter the Lessor may do, and the Lessee shall comply with, one or more
of the following with respect to all or any part of the Airframe and the
Engines, as the Lessor in its sole discretion shall elect, to the extent
permitted by, and subject to compliance with, any mandatory requirements of
applicable law then in effect:
(i) demand in writing that the Lessee shall, and upon such written
demand the Lessee shall, at the Lessee's own cost and expense, return
promptly to the Lessor all or such part of the Airframe and the Engines as
the Lessor may demand in the manner and condition required by, and
otherwise in accordance with all of the provisions of this Lease (provided
that, unless the Lessor shall require otherwise, the Aircraft shall be
returned within the continental United States), or the Lessor, at its
option, may enter upon the premises where such Airframe or Engines are
located or believed to be located and take immediate possession of and
remove such Airframe and Engines (together with any engine which is not an
Engine but is installed on the Airframe, subject to all of the rights of
the owner, lessor, Lien holder or secured party of such engine) without the
necessity for first instituting proceedings, or by summary proceedings or
otherwise, all without liability of the Lessor to the Lessee for or by
reason of such entry or taking of possession, whether for the restoration
of damage to property caused by such action or otherwise;
(ii) with or without taking possession thereof, sell or otherwise
dispose of the Airframe or any Engine, at public or private sale and with
or without advertisement or notice to the Lessee, as the Lessor may
determine, and the Lessor may hold the Lessee liable for any installment of
Interim Rent, Basic Rent and Renewal Rent due on or before the date of such
sale (and, if Interim Rent, Basic Rent or Renewal Rent is payable in
arrears, the pro rata portion of the installment of Interim Rent, Basic
Rent or Renewal Rent due on the next succeeding Rent Payment Date in
respect of any period commencing on the immediately preceding Rent Payment
Date to the date of such sale), or hold, use, operate, lease to others or
keep idle all or any part of the Airframe or any Engine as the Lessor, in
its sole discretion, may determine, in any such case free and clear of any
rights of the Lessee except as otherwise set forth in this Article 17, and
without any duty to account to the Lessee with respect to such action or
inaction or for any proceeds except to the extent required by Section
17.01(a)(iv) hereof; in the event the Lessor elects to exercise its rights
under said Section, and in connection with any sale of the Aircraft or any
part thereof pursuant to this Article 17, the Lessor, the Indenture
Trustee, the Owner Participant or any Holder may bid for and purchase such
property;
(iii) whether or not the Lessor shall have exercised or shall later at
any time exercise any of its rights under Section 17.01(a)(i) or
17.01(a)(ii) hereof, the Lessor, by written notice to the Lessee specifying
a payment date not earlier than 10 days from the date of such notice, may
demand that the Lessee pay to the Lessor, and the Lessee shall pay to the
Lessor on the payment date specified in such notice, as liquidated damages
for loss of a bargain and not as a penalty (in lieu of the Interim Rent,
Basic Rent or Renewal Rent due on Rent Payment Dates occurring after the
payment date specified in such notice), any installment of Interim Rent,
Basic Rent, Renewal Rent and any Supplemental Rent due on or before such
payment date (and, to the extent Interim Rent, Basic Rent or Renewal Rent
is payable in arrears, the pro rata portion of the installment of Interim
Rent, Basic Rent or Renewal Rent due on the next succeeding Rent Payment
Date in respect of the period commencing on the Stipulated Loss Value
Determination Date referred to below and ending on the date of such
payment), plus an amount equal to the excess, if any, of the Stipulated
Loss Value for the Aircraft, computed as of the Stipulated Loss Value
Determination Date on or next preceding the payment date specified in such
notice over the Fair Market Value of the Aircraft, computed as of such
Stipulated Loss Value Determination Date, together with (A), if Interim
Rent or Basic Rent is payable in advance, interest, to the extent permitted
by applicable law, at the Debt Rate on the amount of such Stipulated Loss
Value from such Stipulated Loss Value Determination Date to the date for
payment set forth in such notice from the Lessor and (B) in all cases,
interest, to the extent permitted by applicable law at the Past Due Rate on
the excess of such Stipulated Loss Value over such Fair Market Value, from
the date as of which such Stipulated Loss Value is payable to the date of
actual payment of such amount; provided, however, that if (and in any event
prior to the time for payment hereunder) the Lessor is unable within a
reasonable period of time to recover possession of the Aircraft, or any
portion thereof, pursuant to clause (i) above unencumbered by this Lease
and free and clear of all Liens (other than Lessor's Liens), the Fair
Market Value of the Aircraft or such portion shall, at the option of the
Lessor to the extent legally enforceable, be zero and, if the Fair Market
Value of the Aircraft is deemed to be zero, after payment in full by the
Lessee of the amount specified above and all other amounts due from the
Lessee under this Lease and the other Operative Agreements, the Lessor
shall promptly transfer (without recourse or warranty other than as to the
absence of the Lessor's Liens) all of its right, title and interest in the
Aircraft or such portion, to the Lessee;
(iv) in the event the Lessor, pursuant to Section 17.01(a)(ii) hereof,
shall have sold the Airframe and/or any Engine, the Lessor, in lieu of
exercising its rights under Section 17.01(a)(iii) hereof, may, if it shall
so elect, demand that the Lessee pay the Lessor, and the Lessee shall pay
to the Lessor, on the date of such sale, as liquidated damages for loss of
a bargain and not as a penalty (in lieu of the Interim Rent, Basic Rent or
Renewal Rent due after the date on which such sale occurs) any unpaid
Interim Rent, Basic Rent or Renewal Rent due on or before the date on which
such sale occurs (and, to the extent Interim Rent, Basic Rent or Renewal
Rent is payable in arrears, the pro rata portion of the installment of
Interim Rent, Basic Rent or Renewal Rent due on the next succeeding Rent
Payment Date in respect of any period commencing on the Stipulated Loss
Value Determination Date referred to below and ending on the date of such
sale), and any Supplemental Rent due on or before the date on which such
sale occurs, plus an amount equal to the excess, if any, of (A) the
Stipulated Loss Value for the Aircraft, computed as of the Stipulated Loss
Value Determination Date next preceding the sale date, over (B) the net
proceeds of such sale (after deduction of all of the Lessor's costs and
expenses of such sale, including, without limitation, sales or transfer
taxes, costs of storage, overhaul, maintenance, preparation and
transportation of the Aircraft and brokers' and attorneys' fees) together
with (x), if Interim Rent or Basic Rent is payable in advance, interest, to
the extent permitted by applicable law, at the Debt Rate on such Stipulated
Loss Value from such Stipulated Loss Value Determination Date to the date
of such sale and (y) in all cases, interest to the extent permitted by
applicable law at the Past Due Rate, on the amount of such excess from the
date of such sale to the date of actual payment by the Lessee;
(v) proceed by appropriate court action to enforce the terms of this
Lease or to recover damages for its breach;
(vi) terminate or rescind this Lease as to the Airframe or any or all
of the Engines; or
(vii) exercise any other right or remedy which may be available to the
Lessor under applicable law.
(b) Cost of Exercise of Remedies. In addition, the Lessee shall be
liable, except as otherwise provided above, for any and all unpaid Rent due
before, after or during the exercise of any of the Lessor's remedies, for all
amounts payable by the Lessee under the Participation Agreement before or
after any termination hereof, and for all reasonable legal fees and other
costs and expenses incurred by the Lessor, the Indenture Trustee or the Owner
Participant by reason of the occurrence of any Event of Default or the
exercise of the Lessor's remedies, including, without limitation, all costs
and expenses incurred in connection with the return of the Airframe or any
Engine in accordance with the terms of Article 12 hereof or in placing the
Airframe or Engines in the condition and airworthiness required by such
Article or in connection with any inspection, use, operation, maintenance,
insurance, storage, or leasing carried out as part of such exercise.
Section 17.02. Cumulative Remedies. Except as otherwise provided, no
remedy referred to in this Article 17 is intended to be exclusive, but each
shall be cumulative and in addition to any other remedy referred to above or
otherwise available to the Lessor at law or in equity; and the exercise or
beginning of exercise by the Lessor of any one or more of such remedies shall
not preclude the simultaneous or later exercise by the Lessor of any or all of
such other remedies.
Section 17.03. Waiver. No express or implied waiver by the Lessor of
any Event of Default shall in any way be, or be construed to be, a waiver of
any future or subsequent Event of Default. To the extent permitted by
applicable law, the Lessee waives any rights now or in the future conferred by
statute or otherwise which may require the Lessor to sell, lease or otherwise
use the Airframe or any Engine in mitigation of the Lessor's damages or which
may otherwise limit or modify any of the Lessor's rights or remedies under
this Article 17. The Lessor's access to the Aircraft is of the essence and
shall not be impaired.
Section 17.04. Lessor's Right to Perform for Lessee. If the Lessee
fails to make any required payment of Rent or fails to perform or comply with
any of its agreements contained in this Lease, whether or not such failure
shall constitute an Event of Default hereunder, the Lessor may (but shall not
be obligated to) make such payments or perform or comply with such agreement,
and the amount of such payment and the amount of the reasonable costs and
expenses of the Lessor incurred in connection with such payment or the
performance of or compliance with such agreement, together with interest (to
the extent permitted by applicable law) at the Past Due Rate from the date of
the making of such payment or the incurring of such costs and expenses by the
Lessor to the date of payment of such Rent or other amount by the Lessee,
shall be deemed Supplemental Rent payable by the Lessee upon demand. No such
payment or performance by the Lessor shall be deemed to waive any Default or
Event of Default or relieve the Lessee of its obligations hereunder.
ARTICLE 18
COVENANT OF QUIET ENJOYMENT
Section 18.01. Quiet Enjoyment. So long as no Event of Default shall
have occurred and be continuing, the Lessor covenants that neither it nor any
other Person lawfully claiming through it (other than the holder of a Lien
which the Lessee is obligated to discharge pursuant to Article 6 hereof, and
it being understood that the Lessor shall not be liable for any act or
omission of the Indenture Trustee or any other Person claiming through the
Indenture Trustee) shall interfere with the Lessee's right to quietly enjoy
the Aircraft without hindrance or disturbance by it or any such other Person.
ARTICLE 19
FURTHER ASSURANCES
Section 19.01. Further Assurances. Promptly upon the execution and
delivery of the Lease Supplement and the Indenture Supplement, the Lessee will
cause each of them and this Lease, the Trust Agreement and the Indenture to be
duly filed for recordation in accordance with the Transportation Code and will
maintain the recordation of the Indenture until the Lien of the Indenture
shall have been discharged pursuant to the terms of the Indenture. In
addition, the Lessee will, at the Lessee's own cost and expense, promptly and
duly execute and deliver to the Lessor, the Owner Participant and the
Indenture Trustee such further documents and assurances to carry out the
intent and purpose of this Lease and the Indenture and to establish and
protect the rights and remedies created or intended to be created in favor of
the Lessor under this Lease, and of the Owner Participant under the Trust
Agreement, and of the Indenture Trustee under the Indenture, including,
without limitation, the execution and filing of Uniform Commercial Code
financing and continuation statements, the execution and delivery of
supplements and amendments to this Lease and the Indenture, in recordable
form, subjecting to this Lease and the Indenture any Replacement Airframe
and/or Replacement Engines delivered by the Lessee pursuant to Section 11.03
hereof and any Replacement Engine delivered by the Lessee pursuant to Section
11.04 hereof and the recording and filing of counterparts of this Lease and
the Indenture in accordance with the laws of such jurisdictions as the Lessor
or the Indenture Trustee may from time to time deem advisable. The foregoing
does not impose upon the Lessor any additional liabilities not otherwise
contemplated by this Lease.
ARTICLE 20
NET LEASE
Section 20.01. Nature of Lease. (a) This Lease is a net lease, it
being the intention of the parties hereto that the obligations of the Lessee
to pay all costs and expenses of every character, whether seen or unforeseen,
ordinary or extraordinary, or structural or nonstructural, in connection with
the use, operation, maintenance, repair and reconstruction of the Airframe and
each Engine by the Lessee, including, without limitation, the costs and
expenses particularly set forth in this Lease (unless expressly excluded from
the terms hereof, the costs and expenses of the Lessor and the Owner
Participant shall include the reasonable fees and expenses of their respective
outside counsel), shall be absolute and unconditional, shall be separate and
independent covenants and agreements, and shall continue unaffected unless and
until the covenants have been terminated pursuant to an express provision of
this Lease. The obligation to pay Rent and all amounts payable by the Lessee
under this Lease or the Participation Agreement shall be absolute and
unconditional and (except as otherwise expressly provided with respect to
Supplemental Rent) shall be paid without notice or demand and such obligation
shall not be affected by any circumstance, including, without limitation:
(i) any set-off (except to the extent set forth in Section 3.05
hereof), counterclaim, recoupment, defense or other right which the Lessee
may have against the Lessor, the Owner Participant, any Holder, the
Indenture Trustee or anyone else for any reason (including, without
limitation, any breach by the Lessor or the Owner Participant or the
Indenture Trustee or any Holder of their respective representations,
warranties, agreements or covenants contained in any of the Operative
Agreements);
(ii) any defect in the title, airworthiness, registration, eligibility
for registration under the Transportation Code (and the regulations
thereunder) or under any of the laws or regulations of any other country of
registry of the Aircraft, condition, design, operation, merchantability or
fitness for use of, suitability for a particular purpose of, or any damage
to or loss or destruction of, the Aircraft or any portion thereof, or any
interruption or cessation in the use or possession of the Aircraft by the
Lessee or any sublessee for any reason including, without limitation, by
reason of governmental action or any doctrine of force majeure or
impossibility of performance;
(iii) any insolvency, bankruptcy, reorganization or similar case or
proceedings by or against the Lessor, the Lessee, the Indenture Trustee or
the Owner Participant or any other Person;
(iv) any Liens, encumbrances or rights of any other Person with
respect to the Aircraft, the invalidity or unenforceability or lack of due
authorization or other infirmity of this Lease or any other Operative
Agreement or document or instrument executed pursuant hereto or thereto, or
any lack of right, power or authority of the Lessor or the Lessee or any
sublessee or any other party to any other Operative Agreement to enter into
this Lease or any other Operative Agreement or any such document or
instrument; or
(v) any other circumstance, happening or event whatsoever, whether or
not unforeseen, or similar to any of the foregoing.
(b) To the extent permitted by applicable law, the Lessee waives any
and all rights which it may now have or which at any time it may have
conferred upon it, by statute or otherwise, to suspend performance under,
terminate, cancel, quit, rescind or surrender this Lease, the Airframe, or any
Engine or part thereof, other than in accordance with the terms hereof.
(c) Each payment of Rent made by the Lessee shall be final as to the
Lessor and the Lessee, and the Lessee will not seek to return nor to recover,
xxxxx, suspend, defer or reduce all or any part of any such payment of Rent
from the Lessor or from the Indenture Trustee for any reason, except the
Lessee has the right to the extent provided in Section 3.05 hereof to offset a
portion of payments due from the Lessee to the Lessor pursuant thereto.
ARTICLE 21
SUCCESSOR LESSOR
Section 21.01. Successor Lessor. The Lessee agrees that in the case
of the appointment of any successor trustee for the Lessor pursuant to the
terms of the Participation Agreement, such successor trustee shall, upon
written notice by such successor to the Lessee, succeed to all the rights,
powers and title of the Lessor under this Lease and shall be deemed to be the
Lessor and the owner of the Aircraft for all purposes of this Lease without
the necessity of any consent or approval by the Lessee and without in any way
altering the terms of this Lease or the Lessee's obligations. One such
appointment and designation of a successor trustee shall not exhaust the right
to appoint and designate a further successor trustee pursuant to the
Participation Agreement, but such right may be exercised repeatedly so long as
this Lease shall be in effect.
ARTICLE 22
SECURITY FOR LESSOR'S OBLIGATIONS
Section 22.01. Security for Lessor's Obligations to Holders. In order
to secure the indebtedness evidenced by the Certificates, the Indenture
provides among other things, for the assignment by the Lessor to the Indenture
Trustee of this Lease and the Lease Supplement and for the creation of a first
mortgage and security interest in favor of the Indenture Trustee on the
Aircraft. The Lessee consents to and acknowledges such assignment (subject to
the reservations and conditions therein set forth) and the receipt of a copy
of the Indenture.
Section 22.02. Intentionally Left Blank.
Section 22.03. Consent of Lessee to Assignment of Lease as Security.
The Lessee hereby acknowledges and consents to the Indenture Trustee's rights
pursuant to the terms of the Indenture to receive payments (other than
Excepted Payments) due under this Lease, to transfer or assign title to the
Aircraft subject to this Lease, to make all waivers and agreements except as
otherwise provided in the Indenture, to give all notices, consents and
releases and to take all action upon the happening of a Default or Event of
Default under this Lease (except as otherwise specifically provided in the
Indenture), or to do any and all other things whatsoever which the Lessor is or
may become entitled to do under this Lease (except as otherwise provided in the
Indenture); all or any of which rights, obligations, benefits and interests
may, pursuant to the terms of the Indenture, be reassigned or retransferred by
the Indenture Trustee at any time and from time to time (except as otherwise
provided in the Indenture); provided, however, that the Lessor, except to the
extent, and for such time as, it is unable to do so by virtue of the
Indenture, shall remain liable for the performance of all the terms,
conditions, covenants and provisions for which it is obligated under this
Lease notwithstanding such assignment.
ARTICLE 23
SECURITY FUNDS
Section 23.01. Investment of Security Funds. (a) Any amounts otherwise
payable to the Lessee shall be held by the Lessor as security for, and may be
applied by the Lessor against, the obligations of the Lessee under this Lease
during such time as there shall have occurred and be continuing a Payment
Default, Bankruptcy Default or Event of Default, and, at such times as there
shall not be continuing a Payment Default, Bankruptcy Default or Event of
Default, such amounts, net of any amounts which have been applied by the
Lessor against the Lessee's obligations hereunder, shall be paid to the
Lessee. Any amounts which are held by the Lessor pending payment to the
Lessee shall, until paid to the Lessee or applied against the Lessee's
obligations hereunder, be invested by the Lessor, as directed from time to
time, in writing (and in the absence of a written direction by the Lessee, the
Lessor shall invest such monies in direct obligations of the United States of
America), by the Lessee and at the expense and risk of the Lessee, in the
following securities (which in the case of securities referred to in
subparagraphs (i) through (iv) of this Section 23.01(a) hereof shall mature
within ninety (90) days of the date of purchase):
(i) direct obligations of the United States of America; or
(ii) obligations fully guaranteed by the United States of America; or
(iii) certificates of deposit issued by, or bankers' acceptances of,
or time deposits or a deposit account with, any bank, trust company or
national banking association incorporated or doing business under the laws
of the United States of America or one of its States (which may include the
Owner Trustee or the Indenture Trustee in their respective individual
capacities or any Affiliate thereof), having a combined capital and surplus
of at least $500,000,000 and having a rating of "A" or better from Moody's
or S&P; or
(iv) commercial paper rated A-1/P-1 by S&P and Moody's respectively
(or if neither such organization shall rate such commercial paper at any
time, by any nationally recognized statistical rating organization in the
United States of America) equal to the highest rating assigned by such
rating organization (which may include commercial paper issued by the Owner
Trustee or the Indenture Trustee in their respective individual capacities
or any Affiliate thereof).
(b) At any time any invested funds are distributed to the Lessee,
there shall be promptly remitted to the Lessee any gain (including interest
received) realized as the result of any investment pursuant to Section
23.01(a) hereof (net of any fees, commissions and other costs, Taxes and
expenses, if any, incurred by the Lessor or the Owner Participant in
connection with such investment), unless a Payment Default, Bankruptcy Default
or Event of Default shall have occurred and be continuing in which case such
funds shall be applied in the same manner as the principal so invested. The
Lessee shall be responsible for and will promptly pay to the Indenture Trustee
or the Lessor, as the case may be, on demand, the amount of any loss realized
as the result of any such investment (together with any fees, commissions and
other costs, Taxes and expenses, if any, incurred by the Indenture Trustee or
the Lessor or the Owner Participant in connection with such investment), such
amount to be disposed of in accordance with the terms of the Indenture or the
Lease, as the case may be.
ARTICLE 24
CONCERNING THE LESSOR
Section 24.01. Lessor's Entry into Lease. Except as expressly provided
herein, the Lessor and the Lessee agree that this Lease is executed by NBD not
individually but solely as Owner Trustee under the Trust Agreement in the
exercise of the power and authority conferred and vested in it as such Owner
Trustee, that each and all of the representations, undertakings and agreements
by the Lessor herein are for the purpose and with the intention of binding
only the Lessor's Estate, and that in no case whatsoever shall NBD be
personally liable for any loss in respect of such representations,
undertakings and agreements, that actions to be taken by the Lessor pursuant
to its obligation hereunder may, in certain instances, be taken by the Lessor
only upon specific authority of the Owner Participant and the Indenture
Trustee, that nothing herein contained shall be construed as creating any
liability on NBD, individually or personally, to perform any covenant, either
express or implied, herein, all such liability, if any, being expressly waived
by the Lessee and by each and every Person now or hereafter claiming by,
through or under the Lessee except with respect to the gross negligence or
willful misconduct of NBD, and that so far as NBD, individually or personally
is concerned, the Lessee and any Person claiming by, through or under the
Lessee shall look solely to the Lessor's Estate for the performance by the
Lessor of any of its obligations under this Lease; provided, that nothing in
this Section 24.01 shall be construed to limit in scope or substance those
representations and warranties of NBD in its individual capacity set forth in
the Participation Agreement or the Trust Agreement. The term "Lessor" as used
in this Lease shall include any trustee succeeding NBD as Owner Trustee under
the Trust Agreement. Any obligation of the Lessor hereunder may be performed
by the Owner Participant, and any such performance shall not be construed as
revocation of the trust created by the Trust Agreement. Nothing contained in
this Lease shall restrict the operation of the provisions of the Trust
Agreement with respect to its revocation of the resignation or removal of the
Owner Trustee hereunder.
ARTICLE 25
NOTICES
Section 25.01. Notices. All notices, demands, declarations and other
communications required by this Lease shall be in writing and shall be deemed
received (a) if given by telecopier, when transmitted and the appropriate
telephonic confirmation received if transmitted on a Business Day and during
normal business hours of the recipient, and otherwise on the next Business Day
following transmission, (b) if given by certified mail, return receipt
requested, postage prepaid, five Business Days after being deposited in the
United States mail and (c) if given by FedEx (or, if a Default or Event of
Default shall have occurred and be continuing, by other comparable courier
service), when received or personally delivered, addressed:
(a) if to the Lessee, to its office at 0000 Xxxxxxxxx Xxxxxx,
Xxxxxxx, Xxxxxxxxx 00000, Attention: Senior Vice President and Chief
Financial Officer with a copy to Senior Vice President and General Counsel;
telephone (000) 000-0000, facsimile (000) 000-0000; or at such other
address as the Lessee shall from time to time designate in writing to the
Lessor, the Indenture Trustee and the Owner Participant;
(b) if to the Lessor or Owner Trustee, to its office at 000 Xxxxxxxx
Xxxxxx, Xxxxxxx, Xxxxxxxx 00000, Attention: Corporate Trust Administration
Department; telephone (000) 000-0000, facsimile (000) 000-0000; or to such
other address as the Lessor shall from time to time designate in writing to
the Lessee and the Indenture Trustee, with a copy to Owner Participant at
the Owner Participant's address as provided in subsection (c) below;
(c) if to the Owner Participant, in accordance with the Participation
Agreement; and
(d) if to the Indenture Trustee, to its office at 4 Chase Metrotech
Center, 3rd Floor, Brooklyn, New York 11245, Attention: Corporate Trust
Administration; telephone (000) 000-0000, facsimile (000) 000-0000; or to
such other address as the Indenture Trustee shall from time to time
designate in writing to the Lessor, the Lessee and the Owner Participant.
ARTICLE 26
MISCELLANEOUS
Section 26.01. Section Headings and Captions. All article and section
headings and captions used in this Lease are purely for convenience and shall
not affect the interpretation of this Lease.
Section 26.02. References. Any reference to a specific article or
section number shall be interpreted as a reference to that article or section
of this Lease unless otherwise expressly provided.
Section 26.03. APPLICABLE LAW. THIS LEASE SHALL IN ALL RESPECTS BE
GOVERNED BY, AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW
YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE BUT
WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS, AND IS BEING
DELIVERED IN NEW YORK.
Section 26.04. Severability. Any provision of this Lease which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
Section 26.05. No Oral Modification. The terms and provisions of this
Lease may not be changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought. Any such change, waiver,
discharge or termination is also subject to the provisions of Section 8.01 and
Article XIII of the Indenture.
Section 26.06. Agreement as Chattel Paper. To the extent that this
Lease constitutes chattel paper (as such term is defined in the Uniform
Commercial Code as in effect in any applicable jurisdiction), no security
interest in this Lease may be created through the transfer or possession of
any counterpart other than the original chattel-paper counterpart, which shall
be the counterpart containing the receipt executed by the Indenture Trustee on
its signature page.
Section 26.07. Counterparts. This Lease may be executed in any number
of counterparts, each of which shall be an original (except that only the
counterpart bearing the receipt executed by the Indenture Trustee shall be the
original for purposes of perfecting a security interest therein as chattel
paper under the Uniform Commercial Code), but all of which taken together
shall constitute one and the same instrument and any of the parties hereto may
execute this Lease by signing any such counterpart.
Section 26.08. Public Release of Information. Provided no Event of
Default shall have occurred and be continuing, each party shall in each
instance obtain the prior written approval of each party concerning the exact
text and timing of news releases, articles and other informational releases to
the public media concerning this Lease.
ARTICLE 27
TRUE LEASE
Section 27.01. Intent of the Parties. It is the intent of the parties
to this Lease that for all purposes (including, without limitation, U.S.
Federal income tax purposes) this Lease will be a true lease, and that this
Lease conveys to the Lessee no right, title or interest in the Aircraft except
as a lessee.
Section 27.02. Section 1110 Compliance. Notwithstanding any provision
herein or elsewhere contained to the contrary, it is understood and agreed
among the parties hereto that the transactions contemplated by this Lease and
the other Operative Agreements in respect of the Aircraft are expressly
intended to be, shall be and should be construed so as to be, entitled to the
full benefits of Section 1110 of the Bankruptcy Code and any successor
provision thereof.
Section 27.03. Finance Lease. This Lease is a "finance lease" within
the meaning of Section 2-A-103(g) of the Uniform Commercial Code.
IN WITNESS WHEREOF, the Lessor and the Lessee have each caused this
Lease to be duly executed as of the date first above written.
LESSOR: NBD BANK,
not in its individual capacity,
but solely as Owner Trustee
By: ______________________________________________
Name:
Title:
LESSEE: FEDERAL EXPRESS CORPORATION
By: _______________________________________________
Name: Xxxxxx X. Xxxxxxx
Title: Assistant Treasurer and
Managing Director - Structured Finance
Receipt of this original counterpart of the Lease is hereby
acknowledged on this __ day of October 1995.
Indenture Trustee: THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION),
not in its individual capacity,
but solely as Indenture Trustee
By: _____________________________________________
Name:
Title:
SCHEDULE I
DEFINITIONS
GENERAL PROVISIONS
The following terms shall have the following meanings for all
purposes of the Operative Agreements (other than the Pass Through Agreement
and the Series Supplements) referred to below, unless otherwise defined in an
Operative Agreement or the context thereof shall otherwise require. In the
case of any conflict between the provisions of this Schedule and the
provisions of any Operative Agreement, the provisions of such Operative
Agreement shall control the construction of such Operative Agreement.
Unless the context otherwise requires, (i) references to agreements
shall be deemed to mean and include such agreements as amended and
supplemented from time to time, and (ii) references to parties to agreements
shall be deemed to include the successors and permitted assigns of such
parties.
DEFINED TERMS:
Additional Insureds. As defined in Article 13 of the Lease.
Aeronautics Authority or FAA. As appropriate, the Federal Aviation
Administration and/or the Administrator of the Federal Aviation
Administration, any successor to the former United States Civil Aeronautics
Board, or any Person, governmental department, bureau, commission or agency
located in the United States succeeding to the functions of any of the
foregoing.
Affiliate. With respect to any Person, any other Person directly or
indirectly controlling, controlled by or under common control with such
Person. For the purposes of this definition, "control" (including "controlled
by" and "under common control with") shall mean the power, directly or
indirectly, to direct or cause the direction of the management and policies of
such Person whether through the ownership of voting securities or by contract
or otherwise. In no event shall the Owner Trustee or the Lessor be deemed an
Affiliate of the Owner Participant.
After-Tax Basis. A basis such that any payment received or deemed to
have been received by a Person (the "Original Payment") shall be supplemented
by a further payment to such Person so that the sum of the two payments shall
be equal to the Original Payment, after taking into account (x) all Taxes that
would result from the receipt or accrual of such payments and (y) any
reduction in Taxes that would result from such increased Taxes. In the case
of amounts payable to the Lessor, the Owner Participant, or any corporate
Affiliate of the Owner Participant, it shall be presumed that such Person is
at all times subject to Federal income tax at the maximum marginal rate
generally applicable to corporations from time to time and actual state, local
and foreign income taxes.
Air Carrier. Any U.S. Air Carrier and any "foreign air carrier" (as
defined in the Transportation Code) as to which there is in force a permit
granted under Section 41302 of the Transportation Code.
Airbus Guaranty. The Guaranty to be dated the Delivery Date executed
by the Manufacturer and guaranteeing AVSA's Warranty Xxxx of Sale.
Aircraft. The Airframe to be sold by AVSA to the Owner Trustee
pursuant to the Participation Agreement and to be leased under the Lease (or
any permitted substitute airframe) together with the two Engines (or any
Replacement Engine or Engines) whether or not any of such initial or
Replacement Engines may from time to time be installed on such Airframe or may
be installed on any other airframe or on any other aircraft, including any
aircraft substituted pursuant to Section 11.03 of the Lease. Prior to
delivery of the initial Lease Supplement, references in Section 3.05 of the
Participation Agreement to Aircraft shall mean the Airbus A300F4-605R
airframe bearing FAA Registration Number N663FE and Manufacturer's serial
number 766, together with the two General Electric CF6-80C2-A5F engines
bearing Manufacturer's serial numbers 705-233 and 705-234.
Airframe. The Airbus A300F4-605R aircraft (excluding the Engines or
engines from time to time installed thereon) to be leased by the Lessor to the
Lessee pursuant to the Lease and the initial Lease Supplement and having the
United States FAA Registration Number and manufacturer's serial number
specified in the initial Lease Supplement, including (i) all Parts in respect
thereof and (ii) any replacement airframe which may be substituted pursuant to
Section 11.03 of the Lease.
Ancillary Agreement. Any written agreement of the Lessee to which the
Lessor is a party or to which the Lessor has consented in writing entered into
on the Delivery Date or any date thereafter in connection with the
transactions contemplated by the Operative Agreements, as such agreement may
be amended and supplemented from time to time with the consent of the Lessor
and delivered to the Owner Trustee, the Indenture Trustee, the Pass Through
Trustee and the Owner Participant.
Ancillary Agreement I. The Ancillary Agreement I (Federal Express
Corporation Trust No. N663FE), to be dated the Certificate Closing Date
among the Lessee, the Owner Trustee, not in its individual capacity, but
solely as Owner Trustee, the Owner Participant and the Indenture Trustee
not in its individual capacity, but solely as Indenture Trustee, as
originally executed or as amended, modified or supplemented with the
consent of all the parties thereto.
Appraisal. The report prepared by BK Associates, Inc. and to be
delivered to the Owner Participant (with a copy of such report to the Lessee)
on the Delivery Date pursuant to Section 4.02(h) of the Participation
Agreement.
AVSA. AVSA S.A.R.L., a societe a responsabilite limitee, organized
and existing under the laws of France, and its successors and assigns.
AVSA Consent and Agreement. The Consent and Agreement dated as of
October 26, 1995, executed by AVSA, as the same may be amended, modified or
supplemented from time to time.
AVSA's FAA Xxxx of Sale. The xxxx of sale for the Airframe on AC
Form 8050-2, or such other form as may be approved by the Aeronautics
Authority, executed by AVSA in favor of the Owner Trustee and to be dated the
Delivery Date.
AVSA's Warranty Xxxx of Sale. The full warranty xxxx of sale
covering the Aircraft (and specifically referring to each Engine) executed by
AVSA as owner of the Aircraft in favor of the Owner Trustee and to be dated
the Delivery Date.
Bankruptcy Code. The Federal Bankruptcy Code of 1978, as amended, and
any successor thereto.
Bankruptcy Default. An event specified in Section 16.01(e), (f) or
(g) of the Lease which either does or with the giving of notice or lapse of
time or both would constitute an Event of Default.
Basic Rent. The periodic rent payable for the Aircraft throughout
the Basic Term pursuant to Section 3.02 of the Lease, adjusted pursuant to
Article 3 of the Lease.
Basic Term. The period commencing at the beginning of the day on the
Commencement Date and ending at the end of the day on July 2, 2020, or such
earlier date on which the Lease shall be terminated as provided therein.
Beneficial Interest. The interest of the Owner Participant under the
Trust Agreement.
Business Day. Any day on which commercial banks are not authorized or
required to close in New York, New York and Memphis, Tennessee, and after the
Lien of the Indenture is discharged, Detroit, Michigan.
Certificate Closing Date. The date of the closing with respect to the
purchase of Certificates by the Pass Through Trustee contemplated by Section
2.01(b) of the Participation Agreement.
Certificates. The Equipment Trust Certificates (Federal Express
Corporation Trust No. N663FE), issued by the Owner Trustee pursuant to the
Indenture and any certificate issued in exchange therefor or replacement
thereof pursuant to the Indenture.
Change in Tax Rate. Any amendment, modification, deletion, addition,
or change to the Code which is enacted into law after the Delivery Date which
changes the highest marginal statutory rate of Federal income tax applicable
to the Owner Participant (other than a change which is in the nature of a
minimum tax).
Chase. The Chase Manhattan Bank (National Association) and its
successors and permitted assigns.
Citizen of the United States. A citizen of the United States as
defined in Section 40102(a)(15) of the Transportation Code, or any analogous
part of any successor or substituted legislation or regulation at the time in
effect.
Closings. The closing with respect to the acquisition of the Pass
Through Certificates by the Underwriters and the closing with respect to the
acquisition of Certificates by the Pass Through Trustee.
Code. Except as otherwise provided, references to the Code shall
mean the Internal Revenue Code of 1986, as amended from time to time.
Collateral Account. The deposit account established and maintained
pursuant to Section 2.13 of the Indenture.
Commencement Date. July 2, 1996.
Commitment. The amount of the Owner Participant's participation in
the Purchase Price required to be made available or paid as provided in
Section 3.02 of the Participation Agreement.
Consent and Agreement. The Consent and Agreement dated as of October
26, 1995, executed by the Manufacturer, as the same may be amended, modified
or supplemented from time to time.
Consent and Guaranty. The Consent and Guaranty of the Manufacturer
attached to the Purchase Agreement.
Corporate Trust Administration. The principal office of the
Indenture Trustee located at 4 Chase Xxxxxxxxx Xxxxxx, 0xx Xxxxx, Xxxxxxxx,
Xxx Xxxx 00000, or such other office at which the Indenture Trustee's
corporate trust business shall be administered which the Indenture Trustee
shall have specified by notice in writing to the Lessee, the Owner Participant
and the Owner Trustee.
Corporate Trust Department. The principal office of the Owner Trustee
located at 000 Xxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000, or such other office
at which the Owner Trustee's corporate trust business shall be administered
which the Owner Trustee shall have specified by notice in writing to the
Lessee, the Owner Participant and the Indenture Trustee.
Cut-Off Date. December 29, 1995.
Debt Portion. The amount specified as such on Schedule IV to the
Participation Agreement.
Debt Rate. The weighted average (based on Outstanding principal
amount) rate of interest on the Certificates issued pursuant to the Indenture.
Default. Any event or condition which with the lapse of time or the
giving of notice, or both, would constitute an Event of Default.
Delivery Date. The date on which the Aircraft is delivered and sold
by AVSA to the Lessor and leased by the Lessor to the Lessee under the Lease,
which date shall also be the date of the initial Lease Supplement.
Delivery Notice. Notice of the Aircraft's Delivery Date, given by
the Lessee as provided in Section 3.01 of the Participation Agreement and
including any notice with respect to a postponed Delivery Date given by the
Lessee pursuant to Section 3.05(c) of the Participation Agreement.
EBO Price. Has the meaning set forth in Section 4.02(a)(F) of the
Lease.
Eligible Deposit Account. Either (a) a segregated account with an
Eligible Institution or (b) a segregated trust account with the corporate
trust department of a depository institution with corporate trust powers
organized under the laws of the United States or any state thereof, or the
District of Columbia, and whose deposits are insured by the Federal Deposit
Insurance Corporation, provided that such institution also must have a
combined capital and surplus of at least $100,000,000 and a rating of A or
better from the Thomson Bank Watch.
Eligible Institution. A depository institution organized under the
laws of the United States or any one of the states thereof, or the District of
Columbia, or any domestic branch of a foreign bank, which in any such case at
all times (a) has either (x) a long-term unsecured debt rating of at least Aa2
by Moody's or (y) a short-term certificate of deposit rating of P-1 by
Moody's, (b) has either (x) a long-term unsecured debt rating of a least AA by
S&P or (y) a short-term certificate of deposit rating of A-1+ by S&P and (c)
is a member of the Federal Deposit Insurance Corporation.
Engine. Each of the two General Electric CF6-80C2-A5F engines listed
by its manufacturer's serial number in the initial Lease Supplement and leased
pursuant to the Lease, whether or not from time to time installed on the
Airframe or installed on any other airframe or on any other aircraft, and any
Replacement Engine which may from time to time be substituted for an Engine
pursuant to Section 7.02(a)(vii), 10.03, 11.03, 11.04 or 12.02 of the Lease,
together with all Parts related thereto. Except as otherwise provided, at
such time as a Replacement Engine shall be so substituted and the Engine for
which the substitution is made shall be released from the Lien of the
Indenture, such replaced Engine shall cease to be an "Engine" under the Lease.
The term "Engines" means, as of any date of determination, both Engines then
leased to the Lessee pursuant to the Lease.
Engine Consent. The Engine Consent dated as of October 26, 1995,
executed by the Engine Manufacturer, as the same may be amended, modified or
supplemented from time to time.
Engine Manufacturer. General Electric Company, a New York
corporation.
Engine Warranty Assignment. The Engine Warranty Assignment (Federal
Express Corporation Trust No. N663FE), dated as of October 26, 1995 between
the Lessor and the Lessee, as the same may be amended, modified or
supplemented from time to time.
ERISA. The Employee Retirement Income Security Act of 1974, as
amended.
ERISA Plan. Has the meaning set forth in Section 7.06 of the
Participation Agreement.
Estimated Expense Amount. Has the meaning specified in Section
10.01(a) of the Participation Agreement.
Event of Default. Each of the events specified in Article 16 of the
Lease.
Event of Loss. Any of the following events with respect to the
Aircraft, the Airframe or any Engine: (i) loss of such property or its use (A)
for a period in excess of 90 days due to theft or disappearance or such longer
period, not to exceed 90 days from the end of such initial 90-day period, if
and so long as the location of such property is known to the Lessee and the
Lessee is diligently pursuing recovery of such property, or to the end of the
Term, if less (unless such theft or disappearance constitutes an Event of Loss
pursuant to (i)(B) or (ii) hereof) or (B) for a period in excess of 60 days
due to the destruction, damage beyond economic repair or rendition of such
property permanently unfit for normal use by Lessee for any reason whatsoever;
(ii) any damage to such property which results in an insurance settlement with
respect to such property on the basis of a total loss, or constructive or
compromised total loss; (iii) (1) condemnation, confiscation or seizure of, or
requisition of title to such property by the Government, any foreign
government or purported government or any agency or instrumentality thereof,
or (2) condemnation, confiscation, or seizure of, or requisition or taking of,
use of such property (A) by a foreign government or instrumentality or agency
of any such foreign government, for a period in excess of 180 days (or such
shorter period ending on the earlier of the expiration of the Term or on the
date on which an insurance settlement with respect to such property on the
basis of a total loss or constructive or compromised total loss shall occur)
or (B) by the Government for a period extending beyond the Term, provided that
no Event of Loss shall be deemed to have occurred, and the Term shall be
extended automatically for a period of six months (or the date of return of
the Aircraft, if shorter, so long as the Lessor receives at least six months
notice of such date of return) beyond the end of the Term in the event that
the Aircraft, the Airframe or any Engine as of the end of the Lease Term is
requisitioned by the Government pursuant to an activation as part of the Civil
Reserve Air Fleet Program described in Section 7.02(a)(iv) of the Lease; and
(iv) as a result of any law, rule, regulation, order or other action by the
Aeronautics Authority or other governmental body having jurisdiction, the use
of the Aircraft or Airframe in the normal course of air transportation of
cargo shall have been prohibited by virtue of a condition affecting all Airbus
A300F-600 series aircraft equipped with engines of the same make and model as
the Engines for a period not to exceed six (6) consecutive months, unless the
Lessee, prior to the expiration of such six (6) month period, shall be
diligently carrying forward in a similar manner as are then being carried
forward with respect to other aircraft of the Lessee so as to not discriminate
against the Aircraft by reason of its leased status, all steps which are
necessary or desirable to permit the normal use of the Aircraft or Airframe
or, in any event, if such use of the Aircraft or the Airframe shall have been
prohibited for a period of eighteen (18) consecutive months or until the end
of the Term, if earlier. The date of such Event of Loss shall be (s) the 91st
day or the 180th day, as the case may be, following loss of such property or
its use due to theft or disappearance (or the end of the Term or the Lessee's
abandonment of diligent efforts to recover such property, if earlier); (t) the
61st day following the date of any destruction, damage beyond economic repair
or rendition of such property permanently unfit for normal use; (u) the date
of any insurance settlement on the basis of a total loss or constructive or
compromised total loss; (v) the date of any condemnation, confiscation,
seizure or requisition of title of such property; (w) the 181st day following
condemnation, confiscation, seizure or requisition for use of such property by
a foreign government referred to in clause (iii)(2)(A) above (or the end of
the Term or the date of any insurance settlement described therein, if earlier
than such 181st day); (x) the last day of the Term in the case of requisition
for use of such property by the Government; (y) the last day of the six (6)
month or eighteen (18) month period, referred to in clause (iv) above (or if
earlier, the end of the Term or abandonment of the Lessee's efforts to restore
the normal use of the Aircraft). An Event of Loss with respect to the
Aircraft shall be deemed to have occurred if any Event of Loss occurs with
respect to the Airframe. If an Event of Loss described in any of clauses (i)
(A), (iii) or (iv) above shall occur, Lessor may elect, within 30 days
following the date upon which such Event of Loss is deemed to have occurred,
to waive such Event of Loss and the consequences thereof.
Excepted Payments. Collectively, (i) indemnity or other payments (and
interest thereon to the extent provided in the Operative Agreements) paid or
payable by the Lessee in respect of the Owner Participant, the Owner Trustee
in its individual capacity or any of their respective successors, permitted
assigns, directors, officers, employees, servants and agents or Affiliates,
pursuant to the Participation Agreement or any indemnity hereafter granted to
the Owner Participant or the Owner Trustee in its individual capacity pursuant
to the Lease or the Participation Agreement, (ii) proceeds of public liability
insurance (or government indemnities in lieu thereof) in respect of the
Aircraft payable as a result of insurance claims paid for the benefit of, or
losses suffered by, the Owner Trustee or the Indenture Trustee in their
respective individual capacities or by the Owner Participant, or their
respective successors, permitted assigns or Affiliates, (iii) proceeds of
insurance maintained with respect to the Aircraft by the Owner Participant
(whether directly or through the Owner Trustee) maintained in accordance with
Section 13.05 of the Lease but not required under Section 13 of the Lease,
(iv) payments of Supplemental Rent by the Lessee in respect of any amounts
payable under the Tax Indemnity Agreement, (v) payments constituting increases
in Interim Rent or Basic Rent attributable to payments arising pursuant to
Section 5 of the Tax Indemnity Agreement and (vi) any right to demand, collect
or otherwise receive and enforce the payment of any amount described in
clauses (i) through (v) above.
Expense; Expenses. Have the meaning specified in Section 9.01(a) of
the Participation Agreement.
Fair Market Renewal Term. A term with respect to which the Lessee has
exercised its option to renew the Lease pursuant to the second paragraph of
Section 4.01(a) thereof and with respect to which the conditions set forth in
the second paragraph of Section 4.01(a) are met.
Fair Market Rental. An amount determined on the basis of, and equal
in amount to, the rental which would be obtained in an arm's-length
transaction between an informed and willing lessee and an informed and willing
lessor unaffiliated with such lessee, neither being under any compulsion to
lease the Aircraft. In such determination, it shall be assumed that the
Aircraft is in the condition required under the Lease in the case of return of
the Aircraft pursuant to Article 12 of the Lease. Fair Market Rental shall be
determined in accordance with the provisions of Section 4.03 of the Lease.
Fair Market Value. An amount determined on the basis of, and equal
in amount to, the value which would be obtained in an arm's-length transaction
between an informed and willing purchaser under no compulsion to buy and an
informed and willing seller unaffiliated with such purchaser and under no
compulsion to sell, assuming that the Aircraft (or other property) is
unencumbered by the Lease. In such determination it shall be assumed that the
Aircraft is in the condition required under the Lease in the case of return of
the Aircraft pursuant to Article 12 of the Lease; provided that in connection
with any determination pursuant to or for the purposes of Article 17 of the
Lease, the Aircraft shall be appraised on an "as is, where is" basis. Fair
Market Value shall be determined in accordance with the provisions of Section
4.03 of the Lease.
Federal Aviation Administration; FAA. The United States Federal
Aviation Administration and any successor agency or agencies thereto.
Fixed Renewal Rent. Semi-annual payments during the Fixed Renewal
Term equal to 50% of the average actual semi-annual Basic Rent payable during
the Basic Term.
Fixed Renewal Term. The term with respect to which the Lessee has
exercised its option to renew the Lease pursuant to the first paragraph of
Section 4.01(a) thereof and with respect to which the conditions set forth in
such Section 4.01(a) are met.
French Pledge Agreement. The French Pledge Agreement dated as of
October 26, 1995 between the Owner Trustee and the Indenture Trustee.
Government. The United States of America or an agency or
instrumentality thereof the obligations of which bear the full faith and
credit of the United States of America.
GTA. The General Terms Agreement dated as of July 3, 1991 between the
Engine Manufacturer and the Lessee related to the purchase by the Lessee of
the Engines as originally executed or as modified, amended or supplemented in
accordance with the terms thereof, but only insofar as the General Terms
Agreement relates to the Engines, to the extent assigned to the Owner Trustee
pursuant to the Engine Warranty Assignment.
Holder of a Certificate; Certificate Holder; Holder. As of any
particular time, the Person in whose name a Certificate shall be registered
(but not including the holder of any Pass Through Certificate).
Indemnitee. Each of NBD, in its individual capacity and as Owner
Trustee and Lessor, the Owner Participant, the Indenture Trustee, in its
individual capacity and as trustee, any Owner Participant Guarantor, and any
successor (including any trustee which may succeed to the Lessor's interest
under the Lease), Affiliate, assign, officer, director, employee, agent and
servant of any of the foregoing, the Lessor's Estate and the Trust Indenture
Estate.
Indenture. The Trust Indenture and Security Agreement (Federal
Express Corporation Trust No. N663FE) dated as of October 26, 1995, between
the Lessor and the Indenture Trustee, as supplemented by the Indenture and
Security Agreement Supplement, and as said Indenture may from time to time be
further supplemented or amended, including any amendment or supplement thereto
entered into from time to time pursuant to the applicable provisions of the
Indenture.
Indenture and Security Agreement Supplement. The Indenture and
Security Agreement Supplement No. 1 (Federal Express Corporation Trust No.
N663FE) to be dated the Delivery Date, as such Indenture and Security
Agreement Supplement shall be amended or supplemented from time to time and
any other supplement to the Indenture, substantially in the form of Exhibit A
to the Indenture.
Indenture Default. Any event or condition which with the lapse of
time or the giving of notice, or both, would constitute an Indenture Event of
Default.
Indenture Documents. Has the meaning specified in the Granting
Clause of the Indenture.
Indenture Event of Default. Each of the events specified in Section
7.01 of the Indenture.
Indenture Trustee. The Chase Manhattan Bank (National Association), a
national banking association, not in its individual capacity but solely as
Indenture Trustee under the Indenture and each other Person which may from
time to time be acting as successor trustee under the Indenture.
Indenture Trustee's Liens. Any Lien on the Trust Indenture Estate
resulting from (i) claims against the Indenture Trustee not related to the
administration of the Trust Indenture Estate or any transactions pursuant to
the Indenture or any document included in the Trust Indenture Estate or (ii)
any act or omission of the Indenture Trustee which is not related to the
transactions contemplated by the Operative Agreements or is in violation of
any of the terms of the Operative Agreements.
Independent Investment Banker. An independent investment banking
institution of national standing appointed by the Lessee that is independent
in fact, does not have any direct financial interests, or any material
indirect financial interest, in the Lessee or any Affiliate of the Lessee, and
is not connected with the Lessee or any Affiliate of the Lessee, as an
officer, employee, promoter, underwriter, trustee, partner, director or Person
performing similar functions; provided, that if the Indenture Trustee shall
not have received written notice of such an appointment at least 10 days prior
to the Prepayment Date, "Independent Investment Banker" shall mean such an
institution appointed by the Indenture Trustee.
Interim Rent. The periodic rent payable for the Aircraft throughout
the Interim Term pursuant to Section 3.02 of the Lease, adjusted pursuant to
Article 3 of the Lease.
Interim Term. The period commencing on the Owner Participant Payment
Date and ending at the end of the day immediately preceding the Commencement
Date.
Invoice. The invoice for the Aircraft given by AVSA to the Lessor.
Lease. The Lease Agreement (Federal Express Corporation Trust No.
N663FE) dated as of October 26, 1995, entered into by the Lessor and the
Lessee concurrently with the execution and delivery of the Indenture, as said
Lease may from time to time be supplemented or amended, or its terms waived or
modified, to the extent permitted by, and in accordance with, the terms of the
Indenture, including, without limitation, supplementation by one or more Lease
Supplements entered into pursuant to the applicable provisions of the Lease.
Lease Supplement. The Lease Supplement No. 1 (Federal Express
Corporation Trust No. N663FE) to be dated the Delivery Date, as such Lease
Supplement shall be amended or supplemented from time to time and any other
supplement to the Lease, substantially in the form of Exhibit A to the Lease.
Lease Term. The period commencing on the Delivery Date and ending at
the end of the Basic Term.
Lessee. Federal Express Corporation, a Delaware corporation, and its
successors and permitted assigns.
Lessee Documents. Has the meaning set forth in Section 6.01(b) of the
Participation Agreement.
Lessor. NBD Bank, a Michigan banking corporation, not in its
individual capacity but solely as Owner Trustee under the Trust Agreement, and
its successors and permitted assigns.
Lessor's Estate. All estate, right, title and interest of the Owner
Trustee in and to the Collateral Account, the Liquid Collateral, the Aircraft,
the Lease, any Lease Supplement, the Participation Agreement, AVSA's FAA Xxxx
of Sale, AVSA's Warranty Xxxx of Sale, the Airbus Guaranty, the Purchase
Agreement, the Purchase Agreement Assignment, the Consent and Agreement, the
AVSA Consent and Agreement, the Consent and Guaranty (to the extent assigned
by the Purchase Agreement Assignment), the GTA, the Engine Warranty
Assignment, the Engine Consent, any warranty with respect to the Airframe and
the Engines, all amounts of Interim Rent, Basic Rent and Supplemental Rent,
including without limitation, insurance proceeds (other than insurance
proceeds payable to or for the benefit of the Owner Trustee in its individual
capacity, the Owner Participant or the Indenture Trustee) and requisition,
indemnity or other payments of any kind for or with respect to the Aircraft
(except amounts owing to the Owner Participant, to the Indenture Trustee, to
the Owner Trustee in its individual capacity, or to any of their respective
directors, officers, employees and agents pursuant to Articles 8 and 9 of the
Participation Agreement). Notwithstanding the foregoing, "Lessor's Estate"
shall (i) not include any Excepted Payment and (ii) include all property
intended to be subjected to the Indenture by the Granting Clause thereof.
Lessor's Liens. Liens on the Lessor's Estate or the Trust Indenture
Estate arising as a result of (i) claims against the Lessor, in its individual
capacity or as Owner Trustee, or the Owner Participant, in each case not
related to the transactions contemplated by the Operative Agreements, (ii)
acts or omissions of the Lessor in its individual capacity or as Owner
Trustee, and, in the case of the Lessor in its individual capacity, arising
from its gross negligence or willful misconduct or expressly prohibited under
the Operative Agreements and any act or omission of the Owner Participant
which is in violation of any of the terms of the Operative Agreements, (iii)
Taxes or Expenses imposed against the Lessor, in its individual capacity or as
Owner Trustee, Owner Participant, Lessor's Estate or the trust created by the
Trust Agreement which are not required to be indemnified against by the Lessee
pursuant to the Participation Agreement by reason of Section 8.01(b) or
9.01(b) thereof and which are not required to be indemnified against by the
Lessee pursuant to the Tax Indemnity Agreement, or (iv) claims against the
Lessor or the Owner Participant arising from the voluntary transfer by the
Lessor or the Owner Participant of its interests in the Aircraft other than a
transfer of the Aircraft pursuant to Section 4.02(a) or Article 10 or 11 of
the Lease and other than a transfer pursuant to the exercise of the remedies
set forth in Article 17 of the Lease.
Lien. Any mortgage, pledge, lien, charge, encumbrance, lease or
security interest or other similar interest.
Liquid Collateral. All amounts and securities deposited from time to
time in the Collateral Account and all the products, investments, earnings and
proceeds of the foregoing, including, but not limited to, all proceeds of the
investment or conversion thereof, voluntary or involuntary, into cash,
Specified Investments or other property, all rights to payment of any and
every kind, and other forms of obligations, and instruments and other property
which at any time constitute all or part or are included in the proceeds of
any of the foregoing.
Losses. Has the meaning specified in Section 17.02(a) of the
Participation Agreement.
Majority in Interest of Certificate Holders. As of a particular date
of determination, the Holders of more than 50% of the aggregate unpaid
principal amount of all Certificates outstanding as of such date excluding for
purposes of this definition any Certificates held by (i) the Owner Trustee or
the Owner Participant or any interests of the Owner Participant unless all
Certificates then outstanding shall be held by the Owner Participant, (ii) the
Lessee or (iii) any Affiliate of any thereof.
Make-Whole Premium. An amount determined as of the day before the
applicable Prepayment Date (or date of purchase, as the case may be) which an
Independent Investment Banker determines to be equal to the excess, if any, of
(i) the present values of all remaining scheduled payments of such principal
amount or portion thereof and interest thereon (excluding interest accrued
from the immediately preceding Payment Date to such Prepayment Date or date of
purchase, as the case may be) to the Maturity of such Certificate in
accordance with generally accepted financial practices assuming a 360-day year
consisting of twelve 30-day months at a discount rate equal to the Treasury
Yield, all as determined by the Independent Investment Banker over (ii) the
unpaid principal amount of such Certificate.
Manufacturer. Airbus Industrie G.I E., a groupement d'interet
economique formed under the laws of France, and its successors and assigns.
Maturity. With respect to any Certificate, the date on which the
final principal amount of such Certificate is scheduled to be due and payable.
Moody's. Xxxxx'x Investors Service, Inc.
NBD. NBD Bank, a Michigan banking corporation.
Net Present Value of Rents. The net present value, as of the
Delivery Date, of Interim Rent and Basic Rent set forth in Schedule II of the
Lease, discounted at a rate per semi-annual period equal to the Debt Rate.
Non-U.S. Person. Any Person other than (i) a citizen or resident
of the United States, as defined in Section 7701(a)(30) of the Code, (ii) a
corporation, partnership or other entity created or organized in or under the
laws of the United States or any political subdivision thereof or therein, or
(iii) any estate or trust that is subject to United States federal income
taxation regardless of the source of its income.
Obsolete Parts. Parts which are severable from the Aircraft in
accordance with clauses (ii) and (iii) of the proviso to Section 9.02(b) of
the Lease and the Lessee in good faith determines to be obsolete or no longer
suitable or appropriate for use on the Airframe or any Engine.
Officer's Certificate. When delivered pursuant to the Indenture, a
certificate signed by a Responsible Officer of the Lessee or the Owner
Trustee, as the case may be, and delivered to the Indenture Trustee. Each
such certificate shall include the statements provided for in Section 15.07 of
the Indenture.
Operative Agreements. The Participation Agreement, the Trust
Agreement, AVSA's FAA Xxxx of Sale, AVSA's Warranty Xxxx of Sale, the Airbus
Guaranty, the Purchase Agreement, the Purchase Agreement Assignment, the GTA,
the Engine Warranty Assignment, the French Pledge Agreement, the Lease, the
Lease Supplement, the Owner Participant Guaranty, if any, the Owner Trustee
Guaranty, if any, any Ancillary Agreement entered into by or with the written
consent of the Indenture Trustee, which by its terms is an Operative
Agreement, the Certificates outstanding at the time of reference, the
Indenture, the Indenture and Security Agreement Supplement, the Consent and
Agreement, the AVSA Consent and Agreement, the Consent and Guaranty (to the
extent assigned by the Purchase Agreement Assignment), the Engine Consent and
the Tax Indemnity Agreement, each as amended from time to time.
Opinion of Counsel. When delivered pursuant to the Indenture, a
written opinion of legal counsel, who in the case of counsel (a) for the
Lessee may be (i) an attorney employed by the Lessee who is generally
empowered to deliver such written opinions, (ii) Xxxxx Xxxx & Xxxxxxxx or a
successor firm or (iii) other counsel designated by the Lessee and reasonably
satisfactory to the Indenture Trustee and (b) for the Owner Trustee or the
Indenture Trustee, an attorney selected by such Person and, in the case of the
Owner Trustee, reasonably satisfactory to the Indenture Trustee.
Outstanding. When used with respect to Certificates, as of the date
of determination and subject to the provisions of Section 10.04 of the
Indenture, all Certificates theretofore executed and delivered under the
Indenture, with the exception of the following:
(i) Certificates theretofore cancelled by the Indenture Trustee or
delivered to the Indenture Trustee for cancellation pursuant to
Section 2.08 of the Indenture or otherwise;
(ii) Certificates for which prepayment money in the necessary amount
has been theretofore deposited with the Indenture Trustee in trust
for the Holders of such Certificates pursuant to Section 14.01 of the
Indenture; provided, that if such Certificates are to be prepaid,
notice of such prepayment has been duly given pursuant to the
Indenture or provision therefor satisfactory to the Indenture Trustee
has been made; and
(iii) Certificates in exchange for or in lieu of which other
Certificates have been executed and delivered pursuant to Article II
of the Indenture.
Owner Participant. The trustor originally named in the Trust
Agreement and any successor thereto, and any Person to which Owner Participant
transfers, in accordance with the Trust Agreement, its right, title and
interest in and to the Operative Agreements and the Lessor's Estate.
Owner Participant Amount. The amount described in Section 3.07 of the
Participation Agreement.
Owner Participant Guarantor. The provider of an Owner Participant
Guaranty.
Owner Participant Guaranty. Any guaranty delivered in compliance with
Section 7.03(d) of the Participation Agreement.
Owner Participant Payment Date. March 19, 1996.
Owner Trustee. NBD, not in its individual capacity, but solely as
Owner Trustee under the Trust Agreement, and its successors and permitted
assigns.
Owner Trustee Guarantor. The provider of an Owner Trustee Guaranty.
Owner Trustee Guaranty. Any guaranty delivered in compliance with
Section 11.01(b)(ii) of the Participation Agreement.
Owner's Economic Return. The Owner Participant's anticipated net
after-tax book yield and aggregate after-tax cash during the Interim Term and
the Basic Term utilizing the multiple investment sinking fund method of
analysis, computed on the basis of the same methodology and assumptions as
were utilized by the Owner Participant in determining Interim Rent, Basic
Rent, Stipulated Loss Value and Termination Value percentages or the EBO
Price, as the case may be, as such assumptions may be adjusted for events
which have been the basis of adjustments to Rent pursuant to Section 3.04 of
the Lease.
Participation Agreement. The Participation Agreement (Federal Express
Corporation Trust No. N663FE), dated as of October 26, 1995, among the Lessee,
the Owner Trustee not in its individual capacity except as otherwise expressly
provided therein, but solely as owner trustee, the Owner Participant, the
Indenture Trustee not in its individual capacity except as otherwise expressly
provided therein, but solely as indenture trustee and the Pass Through Trustee
not in its individual capacity except as otherwise expressly provided therein,
but solely as pass through trustee, as amended, modified or supplemented, or
the terms thereof waived.
Parts. All appliances, parts, components, instruments, appurtenances,
accessories, furnishings and other equipment of whatever nature (other than
complete Engines or engines) which may from time to time be incorporated or
installed in or attached to the Airframe or any Engine or, prior to
replacement thereof in accordance with the Lease, which may be removed
therefrom.
Pass Through Agreement. The Pass Through Trust Agreement dated as of
February 1, 1993, as amended and restated as of October 1, 1995 between the
Lessee and the Pass Through Trustee, as such Pass Through Agreement may be
modified, supplemented or amended from time to time in accordance with the
provisions thereof.
Pass Through Certificates. Any of the 1995 Pass Through Certificates,
Series B1, 1995 Pass Through Certificates, Series B2 or 1995 Pass Through
Certificates, Series B3, in each case as issued by the related Pass Through
Trust; and "Pass Through Certificates" means all of the Pass Through
Certificates issued by each of the Pass Through Trusts.
Pass Through Closing Date. The Business Day on which the sale of the
Pass Through Certificates to the Underwriters pursuant to the Underwriting
Agreement takes place.
Pass Through Trust. The Federal Express Pass Through Trust, 1995-B1,
Federal Express Pass Through Trust, 1995-B2 or Federal Express Pass Through
Trust, 1995-B3, in each case formed pursuant to the related Series Supplement
in accordance with the Pass Through Agreement; and "Pass Through Trusts" means
all of such Pass Through Trusts.
Pass Through Trustee. The Chase Manhattan Bank (National
Association), a national banking association, in its capacity as Pass Through
Trustee under the Pass Through Agreement and each Pass Through Trust, and its
successors and permitted assigns as Pass Through Trustee thereunder.
Past Due Rate. In respect of (A) any amount payable to the Owner
Participant or the Owner Trustee a rate per annum during the period from and
including the due date to but excluding the date on which such amount is paid
in full equal to 2% plus the Debt Rate and (B) any principal of or interest on
any Certificate or any other amount payable under the Indenture, any
Certificate or any other Operative Agreement that is not paid when due
(whether at Maturity, by acceleration, by optional or mandatory prepayment or
otherwise) to any Holder, the Indenture Trustee or the Pass Through Trustee, a
rate per annum during the period from and including the due date to but
excluding the date on which such amount is paid in full equal to (i) in the
case of any such amount payable to the Holder of any Certificate, 2% plus the
interest rate applicable to such Certificate and (ii) in the case of any other
such amount, 2% plus the Debt Rate.
Payment Date. The Owner Participant Payment Date, and each January 2
and July 2 commencing July 2, 1996.
Payment Default. Any event specified in Section 16.01(a) or 16.01(b)
of the Lease which with the giving of notice or lapse of time or both would
constitute an Event of Default.
Permitted Investments. Those investments enumerated in Section
23.01(a) (i), (ii), (iii) and (iv) of the Lease.
Person. Any individual, sole proprietorship, partnership, joint
venture, joint stock company, trust, unincorporated organization, association,
corporation, institution, entity or government (federal, state, local, foreign
or any agency, instrumentality, division or body thereof).
Preliminary Term. The period commencing on the Delivery Date and
ending at the end of the day on the day immediately preceding the Owner
Participant Payment Date.
Premium Termination Date. With respect to the Certificates having a
Maturity in 2014, November 7, 2007 and with respect to the Certificates having
a Maturity in 2019, October 7, 2017.
Prepayment Date. Has the meaning specified in Section 6.02(b) of the
Indenture.
Prepayment Price. Has the meaning specified in Section 6.02(b) of the
Indenture.
Proposed Termination Date. Has the meaning specified in Section
10.01(a) of the Lease.
Purchase Agreement. The Airbus A300-600R Freighter Purchase Agreement,
dated as of July 3, 1991 between AVSA and the Lessee, including all exhibits,
appendices and letter agreements attached thereto as originally executed or as
modified, amended or supplemented in accordance with the terms thereof, but
only to the extent that the foregoing relates to the Aircraft and to the
extent assigned pursuant to the Purchase Agreement Assignment.
Purchase Agreement Assignment. The Purchase Agreement Assignment
(Federal Express Corporation Trust No. N663FE), dated as of October 26, 1995
between the Lessor and the Lessee, as the same may be amended, modified or
supplemented from time to time.
Purchase Price. Has the meaning specified in Schedule IV to the
Participation Agreement.
Record Date. With respect to Payment Dates under the Indenture
(except a date for payment of defaulted interest), March 4, 1996 for the Owner
Participant Payment Date, December 18 for January 2 Payment Dates and June 17
for July 2 Payment Dates, whether or not such date is a Business Day.
Recourse Amount. Has the meaning specified in Section 17.10 of the
Participation Agreement.
Refinancing. A non-recourse loan to the Lessor arranged pursuant to
Section 15.01 of the Participation Agreement.
Register. Has the meaning set forth in Section 3.02 of the Indenture.
Registrar. Has the meaning set forth in Section 3.02 of the
Indenture.
Remaining Weighted Average Life. For any Certificate, as of any
determination date, the number of years obtained by dividing (a) the sum of
the products obtained by multiplying (i) the amount of each then remaining
mandatory sinking fund redemption payment of principal, including the payment
due on the Maturity of such Certificate, by (ii) the number of years
(calculated to the nearest one-twelfth) which will elapse between such
determination date, and the date on which such payment is scheduled to be
made, by (b) the then outstanding principal amount of such Certificate.
Renewal Rent. The amount payable by the Lessee as rent in accordance
with Section 4.01 of the Lease during any Renewal Term.
Renewal Term. One or more terms with respect to which the Lessee has
exercised its option to renew the Lease pursuant to Section 4.01(a) thereof.
Rent. All payments due from the Lessee under the Lease as Interim
Rent, Basic Rent, Renewal Rent and Supplemental Rent, collectively.
Rent Payment Date. Each January 2 and July 2 commencing July 2, 1996.
Reoptimization Date. Has the meaning specified in Section 15.02(a)
of the Participation Agreement.
Replacement Engine. A General Electric CF6-80C2-A5F engine (or an
engine of the same or another manufacturer) manufactured after October 22,
1994 of the same or of equal or greater value, remaining useful life and
utility as the Engine being replaced, together with all Parts relating to such
engine; provided, however, that if such replacement engine is not a General
Electric CF6-80C2-A5F engine, such replacement engine must then be commonly
used in the commercial aviation industry on Airbus A300-600 airframes.
Responsible Officer. With respect to the Owner Trustee or the
Indenture Trustee, any officer in its Corporate Trust Department or Corporate
Trust Administration, as the case may be, designated by such Person to perform
obligations under the Operative Agreements, with respect to the Owner
Participant, the president or any vice president with direct responsibility
for the transactions contemplated by the Operative Agreements, and with
respect to any other party, any corporate officer or (except in the case of
the Owner Participant) other employee of a party who, in the normal
performance of his or her operational responsibilities, with respect to the
subject matter of any covenant, agreement or obligation of such party pursuant
to any Operative Agreement, would have responsibility for and knowledge of
such matter and the requirements of any Operative Agreement with respect
thereto.
S&P. Standard & Poor's Ratings Group.
Scheduled Delivery Date. The Delivery Date specified in the Delivery
Notice pursuant to Section 3.01 of the Participation Agreement.
SEC. The Securities and Exchange Commission of the United States and
any successor agencies or authorities.
Securities Act. The Securities Act of 1933, as amended.
Series Supplement. The Series Supplement 1995-B1 to be executed and
delivered by the Lessee and the Pass Through Trustee, the Series Supplement
1995-B2 to be executed and delivered by the Lessee and the Pass Through
Trustee or the Series Supplement 1995-B3 to be executed and delivered by the
Lessee and the Pass Through Trustee, in each case as such Series Supplement
may be modified, supplemented or amended from time to time in accordance with
the provisions thereof and "Series Supplements" means all of such Series
Supplements.
Sinking Fund Redemption Date. Has the meaning specified in Section
6.06 of the Indenture.
Sinking Fund Redemption Price. Has the meaning specified in Section
6.06 of the Indenture.
Special Aviation Counsel. Xxxxxxxxx, Xxxxxx & Xxxxxxxx.
Specified Investments. Direct obligations of the United States of
America and obligations fully guaranteed by the United States of America
maturing within 30 days of the date of purchase.
Stipulated Loss Value. As of any Stipulated Loss Value Determination
Date during the Term, the amount determined by multiplying the Purchase Price
by the percentage set forth in Schedule III of the Lease under the heading
"Stipulated Loss Value Factor" opposite such date (as such Schedule III may be
adjusted from time to time as provided in Section 3.04 of the Lease), and
during any Renewal Term, the amount determined pursuant to Section 4.01(b) of
the Lease. Notwithstanding any other provisions of the Lease or the
Participation Agreement or the Indenture, each Stipulated Loss Value shall be,
under any circumstances and in any event, an amount, together with so much of
the arrears portion of Interim Rent and Basic Rent due and owing through the
date of payment of Stipulated Loss Value as does not constitute an Excepted
Payment, at least sufficient to pay in full as of such date of payment the
aggregate unpaid principal amount of and accrued interest on the Certificates
outstanding on such date of payment. Subject to the immediately preceding
sentence, it is understood and agreed that the amounts set forth on Schedule
III of the Lease, for dates other than Rent Payment Dates on which arrears
Interim Rent and Basic Rent is due, fully reflect appropriate Interim Rent and
Basic Rent accruals and credits of unearned Interim Rent and Basic Rent and,
accordingly, no further accrual or credit shall be required whenever
Stipulated Loss Value is to be calculated with reference to any such date.
Stipulated Loss Value Determination Date. Each date set forth on
Schedule III of the Lease under the heading "Stipulated Loss Value Date."
Substantial Authority. For Federal income tax purposes, shall have
the meaning applicable for purposes of Section 6662 of the Code and relevant
Treasury regulations.
Supplemental Rent. All amounts, liabilities and obligations which
the Lessee assumes or agrees to perform or pay under the Lease or under the
Participation Agreement or Tax Indemnity Agreement or any Ancillary Agreement
or any other Operative Agreement to the Lessor, the Owner Participant or
others, including, without limitation, payments of Stipulated Loss Value, EBO
Price and amounts calculated by reference to Termination Value and all amounts
required to be paid by Lessee under the agreements, covenants and indemnities
contained in the Lease or in the Participation Agreement or the Tax Indemnity
Agreement or any other Operative Agreement, but excluding Interim Rent and
Basic Rent.
Tax. Shall have the meaning set forth in Section 8.01(a) of the
Participation Agreement.
Tax Indemnity Agreement. The Tax Indemnity Agreement (Federal
Express Corporation Trust No. N663FE), dated as of October 26, 1995, between
the Lessee and the Owner Participant, as from time to time modified, amended
or supplemented pursuant to its applicable provisions.
Term. The Preliminary Term, the Interim Term and the Basic Term of
the lease for the Aircraft under the Lease and, if renewed pursuant to Section
4.01 of the Lease, each Renewal Term for the Aircraft for which the Lease is
renewed, or such earlier date on which the Lease is terminated pursuant to its
terms.
Termination Date. A Rent Payment Date during the Basic Term that is
on or after July 2, 2001 in the case of Article 10 of the Lease, and in the
case of (i) Section 4.02(a)(A) of the Lease, the Rent Payment Date falling on
July 2, 2009 or July 2, 2012, (ii) Section 4.02(a)(D) or (E) of the Lease, a
Rent Payment Date that is on or after the fifth anniversary of the
Commencement Date and (iii) Section 4.02(a)(F) of the Lease, January 2, 2015.
Termination Value. As of any Termination Date, the amount determined
by multiplying the Purchase Price by the percentage set forth in Schedule IV
of the Lease under the heading "Termination Value Factor" opposite such
Termination Date (as such Schedule IV may be adjusted from time to time as
provided in Section 3.04 of the Lease). Notwithstanding any other provisions
of the Lease, the Participation Agreement or the Indenture, each Termination
Value shall be, under any circumstances and in any event, an amount, together
with so much of the arrears portion of Basic Rent due and owing through the
date of payment of any amount calculated by reference to Termination Value as
does not constitute an Excepted Payment, at least sufficient to pay in full as
of such date of payment the aggregate unpaid principal amount of and accrued
interest on the Certificates outstanding on such date of payment. Subject to
the immediately preceding sentence, it is understood and agreed that the
amounts set forth on Schedule IV of the Lease, for dates other than Rent
Payment Dates on which arrears Basic Rent is due, fully reflect appropriate
Basic Rent accruals and credits of unearned Basic Rent and, accordingly, no
further accrual or credit shall be required whenever Termination Value is to
be calculated with reference to any such date.
Transaction Costs. Those costs and expenses set forth in Section
10.01(a) of the Participation Agreement.
Transportation Code. Title 49 of the United States Code (which, among
other things, recodified the Federal Aviation Act of 1958, as amended to the
time of such recodification), as amended and in effect on the date of the
Lease or as subsequently amended, or any successor or substituted legislation
at the time in effect and applicable, and the regulations promulgated pursuant
thereto.
Treasury Yield. (i) In the case of a Certificate having a Maturity
within one year after the Prepayment Date the average yield to maturity on a
government bond equivalent basis of the applicable United States Treasury Xxxx
due the week of Maturity of such Certificate and (ii) in the case of a
Certificate having a Maturity one year or more after the Prepayment Date, the
average yield of the most actively traded United States Treasury Note (as
reported by Cantor Xxxxxxxxxx Securities Corp. on page 5 of Telerate Systems,
Inc., a financial news service, or if such report is not available, a source
deemed comparable by the Independent Investment Banker selected to determine
the Make-Whole Premium and reasonably acceptable to the Lessee) corresponding
in maturity to the Remaining Weighted Average Life of such Certificate (or, if
there is no corresponding maturity, an interpolation of maturities by the
Independent Investment Banker), in each case determined by the Independent
Investment Banker selected to determine the Make-Whole Premium based on the
average of the yields to stated maturity determined from the bid prices as of
10:00 a.m. and 2:00 p.m. New York time, on the second Business Day preceding
the Prepayment Date.
Trust Agreement. The Trust Agreement (Federal Express Corporation
Trust No. N663FE), dated as of October 26, 1995, between the Owner Participant
and the Owner Trustee in its individual capacity, as from time to time
modified, amended or supplemented pursuant to its applicable provisions and in
accordance with the Operative Agreements.
Trust Indenture Act. The Trust Indenture Act of 1939, as amended.
Trust Indenture Estate. All estate, right, title and interest of the
Indenture Trustee in and to any of the property, rights, interests and
privileges granted to the Indenture Trustee pursuant to the Granting Clause of
the Indenture, other than Excepted Payments and any and all other rights of
the Owner Trustee or the Owner Participant expressly reserved to the Owner
Trustee or the Owner Participant pursuant to the Indenture.
Underwriters. The several Underwriters named in the Underwriting
Agreement.
Underwriting Agreement. The Underwriting Agreement dated October 26,
1995 among the Lessee, Xxxxxxx Sachs & Co., X.X. Xxxxxx Securities Inc. and
Xxxxxx Xxxxxxx & Co. Incorporated.
United States, U.S. or U.S. The United States of America.
U.S. Air Carrier. Any United States air carrier as to which there is
in force a certificate issued pursuant to Section 41102(a) or Section 41103 of
the Transportation Code, and as to which there is in force an air carrier
operating certificate issued pursuant to Chapter 447 of the Transportation
Code and Part 121 of the regulations under such Transportation Code, for
aircraft capable of carrying ten (10) or more individuals or 6,000 pounds or
more of cargo, or which may operate as an air carrier by certification or
otherwise under any successor or substitute provision thereof or in absence
thereof.
U.S. Person. A Person described in Section 7701(a)(30) of the Code.
SCHEDULE II
OWNER PARTICIPANT AMOUNT
(As a Percentage of Purchase Price)
Date Amount
March 19, 1996 7.32977613%
INTERIM RENT
(As a Percentage of Purchase Price)
Rent
Payment
Date Advance Arrears
[On each Payment Date, Lessee will pay as Interim Rent an amount that
will be at least sufficient to pay in full, as of such Payment Date,
the aggregate unpaid principal amount of due and unpaid installments
on the Certificates outstanding on such Payment Date, together with
the accrued and unpaid interest thereon.]
BASIC RENT
(As a Percentage of Purchase Price)
Rent
Payment
Date Advance Arrears
[On each Payment Date, Lessee will pay as Basic Rent an amount that
will be at least sufficient to pay in full, as of such Payment Date,
the aggregate unpaid principal amount of due and unpaid installments
on the Certificates outstanding on such Payment Date, together with
the accrued and unpaid interest thereon.]
SCHEDULE III
STIPULATED LOSS VALUES
Stipulated Loss
Date Value Factor
[Stipulated Loss Value will be an amount at least sufficient to pay
in full, as of the date of payment thereof, the aggregate unpaid
principal amount of the Certificates outstanding on such date of
payment, together with the accrued and unpaid interest thereon.]
SCHEDULE IV
TERMINATION VALUES
Termination Termination
Date Value Factor
[Termination Value will be an amount at least sufficient to pay in
full, as of the date of payment thereof, the aggregate unpaid
principal amount of the Certificates outstanding on such date of
payment, together with the accrued and unpaid interest thereon.]
SCHEDULE V
PURCHASE OPTION SCHEDULE
(D) Purchase Option Referred to in Section 4.02(a)(D) of the Lease.
In the event of any Significant Expenditure (as defined below) with respect
to the Aircraft, which the Lessee has certified in a certificate of the
Lessee's President, Chief Executive Officer, Chief Financial Officer, Chief
Operating Officer, Treasurer or Assistant Treasurer furnished to the
Lessor, the Indenture Trustee and the Owner Participant, is (as determined
in the Lessee's sole discretion) necessary, desirable or required to be
made at any time on or after the fifth anniversary of the Commencement
Date, the Lessee may elect to terminate the Lease and purchase the Aircraft
on the first Rent Payment Date occurring at least six months after the
Owner Participant has notified the Lessee that they will not permit such
Significant Expenditure to be financed as contemplated in clause (ii) of
the definition of "Significant Expenditure" below, for, at the Lessee's
option, either (1) the payment to the Lessor in immediately available funds
of an amount equal to the greater of the Fair Market Value of the Aircraft
and the Termination Value for the Aircraft, determined in each case as of
such Rent Payment Date, or (2) the assumption by the Lessee, pursuant to
Section 7.11 of the Participation Agreement and Section 2.12 of the
Indenture, of all of the Lessor's obligations under the Indenture, the
Certificates and Section 7.04 of the Participation Agreement, and the
payment to the Lessor in immediately available funds of an amount equal to
the excess of (A) the greater of (I) the Termination Value for the
Aircraft, and (II) the Fair Market Value of the Aircraft, both computed as
of such Rent Payment Date, over (B) the unpaid principal of the
Certificates outstanding plus accrued interest as of such date; it being
understood that the Fair Market Value for this purpose shall be determined
without regard to any Significant Expenditure not yet made.
For purposes of this paragraph (D) the term "Significant Expenditure"
means a single expenditure or a series of related expenditures in respect
of non-severable improvements (i.e. improvements which cannot by the terms
of Section 9.02(b) of the Lease be removed from the Aircraft) which (i) in
the Lessee's reasonable judgment would exceed $5,000,000, (ii) the Owner
Participant will not permit to be financed on similar terms and conditions
then available for similar transactions through the issuance of additional
non-recourse notes of the Lessor or through additional equity investments
of the Owner Participant or both (it being understood that this Section
4.02(a)(D) shall not impose any obligation on the Owner Participant to
provide such financing) and (iii) are improvements which the Lessee has
performed or is in the process of performing in respect of at least 25% of
the A300-600 series aircraft (including the Aircraft) operated by the
Lessee. The Lessee, prior to notifying the Owner Participant and the
Indenture Trustee in accordance with Paragraph (F) of this Schedule V of
its election to purchase the Aircraft pursuant to Section 4.02(a)(D) of the
Lease, shall notify the Owner Participant of the non-severable improvements
which would satisfy the conditions described in clauses (i) and (iii) of
the preceding sentence, and provide the Owner Participant with a reasonable
opportunity to permit the financing thereof as contemplated in clause (ii)
of such sentence. The Owner Participant shall notify the Lessee of their
decision with respect to such financing within 60 days after the Lessee has
given the notice described in the preceding sentence.
(E) Purchase Option Referred to in Section 4.02(a)(E) of the Lease.
In the event that a Burdensome Indemnity Payment shall occur at any time on
or after the fifth anniversary of the Commencement Date, the Lessee may
elect to terminate the Lease and purchase the Aircraft on the first Rent
Payment Date (the "Burdensome Indemnity Payment Date") following the date
that the Owner Participant provides the Lessee with a written notice of any
Loss (as defined in Section 5 of the Tax Indemnity Agreement) that is a
Burdensome Indemnity Payment for, at the Lessee's option, either (1) the
payment to the Lessor in immediately available funds of an amount equal to
the greater of the Fair Market Value of the Aircraft and the Termination
Value for the Aircraft, determined in each case as of such Burdensome
Indemnity Payment Date, or (2) the assumption by the Lessee, pursuant to
Section 7.11 of the Participation Agreement and Section 2.12 of the
Indenture, of all of the obligations of the Lessor under the Indenture, the
Certificates and Section 7.04 of the Participation Agreement and the
payment to the Lessor in immediately available funds of an amount equal to
the excess of (A) the greater of (I) the Termination Value for the Aircraft
and (II) the Fair Market Value of the Aircraft, both computed as of the
Burdensome Indemnity Payment Date, over (B) the unpaid principal of the
Certificates outstanding plus accrued interest as of such date.
For purposes of this paragraph (E), the term "Burdensome Indemnity
Payment" means a Loss as defined in the Tax Indemnity Agreement which under
the circumstances cannot be commercially reasonably avoided by the Lessee
which causes the aggregate net present value as of the determination date,
discounted semi-annually at the Debt Rate, of all such Losses (but
excluding any Losses for which the Owner Participant shall have waived its
right to payment under the Tax Indemnity Agreement) paid or payable by the
Lessee which can be avoided through a purchase by the Lessee of the
Aircraft, to exceed 2.5% of the Purchase Price.
(F) Notice from the Lessee. The Lessee shall give the Lessor, the
Owner Participant and the Indenture Trustee not more than 180 days nor less
than 90 days prior written notice of its election to purchase pursuant to
Section 4.02(a)(D) or 4.02(a)(E) of the Lease. Such notice shall either
direct the Lessor to prepay the Certificates in full on such Termination
Date pursuant to Section 6.02 of the Indenture or state that the Lessee
shall exercise its option to assume the Certificates pursuant to Section
7.11 of the Participation Agreement and Section 2.12 of the Indenture. The
Lessee's notice pursuant to Section 4.02(a)(D) or 4.02(a)(E) hereof shall
become irrevocable 10 days prior to the applicable purchase date designated
in such notice but if any such notice is revoked, the Lessee shall no
longer be entitled to purchase the Aircraft as a result of the facts and
circumstances originally giving rise to such right and will pay all
reasonable expenses of the Owner Participant, the Owner Trustee and the
Indenture Trustee in connection therewith.
Exhibit A
to
Lease Agreement
THE INTEREST OF LESSOR UNDER THIS LEASE SUPPLEMENT
NO. __ IS SUBJECT TO A SECURITY INTEREST
LEASE SUPPLEMENT NO. __
(Federal Express Corporation Trust No. N663FE)
LEASE SUPPLEMENT NO. __ (Federal Express Corporation Trust No.
N663FE), dated ________ __, ____, between NBD BANK, a Michigan banking
corporation, not in its individual capacity, but solely as Owner Trustee under
the Trust Agreement (Federal Express Corporation Trust No. N663FE) dated as of
October 26, 1995 (the "Lessor"), and FEDERAL EXPRESS CORPORATION, a Delaware
corporation (the "Lessee").
W I T N E S S E T H :
WHEREAS, the Lessor and the Lessee have entered into that certain
Lease Agreement (Federal Express Corporation Trust No. N663FE) dated as of
October 26, 1995 (the "Lease", the defined terms in the Lease being used in
this Lease Supplement with the same meaning as in the Lease), which provides
for the execution and delivery of a Lease Supplement, substantially in the
form of this Lease Supplement No. __, for the purpose of leasing under the
Lease the aircraft and engines described below ("Aircraft") as and when
delivered by the Lessor to the Lessee in accordance with the terms of the
Lease;
WHEREAS, the Lease relates to the Aircraft;
WHEREAS, a counterpart of the Lease is attached to and made a part of
this Lease Supplement, and this Lease Supplement, together with such
attachment, is being filed for recordation on this date with the FAA as one
document.
NOW, THEREFORE, for and in consideration of the premises and other
good and sufficient consideration, the Lessor and the Lessee agree as follows:
Section 1. Delivered Aircraft. The Lessor hereby delivers and
leases to the Lessee under the Lease, and the Lessee hereby accepts and leases
from the Lessor under the Lease, the following described Airbus A300F4-605R
Aircraft (the "Delivered Aircraft"), which Delivered Aircraft as of the date
of this Lease Supplement consists of the following:
(a) Airbus X000X0-000X Xxxxxxxx; U.S. Registration Number ______;
Manufacturer's Serial No. ___; and
(b) Two (2) General Electric CF6-80C2-A5F Engines bearing,
respectively, Manufacturer's Serial Nos. ___-___ and ___-___ (each of which
engines has 750 or more rated takeoff horsepower or the equivalent of such
horsepower).
Section 2. Delivery Date. The Delivery Date of the Delivered
Aircraft is the date of this Lease Supplement.
Section 3. Purchase Price. The Purchase Price of the Delivered
Aircraft shall be the amount set forth in Ancillary Agreement I.
Section 4. Term. The Term for the Delivered Aircraft shall commence
on the Delivery Date, and shall terminate on ______, ____, unless earlier
terminated or extended pursuant to the terms of the Lease.
Section 5. Rent. The Lessee hereby agrees to pay the Lessor Rent
for the Delivered Aircraft throughout the Term thereof in accordance with the
terms and provisions of the Lease.
Section 6. Lessee's Acceptance of Delivered Aircraft. The Lessee
hereby confirms to the Lessor that the Delivered Aircraft has been duly marked
in accordance with Section 7.03 of the Lease and that the Lessee has accepted
the Delivered Aircraft for all purposes hereof and of the Lease, and as being
free and clear of all Liens except Lessor's Liens. Such acceptance by the
Lessee shall be without prejudice to any rights of the Lessor or the Lessee
against AVSA, the Manufacturer, the Engine Manufacturer or any vendor of
equipment included in the Aircraft.
Section 7. Incorporation of Lease By Reference. All the provisions
of the Lease are hereby incorporated by reference in this Lease Supplement to
the same extent as if fully set forth in this Lease Supplement.
Section 8. Governing Law. THIS LEASE SUPPLEMENT SHALL IN ALL
RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE BUT WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS, AND
IS BEING DELIVERED IN THE STATE OF NEW YORK.
Section 9. Agreement as Chattel Paper. To the extent that this Lease
Supplement constitutes chattel paper (as such term is defined in the Uniform
Commercial Code as in effect in any applicable jurisdiction), no security
interest in this Lease Supplement may be created through the transfer or
possession of any counterpart other than the original chattel-paper
counterpart, which shall be the counterpart containing the receipt executed by
the Indenture Trustee on its signature page.
Section 10. Counterparts. This Lease Supplement may be executed in
any number of counterparts, each of which shall be an original (except that
only the counterpart bearing the receipt executed by Indenture Trustee shall
be the original for purposes of perfecting a security interest therein as
chattel paper under the Uniform Commercial Code), but all of which taken
together shall constitute one and the same instrument and any of the parties
hereto may execute this Lease Supplement by signing any such counterpart.
IN WITNESS WHEREOF, the Lessor and the Lessee have caused this Lease
Supplement to be duly executed as of the day and year first above written.
LESSOR: NBD BANK,
not in its individual capacity,
but solely as Owner Trustee
By: __________________________________________
Name:
Title:
LESSEE: FEDERAL EXPRESS CORPORATION
By: ___________________________________________
Name: Xxxxxx X. Xxxxxxx
Title: Assistant Treasurer and
Managing Director -
Structured Finance
Receipt of this original counterpart of the Lease Supplement is hereby
acknowledged on this __ day of _________ 1995.
Indenture Trustee: THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION),
not in its individual capacity,
but solely as Indenture Trustee
By: ___________________________________________
Name:
Title:
Exhibit B
to
Lease Agreement
PURCHASE AGREEMENT ASSIGNMENT
(Federal Express Corporation Trust No. N663FE)
PURCHASE AGREEMENT ASSIGNMENT (Federal Express Corporation Trust
No. N663FE), dated as of October 26, 1995 between FEDERAL EXPRESS CORPORATION,
a Delaware corporation (the "Assignor" or "Lessee"), and NBD Bank, a Michigan
banking corporation, not in its individual capacity but solely as Owner
Trustee ("NBD" or the "Lessor") under the Trust Agreement (Federal Express
Corporation Trust No. N663FE), dated as of October 26, 1995 (as amended,
modified or supplemented from time to time, the "Trust Agreement"), between
Chrysler Capital Corporation (the "Owner Participant") and NBD.
W I T N E S S E T H :
WHEREAS, the Assignor and AVSA (as hereinafter defined) are
parties to the Purchase Agreement (as hereinafter defined), providing, among
other things, for the delivery by AVSA to the Assignor of certain aircraft,
including the Aircraft (as hereinafter defined) covered by the Participation
Agreement (as hereinafter defined); and
WHEREAS, pursuant to the Consent and Guaranty (as hereinafter
defined), the Guarantor (as hereinafter defined) has agreed, among other
things, to unconditionally guarantee the due and punctual performance by AVSA
of all of its liabilities and obligations as set forth in the Purchase
Agreement; and
WHEREAS, pursuant to the Lease (as hereinafter defined), the
Lessor will lease the Aircraft to the Assignor; and
WHEREAS, on the terms and conditions hereof and of the Consents
and Agreements (as hereinafter defined), (a) the Assignor desires to assign
to the Lessor (i) the Assignor's right under the Purchase Agreement and the
Consent and Guaranty (insofar as it relates to the Purchase Agreement) to
purchase the Aircraft and (ii) certain of the Assignor's remaining rights,
title and interests in, to and under the Purchase Agreement and the Consent
and Guaranty (insofar as they relate to the Purchase Agreement and the
Aircraft) and (b) the Lessor desires to accept the assignments and, except
as otherwise provided herein, to assume the obligations of the "Buyer"
under the Purchase Agreement, to the extent assigned to it pursuant hereto;
and
WHEREAS, pursuant to the Indenture (as herewith defined), the
Lessor will assign, inter alia, its rights hereunder to the Indenture Trustee
(as herewith defined); and
WHEREAS, such assignments and acceptances are intended to permit
consummation of the transactions contemplated by the Participation Agreement;
and
WHEREAS, AVSA and the Guarantor are willing to execute and deliver
their respective Consents and Agreements;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
1. Defined Terms. For all purposes of this Assignment, except
as otherwise expressly provided or unless the context otherwise requires, the
following terms shall have the following meanings:
"Aircraft" shall mean the Airbus A300F4-605R Freighter aircraft,
bearing manufacturer's serial number 766, delivered under the Purchase
Agreement, including the two General Electric Model CF6-80C2A5 (Fadec
equipped) engines installed on such aircraft on the date of delivery
thereof pursuant to the Purchase Agreement.
"AVSA" shall mean AVSA, S.A.R.L., a French societe a
responsabilite limitee, and its successors and assigns.
"AVSA Consent and Agreement" shall mean the Consent and Agreement
of AVSA attached hereto, as amended, modified or supplemented from time
to time.
"Xxxx of Sale" shall mean the xxxx of sale for the Aircraft to be
delivered by AVSA.
"Certificates" shall have the meaning ascribed thereto in the
Participation Agreement.
"Consent and Guaranty" shall mean the Consent and Guaranty of the
Guarantor attached to the Purchase Agreement, together with all
amendments, waivers, and consents heretofore entered into or heretofore
granted thereunder.
"Consents and Agreements" shall mean the AVSA Consent and Agreement
and the Guarantor Consent and Agreement.
"Delivery Date" shall have the meaning ascribed thereto in the
Purchase Agreement with respect to the Aircraft.
"Guarantor" shall mean Airbus Industrie G.I.E., a French groupement
d'interet economique, and its successors and assigns.
"Guarantor Consent and Agreement" shall mean the Consent and
Agreement of the Guarantor attached hereto, as amended, modified or
supplemented from time to time.
"Indenture" shall mean the Trust Indenture and Security Agreement
(Federal Express Corporation Trust No. N663FE), dated as of October 26,
1995, between the Lessor and the Indenture Trustee (as herewith
defined), as amended, modified or supplemented from time to time.
"Indenture Trustee" shall mean The Chase Manhattan Bank (National
Association), a national banking association, not in its individual
capacity but solely as Indenture Trustee under the Indenture and each
other person which may from time to time be acting as successor trustee
under the Indenture.
"Lease" shall mean the Lease Agreement (Federal Express
Corporation Trust No. N663FE), dated as of October 26, 1995, between the
Lessor and the Assignor, as amended, modified or supplemented from time
to time.
"Participation Agreement" shall mean the Participation Agreement
(Federal Express Corporation Trust No. N663FE), dated as of October 26,
1995, among the Assignor, the Owner Participant (as defined herein), the
Lessor, the Indenture Trustee and the Pass Through Trustee (as defined
therein), as amended, modified or supplemented from time to time.
"Purchase Agreement" shall mean the Airbus A300-600F Purchase
Agreement, dated as of July 3, 1991, between the Assignor and AVSA,
together with all exhibits, appendices and letter agreements thereto and
all amendments, waivers and consents granted thereunder.
All other terms used herein in capitalized form that are
defined in the Lease shall, when used herein, have the meanings specified
in the Lease.
2. Assignment. (a) Generally. The Assignor has sold,
assigned, transferred and set over and does hereby sell, assign, transfer and
set over unto the Lessor (i) the right upon valid tender of the Aircraft by
AVSA in accordance with the Purchase Agreement to purchase the Aircraft
pursuant to the Purchase Agreement for the amount specified in the invoice in
respect thereof to be delivered by AVSA on the Delivery Date therefor
(including, without limitation, the right to accept delivery of the Aircraft
through an appointed representative which may be an employee of the Assignor)
and the right to be named the "Buyer" in the Xxxx of Sale and the right to
enforce the same under the Consent and Guaranty, (ii) the right to take and
hold the Aircraft and (iii) all of the Assignor's other right, title and
interest in and to the Purchase Agreement and the Consent and Guaranty
(insofar as it relates to the Purchase Agreement), as and to the extent that
the same relates to the Aircraft and, except to the extent reserved below or
as otherwise set forth in Section 2(b) below, the operation of the Aircraft,
including, without limitation, in such assignment to the Lessor (A) all claims
for damages in respect of such Aircraft arising as a result of any default by
AVSA under the Purchase Agreement, including, without limitation, all
warranty, service life policy and indemnity provisions in the Purchase
Agreement in respect of the Aircraft and all claims thereunder and under the
Consent and Guaranty and (B) any and all rights of the Assignor to compel
performance of the terms of the Purchase Agreement and the Consent and
Guaranty in respect of the Aircraft, including all warranty and
indemnification provisions in the Purchase Agreement and the Consent and
Guaranty and claims thereunder with respect to the Aircraft; reserving to the
Assignor, however,
(1) all the Assignor's rights and interests in and to the Purchase
Agreement and the Consent and Guaranty as and to the extent that the
Purchase Agreement and the Consent and Guaranty relate to aircraft other
than the Aircraft and the purchase and operation of such aircraft and to
the extent that the Purchase Agreement and the Consent and Guaranty
relate to any other matters not directly pertaining to the Aircraft,
(2) all the Assignor's rights and interests in or arising out of any
payments, advance payments or deposits made by the Assignor in respect
of the Aircraft under the Purchase Agreement or amounts credited or to
be credited or paid or to be paid by the Guarantor or AVSA to the
Assignor in respect of the Aircraft or otherwise (except amounts
credited with respect to warranty claims to the extent set forth in
Section 2(b) hereof)as of the date of purchase,
(3) the rights to demand, accept and retain all rights in and to all
property (other than the Aircraft), data and service, other than data
and service provided under Clauses 12 and 13 of the Purchase Agreement,
that AVSA and the Guarantor are obligated to provide or do provide
pursuant to the Purchase Agreement and the Consent and Guaranty,
respectively, with respect to the Aircraft,
(4) all of the Assignor's right, title and interest in and to the
Purchase Agreement and the Consent and Guaranty as and to the extent
that the same relates to specification changes, performance and
operation pertaining to the Aircraft, other than sub-Clause 2.1 and
Clauses 12 and 13 of the Purchase Agreement and under the Consent and
Guaranty to the extent relating thereto,
(5) the right to obtain services, training, data and demonstration and
test flights pursuant to the Purchase Agreement,
(6) the right to maintain plant representatives at the Guarantor's plant
pursuant to the Purchase Agreement, and
(7) all rights set forth in any exhibits, appendices and letter
agreements, as at any time amended, modified or supplemented, to the
Purchase Agreement, and under the Consent and Guaranty to the extent
relating thereto; provided, however, that the reservation set forth in
this Section 2(a)(7) shall not in any way limit the rights of the Lessor
arising under Sub-clause 2.1 and Clauses 12 and 13 of the Purchase
Agreement.
(b) Assignment of Rights. If and so long as there shall not
exist and be continuing an Event of Default, the Lessor hereby authorizes
the Lessee, to the exclusion of the Lessor, to exercise in the Lessee's
name all rights and powers of the "Buyer" under the Purchase Agreement and
to retain any recovery or benefit resulting from the enforcement of any
warranty or indemnity in respect of the Aircraft, except that the Lessee
may not enter into any change order or other amendment, modification or
supplement to the Purchase Agreement without the written consent or
countersignature of the Lessor if such change order, amendment,
modification or supplement would result in any rescission, cancellation or
termination of the Purchase Agreement in respect of the Aircraft or in any
way limit the rights of the Lessor arising under Clauses 12 and 13 of the
Purchase Agreement or any of the other rights assigned hereunder.
(c) Acceptance of Assignment. Subject to the terms hereof the
Lessor accepts the assignment contained in this Section 2.
(d) Requirement of Notice to AVSA. For all purposes of this
Assignment, AVSA shall not be deemed to have knowledge of and need not
recognize any Event of Default, unless and until AVSA shall have received
written notice thereof from the Lessor or the Indenture Trustee addressed to
its Chief Executive Officer, 0, Xxxx Xxxxx Xxxxxxx Xxxxxxxx, 00000 Xxxxxxx,
Xxxxxx (telex 521155F) and, in acting in accordance with the terms of the
Purchase Agreement and this Assignment, AVSA may act with acquittance and
conclusively rely upon any such notice.
3. Certain Rights and Obligations of the Parties. (a)
Assignor Remains Liable. It is expressly agreed that, anything herein
contained to the contrary notwithstanding: (a) the Assignor shall at all
times remain liable to AVSA under the Purchase Agreement to perform all the
duties and obligations of the "Buyer" thereunder to the same extent as if this
Assignment had not been executed; (b) the exercise by the Lessor of any of the
rights assigned hereunder shall not release the Assignor from any of its
duties or obligations to AVSA under the Purchase Agreement except to the
extent that such exercise by the Lessor shall constitute performance of such
duties and obligations; and (c) except as provided in the next succeeding
paragraph, none of the Lessor, the Indenture Trustee, the Owner Participant or
the Pass Through Trustee shall have any obligation or liability under the
Purchase Agreement by reason of, or arising out of, this Assignment or be
obligated to perform any of the obligations or duties of the Assignor under
the Purchase Agreement or to make any payment or to make any inquiry as to the
sufficiency of any payment received by any of them or to present or file any
claim or to take any other action to collect or enforce any claim for any
payment assigned hereunder.
(b) Lessor Bound by Purchase Agreement. Without in any way
releasing the Assignor from any of its duties or obligations under the
Purchase Agreement, the Lessor confirms for the benefit of AVSA that, insofar
as the provisions of the Purchase Agreement relate to the Aircraft, in
exercising any rights under the Purchase Agreement, or in making any claim
with respect to the Aircraft or other goods and services delivered or to be
delivered pursuant to the Purchase Agreement, the terms and conditions of the
Purchase Agreement disclosed to the Lessor in writing shall apply to, and be
binding upon, the Lessor to the extent of its respective interests assigned
hereunder to the same extent as the Assignor.
(c) Limit of Effect of this Assignment. Nothing contained
herein shall (i) subject AVSA or the Guarantor to any liability to which it
would not otherwise be subject under the Purchase Agreement or (ii) modify in
any respect the contractual rights of AVSA or the Guarantor thereunder
(except, in each case, as provided in the attached Consents and Agreements).
(d) Appointment as Attorney-in-Fact. The Assignor does hereby
constitute, effective at any time after an Event of Default shall have
occurred and be continuing, the Lessor and its successors and assigns to be
the Assignor's true and lawful attorney, irrevocably, with full power (in the
name of the Assignor or otherwise) to ask, require, demand, receive, compound
and give acquittance for any and all monies and claims for monies due and to
become due under, or arising out of, the Purchase Agreement and the Consent
and Guaranty in respect of the Aircraft, to the extent that the same have been
assigned as provided in this Assignment and, for such period as the Lessor,
its successors and assigns may exercise rights with respect thereto under this
Assignment, to endorse any checks or other instruments or orders in connection
therewith and to file any claims or take any action or institute (or, if
previously commenced, assume control of) any proceedings and to obtain any
recovery in connection therewith which the Lessor, its successors and assigns,
may deem to be necessary or advisable in the premises.
4. Further Assurances. The Assignor and the Lessor each agree
that, at any time and from time to time, upon the written request of any other
party hereto, it will promptly and duly execute and deliver any and all such
further instruments and documents and take such further action as the other
may reasonably request in order to obtain the full benefits of this Assignment
and of the rights and powers herein granted.
5. Assignor's Representations, Warranties and Covenants. The
Assignor does hereby represent and warrant that (a) the Purchase Agreement,
insofar as it relates to the Aircraft, is in full force and effect and is
enforceable against the Assignor in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, moratorium,
reorganization or other similar laws or equitable principles of general
application to or affecting the enforcement of creditors' rights generally,
and the Assignor is not in default thereunder and (b) the Assignor has not
assigned or pledged, and hereby covenants that it will not assign or pledge,
the whole or any part of the rights hereby assigned or any of its rights with
respect to the Aircraft under the Purchase Agreement not assigned hereby, to
anyone other than the Lessor as herein provided.
6. No Amendment of Purchase Agreement. So long as the Lease is
in effect, the Lessor agrees that it shall not enter into any agreement that
would amend, modify, supplement, rescind, cancel or terminate the Purchase
Agreement or the Consent and Guaranty in any respect or in any way limit the
rights of the Assignor arising under Clauses 12 and 13 of the Purchase
Agreement or any of the other rights assigned hereunder (except as set forth
above when there has been an Event of Default) without the prior written
consent of the Assignor.
7. Execution of Assignment. This Assignment is executed by the
Assignor and the Lessor concurrently with the execution and delivery of the
Participation Agreement and the Lease.
8. Confidentiality. The Lessor agrees that it will not
disclose to any third party the terms of the Purchase Agreement or this
Assignment, except (a) as required by applicable law or governmental
regulation, (b) as contemplated in the Lease or the Participation Agreement
(including as set forth in Section 17.01 of the Participation Agreement) or
(c) with the consent of the Assignor, the Guarantor and AVSA.
9. Assignment as Collateral. Each party hereto consents to the
assignment and pledge by the Lessor to the Indenture Trustee, as security for
the Certificates to be issued under the Indenture and the other obligations
secured thereby as specified in the Indenture, of all of the Lessor's right,
title and interest in and to the Purchase Agreement and the Consent and
Guaranty under this Assignment.
10. Counterparts. This Assignment may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
11. GOVERNING LAW. THIS ASSIGNMENT SHALL IN ALL RESPECTS BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
12. Successors and Assigns. This Assignment shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and assigns.
13. Notices. All notices with respect to the matters contained
herein shall be delivered in the manner and to the addresses provided in
Article 14 of the Participation Agreement.
14. No Oral Amendments. Neither this Assignment nor any of the
terms hereof may be terminated, amended, supplemented, waived or modified
orally, but only by an instrument in writing signed by the party against whom
the enforcement of such termination, amendment, supplement, waiver or
modification is sought.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment
to be duly executed as of the day and year first above written.
FEDERAL EXPRESS CORPORATION
By ______________________
Title:
NBD BANK,
not in its individual capacity,
but solely as Lessor
By ______________________
Title:
AIRBUS INDUSTRIE CONSENT AND AGREEMENT
The undersigned, Airbus Industrie G.I.E., a groupement d'interet
economique established under Ordonnance No. 67-821 dated September 23, 1967 of
the Republic of France (the "Guarantor"), hereby acknowledges notice of and
consents to all of the terms of the Purchase Agreement Assignment, between
Federal Express Corporation, a Delaware corporation, and NBD Bank, a Michigan
banking corporation, not in its individual capacity, but solely as Lessor,
with respect to Federal Express Corporation Trust No. N663FE, dated as of
October 26, 1995, (hereinafter called the "Assignment", the defined terms
therein being hereinafter used with the same meaning), and hereby confirms to
the Assignor and the Lessor and their respective successors and assigns that:
(i) except as provided in the Assignment, all representations,
warranties, and agreements of the Guarantor under the Consent and
Guaranty with respect to the Aircraft shall inure to the benefit of the
Lessor and its respective successors and assigns, to the same extent as
if the Lessor and its successors and assigns had originally been named
the "Buyer" of the Aircraft therein;
(ii) the Guarantor will pay to the person or entity entitled to
receive the corresponding payment from AVSA under the terms of the
Assignment all amounts required to be paid by the Guarantor with respect
to the Aircraft;
(iii) the Guarantor consents to the sale of the Aircraft by AVSA
to the Lessor, the assignment of Assignor's rights and interests under
the Purchase Agreement and the Consent and Guaranty to the Lessor
pursuant to the Purchase Agreement Assignment, the assignment of the
Lessor's rights and interests in the Assignment to the Indenture Trustee
pursuant to the Indenture, the lease of the Aircraft by the Lessor to
the Assignor under the Lease; and
(iv) from and after the delivery of the Aircraft pursuant to the
Purchase Agreement and payment in full for the Aircraft as described in
the Participation Agreement, the Guarantor will not assert any lien or
claim against the Aircraft or any part thereof or the Lessee, the
Lessor, the Owner Participant or the Indenture Trustee arising on or
prior to such delivery or in respect of any work or services performed
on or prior thereto.
The Guarantor hereby represents and warrants that:
(A) the Guarantor is a groupement d'interet economique duly
organized and existing in good standing under the laws of the Republic
of France and has the requisite power and authority to enter into and
perform its obligations under the Consent and Guaranty, the Airbus
Guaranty and this Consent and Agreement;
(B) the making and performance, in accordance with their terms of
the Consent and Guaranty, the Airbus Guaranty and this Consent and
Agreement have been duly authorized by all necessary corporate action on
the part of the Guarantor, do not require the consent or approval of the
members of the Guarantor, do not require the consent or approval of,or
the giving of notice to, or registration with, or the taking of any
other action in respect of, any French governmental authority or agency
except for those that have already been obtained and do not contravene
any law binding on the Guarantor or contravene the Guarantor's charter
documents or any indenture, credit agreement or other contractual
agreement to which the Guarantor is a party or by which it is bound;
(C) the Consent and Guaranty constituted, as of the date thereof
and at all times thereafter to and including the date of this Consent
and Agreement, and each of this Consent and Agreement and the Airbus
Guaranty constitutes, binding obligations of the Guarantor enforceable
against the Guarantor in accordance with their respective terms; and
(D) the Consent and Guaranty is in full force and effect.
THIS CONSENT AND AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE.
Dated as of October ____, 1995
AIRBUS INDUSTRIE G.I.E.
By _____________________
Name:
Title:
AVSA CONSENT AND AGREEMENT
The undersigned, AVSA, S.A.R.L., a societe a responsabilite
limitee organized and existing under the laws of the Republic of France
("AVSA"), hereby acknowledges notice of and consents to all of the terms of
the Purchase Agreement Assignment between Federal Express Corporation, a
Delaware corporation, and NBD Bank, a Michigan banking corporation, not in
its individual capacity, but solely as Lessor, with respect to Federal
Express Corporation Trust No. N663FE, dated as of October 26, 1995,
(hereinafter called the "Assignment", the defined terms therein being
hereinafter used with the same meaning), and hereby confirms to the
Assignor and the Lessor and their respective successors and assigns that:
(i) except as provided in the Assignment, all representations,
warranties, indemnities and agreements of AVSA under the Purchase
Agreement with respect to the Aircraft shall inure to the benefit of the
Lessor and its respective successors and assigns to the same extent as
if the Lessor and its successors and assigns had originally been named
the "Buyer" of the Aircraft therein;
(ii) AVSA will pay to the Assignor all payments required to be
paid by it under the Purchase Agreement, unless and until AVSA shall
have received written notice from the Indenture Trustee or the Lessor
(or, after the Indenture shall have been discharged in full, the Lessor)
addressed to it at the address and in the manner set forth in the
Assignment that an Event of Default has occurred and is continuing,
whereupon AVSA will make any and all payments thereafter required to be
made by it under the Purchase Agreement, to the extent that the right to
receive such payment has been assigned under the Assignment ("AVSA
Payments"), directly to the Indenture Trustee (or, after the Indenture
shall have been discharged in full, the Lessor) if AVSA shall have
received notice as aforesaid that an Event of Default has occurred and
is continuing;
(iii) The Lessor shall not be liable for any of the obligations or
duties of the Assignor under the Purchase Agreement, nor shall the
Assignment give rise to any duties or obligations whatsoever on the part
of the Lessor owing to AVSA, except for the agreements of the Lessor set
forth in the Assignment, including, but not limited to Section 3(b) of
the Assignment;
(iv) AVSA consents to the assignment of the Lessor's rights and
interests in the Assignment to the Indenture Trustee pursuant to the
Indenture and to the lease of the Aircraft by the Lessor to the Lessee
under the Lease; and
(v) from and after the delivery of the Aircraft pursuant to the
Purchase Agreement and payment in full for the Aircraft as described in
the Participation Agreement and the Assignment, AVSA will not assert any
lien or claim against the Aircraft or any part thereof arising on or
prior to such delivery or in respect of any work or services performed
on or prior thereto.
AVSA hereby represents and warrants that:
(A) AVSA is a societe a responsabilite limitee duly organized and
existing in good standing under the laws of the Republic of France and
has the requisite power and authority to enter into and perform its
obligations under the Purchase Agreement and this Consent and Agreement;
(B) the making and performance, in accordance with their terms,
of the Purchase Agreement and this Consent and Agreement have been duly
authorized by all necessary corporate action on the part of AVSA, do not
require any approval of AVSA's shareholders, do not require the consent
or approval of, the giving notice to, or registration with, or the
taking of any other action in respect of, any French governmental
authority or agency except for those that have already been obtained and
do not contravene any law binding on AVSA or contravene AVSA's charter
documents or any indenture, credit agreement or other contractual
agreement to which AVSA is a party or by which it is bound;
(C) each of the Purchase Agreement and this Consent and Agreement
constitutes a binding obligation of AVSA enforceable against AVSA in
accordance with its terms, subject to: (i) the limitations of applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the rights of creditors generally; and (ii) general principles
of equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law), which principles do not make the
remedies available at law or in equity with respect to the Purchase
Agreement and this Consent and Agreement inadequate for the practical
realization of the benefits intended to be provided thereby and
(D) the Purchase Agreement is in full force and effect as to
AVSA.
THIS CONSENT AND AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE.
Dated as of October ____, 1995
AVSA, S.A.R.L.
By:_______________________
Name:
Title:
Exhibit C
to
Lease Agreement
ENGINE WARRANTY ASSIGNMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N663FE)
Words and phrases appearing in this Engine Warranty Assignment, (the
"Assignment") shall have the respective meanings as defined below:
A. General Terms Agreement means that agreement dated as of July 3, 1991,
(the "GTA") by and between the Engine Manufacturer and Federal Express
Corporation ("Fed Ex"), including the Engine Product Support Plan at
Exhibit B, insofar as such Product Support Plan relates to the Engine
Warranties (the "Product Support Plan"), but excluding any and all
letter agreements attached thereto.
B. Engine Warranties means the Engine Manufacturer's New Engine Warranty,
New Parts Warranty, Ultimate Life Warranty and Campaign Change
Warranty, as set forth in the Engine Manufacturer's Product Support
Plan which forms a part of the GTA, and as limited by the applicable
terms of such GTA and Product Support Plan.
C. Engine means each of the CF6-80C2-A5F series engines installed on the
aircraft at the time of delivery to the Assignor, each bearing Engine
Manufacturer's serial numbers 705-233 and 705-234, respectively.
D. Replacement Engine means each of the CF6-80C2-A5F series engines which
are not subject to this Assignment and are a replacement or
substitute for an Engine, excluding, however, any engines obtained
from the Engine Manufacturer's lease pool which are installed on the
aircraft for the limited purpose of permitting the continued
operation of the aircraft during the period necessary to effect or
complete repairs or overhaul of an Engine.
E. Lease means the Lease Agreement (Federal Express Corporation Trust No.
N663FE), dated as of October 26, 1995, (the "Lease") between NBD Bank
(not in its individual capacity, but solely as Owner Trustee), as
Lessor ("Lessor") and Fed Ex, as Lessee, as amended, modified or
supplemented from time to time.
All other capitalized terms used and not defined herein that are in the
Lease shall, when used herein, have the meanings specified in the Lease.
1
Fed Ex, pursuant to the terms and conditions herein, hereby sells, assigns,
transfers and sets over unto Lessor all of its rights, claims and interests in
and under the GTA and the Product Support Plan, as such apply to the Engines,
to enforce in Lessor's own name such rights as Fed Ex may have with respect to
the Engine Warranties, to the extent the same relate to the Engines, and to
retain any benefit resulting therefrom; provided, however, that there is
reserved to Fed Ex all of its other rights, claims and interests under the GTA
except as expressly stated above; and provided, further, that Fed Ex shall,
during the term of the Lease (but only so long as no Event of Default shall
have occurred and be continuing), have the benefit of and shall be entitled to
enforce (as it shall deem appropriate), either in its own name or (at the cost
of Fed Ex) in the name of the Lessor for the use and benefit of Fed Ex, any
and all Engine Warranties available to the Lessor under the GTA in respect of
the Engines and each Part thereof, and the Lessor agrees (but only so long as
no Event of Default shall have occurred and be continuing) at Fed Ex's expense
to do, execute and deliver such further acts, deeds, matters or things as may
be reasonably requested by Fed Ex and necessary to enable Fed Ex to obtain
customary warranty services furnished for the Engines or any Part thereof
pursuant to the Engine Warranties. Fed Ex shall, at the Lessor's expense,
cooperate with the Lessor and take such action as the Lessor reasonably deems
necessary to enable the Lessor to enforce such rights, claims and interests as
assigned herein.
2
Notwithstanding anything in this Assignment or the Consent attached hereto
and incorporated herein to the contrary, Fed Ex and Lessor confirm expressly
for the benefit of the Engine Manufacturer that:
A. Lessor agrees that it will not, without the prior written consent of
the Engine Manufacturer, disclose, directly or indirectly, to any
third party, any of the terms of the Engine Warranties disclosed to
it by the Engine Manufacturer incident to effecting the assignment
herein; provided, however, that (1) Lessor may use, retain and
disclose such information to its special counsel, bank examiners or
similar regulatory authorities, auditors and public accountants, who
shall not further disclose such terms, (2) Lessor may use, retain and
disclose such information to the Owner Participant, the Indenture
Trustee and any Certificate Holder, as the case may be, and their
special counsel, bank examiners or similar regulatory authorities,
auditors and public accountants, who shall not further disclose such
terms, (3) Lessor may disclose such information as required by
applicable laws, governmental regulations, subpoena, or other written
demand under color of legal right, but it shall first, as soon as
practicable upon receipt of such demand and to the extent permitted
by applicable laws, furnish a copy thereof to Fed Ex and to the
Engine Manufacturer, and Lessor, to the extent permitted by applicable
law, shall afford Fed Ex and the Engine Manufacturer reasonable
opportunity, at the moving party's cost and expense, to obtain a
protective order or other assurance reasonably satisfactory to the
Engine Manufacturer of confidential treatment of the information
required to be disclosed, (4) Lessor may disclose such information as
required to enforce its rights under the Engine Warranties assigned
to it pursuant to this Assignment, and (5) Lessor may disclose such
information to any bona fide potential purchaser of the Aircraft
and/or Engines (subject to the execution by such prospective
purchaser of a written confidentiality statement setting forth the
same or substantially similar terms as those referred to in this
paragraph).
B. Without in any way releasing Fed Ex from any of its duties or
obligations under the GTA, Lessor agrees that, insofar as the
provisions of the GTA relate to the Engines, in exercising any rights
under such Engine Warranties or in making any claim with respect
thereto, the applicable terms and conditions of the GTA, including
Article Eight (Limitation of Liability) and the Product Support Plan,
shall apply to, and be binding upon, Lessor to the same extent as Fed
Ex.
C. Insofar as the provisions of the GTA relate to the Engines, in
exercising any rights under the Engine Warranties or in making any
claim with respect thereto, the applicable terms and conditions of
the GTA and the Product Support Plan or the Consent attached hereto
and incorporated herein shall apply to, and be binding upon, Lessor
to the same extent as if named "Airline" therein. It is expressly
agreed that Fed Ex shall at all times remain liable to the Engine
Manufacturer under the GTA to perform all the duties and obligations
of Fed Ex thereunder to the same extent as if this Assignment had not
been executed, and except as provided in the preceding sentence, the
Lessor shall not be deemed to have assumed any obligations
thereunder. The performance by Lessor of any of the rights assigned
hereunder shall not release Fed Ex from any of its duties or
obligations to the Engine Manufacturer under the GTA except to the
extent that such exercise by Lessor shall constitute performance of
such duties and obligations.
D. Nothing contained in this Assignment shall subject the Engine
Manufacturer to any obligation or liability to which it would not
otherwise be subject under the GTA or modify in any respect the
Engine Manufacturer's contract rights thereunder, or subject the
Engine Manufacturer to any multiple or duplicative liability or
obligation under the GTA. The Engine Manufacturer recognizes and it
is consented to by all parties to the Assignment that Lessor shall
assign its rights under the Lease and this Assignment and will
mortgage the Aircraft and Engines, to The Chase Manhattan Bank
(National Association) as Indenture Trustee under the Trust Indenture
and Security Agreement (Federal Express Corporation Trust No.
N663FE), dated as of October 26, 1995; however, no further extension
or assignment of any remaining Engine Warranties, including but not
limited to extensions or assignments for security purposes, are
permitted without the prior written consent of the Engine
Manufacturer.
E. Exclusive of the assignment noted in Section 2D above, the Engine
Manufacturer shall not be deemed to have knowledge of any change in
the authority of Fed Ex or Lessor, as the case may be, to exercise
the rights established hereunder until the Engine Manufacturer has
received written notice thereof from the Indenture Trustee or the
Lessor. Such notice shall be sent to: Commercial Contracts
Director, GE Aircraft Engines, Mail Drop F17, Xxx Xxxxxxx Xxx, Xxx
000000, Xxxxxxxxxx, Xxxx 00000-0000, facsimile: (000) 000-0000.
F. This Assignment shall apply only in respect to each Engine and shall
not extend to any replacement or substitute engine. If, during the
term of this Assignment and the Lease, it becomes necessary to
replace or substitute an Engine due to a Failure (as such term is
defined in the Engine Product Support Plan, excluding normal wear,
tear and deterioration which can be restored by overhaul and repair),
damage or loss, the Assignor shall give the Engine Manufacturer
written notice of such Failure, damage or loss. The notice shall
include (i) a description of the event or circumstances which
constitute a Failure, damage or loss, and (ii) the serial numbers of
the (a) failed, damaged or lost Engine and (b) Replacement Engine and
shall be sent to: Customer Support Manager, GE Aircraft Engines, 000
Xxxxxxxx Xxxxxx, Xxxx 000, Xxxxxxxxxx, Xxxx 00000. The Engine
Manufacturer shall not be deemed to have knowledge of the need for a
replacement engine until it has received the aforementioned notice.
In the event an Engine subject to this Assignment fails, is damaged
or lost, and such Engine is replaced by a Replacement Engine, the
Assignor and the Assignee shall, prior to, or contemporaneous with,
the delivery of such Replacement Engine, obtain the written consent
of the Engine Manufacturer that the Engine Warranties as set forth in
the Engine Product Support Plan shall apply to such Replacement
Engines. The Engine Manufacturer shall not incur any obligation or
liability for a Replacement Engine under the Engine Warranties until
the execution of the aforementioned consent.
G. At any time and upon the written request of the Engine Manufacturer,
Fed Ex and Lessor shall promptly and duly execute and deliver any and
all such further assurances, instruments and documents and take all
such further action as the Engine Manufacturer may reasonably request
in order to obtain the full benefit of Fed Ex and Lessor's agreement
as set forth in this Assignment and the Consent attached hereto and
incorporated herein.
Any performance by the Engine Manufacturer that discharges its
obligation under the Engine Warranties will satisfy the respective
interests of Fed Ex and Lessor. So long as the Engine Manufacturer
acts in good faith in accordance with this Assignment, the Engine
Manufacturer may rely conclusively on any such notice without
inquiring as to the accuracy of, or the entitlement of the party to
give, such notice.
3
The Engine Manufacturer shall reserve to Fed Ex all those rights, claims and
interests, as and to the extent such relates to the purchase and operation of
engines other than the Engines subject to the Assignment, as well as other
matters not directly pertaining to the Engines, and Fed Ex will have or retain
under the GTA such rights, claims and interest not expressly assigned to
Lessor hereunder.
4
The Engine Manufacturer warrants each new Reverser (as such is defined in
the Engine Product Support Plan) installed on the Aircraft at the time of
delivery to Fed Ex under the terms of the New Engine Warranty; however,
administration of such New Engine Warranty, with respect to both installed and
replacement Reversers, shall be performed by Xxxxxx Xxxxxxxx.
5
If at some point in time, the Engine Manufacturer receives written
notification from the Indenture Trustee or the Lessor that the Lessor is or
becomes entitled to possession of the Engines, pursuant to an Event of
Default, and desires to sell or lease the Engines to a party who is not
currently a party to a General Terms Agreement with the Engine Manufacturer,
the Engine Manufacturer agrees if such agreement is permissible under
applicable U.S. law, that it will offer to such purchaser or lessee, subject
to the execution of an agreement to sell or lease such Engines, a General
Terms Agreement on the Engine Manufacturer's standard terms and conditions.
If, however, such purchaser or lessee is currently a party to a General Terms
Agreement with the Engine Manufacturer, the remaining portion of the terms of
such General Terms Agreement shall be extended to and apply to such subsequent
purchase or lease; provided, however, that the written consent of the Engine
Manufacturer to such an extension is obtained prior to the transaction's
occurrence.
This Assignment shall be governed by the laws of the State of New York,
including all matters of construction, validity and performance, as applicable
to contracts between citizens of that state to be performed wholly within that
state, and without reference to conflicts of law principles.
In witness whereof, General Electric Company, Federal Express Corporation
and NBD Bank have caused this Engine Warranty Assignment to be duly executed
and delivered as of the date hereof.
General Electric Company
_____________________________
Name:
Title:
Federal Express Corporation
_____________________________
Name: Xxxxxx X. Xxxxxxx
Title: Assistant Treasurer and
Managing Director -
Structured Finance
NBD Bank
not in its individual capacity,
but solely as Owner Trustee
_____________________________
Name:
Title:
CONSENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N663FE)
The Engine Manufacturer, General Electric Company (the "Engine
Manufacturer"), a New York corporation, hereby consents to the Engine Warranty
Assignment attached hereto and acknowledges notice of (i) the Purchase
Agreement Assignment (Federal Express Corporation Trust No. N663FE), dated as
of October 26, 1995 and entered into by and between Federal Express
Corporation, as Assignor ("Fed Ex") and NBD Bank (not in its individual
capacity, but solely as Owner Trustee) as Assignee ("Lessor"), (the "Purchase
Agreement Assignment"); and (ii) the Lease Agreement (Federal Express
Corporation Trust No. N663FE), dated as of October 26, 1995 and entered into
by and between Fed Ex, as Lessee and Lessor, as Lessor (as in effect from time
to time, the "Lease") and (iii) the Trust Indenture and Security Agreement
(Federal Express Corporation Trust No. N663FE), dated as of October 26, 1995
(the "Indenture"), between the Lessor and The Chase Manhattan Bank (National
Association), as Indenture Trustee ("Indenture Trustee"). The Purchase
Agreement Assignment and Lease cover two GE CF6-80C2-A5F series engines
bearing Engine Manufacturer's serial numbers 705-233 and 705-234,
respectively, (the "Engines") as installed on the Airbus A300F4-605R series
aircraft bearing Manufacturer's serial number 766 (the "Aircraft"). In
connection with such Purchase Agreement Assignment and Lease, reference is
made to the General Terms Agreement No. 6-9034 dated as of July 3, 1991,
between the Engine Manufacturer and Fed Ex (the "General Terms Agreement"),
under which the Engine Manufacturer agreed to support certain GE CF6-80C2-A5F
series engines, including the Engines and spare parts therefor to be purchased
by Fed Ex from the Engine Manufacturer, as installed on certain Airbus
A300F4-605R series aircraft, including the Aircraft. Recognizing that Lessor
and Fed Ex have entered into the Lease which provides for the lease by Lessor
to Fed Ex of the Aircraft and Engines and that Lessor has granted a security
interest in the Engines and assigned certain of its rights under the Lease to
the Indenture Trustee, the Engine Manufacturer agrees that in furtherance of
the Lease, it will so support such Engines and spare parts therefor, subject
to the applicable terms and conditions of the General Terms Agreement,
including Article Eight (Limitation of Liability).
The Engine Manufacturer represents and warrants that:
1. it is a corporation existing in good standing under the laws of
the State of New York;
2. the making and performance of this Consent in accordance with
its terms has been duly authorized by all necessary corporate
action on the part of the Engine Manufacturer, does not require
any shareholder approval and does not contravene its
certificate of incorporation or by-laws or any debenture,
credit agreement or other contractual agreement to which the
Engine Manufacturer is a party or by which it is bound or any
law binding on the Engine Manufacturer;
3. the making and performa