EXHIBIT 10.6
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE
CONFIDENTIAL PORTIONS HAVE BEEN REDACTED AND ARE DENOTED BY {***}. THE
CONFIDENTIAL PORTIONS HAVE BEEN SEPARATELY FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION.
F-100 LEASE #114
(TAIL # N106ML)
THE SINGLE EXECUTED ORIGINAL OF THIS AGREEMENT MARKED "ORIGINAL" SHALL BE THE
"ORIGINAL" AND ALL OTHER COUNTERPARTS OF THIS AGREEMENT SHALL BE DUPLICATES AND
MARKED "DUPLICATE" OR "DUPLICATE ORIGINAL". TO THE EXTENT THAT THIS AGREEMENT
AND CERTIFICATE OF ACCEPTANCE RELATED THERETO CONSTITUTES CHATTEL PAPER, AS SUCH
TERM IS DEFINED IN THE UNIFORM COMMERCIAL CODE AS IN EFFECT IN ANY APPLICABLE
JURISDICTION, NO SECURITY INTEREST MAY BE CREATED THROUGH TRANSFER OR POSSESSION
OF ANY COUNTERPART OTHER THAN THE "ORIGINAL".
LONG TERM LEASE
AIRCRAFT OPERATING LEASE AGREEMENT
No. AOLAF-114
Dated as of
November 11, 1993
between
FIRST SECURITY BANK OF UTAH, N.A.,
not in its individual
capacity but solely as trustee,
as
Lessor
and
MIDWAY AIRLINES CORPORATION
as
Lessee
Aircraft Xxxxxx 000
Xxxxxx Xx 00000
Date November 11, 1993
INDEX
ARTICLE Page
----
1. Definitions ...................................................... 1
2. Agreement to Lease ............................................... 12
3. Term; Delivery; Acceptance; Delay ................................ 16
4. Registration and Title ........................................... 18
5. Possession and Use ............................................... 20
6. Charges, Method of Payment and Financial
Information ...................................................... 25
7. Maintenance ...................................................... 27
8. Taxes, Duties and Expenses ....................................... 32
9. Liens ............................................................ 36
10. Indemnification .................................................. 37
11. Insurance ........................................................ 39
12. Assignment and Subletting ........................................ 46
13. Disclaimer, Representations and Warranties ....................... 50
14. Covenants of Lessee .............................................. 55
15. Default by Lessee ................................................ 58
16. Return of Aircraft ............................................... 65
17. Casualty Occurrences ............................................. 67
18. Governing Law and Jurisdiction ................................... 70
19. Miscellaneous .................................................... 71
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APPENDICES
A. Description of Aircraft
B. Further Definitions and Values
C. Certificate of Acceptance
D. Charges
E. Operating Condition at Re-Delivery
F. Aircraft Documents
G. Legal Opinion
H. Certificate of Insurance
I. Broker's Letter of Undertaking
J. FAA Power of Attorney
K. Order of the Bankruptcy Court
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AIRCRAFT OPERATING LEASE AGREEMENT
No. AOLAF-114
THIS AIRCRAFT OPERATING AGREEMENT No. AOLAF-114 is made as of the 11th day
of November, 1993 between FIRST SECURITY BANK OF UTAH, N.A., a national banking
association existing pursuant to the laws of the United States, having its
principal place of business at 00 Xxxxx Xxxx Xxxxxx, Xxxx Xxxx Xxxx, Xxxx 00000-
0007, not in its individual capacity (except as expressly herein set forth) but
solely as Owner Trustee under the Trust Agreement (as defined in Article 1
hereof) and its permitted successors and assigns (herein referred to as
"Lessor") and MIDWAY AIRLINES CORPORATION a company incorporated under the laws
of the State of Delaware, having its principal place of business at 0000 Xxxxx
Xxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000 and its permitted successors and assigns
(herein referred to as "Lessee").
WHEREAS Lessor has the right to possess, use and lease the Aircraft; and
WHEREAS Lessee desires to lease the Aircraft from Lessor; and
WHEREAS Lessor is willing to lease the Aircraft to Lessee upon the terms
and conditions set out herein.
NOW THEREFORE, in consideration of the mutual promises herein contained,
Lessor and Lessee agree as follows:
1. DEFINITIONS
The following terms shall have the following respective meanings for all
purposes of this Agreement:
1.1 Air Authority shall mean the Federal Aviation Administration of the United
States Department of Transportation and any successor.
1.2 Aircraft shall mean the aircraft identified and described in Appendix A,
including any Engine, Part, or component thereof, and/or ancillary and
loose equipment or devices installed in or on the Aircraft at the Delivery
Date (or which having been removed therefrom remain the property of the
Lessor pursuant to this Agreement) and Aircraft Documents furnished
therewith under this Agreement, or any substitutions, renewals and
replacements from time to time made in or on the said Aircraft in
accordance with this Agreement,
whether or not for the time being installed on or in the said Aircraft or
any other aircraft.
1.3 Aircraft Documents shall mean the items identified in Appendix F.
1.4 Airframe shall mean the Aircraft, excluding the Engines.
1.5 Appraisal Procedure shall mean the procedure for determining the FMV of
the Aircraft set forth Article 19.10.
1.6 Approved Maintenance Program shall mean the Maintenance Program approved
by Lessor pursuant to Article 2.2(iii) or such other Maintenance Program
as Lessor shall from time to time approve in writing.
1.7 Authorized Maintenance Performer shall mean Lessee, American Airlines,
Inc., U.S. Air, Aviall, Rolls Royce Canada or any Air Authority approved
original equipment manufacturer for the Aircraft or the Engines or any
Part or any other person approved by Lessor in accordance with the
provisions of Article 7.1.
1.8 Bank shall mean the financial institution(s) and/or other provider(s) of
finance from whom finance respecting the acquisition or continued
ownership of the Aircraft by Lessor is to be, or is for the time being,
obtained and/or in whose favor or for whose benefit security over, or
rights with respect to, the Aircraft is to be, or is for the time being,
granted by Lessor or at its request and shall include any financial
institution providing finance to the Head Lessor in respect of Head
Lessor's acquisition of the Aircraft by whatever means, including without
limitation by way of loan or by way of non-recourse sale of lease
receivables.
1.9 Bankruptcy Case shall mean the bankruptcy case of Jet Express, Inc., Case
No. 91-B-12287 (FGC) in the Bankruptcy Court.
1.10 Bankruptcy Court shall mean the United States Bankruptcy Court for the
Southern District of New York having jurisdiction over Lessee's Bankruptcy
Case.
1.11 Beneficiary shall mean, Fokker Aircraft B.V., beneficiary under the Trust
Agreement, and its successors and permitted assigns.
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1.12 Business Day shall mean a day (other than a Saturday or Sunday) on which
banks are open for business in New York.
1.13 Casualty Occurrence shall have the meaning set forth in Article 17.1.
1.14 Certificate of Acceptance shall mean the Certificate of Acceptance given
in the form of Exhibit C.
1.15 Credit and Security Agreement shall mean the Credit and Security Agreement
dated as of October 29, 1993 therein between FAUSA and Lessee.
1.16 Cycle shall mean one take-off and landing of the Aircraft.
1.17 Default shall mean an Event of Default or any event which, with the giving
of notice and/or lapse of time and/or the making of any relevant
determination, would constitute an Event of Default.
1.18 Delivery Date shall mean the date on which the Aircraft is delivered to
and accepted by the Lessee for the purposes of this Agreement.
1.19 Delivery Location shall mean Schiphol Airport, The Netherlands.
1.20 Dollars and $ shall mean the lawful currency of the United States of
America and in respect of all payments to be made under this Agreement in
Dollars shall mean funds which are for same day settlement in the New York
Clearing House Interbank Payments System (or such other US Dollar funds as
may at the relevant time be customary for the settlement of international
banking transactions denominated in United States Dollars).
1.21 Engine shall mean (i) any engine installed on or furnished with the
Aircraft on the Delivery Date, such Engines being identified as to
manufacturer and type in Appendix A and as to serial numbers in the
Certificate of Acceptance executed by Lessee on the Delivery Date and (ii)
any substitute or replacement engine title to which has, or should have,
transferred to and vested in Lessor in accordance with this Agreement, in
each case including all modules or Parts from time to time belonging to or
installed in that engine and irrespective of whether or not the same shall
for the time being be installed on the Aircraft or on any other
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aircraft. The term "Engine" shall exclude any properly replaced engine
title to which has, or should have, passed to Lessee pursuant to this
Agreement.
1.22 Equipment Change shall have the meaning set forth in Article 17.3(a).
1.23 Equity Commitment shall mean the Financing Agreement dated August 3, 1993
among Lessee, the Equity Investors, and the other parties listed therein,
as the same may be amended from time to time.
1.24 Equity Investors shall mean the parties to the Equity Commitment other
than Lessee, Xxxxx Air Express, Inc., Xxxxxxxxxx Air Incorporated and Jet
Express Funding Corporation.
1.25 Event of Default shall mean any of the events specified in Article 15.1.
1.26 Expected Delivery Date shall mean January 15, 1994.
1.27 Expiry Date shall mean the day preceding the numerically corresponding day
120 (One Hundred Twenty) months after the Delivery Date.
1.28 Fair Market Rental Value shall be equal in amount to the value that would
be obtained in an arms'-length transaction between an informed and willing
lessee under no compulsion to lease and an informed and willing lessor
under no compulsion to lease, in accordance with a lease to a lessee
similarly situated with Lessee, for a term equal to the relevant period
and on conditions as herein provided, any such determination (made for
purposes of Article 15.3(b)) to be made on the basis of the then actual
condition of the Aircraft, to be determined pursuant to an Independent
Appraisal and to be the average of the two determinations obtained
thereunder.
1.29 FAUSA shall mean Fokker Aircraft U.S.A., Inc., a company incorporated
under the laws of the State of Delaware, with its principal office at
Alexandria, Virginia.
1.30 Federal Aviation Act shall mean the Federal Aviation Act of 1958, as
amended.
1.31 First Rent Date shall mean the Delivery Date.
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1.32 Flight Hour shall mean each hour or part thereof elapsing from the moment
at which the wheels of the Aircraft leave the ground on the take off of
the Aircraft until the wheels of the Aircraft touch the ground on the
landing of the Aircraft following such flight.
1.33 FMV shall have the meaning set forth in Appendix D.
1.34 Fokker shall mean Fokker Aircraft B.V., a Dutch corporation with its
principal office at Amsterdam Zuid-Oost, The Netherlands, together with
its successors.
1.35 Force Majeure in relation to the delivery of the Aircraft shall mean delay
or non-delivery due to or arising out of acts of God or public enemy,
civil war, insurrection or riot, fire, flood, explosion, earthquake,
accident, epidemic, quarantine restriction, any act of government,
governmental priority, allocation, regulation or order affecting directly
or indirectly, the Aircraft, Lessor or any materials or facilities, strike
or labor dispute causing cessation, slow-down or interruption of work,
inability after due and timely diligence to procure equipment, data or
materials from suppliers in a timely manner, or any other cause whether or
not mentioned above and whether or not similar to any of the foregoing to
the extent that such cause is beyond the control of Lessor or not
occasioned by Lessor's fault or negligence.
1.36 Governing Law shall mean the law of the state of New York.
1.37 Government Entity shall mean and include (i) any national or state
government, political subdivision thereof, or local jurisdiction therein;
(ii) any board, commission, department, division, organ, instrumentality,
court, or agency of any thereof, however constituted; and (iii) any
association, organization, or institution of which any thereof is a member
or to whose jurisdiction any thereof is subject or in whose activities any
thereof is a participant.
1.38 Head Lessor shall mean any person or persons to whom title to the Aircraft
is vested or transferred in accordance with Article 12.3(e).
1.39 Indemnitees shall mean Lessor (in its trust and individual capacities),
the Voting Trustee (in its
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trust and individual capacities), the Beneficiary, the Head Lessor, the
Bank, Fokker, FAUSA, including any of their respective successors and
assigns and their respective shareholders, subsidiaries, affiliates,
directors, officers, agents and employees.
1.40 Independent Appraisal shall mean a determination of Fair Market Rental
Value of the Aircraft by two independent aircraft appraisers, selected by
Lessor, the costs and expenses of the appraisal to be paid by Lessee.
1.41 Law shall mean and include (i) any law, statute, decree, constitution,
regulation, order or any directive of any Government Entity; (ii) any
treaty, pact, compact or other agreement to which any Government Entity is
a signatory or party; (iii) any judicial or administrative interpretation
or application of any thereof; and (iv) any amendment or revision of any
thereof.
1.42 Lessor or Lessee shall have the meanings respectively ascribed to them in
the first paragraph of this Agreement and shall include their respective
assignees or successors.
1.43 Lessor Liens shall mean:
(a) the Mortgage, the Security Assignment and any security interest
whatsoever from time to time created by or through Lessor and/or
Head Lessor in connection with the financing of the Aircraft;
(b) any other security interest in respect of the Aircraft which results
from acts of or claims against Lessor and/or Head Lessor not related
to the transactions contemplated by or permitted under this
Agreement; and
(c) liens in respect of the Aircraft for Lessor Taxes.
1.44 Lessor Taxes shall mean Taxes:
(a) imposed as a direct result of activities of a Tax Indemnitee in any
jurisdiction imposing a liability unrelated to that Tax Indemnitee's
dealings with Lessee, to the transactions contemplated by this
Agreement or the operation of the Aircraft by Lessee; or
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(b) imposed on or measured by net income, profits or gains, or capital
or net worth (excluding, however, in each case, Taxes that are, or
are in the nature of, license, sales, use, rental, value-added, or
property taxes) of a Tax Indemnitee, by (A) any Governmental Entity
by or in which that Tax Indemnitee would be subject to tax without
regard to the transactions contemplated by this Lease, except to the
extent that the Tax Indemnitee would be subject to such Tax if the
Tax Indemnitee's participation in the transactions contemplated by
this Agreement were the sole connection between the Tax Indemnitee
and the jurisdiction imposing the Tax, or (B) the Federal Government
of the United States of America (including, without limitation, any
withholding taxes imposed by such government); or
(c) imposed with respect to any period or event occurring prior to the
date of this Agreement or after the Expiry Date or earlier
termination of this Agreement in accordance with the terms hereof,
provided that such Tax is unrelated to a Tax Indemnitee's dealings
with Lessee or to the transactions contemplated by this Agreement;
or
(d) imposed as a result of any voluntary sale, assignment, transfer or
other disposition by the Lessor (including to the Head Lessor) or
any other Tax Indemnitee of any interest in the Aircraft or any part
thereof or this Agreement unless such transfer or disposition occurs
(1) in connection with a Tax Indemnitee's pursuing its remedies
while an Event of Default by Lessee is continuing or otherwise
resulting from an Event of Default, or (2) pursuant to Lessee's
exercise of its option to purchase the Aircraft under Article 19.10
of this Agreement.
1.45 Maintenance Program shall mean an Air Authority approved maintenance
program for the Aircraft encompassing scheduled maintenance (including
block maintenance), condition monitored maintenance, and on-condition
maintenance of Airframe, Engines and Parts, including but not limited to,
servicing, testing, preventive maintenance, repairs, structural,
inspections, system checks, overhauls, approved modifications, service
bulletins, engineering orders, airworthiness directives, corrosion
control, inspections and treatments.
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1.46 Major Checks shall mean any 12,000 hours Check, 24,000 hours Check or
Intersupplementary Check or segment thereof or any equivalent thereof with
more or less hours, however denominated, to the extent set out in the
Approved Maintenance Program from time to time.
1.47 Manufacturer shall mean Fokker.
1.48 Mortgage shall mean such mortgage or other security as from time to time
may be created over the Aircraft in favor of the Bank or over the
Beneficiary's interest in the Trust Agreement, in favor of the Bank.
1.49 Note shall mean the Secured Promissory Note executed and delivered to
FAUSA by the Lessee and secured by the Credit and Security Agreement.
1.50 Operative Documents shall mean this Agreement, the Support Services
Agreement, the Stock Option Agreement, the Credit and Security Agreement
and the Note.
1.51 Other Aircraft Agreements shall mean Aircraft Operating Lease Agreements
relating to other Fokker 100 aircraft so long as leased to Lessee by a
lessor for the benefit of Fokker, FAUSA or any affiliate thereof, as
Beneficiary.
1.52 Part shall mean, whether or not installed on the Aircraft:
(a) any component, furnishing or equipment (other than a complete
Engine) furnished with the Aircraft on the Delivery Date; and
(b) any other component, furnishing or equipment (other than a complete
Engine) title to which has, or should have; passed to Lessor
pursuant to this Agreement
but excludes any such items title to which has, or should have, passed to
(i) Lessee pursuant to this Agreement or (ii) any person pursuant to any
agreement relating to the financing of spare parts for the Aircraft,
including, but not limited to, FAUSA pursuant to the Credit and Security
Agreement and the Note.
1.53 Permitted Lien shall mean:
(a) liens of repairers, mechanics, material men, carriers,
hangarkeepers, employees or other
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similar liens arising in the ordinary course of business by statute
or by operation of law in respect of obligations which are either
not overdue or are being contested in good faith by appropriate
proceedings;
(b) any lien for Taxes of any kind either not assessed or, if assessed,
not yet due and payable or being contested in good faith by
appropriate proceedings, and any lien arising out of a judgment
against Lessee with respect to which at the time an appeal is being
prosecuted in good faith and with respect to which there shall have
been secured a stay of execution pending such appeal,
provided that in the case of this subclause (b):
(i) adequate reserves for the payment of such obligations have
been provided by Lessee;
(ii) such proceedings, or the continued existence of such lien, do
not give rise to any likelihood of the sale, forfeiture or
other loss of the Aircraft or any Engine or any Part or any
interest therein; and
(iii} any such lien does not arise as a result of any default on the
part of Lessee in respect of its obligations under this
Agreement;
(c) any Lessor Lien and the lien of this Agreement; and
(d) any lien for Lessor Taxes.
1.54 Redelivery Location shall mean Schiphol Airport, The Netherlands.
1.55 Rent Date shall mean the First Rent Date and the numerically corresponding
date of each and every subsequent month during the Term, or (if there is
no corresponding date in any month), the last day of such month.
1.56 Rental Adjustment Period shall mean the period from and including the
Delivery Date up to and including the day preceding the sixth Rent Date
after the Delivery Date and each subsequent period commencing on and
including the day after the immediately preceding Rental
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Adjustment Period and ending on and including the day preceding the sixth
Rent Date after the date on which that Rental Adjustment Period commenced.
1.57 Rental Period shall mean the period from and including any Rent Date to
and including the day preceding the next Rent Date.
1.58 Security Assignment shall mean an assignment or pledge in favor of the
Head Lessor or the Bank of the benefit of all or any part of Lessor's
rights hereunder.
1.59 Security Interest shall mean any mortgage, charge, pledge, lien,
assignment, hypothecation, right of set-off or any agreement or
arrangement having the effect of creating a security interest.
1.60 State of Incorporation shall mean the State of Delaware.
1.61 State of Registration shall mean United States of America.
1.62 Stock Option Agreement shall mean the Stock Option Agreement dated as of
October 1, 1993 among Lessee and FAUSA and any other party listed thereon.
1.63 Supplemental Rent shall mean Agreed Value and any other amount which by
the terms of this Agreement is payable by Lessee to Lessor other than Rent
and the Reserve Rate.
1.64 Support Services Agreement shall mean the Aircraft Support Services
Agreement No. ASSAF-110 between FAUSA and Lessee.
1.65 Taxes shall mean any and all present and future sales, use, property,
customs, value-added, turnover, stamp, interest equalization, income,
gross or net receipts, franchise, excise, net worth, capital or other
taxes, fees, withholdings, imposts, duties, levies, or other charges of
any nature, together with any penalties, fines, or interest thereon,
imposed, levied, or assessed by, or otherwise payable to, any Governmental
Entity and "Tax" shall be construed accordingly.
1.66 Tax Indemnitee shall mean each of the Lessor, Beneficiary, and the Head
Lessor, including any of their respective successors and assigns.
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1.67 Term shall bear the meaning ascribed to it in Article 3.4.
1.68 Trust Agreement shall mean the Trust Agreement dated as of November 1,
1993 between the Beneficiary and the Lessor in its individual capacity, as
the same may be amended from time to time.
1.69 Trust Estate shall mean the "Trust Estate" as defined in the Trust
Agreement.
1.70 Voting Trust Agreement shall mean the Voting Trust Agreement dated as of
November 1, 1993 between the Beneficiary and the Voting Trustee, as the
same may be amended from time to time.
1.71 Voting Trustee shall mean First Security Bank of Idaho, NA., a national
banking association, and its permitted successors and assigns.
1.72 The terms:
Agreed Value,
Assumed Rent,
Deposit,
Enumerated Financial Milestones
Escalated Rent,
Rent,
Reserve Rate,
shall have the meanings and values set forth in Appendix B.
1.73 References in this Agreement to:
(a) Articles or Appendices are, unless otherwise specified, references
to Articles of, and Appendices to, this Agreement and references to
this Agreement include its Appendices;
(b) any statute or other legislative provision shall be read to include
any statutory or legislative modification or re-enactment thereof,
or any substitution therefor;
(c) the Aircraft include any Part of the Aircraft, and, where the
context so admits, any of the Aircraft Documents and references to
any part of the Aircraft include any part of any Engine;
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(d) the word "person" or "persons" or to words importing persons
include, without limitation, individuals, firms, partnerships, joint
ventures, trusts, Government Entities, organizations, associations,
corporations, government agencies, committees, departments,
authorities and other bodies, corporate or incorporate, whether
having distinct legal personality or not, or any member of any of
the same;
(e) words importing the plural include the singular and vice versa;
(f) any agreement or instrument include such agreement or instrument as
it may from time to time be amended or supplemented; and
(g) headings in this Agreement are for ease of reference only.
2. AGREEMENT TO LEASE
2.1 Lessor will lease the Aircraft to Lessee and Lessee will take the Aircraft
on lease from Lessor in "As Is" condition in accordance with the terms and
conditions of this Agreement.
2.2 Lessor's obligation to deliver the Aircraft on the Delivery Date to Lessee
shall be subject to:
(i) the receipt by Lessor from Lessee on or prior to the Expected
Delivery Date of the following, all of which shall be in the English
language and be satisfactory in form and substance to Lessor:
(a) a final non-appealable order of the Bankruptcy Court in the
form set forth in Appendix K confirming the Plan of
Reorganization submitted to the Bankruptcy Court;
(b) copies of Lessee's certificate of incorporation and/or
memorandum and articles of association and/or by-laws and/or
other constitutional documents, certified to be true and up to
date copies by a duly authorized officer of Lessee;
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(c) copies of resolutions of Lessee's board of directors
authorizing Lessee to enter into and perform this Agreement,
the other Operative Documents and the transactions
contemplated hereby, certified to be true and in full force
and effect by a duly authorized officer of Lessee;
(d) evidence that each approval, license and consent which may be
required in relation to, or in connection with the performance
by Lessee of any of its obligations hereunder and the other
Operative Documents has been granted by or obtained from the
applicable Government Entity in the State of Registration;
(e) copies of Lessee's air transport license, certificate of
public convenience and necessity, and any other air operator
certificates and other licenses, certificates and permits
required by a Governmental Authority enabling Lessee to
operate as an air carrier, certified to be true copies and to
be in full force and effect by a duly authorized officer of
Lessee;
(f) evidence of appointment of Lessee's agent for service of
process in the State of New York;
(g) [intentionally omitted];
(h) the consent referred to in Article 15.5;
(i) a power of attorney in the form of Appendix J authorizing
Lessor and/or the Head Lessor/and/or the Bank to take action
at the Air Authority and a certified resolution authorizing
Same;
(j) such other documents as Lessor may reasonably request;
(ii) the receipt by Lessor from Lessee on or before the Delivery Date of:
(a) opinions satisfactory in form and substance to Lessor of
independent counsel practicing in the State of Registration as
instructed by Lessee, addressing the matters referred to in
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the form set out in Appendix G and dated the Delivery Date;
(b) all sums due to Lessor pursuant to this Agreement;
(c) a certificate of insurance in the form of Appendix H, a
broker's letter of undertaking in the form of Appendix I,
certificates of reinsurance if required by Lessor and other
evidence satisfactory to Lessor that Lessee is taking the
required steps to ensure due compliance with the provisions of
this Agreement as to Insurances with effect on and after the
Delivery Date;
(d) evidence that the representations and warranties of Lessee set
forth in Article 13.4 are true and correct;
(iii) Lessor having approved the Maintenance Program under which it is
proposed that the Aircraft will be maintained (which approval shall
be granted or withheld at Lessor's sole discretion);
(iv) Lessor being satisfied that adequate arrangements have been made for
the issue, forthwith following delivery of the Aircraft, of the
acknowledgments referred to in Article 12.3 in the event that a Head
Lessor and/or a Bank has been identified;
(v) evidence (including satisfactory opinions of Xxxxx & Xxxxxxx,
special Air Authority aviation counsel, as to Air Authority
registration and recordation matters) that on the Delivery Date the
Aircraft has been validly registered under the laws of the State of
Registration and that all filings, registrations, recordings and
other actions have been or will be undertaken which are necessary or
advisable to ensure the validity, effectiveness and enforceability
of this Agreement and to protect the property rights of Lessor and
Head Lessor in the Aircraft or any Part and any Security Interest of
the Bank therein;
(vi) Lessor being satisfied that no default shall have occurred under any
Other Aircraft Agreement or any other agreement between Lessor or
FAUSA and Lessee;
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(vii) each of the Operative Documents shall have been duly authorized,
executed and delivered by Lessee, shall be satisfactory in form and
substance to Lessor, and shall be in full force and effect; and
(viii) Lessor obtaining an export license for delivery of the Aircraft for
export to the Lessee on or before the Delivery Date if so required
by the Laws of The Netherlands.
2.3 The conditions specified in Article 2.2 are inserted for the sole benefit
of Lessor and may be waived or deferred in whole or in part and with or
without conditions by Lessor. If any of the said conditions are
outstanding on the Delivery Date and Lessor (in its absolute discretion)
nonetheless agrees to deliver the Aircraft to Lessee, Lessee shall ensure
that such outstanding conditions are fulfilled within fifteen (15) days
after the Delivery Date and Lessor shall be entitled to treat the failure
of Lessee to perform such outstanding conditions as an Event of Default.
2.4 The obligation of Lessee to accept delivery of the Aircraft from Lessor is
subject to the satisfaction of the following conditions precedent on or
before the Delivery Date:
(i) each of the Operative Documents to which Lessor or FAUSA is a
party shall have been duly authorized, executed and delivered by Lessor or
FAUSA and shall be in full force and effect, and executed counterparts
shall have been delivered to Lessee;
(ii) Lessee shall have received the following:
a. an incumbency certificate of each of Lessor and FAUSA as
to the persons authorized to execute and deliver the
Operative Documents to which each is a party and each
other document to be executed on behalf of Lessor and
FAUSA in connection with the transactions contemplated
by the Operative Documents, including the signatures of
such persons; and
b. such other documents and evidence with respect to Lessor
and FAUSA and the transactions contemplated by the
Operative Documents as Lessee may
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reasonably request in order to establish the
consummation of the transactions contemplated by the
Operative Documents to be performed by Lessor and FAUSA,
the taking of all corporate proceedings in connection
with such transactions and compliance with the
conditions set forth herein;
(iii) on the Delivery Date, the representations and warranties of
Lessor contained in Article 13.6 shall be true and accurate as though made
on and as of such date;
(iv) Lessee shall have received the favorable opinion, addressed to
it and reasonably satisfactory in form and substance to it, from Xxxxx &
Xxxxxxx, special Air Authority aviation counsel;
(v) the Aircraft shall meet the delivery conditions specified in
Article 3.6; and
(vi) Lessor submitting an export license for Delivery of the
Aircraft for export to the Lessee on or before the Delivery Date if so
required by the Law of The Netherlands.
3. TERM; DELIVERY; ACCEPTANCE; DELAY
3.1 Subject to Article 3.2 and 3.3, Lessor shall deliver and Lessee shall
accept the Aircraft and the delivery thereof on the Expected Delivery
Date.
3.2 Lessor may delay the delivery of, or fail to deliver the Aircraft for
reasons of Force Majeure. Lessor shall not be responsible for any losses,
or any loss of profit, arising from any such failure or delay and Lessee
shall not be entitled on the grounds of such delay to terminate this
Agreement or reject the Aircraft when tendered for delivery by Lessor,
subject always to Article 3.3. In the event of any such delay and subject
to Article 3.3, Lessor shall be entitled to specify from time to time such
date as shall then become the "Expected Delivery Date" for the purpose of
this Agreement.
3.3.1 If for any reason the Aircraft has not been delivered by Lessor by the
date falling three (3) months after the original Expected Delivery Date,
either party may
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terminate this Agreement. Upon any such termination by Lessee, unless the
Aircraft has not been delivered by Lessor due to Lessee's fault, Lessor
shall return the Deposit to Lessee. Otherwise, Lessor shall retain the
Deposit.
3.3.2 If the Aircraft has not been delivered by Lessor by the date falling one
(1) month after the Expected Delivery Date (or any day thereafter) due to
any failure of Lessee to meet the conditions specified in Article 2.2
(other than clauses (iv) and (v) in Article 2.2), Lessor may terminate
this Agreement and retain the Deposit.
3.4 The term of the lease shall commence on the Delivery Date and shall
continue until the Expiry Date unless earlier terminated or extended as
herein provided (such period being herein referred to as the "Term").
3.5 The Aircraft shall be delivered to and accepted by Lessee at the Delivery
Location or such other location as is mutually acceptable to the parties.
It shall be the responsibility of Lessee to obtain at its expense any and
all licenses, permits and approvals under the Law of The Netherlands or
the Air Authority which may be necessary to ferry the Aircraft from the
Netherlands (the "Ferry Permits"). Prior to or on the Delivery Date,
Lessor shall furnish to Lessee such evidence as may be reasonably
requested by Lessee of the obtaining of any export license insofar as it
may be required by the Law of The Netherlands and such data and
information as may be reasonably requested by Lessee in order to obtain
the Ferry Permits.
Notwithstanding the foregoing, Lessor shall, as agent for Lessee, apply
for the Ferry Permits and approvals, provided, however, that Lessor shall
have no responsibility for any failure to or delay in obtaining the Ferry
Permits. Acceptance by Lessee of the Aircraft by execution and delivery of
the Certificate of Acceptance shall be deemed to be evidence that Lessor
has performed all its obligations under this Article 3.5.
3.6 Prior to the Expected Delivery Date, Lessee shall be given an opportunity
to inspect the Aircraft at the Delivery Location. Lessee's right of
inspection shall include the right to participate in the acceptance flight
provided by Fokker for the purpose of
-17-
demonstrating that the Aircraft is in good operating condition in a one to
two hour acceptance flight in accordance with the Manufacturer's Customer
Inspection Program and to verify that it generally accords with the
description set forth in Appendix A. Lessee may assign a maximum of two
(2) representatives to participate in the acceptance flight test as
observers. In the event that Lessee discovers and records any defect
and/or non-conformity with said description during any such inspection
and/or during such acceptance flight test, Lessor shall procure that such
defect and/or non-conformity is corrected as promptly as possible.
3.7 Lessee shall indemnify and hold harmless the Indemnitees from and against
any and all liabilities, damages, losses (including costs and expenses
incident thereto) arising by reason of death of or injury to any such
observer or any employee of Lessee, arising out of, or in any way
connected with the acceptance flight test and inspection of the Aircraft
upon delivery and redelivery of the Aircraft.
3.8 Lessee shall indicate and confirm its acceptance of the Aircraft by the
execution and delivery to Lessor of the Certificate of Acceptance.
4. REGISTRATION AND TITLE
4.1 It shall be the responsibility of Lessee, at its expense, to effect and
maintain registration of the Aircraft in the name of Lessor or Head
Lessor, as the case may be, under the Laws of the State of Registration
during the Term, such registration to reflect the interests of Lessor or
Head Lessor as the case may be, and to obtain and maintain all licenses,
permits and approvals, including, without limitation, a certificate of
airworthiness from the Air Authority, as may be requisite in connection
with operation of the Aircraft under this Agreement.
4.2 Lessee shall at its own expense and responsibility cause this Agreement to
be kept, filed and recorded at all times during the Term, in such office
or offices for the registration of the Aircraft in the State of
Registration and in such other offices (in the United States but not in
any jurisdiction outside of the United States unless directly required due
to Lessee's operation) as may be necessary, to protect Lessor's,
-18-
Head Lessor's and the Bank's rights in any state in which the Aircraft may
operate including the State of Registration of the Aircraft and the State
of Incorporation or as Lessor may reasonably request to protect and
preserve Lessor's, Head Lessor's and the Bank's rights hereunder, and
shall on request furnish to Lessor an opinion of counsel or other evidence
satisfactory to Lessor of such filing and recording.
4.3 Title to and ownership of the Aircraft as between Lessor, Head Lessor and
Lessee shall at all times remain in Lessor or Head Lessor, as the case may
be, and Lessee shall have no right, title or interest in or to the
Aircraft or any part thereof except as expressly provided by this
Agreement. Lessee shall identify and specify the interest of Lessor, Head
Lessor and the Bank and shall affix or keep affixed (i) in a reasonably
prominent position on the flight-deck of the Aircraft and on each Engine a
metal name plate (having dimensions of not less than 10 cm x 7 cm) bearing
the inscription (in fireproof and legible characters) stating:
"NOTICE OF OWNERSHIP
THIS AIRCRAFT/ENGINE IS OWNED BY [__________________] AND
IS SUBJECT TO A FIRST PRIORITY MORTGAGE IN FAVOR OF
[_______________]"
The proper completion of the metal name plate shall be advised by Lessor
at its earliest convenience. Lessee shall not remove or deface evidence of
ownership of the Aircraft and shall not do or permit to be done or omitted
any act or thing which would jeopardize the rights of Lessor, Head Lessor
or the Bank in the Aircraft. Lessee will on all occasions when the
ownership of the Aircraft or any Part is relevant make clear to third
parties that title to the same is held by Lessor, Head Lessor or the Bank
as the case may be.
4.4 Lessee acknowledges that the Aircraft may from time to time be owned by
Head Lessor or the Bank and/or be subject to the Mortgage, which shall be
a first priority mortgage, and to the Security Assignment, in favor of
Head Lessor or the Bank. Lessee undertakes to Lessor (both for itself and
as agent for each of Head Lessor and the Bank) at Lessee's expense (except
for the expense of assignments pursuant to Article 12 after the first
refinancing and first assignment described in Article 8.2(a)(ii)) to, from
time to time, cause this
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Agreement, the Mortgage, the Security Assignment and such other documents
as may be necessary or advisable to give effect to the transactions
contemplated hereby or thereby, to be kept, recorded or filed in such
office or offices in the State of Incorporation and in the State of
Registration as may be necessary or advisable to protect and perfect the
interests of Lessor, Head Lessor and the Bank in the Aircraft, this
Agreement, the Mortgage and the security Assignment, and to do, from time
to time, all other things which the Bank, Head Lessor and/or Lessor may
reasonably require in order to protect and perfect their rights.
5. POSSESSION AND USE
5.1 Lessee shall not transfer possession of the Aircraft, the Engines or any
Part to any person or any legal entity or remove any Engine or Part from
the Airframe other than in accordance with the provisions of this Article
5 or of Article 12.1; provided, however, that so long as no Default shall
have occurred and be continuing, Lessee may, without the prior written
consent of Lessor deliver possession of the Aircraft, the Engines or Parts
to the manufacturer thereof for testing or other similar purposes, or to
an Authorized Maintenance Performer for service, repair, maintenance or
overhaul work on the Aircraft, the Engines or Parts, or for alterations,
modifications, or additions thereto, to the extent required or permitted
by the terms of Article 7.3.
5.1.1 Lessee will ensure that no Engine or Part installed on the Aircraft is at
any time removed from the Aircraft other than:
(a) if replaced as expressly permitted by this Agreement; or
(b) if the removal is of an obsolete item and is in accordance with the
Approved Maintenance Program; or
(c) (i) during the course of maintaining, servicing, repairing,
overhauling or testing that Engine or Part or the Aircraft, as
the case may be; or
(ii) as part of a normal engine or part rotation program; or
-20-
(iii) for the purpose of making such modification to the Engine or
Part, or the Aircraft, as the case may be, as are permitted
under this Agreement,
and then in each case only if it is reinstalled or replaced by an engine
or part complying with Article 5.1.2(a) as soon as practicable and in any
event no later than the Expiry Date.
5.1.2 (a) Lessee will ensure that, except as permitted by this Agreement, no
engine or part is installed on the Aircraft unless:
(i) in the case of an engine, it is an engine of the same model
as, or an improved or advanced version of the Engine it
replaces, which is in similar or better operating condition,
and in the case only of a Casualty Occurrence, has
substantially similar hours available until the next scheduled
checks, inspections, overhauls and shop visits and has the
same or greater value and utility as the replaced Engine;
(ii) in the case of a part, it is in as good operating condition,
is of similar or a more advanced make and model and is of the
same interchangeable modification status as the replaced Part;
(iii) in the case of any part, it has become and remains the
property of Lessor free from Security Interests and on
installation on the Aircraft will without further act be
subject to this Agreement and the Mortgage; and
(iv) in each case, Lessee has full details as to its source and
maintenance records.
(b) Provided no Default has occurred and is continuing, Lessee shall be
entitled to install any engine or part on the Aircraft by way of
replacement notwithstanding Article 5.1.2(a) if:
(i) there is not available to Lessee at the time and in the place
that engine or part is required to be installed on the
Aircraft, a replacement engine or, as the case may be,
-21-
part complying with the requirements of Article 5.1.2(a); and
(ii) it would result in an unreasonable disruption of the operation
of the Aircraft and/or the business of Lessee to ground the
Aircraft until an engine or part, as the case may be,
complying with Article 5.1.2(a) becomes available for
installation on the Aircraft; and
(iii) as soon as reasonably practicable after installation of the
same on the Aircraft, Lessee removes any such engine or part
and replaces it with the Engine or Part replaced by it or by
an engine or part, as the case may be, complying with Article
5.1.2(a).
5.1.3 Lessee will:
(a) ensure that any Engine or Part which is not installed on the
Aircraft (or any other aircraft as permitted by this Agreement) is,
except as expressly permitted by this Agreement, properly and safely
stored, and kept free from Security Interests;
(b) from time to time on request, notify Lessor in writing as to the
location of any engine and on request shall use its reasonable
efforts to procure that any person to whom possession of an Engine
is given acknowledges in writing to Lessor, in terms satisfactory to
Lessor, that it will respect the interest of the Bank as mortgagee
and Lessor (or, as the case may be, Head Lessor) as owner and lessor
of the Engine and will not seek to exercise any rights whatsoever in
relation to it;
(c) (notwithstanding the foregoing provisions of this Article 5.1.3), be
permitted, if no Default has occurred and is continuing, to install
any Engine or Part on an aircraft, or in the case of a Part, on an
engine:
(i) owned and operated by Lessee free from Security Interests; or
(ii) leased or hired to Lessee pursuant to a lease or conditional
sale agreement on a long-term
-22-
basis and on terms whereby Lessee has full operational control
of that aircraft or engine; or
(iii) acquired by Lessee and/or financed or refinanced, and operated
by Lessee, on terms that ownership of that aircraft or engine,
as the case may be, pursuant to a lease or conditional sale
agreement, or a Security Interest therein, is vested in or
held by any other person;
provided that in the case of (ii) and (iii):
(1) the terms of any such lease, conditional sale agreement or Security
Interest will not have the effect of prejudicing the interests of
the Bank as mortgagee or Lessor (or, as the case may be, Head
Lessor) as owner and lessor of that Engine or Part; and
(2) the lessor under such lease, the seller under such conditional sale
agreement or the holder of such Security Interest, as the case may
be, has confirmed and acknowledged in writing to Lessor, in form and
substance satisfactory to Lessor, that it will respect the interest
of Lessor (or, as the case may be, Head Lessor) as owner and lessor
and the Bank as mortgagee of that Engine or Part and that it will
not seek to exercise any rights whatsoever in relation thereto; and,
to the extent such an acknowledgment has been given, Lessor hereby
agrees, for the benefit of the lessor, the seller, or secured party,
as the case may be, of any engine or part (other than an Engine or a
Part) leased to Lessee or owned by Lessee subject to a conditional
sale or other security agreement, that Lessor will not acquire or
claim, as against such lessor, seller or secured party, any right,
title or interest in any engine or engines owned by the lessor under
such lease or subject to a security interest in favor of the seller
or secured party under such conditional sale or other security
agreement as the result of such engine or engines being installed on
the Airframe at any time while such engine or engines are subject to
such lease or conditional sale or other security agreement.
-23-
5.1.4 Lessee will not enter into nor permit any pooling agreement or arrangement
in respect of an Engine or Part without the prior written consent of
Lessor, which shall not be unreasonably withheld.
5.2 Lessee shall use the Aircraft solely in commercial or other operations for
which Lessee is duly authorized by the Laws of the State of Registration
and/or any jurisdiction to whose Laws Lessee's operation of the Aircraft
is subject and shall not use or permit the Aircraft to be used for any
purpose for which the Aircraft is not designed or reasonably suitable.
Lessee shall not use the Aircraft for the carriage of (i) whole animals
living or dead except in the cargo compartments according to the United
States Department of Transportation ("DOT") (or for international flights,
International Civil Aviation Organization ("ICAO")) regulations, and
except domestic pet animals carried in a suitable container to prevent the
escape of any liquid and to ensure the welfare of the animal; (ii) acids,
toxic chemicals, other corrosive materials, explosives, nuclear fuels,
wastes, or any nuclear assemblies or components, except as permitted for
passenger aircraft under the "Restriction of Goods" schedule issued by the
DOT (or for international flights, ICAO) from time to time and provided
that all the requirements for packaging or otherwise contained therein are
fulfilled; or (iii) any other goods, materials or items of cargo which
could reasonably be expected to cause damage to the Aircraft and which
would not be adequately covered by the insurance required by or obtained
pursuant to Article 11.
5.3 Lessee shall not permit the Aircraft to be maintained, used, or operated
in violation of any Law of any Government Entity having jurisdiction, or
contrary to any manufacturer's operating manuals and instructions, or in
violation of any airworthiness certificate, license or registration
relating to the Aircraft issued by any such Government Entity. In the
event that such Laws require alteration of the Aircraft, Lessee shall
conform therewith at its own expense and shall maintain the same in proper
condition for operation under such Laws. Lessee agrees not to operate the
Aircraft or to permit or suffer the Aircraft to be operated (i) contrary
to applicable Law, and/or (ii) within or into any geographic area unless
the Aircraft is covered by insurance as required by the provisions of
Article 11 or insurance or an indemnity in lieu of such insurance
-24-
from the United States government against the risks and in the amounts
required by Article 11 covering such area, and/or (iii) contrary to the
terms of such insurance as required by the provisions of Article 11.
5.4 Throughout the Term and until re-delivery of the Aircraft to Lessor in
accordance with the provisions of this Agreement, the Aircraft and every
part thereof shall be in every respect at the sole risk of Lessee, who
shall bear all risks of loss, theft, damage or destruction to the Aircraft
from any cause whatsoever. Lessor shall not be liable for any liability,
claim, loss, damage or expense of any kind or nature caused directly or
indirectly by the Aircraft or any part thereof by any inadequacy thereof
for any purpose or any deficiency or defect therein, by the use or
performance thereof, by any repairs or servicing thereto or any delay in
providing or failure to provide any thereof, by any interruption or loss
of service or use thereof, or by any loss of business or other
consequential damage or any damage whatsoever and howsoever caused prior
to re-delivery of the Aircraft to Lessor.
5.5 Lessee shall ensure that such crew and engineers as are employed by it in
connection with the operation and maintenance of the Aircraft shall have
such qualifications and hold such licenses as are required by the Air
Authority and by all applicable Laws and regulations.
6. CHARGES, METHOD OF PAYMENT AND FINANCIAL INFORMATION
6.1 Lessee shall punctually pay to Lessor, when due, the Rent, Reserve Rate
and Supplemental Rent expressed to be payable by the Lessee to the Lessor
hereunder including the monies specified and calculated in accordance with
the provisions of Appendix D at the time and in the manner therein
specified, and shall punctually and duly observe and perform Lessee's
obligations under the said Appendix D which forms an integral part of this
Agreement. The time stipulated in this Agreement for all payments payable
by Lessee to Lessor and for the performance of Lessee's other obligations
under this Agreement shall be of the essence of this Agreement.
6.2 Lessee shall not be entitled to any abatement, compensation, reduction or
set-off against any
-25-
installment of Rent, the Reserve Rate or Supplemental Rent, including but
not limited to, abatements, compensations, reductions or set offs, by
reason of any past, present or future claims of Lessee against Lessor or
any other person under this Agreement or otherwise.
6.3 Lessee's obligation to pay Rent and make other payments in accordance with
this Agreement, until Lessee shall have redelivered the Aircraft to Lessor
in accordance with Article 16 and shall have complied with its other
obligations hereunder, shall be absolute and unconditional irrespective of
any contingency whatsoever including (but not limited to) (i) any right of
set-off, counterclaim, recoupment, defence or other right which either
party may have against the other, (ii) any unavailability of the Aircraft
for any reason, including, but not limited to, any defect in the
airworthiness, merchantability, fitness for any purpose, condition,
design, or operation of any kind or nature of the Aircraft, or the
ineligibility of the Aircraft for any particular use or trade, or for
registration or documentation under the laws of any relevant jurisdiction,
or (save as herein provided) any Casualty Occurrence in respect of or any
damage to the Aircraft, (iii) any insolvency, bankruptcy, reorganization,
arrangement, readjustment of debt, dissolution, liquidation or similar
proceedings by or against Lessor or Lessee, (iv) any invalidity or
unenforceability or lack of due authorization of, or other defect in this
Agreement, (v) any failure of Lessee to obtain any required license,
certificate, authorization or other approval of any Governmental Entity
having jurisdiction over the operation by Lessee of the Aircraft or the
operation by Lessee in any airport and (vi) any other cause which, but for
this provision, would or might have the effect of terminating, frustrating
or in any way affecting any obligation of Lessee hereunder, it being the
declared intention of the parties that the provisions of this Article and
the obligations of Lessee to pay the Rent, the Reserve Rate and
Supplemental Rent provided for by this Agreement shall survive any
frustration and that, save as expressly provided in this Agreement, no
monies payable hereunder by Lessee to Lessor shall in any event or
circumstance be repayable to Lessee.
6.4 Lessee agrees to furnish Lessor during the Term:
(i) any financial reports or projections supplied to the Equity
Investors;
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(ii) upon Lessor requesting the same a quarterly unaudited balance sheet
of Lessee prepared by it as of the close of the most recent previous
financial quarter, together with the related profit and loss
statement for such period;
(iii) within ninety (90) days after the close of each financial year of
Lessee, an audited balance sheet and profit and loss statement as of
the close of such financial year;
(iv) from time to time such other information as Lessor may reasonably
request, including, without limitation, information in respect of
the Equity Commitment and any other agreements relating to the
Equity Investors; and
(v) copies of all notices sent by Lessee to its shareholders or
creditors as a group in their respective capacities as such relating
to major business or financial developments of Lessee.
7. MAINTENANCE
7.1 Lessee, during the Term, at its own cost and expense shall:
(a) service, repair, maintain, overhaul, test, or cause the same to be
done to the Aircraft in accordance with the Approved Maintenance
Program so as to keep the Aircraft in as good operating condition as
when delivered to Lessee on the Delivery Date, ordinary wear and
tear excepted, and such operating condition as may be necessary to
enable the airworthiness certificate of the Aircraft to be
maintained in good standing at all times under applicable Law, and
Lessee shall at all times maintain current certificates of
airworthiness and Air Authority required records of maintenance in
respect of the Aircraft and produce copies thereof to Lessor upon
request;
(b) maintain in the English language all Aircraft Documents, records,
logs, and other materials required by applicable Laws and best
airline practice to be maintained in respect of the Aircraft
including engine trend monitoring data;
-27-
(c) perform, or cause to be performed, all airworthiness directives and
mandatory notes and mandatory bulletins affecting the Aircraft
having a compliance date during the Term and issued by (a) the Air
Authority and/or (b) Fokker or any other manufacturer of any part of
the Aircraft (except that, in the event of a conflict, those
required by the Air Authority shall prevail);
(d) maintain the Aircraft in conformity with Air Authority Regulations
and such other rules and regulations of the Air Authority as may
from time to time be applicable to passenger category airline
aircraft;
(e) provide Lessor by telex or fax message with a monthly summation
(which may utilize Air Authority forms) of Flight Hours and Cycles
accumulated on the Airframe, Engines, A.P.U. and Landing Gear and
details of all modifications and material component changes within
five (5) days after the end of each month.
Such maintenance shall be performed by Lessee or by the Authorized
Maintenance Performer identified in Appendix B or such other person as
Lessor may from time to time approve in writing (such approval not to be
unreasonably withheld) which person shall thereupon become an Authorized
Maintenance Performer for the purposes of this Agreement.
7.2 Except as otherwise provided herein, Lessee, at its own cost and expense,
shall promptly replace all Engines or Parts which may from time to time
become worn out, lost, stolen, destroyed, seized, confiscated, damaged
beyond repair, or unserviceable with an engine or part meeting the
requirements of Article 5.1.2(a).
7.3 (a) Save as expressly herein provided the Aircraft shall not be
modified, altered, converted or added to (each such action in
relation to the Aircraft being herein referred to as an "Equipment
Change"), provided that Lessee may, at its own expense and subject
to the prior written approval of Lessor (such approval not to be
unreasonably withheld), make such Equipment Changes to the Aircraft
as Lessee may deem desirable in the proper conduct of its business,
provided that no such Equipment Change diminishes the value,
utility, condition or airworthiness of the
-28-
Aircraft below the value, utility, condition and airworthiness
thereof immediately prior to such Equipment Change, assuming the
Aircraft was then in the condition required to be maintained by the
provisions of this Agreement.
(b) Title to all Parts incorporated or installed in or attached or added
to the Aircraft as the result of such Equipment Change shall,
without further act, vest in Lessor free and clear of all liens,
charges and encumbrances. Lessee shall at its own expense take all
such steps and execute, and procure the execution of, all such
instruments as Lessor may require and which are necessary to ensure
that title to any such replacement Part as aforesaid passes to
Lessor according to the Governing Law and the lex situs, provided,
however, that so long as a Default shall not have occurred and be
continuing, at any time during the Term, Lessee may remove any such
Part if (i) such Part is in addition to, and not in replacement of
or in substitution for, any Part originally incorporated or
installed in or attached to the Aircraft at the time of the delivery
thereof hereunder, (ii) such Part is not required to be incorporated
or installed in or attached or added to the Aircraft pursuant to the
provisions of Article 5.1 and (iii) such Part can be removed from
the Aircraft without diminishing or impairing the value, utility or
airworthiness which the Aircraft would have had at such time, had
such Equipment Change not occurred.
(c) Upon the removal by Lessee of any such Part as above provided, title
thereto shall, without further act, vest in Lessee and such Part
shall no longer be deemed a part of the Aircraft. Any Part not
removed by Lessee as above provided prior to the return of the
Aircraft to Lessor hereunder shall remain the property of Lessor
(save as the parties may otherwise agree in writing) provided that
Lessor may require Lessee, prior to the end of the Term, to remove
any Parts incorporated or installed in the Aircraft as a result of
an Equipment Change and to restore the Aircraft to its condition
prior to an Equipment Change.
7.4.1 Upon submission by Lessee to Lessor of invoices or receipts reasonably
satisfactory to Lessor evidencing
-29-
the performance in accordance with the provisions of this Agreement by or
at the direction of Lessee of:
(a) with respect to the Airframe, the accomplishment of those items of
maintenance characterized as scheduled airframe heavy maintenance as
defined in the Approved Maintenance Program for 12,000 hours and
24,000 hours inspections or any equivalent thereof with more or less
hours ("Airframe Maintenance"), or
(b) with respect to any Engine, the performance of all scheduled shop
visit engine maintenance and repair, other than (i) repairs arising
as a result of foreign object damage or operational mishandling
and/or (ii) maintenance and repair of QEC (Quick Engine Change) kits
("Engine Maintenance"), or
(c) with respect to any nose or main landing gear ("Landing Gear"), the
performance of all scheduled shop visit nose and main landing gear
maintenance and repair, other than repairs arising as a result of
foreign object damage or operational mishandling ("Landing Gear
Maintenance"), or
(d) the Auxiliary Power Unit ("A.P.U."} the performance of all off
Aircraft shop A.P.U. maintenance and repair, other than repairs
arising as a result of foreign object damage or operational
mishandling ("A.P.U. Maintenance"),
Lessor shall, subject to Article 3.5 of Appendix D and provided that a
Default shall not have occurred and be continuing, release to Lessee, from
the relevant Maintenance Fund as defined in paragraph 3.2 of Appendix D, a
sum equal to the aggregate amount evidenced by such invoices or receipts
for such relevant maintenance, to the extent there are sufficient sums in
the relevant Maintenance Fund at the date of the start of the relevant
maintenance. Lessee agrees to use its reasonable efforts to ensure that
the relevant invoices or receipts are received by Lessor as promptly as
possible after completion of the relevant maintenance. All sums remaining
in any Maintenance Fund at the expiration or other termination of this
Agreement shall be retained by Lessor, except (i) upon payment in full of
Agreed Value and any other amounts due to Lessor or otherwise hereunder
after a Casualty Occurrence pursuant to Article 17.2(b), in which case all
sums
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remaining in any Maintenance Fund shall be paid to Lessee and (ii) under
the circumstances and to the extent described in Article 3.6 of Appendix
D.
7.4.2 Lessor shall be entitled to delay the release or payment of funds from any
Maintenance Fund (to the extent related to any disputed amounts) to Lessee
provided for by this Article 7 until such time as it shall in its opinion
be in a position to determine (which Lessor agrees to use reasonable
efforts to do as promptly as possible) the amount to be released or paid,
but in any event release all undisputed amounts from the relevant
Maintenance Fund (but where insufficient funds are in such maintenance
Fund the lesser pro rata portion of such funds which corresponds to the
undisputed amount) upon request unless a Default shall have occurred and
be continuing.
7.5.1 During the Term, Lessee shall furnish to Lessor such information
concerning the location, condition, use and operation of the Aircraft as
Lessor may reasonably request. The right of Lessor, or its designated
representatives, to inspect the Aircraft during any Major Checks performed
by or on behalf of Lessee during the Term, shall be absolute and Lessee
shall inform Lessor by providing sixty (60) days' written notice as to
time and location of all Major Checks. During such Major Checks, Lessee
agrees to provide sufficient manpower to allow Lessor, or its authorized
representatives, to inspect any area of the Aircraft which Lessor requests
to inspect and which would normally be required during such a Major Check,
provided that such inspection is to be made only at the time that Lessee
opens up such area in accordance with the Approved Maintenance Program.
Lessee also shall permit any persons designated by Lessor to visit and
inspect the Aircraft, its condition, use and operation, and the records
maintained in connection therewith.
7.5.2 Lessor shall have the right at any time on reasonable notice to inspect or
survey the Aircraft or any part thereof, or instruct a duly authorized
surveyor to carry out a survey on its behalf, to ascertain the condition
of the Aircraft or any part thereof and satisfy itself that the Aircraft
is being properly repaired and maintained in accordance with the terms of
this Agreement. The cost of any such inspection or
-31-
survey shall be borne by Lessor unless an Event of Default has occurred
and is continuing.
7.5.3 Lessor shall have no duty to make any such inspection as is referred to in
Article 7.5.1 and 7.5.2 and shall not incur any liability or obligation by
reason of not making any such inspection. No exercise of such inspection
right shall unreasonably interfere with the normal operation or
maintenance of the Aircraft.
8. TAXES, DUTIES AND EXPENSES
8.1 Lessee agrees promptly to pay and indemnify and hold Lessor and Head
Lessor harmless against all Taxes (other than Lessor Taxes) levied or
imposed against or upon or otherwise payable by any Tax Indemnitee or
Lessee and relating to or attributable to Lessee, this Agreement, the
Aircraft and/or the importation, exportation, registration, ownership,
leasing, sub-leasing, delivery, possession, use, operation,
reregistration, repair, maintenance, overhaul, replacement, improvement,
modification, alteration, transportation, landing, storage, presence or
re-delivery of or addition to, the Aircraft or any Engine or any Part
thereof or any rent, receipts, insurance proceeds or income arising
therefrom, or any sum payable by Lessee to a Tax Indemnitee under this
Agreement or any other transactions or activities contemplated by this
Agreement. If Lessee is required by any applicable Law or regulation to
deliver or furnish any report or return in connection with any such Taxes,
Lessee shall complete the same in a manner satisfactory to the relevant
Tax Indemnitee and in particular shall state therein that Lessor or Head
Lessor, as the case may be, is the owner of the Aircraft and that the
Lessee is exclusively responsible for the use and operation of the
Aircraft and for any such Taxes and Lessee shall supply a copy of such
report or return to the relevant Tax Indemnitee.
All payments by Lessee hereunder to Lessor shall be free of withholdings
of any nature whatsoever (and at the time Lessee is required to make any
payment upon which any withholding is required, Lessee shall pay an
additional amount such that the net amount actually received by the Lessor
will, after such withholding, equal the full amount of the payment then
due) and shall be free of expense for collection or other charges. If
Lessee shall have paid any additional
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amount pursuant to the first sentence of this paragraph with respect to
Taxes not subject to indemnification pursuant to the provisions of this
Section 8.1, the Lessor for whose benefit such Taxes were paid shall
reimburse Lessee within 10 Business Days of written demand therefor for
the amount of such Taxes so paid by Lessee. For the purpose of Article
1.29 and Article 8, the terms, "Lessor" and "Head Lessor" shall include
each group of corporations (and each member thereof) that includes Lessor
or Head Lessor and for which consolidated, combined, unitary or other
group tax returns are filed.
8.2 Except as otherwise specifically provided herein, Lessee shall pay to
Lessor on or after Delivery Date (unless otherwise agreed to be financed
by Lessor) upon demand:
(a) all reasonable expenses paid to third parties (including legal,
printing and out-of-pocket expenses) incurred or payable by Lessor
(i) in connection with the negotiation, preparation and execution of
this Agreement and all related documents, including reasonable
out-of-pocket expenses in connection with this Agreement and (ii) in
connection with the events referred to in Article 2.7 of Appendix D
and (iii) related to any amendment to or extension of, or the
granting of any waiver or consent under, this Agreement;
(b) all reasonable expenses paid to third parties (including legal fees
and disbursements but excluding surveyor costs) payable or incurred
by Lessor in connection with, the enforcement of or preservation of
any rights of Lessor under this Agreement or otherwise in respect of
moneys owing under this Agreement by Lessee or in respect of any
breach of Lessee of any representation, warranty, covenant or
undertaking herein contained; and
(c) the ongoing annual fees and reasonable out-of-pocket expenses
related to this Agreement of the Owner Trustee and the Voting
Trustee.
8.3 Lessee shall pay all stamp, documentary, registration or other like duties
or taxes (including any such duties or taxes payable by a Tax Indemnitee
but excluding all Lessor Taxes) imposed on or in connection with this
Agreement and shall indemnify that Tax
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Indemnitee against any liability arising by reason of any delay or
omission by Lessee to pay such duties or taxes.
8.4 If and to the extent that any sum (the "indemnity sum") constituting
(directly or indirectly) an indemnity to one or more Tax Indemnitees paid
by Lessee to any person other than that Tax Indemnitee shall be treated as
taxable in the hands of the relevant Tax Indemnitee, Lessee shall pay to
the relevant Tax Indemnitee a sum as (after taking into account any
taxation suffered by the relevant Tax Indemnitee on the indemnity sum)
shall reimburse the relevant Tax Indemnitee for the net amount of any
Taxes suffered by them in respect of the indemnity sum (after taking into
account any current tax savings or other benefits to the relevant Tax
Indemnitee resulting from the payment or accrual of the indemnified
expense).
8.5 If and to the extent that any sums payable to a Tax Indemnitee by Lessee
under this Agreement by way of indemnity are insufficient, by reason of
any Taxes payable in respect of those sums, for that Tax Indemnitee to
discharge the corresponding liability to the relevant third party
(including any taxation authority), or to reimburse that Tax Indemnitee
for the cost incurred by it to a third party (including any taxation
authority), Lessee will pay to that Tax Indemnitee such sum as will after
the tax liability has been fully satisfied leave that Tax Indemnitee with
the same net amount (after taking into account any current tax savings or
other benefits to the that Tax Indemnitee resulting from the payment or
accrual of the indemnified expense) as it would have been entitled to
receive in the absence of that liability. For the purpose of computing the
amount of an indemnity payment pursuant to this Article 8.5 and the amount
of any payment to Lessee under Article 8, it shall be assumed that the
relevant Tax Indemnitee is subject to tax on the amount of each indemnity
it receives or accrues under this Agreement and can use any tax savings to
offset Taxes at the highest marginal statutory rates of tax applicable to
that Tax Indemnitee (as certified to Lessee by an officer of that Tax
Indemnitee) at the time such indemnity or tax savings is received or
accrued.
8.6 If, as a result of any indemnity paid by Lessee or any event giving rise
to an indemnity obligation of Lessee, a Tax Indemnitee at any time
realizes any tax savings,
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refunds or other reductions in taxes not previously taken into account in
computing the amount of the indemnity, that Tax Indemnitee shall promptly
pay to the Lessee the amount of such tax savings, refunds or other
reductions in taxes; provided, however, that no Tax Indemnitee will be
required to make any payment to Lessee pursuant to this Article 8.6 so
long as a Default shall be continuing or if Lessee shall not have
theretofore made all payments due to all Tax Indemnitees under this
Agreement, or to the extent that the amount of such payment would exceed
the amount of all prior payments by Lessee to the relevant Tax Indemnitee
pursuant to this Article 8 less the amount of all prior payments by the
relevant Tax Indemnitee to Lessee pursuant to this Article 8.6. The
relevant Tax Indemnitee shall estimate the amount of such tax savings,
refunds and other reductions in Taxes and shall use reasonable efforts to
take such actions in filing its tax returns and in dealing with taxing
authorities to seek and claim each such tax savings, refund and other
reduction in Taxes, but shall not be obligated to take any such action
that it determines in its sole discretion to involve the imposition or
risk of any material unindemnified cost or expense, and in no event will
any person have any right to inspect the books, records, tax returns or
other documents of any Tax Indemnitee, and the positions to be taken by
any Tax Indemnitee on or with respect to its tax returns and in any tax
proceedings shall be within their sole control.
8.7 Lessee's, and each Tax Indemnitee's obligations under this Article 8 shall
continue in full force and effect, notwithstanding the expiration or
earlier termination of the Term hereunder.
8.8 If Lessee disputes the payment of any Taxes payable by a Tax Indemnitee
for which Lessee is responsible under this Agreement, that Tax Indemnitee
will take such action as Lessee may reasonably request at Lessee's expense
to contest that payment but that Tax Indemnitee will not be obliged to
take any such action:
(a) which that Tax Indemnitee considers in good faith may result in the
imposition or risks of any material liability cost, or expense for
which that Tax Indemnitee is not indemnified to its satisfaction; or
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(b) which that Tax Indemnitee considers not to have a reasonable
prospect of success; or
(c) for which Lessee has not made adequate provision to the satisfaction
of that Tax Indemnitee in respect of the expense concerned.
8.9 Lessor covenants and agrees to deliver to Lessee, (a) within 30 days of
the signing of this Agreement (but in all events prior to the date of the
first payment of Rent to Lessor under this Agreement) and within 30 days
prior to January 1, 1996 and each January 1 falling every three years
thereafter (or at such other date as prescribed by United States Treasury
Regulations) as long as this Agreement has not been terminated, two
accurate and complete original copies of Internal Revenue Service Form
1001 (or any successor form), dated the date hereof or January 1, 1996 (or
such subsequent January 1 or other date) signed by Beneficiary, as
appropriate, and such other related forms (including any certificate with
respect thereto) as Lessee may reasonably request, or (b) within 30 days
of the signing of this Agreement (but in all events prior to the date of
the first payment of Rent to Lessor under this Agreement) and within 30
days prior to the beginning of each taxable year of Lessor beginning
subsequent to the date of this Agreement (or at such other date as
prescribed by United States Treasury Regulations), two accurate and
complete original copies of Internal Revenue Service Form 4224 (or any
successor form), signed by Beneficiary, dated as appropriate, and such
other related forms (including any certificate with respect thereto) as
Lessee may reasonably request. In addition, Lessor shall deliver to Lessee
two accurate and complete original copies of Form 1001 or Form 4224 signed
by Beneficiary, at any time that a change in circumstances renders the
previous form inaccurate in any material respect. Nothing in this Article
8.9 shall be construed as imposing on the Lessee any obligation
whatsoever, including, without limitation, to indemnify Lessor or any
other party for U.S. withholding taxes.
9. LIENS
9.1 Lessee, during the Term, shall not create or suffer to exist any lien,
attachment, mortgage or other encumbrance upon or against the Aircraft, or
any of its rights under this Agreement, other than the Mortgage,
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the Security Assignment and Permitted Liens. If at any time a lien,
attachment, mortgage, or other encumbrance except as permitted above shall
be created or suffered to exist by Lessee, or be levied upon the Aircraft
or any of its rights under this Agreement, Lessee shall forthwith notify
Lessor and cause the same forthwith to be discharged by bond or otherwise.
In the event Lessee shall fail to discharge any such lien, attachment,
mortgage or other encumbrance, Lessor, Head Lessor or the Bank shall be
entitled (but not bound) to discharge the same, in which event Lessee
shall pay to Lessor, on demand, the amount paid by Lessor and/or Head
Lessor and/or the Bank, together with Lessor's and/or Head Lessor's and/or
the Bank's losses, costs and expenses, including reasonable legal fees and
expenses.
10. INDEMNIFICATION
10.1 LESSEE SHALL RELEASE AND DEFEND, HOLD HARMLESS AND INDEMNIFY ANY AND/OR
ALL OF THE INDEMNITEES, FROM AND AGAINST ANY AND ALL CLAIMS, PROCEEDINGS,
SUITS, JUDGEMENTS, COSTS, EXPENSES, PENALTIES, FINES AND LIABILITIES,
DIRECT AND CONSEQUENTIAL DAMAGES AND LOSSES, INCLUDING WITHOUT LIMITATION
COSTS AND EXPENSES INCIDENTAL THERETO, OF WHATSOEVER KIND AND NATURE, AND
INCLUDING REASONABLE LEGAL FEES AND EXPENSES BUT EXCLUDING ANY TAXES,
INDEMNITY FOR WHICH IS ENCOMPASSED SOLELY IN ARTICLE 4.1 AND ARTICLE 8
(EACH A "CLAIM"), WHICH MAY BE SUFFERED BY, ASSERTED AGAINST, CHARGED TO
OR RECOVERABLE FROM, DIRECTLY OR INDIRECTLY, ANY AND/OR ALL OF THE
INDEMNITEES:
(A) RELATING TO, ARISING OUT OF OR IN ANY WAY CONNECTED WITH THE
POSSESSION, DELIVERY, PERFORMANCE, MANAGEMENT, OWNERSHIP,
REGISTRATION, CONTROL, MAINTENANCE, CONDITION, SERVICE, REPAIR,
OVERHAUL, LEASING, USE, OPERATION OR RETURN OF THE AIRCRAFT, ANY
ENGINE OR ANY PART, OR THE PERFORMANCE OR NON- PERFORMANCE OF ANY
AND/OR ALL OF THE INDEMNITEES OF SERVICES OR DELIVERY OF ANY THINGS
IN CONNECTION WITH THE AIRCRAFT DURING THE TERM, OR OTHERWISE IN
CONNECTION WITH THIS AGREEMENT, WHETHER OR NOT ARISING IN TORT OR
OCCASIONED IN WHOLE OR IN PART BY THE FAULT OR NEGLIGENCE OF ANY
AND/OR ALL OF THE INDEMNITEES; OR
(B) AS A CONSEQUENCE OF ANY DESIGN, ARTICLE OR MATERIAL IN THE AIRCRAFT,
ANY ENGINE OR ANY PART OR ITS OPERATION OR USE CONSTITUTING AN
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INFRINGEMENT OF PATENT (TO THE EXTENT AND SCOPE AND SUBJECT TO THE
LIMITATIONS SET FORTH IN PART C OF EXHIBIT G OF THE SUPPORT SERVICES
AGREEMENT), COPYRIGHT, TRADEMARK, DESIGN OR OTHER PROPRIETARY RIGHT
OR A BREACH BY LESSEE OF ANY OBLIGATION OF CONFIDENTIALITY OWED TO
ANY PERSON;
EXCLUDING, HOWEVER, FROM THE FOREGOING ANY SUCH CLAIM TO THE EXTENT
THAT SUCH CLAIM RESULTS FROM THE GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT OF SUCH INDEMNITEE OR FROM ANY MISREPRESENTATION BY SUCH
INDEMNITEE CONTAINED IN THIS AGREEMENT OR ANY BREACH BY SUCH
INDEMNITEE OF ANY COVENANT SET FORTH IN THIS AGREEMENT.
10.2 The indemnities contained in this Article 10 shall continue in full force
and effect notwithstanding the expiration or other termination of this
Agreement or of the letting of the Aircraft hereunder.
10.3 The indemnities contained in this Article 10 are given to the Lessor for
itself and as agent and trustee on behalf of the other Indemnitees
10.4 Notwithstanding anything to the contrary contained herein, Lessee does not
release and does not agree to defend, hold harmless or indemnify under
this Agreement (and without limiting any obligations or indemnities
contained in any other agreement with Lessee) Fokker or any other
Indemnitee in its capacity as manufacturer or seller of the Aircraft from
or against (i) claims of third parties made directly against Fokker or
such Indemnitee, based on its product liability or its status as
manufacturer or Seller, or (ii) claims made against Fokker or such
Indemnitee based on the warranties or indemnities contained in the Product
Assurance Document which is Exhibit G of the Support Services Agreement,
or (iii) the matters described in Article 10.1(B).
10.5 If any Indemnitee has knowledge of the occurrence of any Claim, liability
or other matter for which it is or may be entitled to be indemnified
hereunder, it shall give prompt written notice thereof to the Lessee. Each
Indemnitee shall cooperate in good faith with Lessee and supply such
information as may reasonably be requested by Lessee to enable Lessee to
investigate, defend or contest any Claim, liability or other matter for
which Lessee may be required to indemnify an Indemnitee hereunder. In the
event that Lessee pays
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any amount to an Indemnitee pursuant to this Article 10, Lessee shall be
subrogated to all rights of the Indemnitee in respect of the Claim,
liability or other matter indemnified against giving rise to such payment.
Lessee or its insurers shall have the right, unless an Event of Default
shall have occurred and be continuing and such matter is not covered by
insurance to investigate or (provided that Lessee or its insurers shall
agree not to dispute liability hereunder or under any insurance policies
pursuant to which coverage is sought and provided that Lessee shall have
consulted with Lessor prior thereto), defend or compromise any Claim, and
Lessor shall cooperate with Lessee with respect thereto.
11. INSURANCE
11.1 On or before the Expected Delivery Date of the Aircraft and throughout the
Term, Lessee shall carry and maintain in full force and effect, at its own
cost and expense, in such forms, on such conditions and with such insurers
and, if requested, reinsurers and through such insurance and, if
requested, reinsurance brokers as are satisfactory to Lessor, the
following insurances with respect to the Aircraft, Engines and Parts
(herein referred to as "the Insurances"):
(a) All Risks Aircraft Hull insurance of the type usually insured
against by commercial airlines engaged in the same or similar
business and owning or operating similar aircraft (including Engines
and Parts while not installed on the Aircraft and including Extended
Coverage Endorsement (Aircraft Hull) AVN5l or equivalent on the
Agreed Value. The insurance may be subject to a deductible in
respect of losses other than total loss, arranged total loss or
constructive total loss of not more than $100,000.00 (Dollars One
Hundred Thousand) for each accident.
(b) If operated outside the United States and Canada, Aircraft Hull War
and Allied Perils insurance covering the risks excluded from the All
Risks Aircraft Hull insurance specified in paragraph (a) above by
the terms of the War, Hi- Jacking and Other Perils Exclusion Clause
AVN.48B except paragraph (b) thereof and shall include cover in
respect of confiscation, nationalization, seizure, restraint,
detention, appropriation for title or
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use by or under the order of any Government Entity of the State of
Registration.
(c) Comprehensive Airline Liability insurance (including without
limitation aircraft Third Party Liability, Passenger and Crew
Liability (including Baggage and Personal Effects)), Cargo
Liability, Mail Liability, Personal Injury Liability, Contractual
Liability, Hangar Keeper's Liability, Aircraft Products Liability
and General Third Party Liability of the types usually insured
against by commercial airlines engaged in the same or similar
business and owning or operating similar aircraft in an amount of
not less than $500,000,000.00 (Dollars Five Hundred Million)
Combined Single Limit any one occurrence each Aircraft but limited
in respect of Personal Injury to the equivalent of $25,000,000.00
(Dollars Twenty Five Million) any one offence and in the aggregate.
Such insurance shall include cover in respect of the risks excluded
by War, Hi- Jacking and Other Perils Exclusion Clause AVN.48B except
paragraph (b) thereof.
This insurance may be subject to deductibles in respect of
passengers baggage and personal effects of not more than $1,250.00
(Dollars One Thousand Two Hundred Fifty) any one claim and in
respect of cargo and mail of not more than $5,000.00 (Dollars Five
Thousand) any one claim. Such deductibles shall not apply to claims
arising from accidents to the carrying aircraft.
(d) All Risks insurance on Engines and Parts while any such items are
not installed on the Aircraft and in respect of which cover is not
provided under the All Risks Aircraft Hull insurance and/or Aircraft
Hull War and Allied Perils insurance (respectively specified in
paragraphs (a) and (b) above) of the type usually insured against by
commercial airlines engaged in the same or similar business and
owning or operating similar aircraft for not less than full
replacement value. If Engines and Parts are located outside the
United States and Canada, such insurance shall include War and
Allied Perils to the extent that such insurance is customarily
available in the
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international insurance market for this type of insurance.
This insurance may be subject to a deductible of not more than
$10,000.00 (Dollars Ten Thousand).
Lessor's current requirements as at the date of this Agreement as to the
Insurances are as specified in this Article and in Appendices H and I.
Lessor reserves the right to amend the insurance requirements of this
Article 11 to reflect changes in insurance practice.
If required by the first paragraph of Article 11.1, the Lessee shall
procure that the insurers effect reinsurances in the same form and
conditions through such reinsurance brokers and with such reinsurers and
for such proportions as are satisfactory to Lessor.
11.2 All Insurances to be carried in accordance with Article 11.1 above shall:
(a) in respect of All Risks Aircraft Hull insurance, Aircraft Hull War
and Allied Perils insurance and All Risks insurance on Engines and
Parts:
(i) name the Lessor, Head Lessor and the Bank and their respective
successors and assigns as additional assureds;
(ii) provide that all claims in respect of the Aircraft, Engines
and Parts shall be payable to Lessor or as it may direct, such
payee to be named Loss Payee; provided, that partial loss
amounts up to the Partial Loss Amount set forth in Appendix B
shall be payable to Lessee unless the insurers have been given
notice that a Default has occurred; and
(iii) if applicable, provide in respect of Hull All Risks and Hull
War and Allied Perils for a 50/50 Claims Settlement Clause in
the form of AVS.103;
(b) in respect of Comprehensive Airline Liability insurance:
(i) name the Lessor, its successors and assigns and its
shareholders, subsidiaries,
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directors, officers, agents, employees and the Indemnitees as
additional assureds; and
(ii) provide that the insurance shall operate in all respects as if
a separate policy had been issued covering each party insured
thereunder, but this provision shall not operate to include
any claim howsoever arising in respect of loss or damage to
the Aircraft, Engines and Parts insured under the All Risks
Hull, Hull War and Allied Perils or All Risks insurance of the
assured. Notwithstanding the foregoing the total liability of
insurers in respect of any and all assureds shall not exceed
the limits of liability stated in the policy;
(c) in respect of all Insurances:
(i) be effective worldwide except for territories approved in
writing by the Lessor;
(ii) provide that insurers waive all rights of subrogation against
the Lessor, its subcontractors, FAUSA, Fokker, the Head
Lessor, the Bank, and their respective officers, directors,
employees, servants, agents, successors and assigns;
(iii) provide that in the event that the Insurances are cancelled
(including cancellation for non-payment of premium) or are
materially changed such cancellation or change shall not be
effective as to the interest of the Lessor until thirty (30)
days (but seven (7) days or such lesser period as is
customarily available in accordance with policy conditions in
respect of war and allied perils) after confirmed receipt by
Lessor of written notice by insurers of such cancellation or
change;
(iv) provide that in respect of the interests of the Additional
Assureds, the Insurances shall not be invalidated by any act,
neglect, omission, misrepresentation or non-disclosure on the
part of the Lessee or any other party other than the
Additional Assured seeking to make a claim thereunder, and
shall insure each Additional Assured regardless of any
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breach or violation of any warranties, declarations or
conditions contained in such policies by the Lessee or any
other party other than the Additional Assured seeking to make
& claim thereunder;
(v) provide that the Additional Assureds shall have no
responsibility for premium and insurers shall waive any right
of set-off or counterclaim against the Additional Assureds
except in respect of outstanding premium in respect of the
Aircraft, Engines and Parts subject of a claim;
(vi) not provide for any deductible or self insurance other than
the deductibles allowed under the terms of Article 11.1 above;
(vii) be primary without right of contribution from any other
insurance carried by Lessor, Lessee or any other person; and
(viii) be denominated in Dollars.
11.3 If required by the first paragraph of Article 11.1, the re-insurance
policies shall:
(a) provide that cover shall be identical to the cover provided by the
original insurances and be subject to the same terms and conditions
as the original insurances;
(b) provide that so far as the respective interests of the Additional
Assureds are concerned the reinsurance shall not be invalidated by
any act, neglect, omission, misrepresentation or nondisclosure on
the part of the reinsured party;
(c) confirm the insurers' agreement to the provision of paragraph (d)
below;
(d) include a "cut-through" clause in the following terms or in such
other terms as may be satisfactory to Lessor:
"In respect of All Risks Aircraft Hull insurance, Aircraft Hull War
Risk and Allied Perils insurance as described in Article 11.1(a) and
(b) above and All Risks insurance on any Engine and Parts as
described in Article 11.1(d) above, the reinsurers
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and the reassured hereby agree that in the event of any claim
arising under the relevant reinsurances the reinsurers shall in lieu
of payment to the reassured, its successors in interest and assigns
pay to the Loss Payee specified in the primary insurances all sums
payable under or in connection with such reinsurances by virtue of
any reinsured loss of, or damage to, the Aircraft, Engines and
Parts, without any deduction or deductions whatsoever, other than
any outstanding premium in respect of the Aircraft, Engines or Parts
the subject of the claim, it being understood and agreed that any
such payment by the reinsurers shall fully discharge and release the
reinsurers from any and all further liability in connection
therewith.
In respect of Comprehensive Airline Liability insurance as described
in Article 11.1(c} above, the reinsurers and reassured hereby agree
that in the event of any claim arising under the relevant
reinsurances, the reinsurers shall in lieu of payment to the
reassured, its successors in interest and assigns pay to the person
or party who has sustained the relevant loss (or as reimbursement of
any payment made by any Additional Assureds) all sums payable under
such reinsurances by virtue of such reinsured loss, without any
deduction or deductions whatsoever, it being understood and agreed
that any such payment by the reinsurers shall fully discharge and
release the reinsurers from any and all further liability in
connection therewith"; and
(e) provide that the reinsurers and reassured agree that in the event
that the reassured, its successors in interest and assigns shall at
any time be or become insolvent or suspend business or file a
petition in bankruptcy or be adjudicated insolvent or bankrupt or
admit in writing its inability to pay its debts as they become due,
or make a general assignment for the benefit of creditors or that a
receiver or liquidator or assignee or trustee or state commissioner
of insurance be appointed in respect of the reassured its successors
in interest or assigns or any substantial part of its property for
the purpose of liquidation on account of insolvency, then the
reinsurers, in lieu of payment to the reassured, its successors in
interest or assigns, shall pay
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upon demand that portion of any loss due to the party entitled
thereto under the terms of the original insurance for which such
reinsurers would under the terms of the reinsurance be liable to pay
the reassured, its successors in interest or assigns, less any
amounts already paid, it being understood and agreed that any such
direct payment by reinsurers shall fully discharge and release the
reinsurers from any and all further liability for such payment made.
11.4 At least fifteen (15) Business Days prior to the Expected Delivery Date
or, in the event any Parts or Engines are delivered to Lessee prior to
such date, at least fifteen (15) Business Days prior to the date of
delivery of such Parts or Engines, and thereafter during the Term, at
least one month prior to the renewal date of any Insurance required or
maintained by Lessee under Article 11.1 but in no event less than once in
each 12 month period, Lessee shall furnish or cause to be furnished to
Lessor by the insurer or insurance broker and the reinsurance broker
1) a certificate of insurance describing in detail the insurance then
carried and maintained, and certifying that such insurance complies
with the terms of this Agreement, including:
(i) confirmation that the insurance/reinsurance has been placed
with the insurers/reinsurers required (giving the name of such
insurers/reinsurers), the insured/reinsured amount and the
period of the policy and
(ii) confirmation that all premiums due to insurers/reinsurers have
been paid,
and
2) a letter of undertaking from Lessee's brokers and, if required, from
the reinsurance brokers.
Such certificate(s) of insurance and letter(s) of undertaking shall
be substantially in the form as set out in Appendix H and Appendix
I, respectively.
In the event that Lessee shall fail to effect, maintain or cause to be
effected or maintained, insurance as required by this Article 11, Lessor,
Head Lessor or the
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Bank may at its option, but without any obligation to do so, and without
prejudice to Lessor's, Head Lessor's and the Bank's other rights or
remedies hereunder, maintain such insurance or provide such or a similar
insurance, and, in such event, Lessee shall, upon demand, promptly
reimburse to Lessor, Head Lessor or the Bank the cost thereof, including
interest thereon at the rate referred to in paragraph 6 of Appendix D.
11.5 In the event of any damage to the Aircraft, Engines or Parts during the
Term not constituting a Casualty Occurrence, Lessee shall, if so consented
to by Lessor (such consent not to be unreasonably withheld), repair, or
cause the same to be repaired by an Authorized Maintenance Performer at
its sole cost and expense. Except as otherwise provided in Section
11.2(a)(ii), Lessor and Lessee agree that all insurance proceeds payable
in connection with any such damage shall be payable directly to Lessor. In
such event any insurance proceeds received by Lessor shall be applied to
reimburse Lessee for such cost and expense. Any excess remaining shall,
unless a Default shall have occurred and be continuing, be paid over to
Lessee.
11.6 Not later than ten (10) days, prior to the Expected Delivery Date, Lessee
shall deliver to Lessor an irrevocable power of attorney, in form and
substance acceptable to Lessor, authorizing Lessor to initiate, process
and settle any insurance claim with respect to the Aircraft, Engines and
Parts together with an acknowledgment thereof from the insurers.
11.7 When used in this Article 11, the expression Additional Assured(s)
denotes:
(a) in relation to those insurances referred to in Article 11.2(a),
those persons referred to in sub-paragraph (i) of Article 11.2(a);
and
(b) in relation to those insurances referred to in Article 11.2(b),
those persons referred to in sub-paragraph (i) of Article 11.2(b).
12. ASSIGNMENT AND SUBLETTING
12.1 Lessee shall not assign any of its rights or obligations or delegate any
of its duties under this Agreement and, except as permitted by Article 5.1
above, Lessee shall not sublet or otherwise part with
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possession of the Aircraft or any Part thereof unless previously approved
by Lessor in writing (such consent not to be unreasonably withheld).
12.2 This Agreement, the Aircraft and Lessor's interest in each thereof is
freely assignable and alienable by Lessor upon written notice to Lessee in
accordance with Article 12.3, provided, however, that so long as the
Aircraft shall be leased to Lessee under this Lease, Lessor will not sell,
assign, convey or otherwise transfer absolutely (and not for security) any
of its right, title, or interest in and to this Agreement or the Aircraft
to any person unless Lessor and the proposed transferee (the "Transferee")
have complied with the following conditions:
(i) Lessor shall give Lessee written notice of such transfer
at least 3 Business Days before the date of such transfer,
specifying the name and address of the proposed Transferee;
(ii) the Transferee shall not be an airline or a commercial
air carrier or person controlling, controlled by or under common
control with an airline or a commercial air carrier which is in
direct competition with Lessee in the United States;
(iii) the Transferee shall qualify as a "citizen of the United
States" within the meaning of Section 101(16) of the Federal
Aviation Act by a Voting Trust Agreement or otherwise; and
(iv) on the transfer date the Lessor and the Transferee shall
enter into an agreement or agreements in which the Transferee
confirms that it shall be deemed a party to this Lease and agrees to
be bound by all the terms of, and to undertake all of the
obligations of, the Lessor contained in this Agreement and Lessee
shall receive an opinion of counsel to the Transferee stating, with
the customary assumptions and exceptions, that such agreement or
agreements has been duly authorized, executed and delivered and
constitute the legal, valid and binding obligations of the
Transferee enforceable in accordance with their terms and that the
entry into such agreement(s) does not violate any laws or agreements
applicable to such Transferee.
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The agreements, covenants, obligations and liabilities contained
herein, including but not limited to all obligations to pay Rent and
indemnify Lessor, are made for the benefit of Lessor, Beneficiary,
any assignee including the Head Lessor and/or the Bank as security
assignee, and their respective successors and assigns,
notwithstanding the possibility that any such person was not
originally a party to this Agreement or may, at the time any
enforcement is sought, no longer be a party to this Agreement.
Lessee shall comply with all reasonable requests of Lessor, its
successors and assigns respecting the assignment and Lessee's
acknowledgement of the assignee as Lessor. Notwithstanding anything
contained in this paragraph to the contrary, no assignment of
Lessor's interest in this Agreement or the Aircraft or Beneficiary's
interest in the Trust Estate shall alter the terms of this Agreement
in so far as the costs to Lessee of the performance of its
obligations to pay Rent, Reserve Rate, and Deposits hereunder and,
except as otherwise expressly provided in this Agreement, the rights
and liabilities of Lessee under this Agreement are concerned.
Lessee's rights under this Agreement shall not be subject or
subordinate to any Security Assignment or Mortgage executed by
Lessor or Beneficiary (which Security Assignment or Mortgage shall
be subject to this Agreement).
12.3 It is acknowledged and agreed that:
(a) Lessor has the right to assign all of its right, title and interest
in and to this Agreement and the Aircraft to the Head Lessor and/or
the Bank. In order to comply with its obligations in relation
thereto, Lessor will, upon such assignment, give Lessee a notice of
assignment and it is agreed that Lessee shall forthwith acknowledge
the same by executing and delivering to Lessor on behalf of Head
Lessor and/or the Bank a consent to assignment in form and substance
reasonably acceptable to Head Lessor and/or the Bank;
(b) Lessor may be required by Head Lessor and/or the Bank to assign to
Head Lessor and/or the Bank all of its rights, title and interest in
and to the Insurances (other than liability insurances). In order to
comply with its obligations in relation thereto, Lessor, upon
assignment of this Agreement pursuant to Article 12.3 (a), shall
give the
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insurers a notice of assignment of Insurances and the Lessee shall
procure that such insurers forthwith acknowledge the same by
executing and delivering to Lessor an acknowledgement in form and
substance acceptable to Head Lessor and/or the Bank;
(c) Lessor may from time to time require to amend, modify or replace the
security arrangements in respect of the financing or refinancing of
the Aircraft and Lessee agrees to cooperate with Lessor in
connection therewith and, in particular (but without limiting the
generality of the foregoing), to change the plates provided for in
Article 4.3 and to execute and deliver such other or further
acknowledgments of assignment or other documents and to do such
other things as Lessor may reasonably require to be executed and
delivered;
(d) Upon any financing or refinancing of the Aircraft as contemplated by
this Article 12.3, Lessee will promptly and duly execute and deliver
to Lessor, Head Lessor or the Bank such other documents and
assurances and take such further action as may from time to time be
reasonably requested in order more effectively to carry out the
intent and purpose of this Agreement, the Mortgage and the Security
Assignment. Lessee will procure on request of Lessor that the
independent counsel will confirm to the Head Lessor and the Bank
that the Head Lessor and the Bank may rely on the terms of the
opinion as set out in Appendix G as if the Head Lessor and the Bank
were each addressees of such opinion;
(e) Title to the Aircraft may be transferred by Lessor to the Head
Lessor to be indicated by Lessor or Beneficiary's interest in the
Trust Estate may be transferred by Beneficiary, in either case for
the purpose of enabling Lessor to raise finance in relation to the
Aircraft. In such event either a lease agreement shall be executed
in respect of the Aircraft between the Head Lessor and Lessor ("Head
Lease") in order to enable Lessor to continue to lease the Aircraft
to Lessee in accordance with this Agreement or Lessor may assign all
or part of its rights, title and interest in and to this Agreement
and the Aircraft to Head Lessor pursuant to Article 12.2 or
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Beneficiary may assign all of its right, title and interest in and
to the Trust Estate and Lessee agrees to cooperate with Lessor in
connection therewith and, in particular (but without limiting the
generality of the foregoing), to cooperate in the execution of any
documents, agreements and amendments to this Agreement that are
necessary in connection with such Head Lease or such assignment and
to do such other things as Lessor may require to be executed and
delivered so long as any such amendments to this Agreement do not
materially adversely affect Lessee; and
(f) Lessee shall not be liable to (1) any Transferee or (2) any
assignee, purchaser, or transferee of the beneficial interest of the
Trust Estate (a "Beneficiary Transferee") for any payment of Taxes
pursuant to this Agreement in excess of the amount that would have
been payable to the Lessor or the Beneficiary originally party
hereto, as the case may be, if that party had remained as the Lessor
or the Beneficiary, respectively.
13. DISCLAIMER, REPRESENTATIONS AND WARRANTIES
13.1 THE AIRCRAFT IS LEASED IN "AS-IS, WHERE-IS" CONDITION AND LESSEE EXPRESSLY
AGREES AND ACKNOWLEDGES THAT, SAVE AS EXPRESSLY STATED IN THIS AGREEMENT,
LESSOR WILL HAVE NO LIABILITY IN RELATION TO, AND LESSOR HAS NOT AND WILL
NOT BE DEEMED TO HAVE MADE OR GIVEN ANY WARRANTIES, GUARANTEES OR
REPRESENTATIONS, EXPRESS OR IMPLIED, ARISING BY LAW OR OTHERWISE, WITH
RESPECT TO, THE AIRCRAFT LEASED HEREUNDER INCLUDING BUT NOT LIMITED TO (1)
ANY WARRANTY AS TO THE AIRWORTHINESS, CONDITION, DESIGN, MERCHANTABILITY
OR FITNESS FOR USE OR OPERATION, (2) ANY WARRANTY ARISING FROM COURSE OF
PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE, (3) ANY OBLIGATION,
LIABILITY, RIGHT, CLAIM OR REMEDY IN TORT, WHETHER OR NOT ARISING FROM
LESSOR'S NEGLIGENCE, ACTUAL OR IMPUTED, AND (4) ANY OBLIGATION, LIABILITY,
RIGHT, CLAIM OR REMEDY FOR LOSS OF OR DAMAGE TO THE AIRCRAFT, FOR LOSS OF
USE, REVENUE OR PROFIT WITH RESPECT TO THE AIRCRAFT, FOR ANY LIABILITY OF
LESSEE TO ANY THIRD PARTY, OR FOR ANY OTHER DIRECT, INCIDENTAL OR
CONSEQUENTIAL DAMAGES; AND ALL SUCH WARRANTIES, GUARANTEES,
REPRESENTATIONS, OBLIGATIONS, LIABILITIES, RIGHTS, CLAIMS OR REMEDIES,
EXPRESS OR IMPLIED, STATUTORY OR OTHERWISE, ARE EXPRESSLY EXCLUDED.
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Nothing in this Agreement shall afford Lessor or any Indemnitee any wider
or greater exclusion of liability for death or bodily injury than would be
permitted by the Governing Law.
This paragraph shall not be modified except by a written agreement signed
on behalf of Lessor and Lessee by their respective duly authorized
representatives.
13.2 Lessor and Lessee agree that this Article 13 has been the subject of
discussion and negotiation and is fully understood by the parties, and
that the amount of the Rent and other mutual agreements of the parties set
forth in this Agreement were arrived at in consideration of the provisions
of this Article 13 specifically including the waiver by Lessee set forth
in Article 13.1.
13.3 So long as no Event of Default has occurred and is continuing Lessor
agrees to assign or otherwise make available to Lessee for the duration of
the Term such rights as Lessor may have under any warranty, express or
implied, with respect to the Aircraft made by the Manufacturer of the
Aircraft, any subcontractor or supplier thereof, or any other seller
thereof, to the extent that the same may be assigned or otherwise made
available to Lessee and without warranty by Lessor as to enforceability of
any of the rights so assigned.
To the extent that the same may not be assigned or otherwise made
available to Lessee, Lessor agrees to exert its reasonable efforts, at
Lessee's expense, to enforce such rights as Lessor may have with respect
thereto for the benefit of Lessee; provided however, that upon an Event of
Default all such rights shall immediately revert to Lessor including all
claims thereunder, whether or not perfected, unless such Event of Default
has forthwith been remedied by Lessee.
13.4 Lessee represents and warrants that:
(a) Lessee is a corporation organized and existing in good standing, in
accordance with the Laws of the State of Incorporation, and has the
corporate power and authority to carry on its business as presently
conducted and to perform its obligations under this Agreement, is an
"air carrier" within the meaning of the Federal Aviation Act
operating under a certificate of convenience and necessity issued
pursuant to Section 401 of such Act and is
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the holder of all necessary licenses issued by all Government
Entities having jurisdiction to authorize or permit Lessee to engage
in air transportation and to perform and comply with its obligations
hereunder;
(b) This Agreement has been duly authorized by all necessary corporate
action on the part of Lessee, and neither the execution and delivery
nor the consummation of the transactions contemplated hereby nor
compliance by Lessee with the provisions of this Agreement will
contravene any Law applicable to Lessee or result in any breach of,
or constitute any default under, or result in the creation of any
lien, charge or encumbrance upon any property of Lessee under, any
indenture, mortgage, chattel mortgage, deed of trust, conditional
sales contract, bank loan or credit agreement, corporate charter,
by-law, or other agreement or instrument to which Lessee is a party
or by which Lessee or its properties or assets may be bound or
affected;
(c) The execution and delivery by Lessee of this Agreement, and all of
the transactions by Lessee contemplated hereby, have received, and
Lessee has complied with, every necessary consent, approval, order,
or authorization of, or registration with, or the giving of prior
notice to, any Government Entity having jurisdiction with respect to
the execution and delivery of this Agreement or the validity and
enforceability of this Agreement or the satisfaction of all monetary
and other obligations hereunder;
(d) This Agreement has been duly entered into and delivered by Lessee
and constitutes the valid, legal and binding obligations of Lessee,
enforceable in accordance with their terms subject to principles of
equity, laws relating to bankruptcy, insolvency or liquidation or
any other laws or legal procedures generally affecting the
enforcement of creditor's rights or the rights of contracting
parties;
(e) It is not necessary or advisable under the Laws of the State of
Registration in order to ensure the validity, effectiveness and
enforceability of this Agreement, the Mortgage or the Security
Assignment or to protect the property rights of Lessor,
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Beneficiary, Head Lessor or the Bank in the Aircraft and under the
Mortgage and Security Assignment that this Agreement, the Mortgage,
the Security Assignment or any other instrument relating thereto be
filed, registered or recorded or that any other action be taken
under the Laws of the State of Incorporation and the State of
Registration to perfect the property rights of Lessor, Head Lessor
and the Bank in the Aircraft other than the filing of all such
instruments with the Air Authority, the filing of UCC-l financing
statements in relevant jurisdictions, and the Mortgage and Security
Assignment will have priority in all respects over the claims of all
creditors of Lessee in or against the Aircraft, except for Permitted
Liens;
(f) Under the Laws of the State of Incorporation and the State of
Registration Lessee will not be required to make any deduction or
withholding from any payment it may make under this Agreement. There
is no withholding or other tax to be deducted from any payment to be
made by Lessee under this Agreement;
(g) There are no suits or legal proceedings (including any
administrative proceeding) pending or threatened before any court or
administrative agency against Lessee which, if adversely determined,
would have a material adverse effect upon its financial condition or
business or its ability to perform its obligations hereunder;
(h) Each of the Equity Investors and Lessee has performed all of its
respective obligations under the Equity Commitment required to be
performed and the Equity Commitment remains in full force and effect
and has not been modified, supplemented or amended except as has
been disclosed in writing to Lessor;
(i) There has been no material adverse change in the financial position
of Lessee or the consolidated financial position of Lessee and its
subsidiaries from that set forth in the financial statements last
furnished pursuant to Article 6.4 and neither Lessee nor any of its
subsidiaries have any significant liabilities (contingent or
otherwise) which are not disclosed by, or reserved against in such
financial statements;
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(j) The chief executive office (as such term is used in Sections 9-103
and 9-401 of the Uniform Commercial Code) of Lessee is located at
Chicago, Illinois, and Lessee agrees to give at least 30 days' prior
notice to Lessor of any relocation of said chief executive office or
place where such records are kept and of any change in its name.
13.5 The representations and warranties in Article 13.4 (other than in clauses
(f), (g) and (i) shall be deemed to be repeated by Lessee on and as of
each Rent Date as if made with reference to the facts and circumstances
existing on each such date.
13.6 Lessor represents, warrants and covenants that:
(a) Lessor is a national banking association duly organized and validly
existing in good standing under the laws of the United States of
America, qualifies as a "citizen of the United States" within the
meaning of Section 101(16) of the Federal Aviation Act, and has the
corporate power and authority to carry on its business as presently
conducted and to perform its obligations under this Agreement; if at
any time Lessor shall have actual knowledge that it has ceased to
qualify as such a citizen, it will, if such citizenship is then
necessary to maintain the eligibility of the Aircraft for United
States registration, take such action as may be necessary to
maintain such United States registration;
(b) This Agreement has been duly authorized by all necessary corporate
action on the part of Lessor, has been duly entered into and
delivered by Lessor in accordance with the Trust Agreement and
constitutes the valid, legal and binding obligations of Lessor,
enforceable in accordance with their respective terms subject to
principles of equity, laws relating to bankruptcy, insolvency or
liquidation or any other laws or legal procedures generally
affecting the enforcement of creditor's rights or the rights of
contracting parties;
(c) Neither the execution and delivery nor the consummation of the
transactions contemplated hereby nor compliance by Lessor with the
provisions of this Agreement will result in any breach of, or
constitute any default under, any
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indenture or any corporate charter, by-law, or other agreement or
instrument to which Lessor is a party or by which Lessor or its
properties or assets may be bound; and
(d) Except for the Ferry Permits described in Article 3.5, the
registration of the Aircraft and the issuance of the licenses
described in Article 4.1, neither the execution and delivery nor the
consummation of the transactions contemplated hereby nor compliance
by Lessor with the provisions of this Agreement requires the consent
or approval of, the giving of notice to, or the registration with,
or the taking of any other action in respect of any Government
Entity.
The representations and warranties contained in clauses (a), (b) and (c)
of this Article 13.6 are made by Lessor in its individual capacity.
13.7 Lessor undertakes that, so long as no Event of Default shall have occurred
and be continuing, Lessor will not interfere with the peaceful and quiet
use and enjoyment of the Aircraft by Lessee in accordance with the terms
of this Agreement.
14. COVENANTS OF LESSEE
14.1 Lessee hereby covenants with Lessor that from the Delivery Date and during
the Term and until redelivery of the Aircraft to Lessor in accordance with
Article 16 it will:
(a) remain in and continue to operate as an air carrier holding a valid
certificate of convenience and necessity issued pursuant to Section
401 of the Federal Aviation Act to preserve its corporate existence,
to satisfy its debts and obligations as they fall due;
(b) comply with all Laws and regulations for the time being in force in
the State of Incorporation, the State of Registration and in any
country to, from, in or over which the Aircraft is flown;
(c) (i) at its own expense from time to time do and perform such other
and further acts and execute and deliver any and all further
instruments as may be required by Law (in the United States but not
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in any jurisdiction outside the United States unless directly
required due to Lessee's operation), and (ii) at Lessor's expense
(insofar as not covered in Article 8.2(a)) from time to time do and
perform such other and further acts and execute and deliver any and
all further instruments as may be reasonably requested by Lessor to
establish, maintain and protect the respective rights and remedies
of Lessor, Head Lessor and the Bank and to carry out and give effect
to the intents and purposes of this Agreement and the parties;
(d) notify Lessor immediately of the occurrence of any Default;
(e) obtain and maintain all necessary government and other certificates,
consents, licenses, permits and authorizations and take all action
which may be necessary for the continued due performance of Lessee's
obligations under this Agreement and for the use and operation of
the Aircraft;
(f) not do or permit to be done any act or thing which might impair the
respective interests of Lessor, Head Lessor and the Bank in the
Aircraft, or the registration of the Aircraft;
(g) notify Lessor as soon as practicable after becoming aware of any
loss, theft, damage or destruction of or to the Aircraft or any part
thereof if the potential cost of repair or replacement may exceed
$100,000.00 (Dollars One Hundred Thousand);
(h) not do anything which may subject the Aircraft or any part thereof
to penalty, forfeiture, seizure, arrest, impounding, detention,
confiscation, taking in execution, appropriation or destruction nor
abandon the Aircraft or any part thereof;
(i) not represent or hold out Lessor, Head Lessor or the Bank as
carrying goods or passengers on the Aircraft or as being in any way
connected or associated with any operation or carriage (whether for
hire or reward or gratuitously) which Lessee may undertake;
(j) not pledge the credit of Lessor, Head Lessor or the Bank for any
maintenance, overhauls,
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replacements, repairs or modifications to the Aircraft;
(k) keep Lessor and the insurers, as referred to in Article 11, informed
as to current serial numbers of the Engines and any engine installed
on the Aircraft in accordance with the provisions of this Agreement,
and the location of any Engine for the time being not installed on
the Aircraft; and shall notify such insurers of any renewal,
replacement or substitution, or the location of any Engine not
installed on the Aircraft;
(l) discharge all fees, charges and expenses payable to any third party
in relation to the use or operation of the Aircraft or any premises
where the Aircraft is situated;
(m) in the event of any forfeiture, impounding or detention of the
Aircraft or any part thereof not constituting a Casualty Occurrence,
use all reasonable endeavors to procure the immediate release
therefrom of the same;
(n) keep accurate, complete and current records of all flights made by
the Aircraft. Such records shall be kept in such manner as the Air
Authority may from time to time require and in accordance with the
Approved Maintenance Program. Lessee shall permit Lessor or its
authorized representatives to examine such records upon giving
reasonable notice not involving delay to the Aircraft;
(o) on request, provide Lessor with evidence satisfactory to Lessor that
all Taxes and charges incurred by Lessee with respect to the
Aircraft, including without limitation any payments due to any
relevant air traffic control authorities and airport authorities,
have been paid and discharged in full;
(p) not consolidate with, or merge into, any other corporation, convey,
transfer or lease substantially all of its assets as an entirety to
any person or acquire the shares of or make any investment in any
firm, corporation or person without the prior written consent of
Lessor (such consent not to be unreasonably withheld) and the
execution and delivery to Lessor of such
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agreements, certificates and legal opinions as Lessor may request
with respect thereto; and
(q) prior to the payment in full of all deferred amounts of Rent,
Reserve Rate or Deposits under this Agreement and all Other Aircraft
Agreements (such event being referred to as the "Enumerated
Milestone"), obtain the prior written consent of Lessor (such
consent not to be unreasonably withheld) to any commitment of Lessee
to any person where such commitment has a value in excess of
$500,000.00 (Dollars Five Hundred Thousand)
15. DEFAULT BY LESSEE
15.1 Each of the following events shall constitute an "Event of Default":
(a) if default shall be made by Lessee in the making of any Rent,
Reserve Rate and/or Agreed Value payment when due and payable under
this Agreement or of any other Supplemental Rent payment within 5
Business Days after the date when such other Supplemental Rent is
due and payable under this Agreement; or
(b) (i) if default shall be made by Lessee at any time in the
procurement or maintenance of any insurance coverage prescribed
herein or (ii) any insurance which may be maintained by Lessor, Head
Lessor or the Bank under Article 11.4 is cancelled or terminated or
notice of cancellation is given; or
(c) if default shall be made by Lessee in the observance or performance
of any of the other obligations of Lessee contained in this
Agreement and, if such default is in the opinion of Lessor capable
of remedy, such default shall continue for a period of fifteen (15)
Business Days after notice from Lessor to Lessee specifying the
default and requiring that the same be remedied; or
(d) if any representation or warranty made (or deemed to be repeated) by
Lessee in or pursuant to this Agreement or in any document or
certificate or statement referred to in or delivered under this
Agreement is or proves to have been incorrect in
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any material respect when made or deemed to be repeated and such
incorrectness, if capable of being cured, shall continue for fifteen
(15) Business Days after notice from Lessor specifying such
incorrectness; or
(e) if any borrowed money of Lessee or any of its subsidiaries is not
paid when due, or by reason of breach or default under the terms of
any instrument evidencing or guaranteeing the same on the part of
Lessee or any of its subsidiaries any borrowed money of Lessee or
any of its subsidiaries becomes due or capable of being declared due
prior to the date when it would otherwise have become due, or the
security for any such borrowed money or any guarantee in respect
thereof becomes enforceable, or Lessee is in default under any
lease, hire-purchase, conditional sale or credit sale agreement
(including without limitation any other agreement between Lessor,
its associates, subsidiaries or affiliates and Lessee) for equipment
having a casualty value in excess of $100,000; or
(f) if an encumbrancer takes possession or a receiver, administrator,
administrative receiver, trustee, liquidator or similar officer is
appointed of the whole or any part of the assets, rights or revenues
of Lessee or any of its subsidiaries or a distress, execution,
sequestration or other process is levied or enforced upon or sued
out against any of the assets, rights or revenues of Lessee or any
of its subsidiaries and is not discharged within fourteen days, or
Lessee applies for or consents to the appointment of a receiver,
administrator, administrative receiver, trustee, liquidator or
similar officer for it or for all or any part of its assets, rights
or revenues; or
(g) if Lessee or any of its subsidiaries suspends payment of its debts,
or is unable or admits its inability to pay its debts as they fall
due, or shall be adjudicated or found, or becomes, bankrupt or
insolvent, or proposes or enters into any composition or other
arrangement for the benefit of its creditors generally, or Lessee or
any of its subsidiaries shall, by voluntary petition, answer or
consent, seek relief under the provisions of any bankruptcy,
insolvency or other similar law providing for the reorganization,
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liquidation, administration, dissolution or winding-up of
corporations, or providing for an agreement, composition, extension
or adjustment with its creditors; or
(h) if a petition against Lessee in a proceeding under applicable
bankruptcy or other insolvency laws shall be filed and shall not be
withdrawn or dismissed within 30 days thereafter, or if any order
shall be made by any competent court or resolution passed by Lessee
or any of its subsidiaries or their respective board of management
or supervisory board, whichever is competent to pass such resolution
for the winding-up or dissolution of Lessee or any of its
subsidiaries or for the appointment of a liquidator, trustee or
conservator, save for winding-up or dissolution for the purposes of
amalgamation or reorganization (not involving or arising out of
insolvency) the terms of which shall have received the prior written
approval of Lessor; or
(i) if Lessee or any of its subsidiaries disposes of all or a material
part of its assets, whether by one or a series of transactions,
related or not, other than for the purpose of a reconstruction or
amalgamation the terms of which have received the previous consent
in writing of Lessor; or
(j) if any action shall be taken by Lessee which shall impair the title
or ownership of Lessor (or Head Lessor), or the Security Interest of
the Bank, in the Aircraft or this Agreement is or becomes wholly or
partly invalid, ineffective or unenforceable by reason of any act or
omission of Lessee; or
(k) if any consent, authorization, license, certificate or approval of
or registration with or declaration to any Government Entity in
connection with this Agreement including, without limitation:
(i) any Certificate of Public Convenience and Necessity; or
(ii) required by Lessee or as a condition precedent required by
Lessor pursuant to Article 2.3 to authorize, or in connection
with, the execution, delivery, validity, enforceability or
admissibility in evidence
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of this Agreement or the performance by Lessee of its
obligations under this Agreement; or
(iii) the registration of the Aircraft; or
(iv) any airline license or air transport license;
is changed such that it materially impairs the ability of Lessee to
perform its obligations hereunder, or is withheld, or is revoked,
suspended, cancelled, withdrawn, terminated or not renewed, or
otherwise ceases to be in full force; or
(m) if any circumstances analogous to any of the circumstances described
in paragraphs (f), (g) or (h) above arise under the Law of any
applicable jurisdiction; or
(n) if an event of default (however defined) occurs under any Operative
Document or any Other Aircraft Agreement which event permits
acceleration or termination; or
(o) any advance pursuant to the Equity Commitment has not been made when
due; or
(p) the Enumerated Milestone as defined in Article 14.1(q) is not
fulfilled by the last date on which a deferral is to be paid and
such failure continues for a period of five (5) days; or
(q) an event of default by or relating to Lessee shall occur under, and
as a result a termination shall occur under, any agreements for
gates, hangars or other facilities at Xxxxxx Xxxxxxx, Xxxxxxx,
Xxxxxxxx or any other airport that are material to Lessee's
operations including any agreements relating to the provision by
American Airlines, Inc. (or any affiliate) of services to Lessee.
15.2 If one or more Events of Default shall have occurred and be continuing, at
Lessor's option and subject to any mandatory requirement of Law:
(a) For Lessee's account Lessor may do anything that may reasonably be
required to cure any Event of Default and recover from Lessee all
costs
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including legal expenses incurred in so doing, and/or
(b) Lessor may accept such Event of Default as a repudiation of this
Agreement and terminate the lease of the Aircraft to Lessee
hereunder by:
(i) serving notice of such termination on Lessee specifying the
occurrence giving rise to such Event of Default or Events of
Default, provided that such notice shall be deemed to have
been served without the necessity of actual service upon the
occurrence of any Event of Default described in paragraphs
(f), (g) and (h) of Article 15.1.
Thereafter (if the Term shall have commenced) Lessee shall
redeliver possession of the Aircraft to Lessor at Schiphol
Airport, The Netherlands (or such other location as Lessor may
require); or (at Lessor's election)
(ii) taking possession of the Aircraft for which purpose Lessor by
its servants or agents may enter upon Lessee's premises where
the Aircraft may be located, or cause the same to be
redelivered to Lessor at Schiphol Airport, The Netherlands,
(or such other location as Lessor may require Lessee to
assemble and deliver the Aircraft to Lessor, and Lessor shall
be entitled to act as attorney for Lessee in causing such
redelivery and shall have all the powers and authorizations
legally necessary for taking such action. In the event of
exercise by Lessor of its powers under this sub-paragraph (ii)
such termination shall be deemed to take effect on such taking
of possession by Lessor or such redelivery of the Aircraft to
Lessor at the said airport; and/or
(c) Lessor may proceed by appropriate court action or actions to enforce
performance of Article 15.2(b) or to recover damages for the breach
thereof; and/or
(d) all rights of Lessee hereunder shall, in the event the Term shall be
terminated pursuant to Article 15.2(b) henceforth absolutely cease
and terminate but without prejudice to Lessee's obligations
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under this Agreement all of which shall continue in full force and
effect except for obligations to pay Rent and Reserve Rate after the
Aircraft is returned to Lessor, and is in the condition required by
Article 16; and Lessee shall take all steps necessary to effect
deregistration of the Aircraft in the State of Registration and
Lessor shall be entitled to sell or otherwise deal with the Aircraft
as if this Agreement had never been made. Without prejudice to the
foregoing, Lessee hereby appoints Lessor as its attorney to do any
act or thing required in connection with such deregistration of the
Aircraft.
15.3 If an Event of Default occurs, Lessor shall have the right to demand that:
(a) Lessee pay all amounts which may be then due and unpaid hereunder,
and
(b) at Lessor's option whether or not Lessor shall have exercised, or
shall thereafter at any time exercise, any of its rights under
Article 15.2, by thirty (30) days written notice to Lessee from
Lessor specifying a payment date, Lessee pay Lessor, and Lessee
shall pay Lessor, on the payment date specified in such notice, as
liquidated damages for loss of bargain and not as a penalty (in lieu
of the Rent due for the Aircraft covered by such notice for the
period commencing after the date specified for payment in such
notice), any unpaid Rent for the Aircraft (prorated in the case of
Rent on a daily basis) to and including the payment date specified
in such notice, plus the amount, if any, by which the aggregate Rent
for the Aircraft for the remainder of the Term for the Aircraft,
discounted periodically (equal to installment frequency) to present
worth at the interest rate of six percent (6%) per annum, exceeds
the Fair Market Rental Value of the Aircraft for the remainder of
the Term, after discounting such Fair Market Rental Value
periodically (equal to installment frequency) to present worth as of
the payment date specified in such notice at the interest rate of
six percent (6%) per annum.
Lessee shall fully indemnify Lessor on its own behalf and on behalf of the
Head Lessor and the Bank on demand
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against any loss (including loss of profit), damage, expense (including
without limitation attorneys' fees), cost or liability which Lessor, Head
Lessor or the Bank may sustain or incur as a consequence of the occurrence
of any Event of Default and/or termination of the letting of the Aircraft
pursuant to this Agreement, including but not limited to (i) any loss of
profit suffered by Lessor and/or the Head Lessor because of Lessor's
inability to place the Aircraft on lease with another lessee on terms as
favorable to Lessor as the terms of this Agreement or because whatever
use, if any, to which Lessor is able to put the Aircraft upon its return
to Lessor, or the funds arising upon a sale or other disposal thereof, is
not as profitable to Lessor as letting the Aircraft in accordance with the
terms of this Agreement would have been to the extent the foregoing loss
of profit shall not be recovered under Article 15.3(b), (ii) any amount of
interest, fees or other sums whatsoever paid or payable on account of
funds borrowed in order to carry any unpaid amount, (iii) any loss,
premium, penalty or expense which may be incurred repaying funds raised to
finance the Aircraft or in unwinding any swap, forward interest rate
agreement or other financial instrument relating in whole to Lessor's
financing of the Aircraft and/or the Aircraft under the Other Aircraft
Agreement, and (iv) any loss, cost, expense or liability sustained or
incurred by Lessor owing to Lessee's failure to redeliver the Aircraft in
the condition required by this Agreement.
15.4 No remedy referred to in this Article 15 is exclusive, but each remedy
shall be cumulative and in addition to any other remedy referred to herein
or otherwise available to Lessor. The exercise by Lessor of any of its
remedies hereunder shall not preclude or estop the exercise or beginning
of exercise by Lessor of any or more of such other remedies.
No express or implied waiver by Lessor of any Event of Default, or failure
or delay of Lessor in exercising any right hereunder shall operate as
waiver thereof unless an express waiver is executed and delivered to
Lessee.
15.5 Prior to the Expected Delivery Date Lessee shall deliver to Lessor a duly
authorized consent, undated and in form and substance acceptable to
Lessor, addressed to the Federal Aviation Administration consenting to the
release of this Agreement in
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connection with the termination of this Agreement pursuant to the terms
hereof and, if so requested by Lessor, the deregistration of the Aircraft
from the register of civil aviation in the State of Registration.
16. RETURN OF AIRCRAFT
16.1 On the Expiry Date or upon earlier termination of the Term (unless a
Casualty Occurrence shall have occurred with respect to the Aircraft),
Lessee shall, at its own expense, redeliver the Aircraft to Lessor at the
Re-Delivery Location or such other airport as is mutually acceptable to
the parties, in a condition complying with the provisions of Appendix E,
free and clear of all liens and encumbrances (including Permitted Liens
other than Lessor Liens) and thereupon cause the Aircraft to be removed
from the Register of Civil Aircraft in the State of Registration and
Lessee shall return the Aircraft to Lessor together with the Aircraft
Documents and all equipment and records supplied pursuant to this
Agreement when the Aircraft was delivered to Lessee hereunder.
16.2 Immediately prior to such redelivery of the Aircraft, Lessee, at its own
expense, shall make the Aircraft, Aircraft Documents and other records
available to Lessor for inspection ("Final Inspection") in order to verify
that the condition of the Aircraft complies with the provisions of this
Agreement. Such inspection shall not unreasonably interfere with the
operation of the Aircraft. The period will be long enough for the Final
Inspection to permit the conduct by Lessor of the following:
(a) Inspection of the Aircraft Documents;
(b) Inspection of the Aircraft structure and Parts;
(c) Inspection of the Engines and Auxiliary Power Unit ("A.P.U."),
including without limitation, a boroscope inspection or any other
equivalent inspection method supported by Rolls Royce, inspection of
the compressor and turbine area, and, if reasonably requested based
on evidence that it is required, the Engine and A.P.U. condition
runs confirming release of each Engine and A.P.U. for its remaining
operational life;
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(d) A one-hour to two-hour test flight with Lessor's representatives on
board as observers and, if any non compliance is found, a subsequent
test flight to check compliance after rectification.
16.3 To the extent that, upon such Final Inspection, the condition of the
Aircraft and Aircraft Documents does not comply with the provisions of
this Agreement, Lessee, at its own expense, shall cause such
non-compliance to be promptly rectified and to the extent such
rectification extends beyond the Expiry Date, the Term shall, at Lessor's
sole option, be deemed to be automatically extended and the provisions of
this Agreement shall remain in full force and effect until such
rectification has been accomplished. During such extension of the Term the
Lessee shall be liable to pay Rent at a daily pro rata rate equal to the
Rent payable during the last Rental Period of the Term.
16.4 Upon redelivery Lessee shall provide to Lessor all necessary assistance to
enable Lessor to obtain any required documents in relation to the export
of the Aircraft from the State of Registration, and if different, from the
State of Incorporation (including a valid and subsisting export license
for the Aircraft), and shall reassign to Lessor, at the expense of Lessee,
the benefit of any indemnity or warranty which has been assigned to Lessee
pursuant to Article 13.3 above to the extent such indemnity or warranty is
assignable.
16.5 Prior to the Expiry Date or upon any earlier termination of the Term and
upon Lessor's request, Lessee will provide Lessor or its agent reasonable
access to the Approved Maintenance Program and the Aircraft Documents in
order to facilitate the Aircraft's integration into any subsequent
operator's fleet.
Lessee will, if requested by Lessor to do so, upon return of the Aircraft
deliver to Lessor a certified true current and complete copy of the
Approved Maintenance Program. Lessor agrees that it will not disclose the
contents of the Approved Maintenance Program to any person or entity
except to the extent necessary to monitor Lessee's compliance with this
Agreement and/or to bridge the maintenance program for the Aircraft from
the Approved Maintenance Program to another program.
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16.6 Upon redelivery of the Aircraft to Lessor, an adjustment shall be made in
respect of fuel on board on the Delivery Date and on redelivery at the
price then prevailing at the Redelivery Location.
16.7 If Lessor shall request that Lessee paint the Aircraft any other basic
color as contemplated by Section 1(h) of Appendix E, Lessor agrees that it
shall bear the cost and expense of the difference between white paint and
such other basic color.
17. CASUALTY OCCURRENCES
17.1 In this Agreement "Casualty Occurrence" shall mean any of the following
events with respect to the Aircraft, the Airframe or an Engine:
(a) the actual, agreed, constructive, arranged or compromised total loss
or destruction of the Aircraft, the Airframe or an Engine, or damage
to the Aircraft, Airframe or Engine rendering repair impracticable
or uneconomical, or the Aircraft, Airframe or Engine being rendered
permanently unfit for normal use;
(b) requisition of title or other compulsory acquisition, requisition,
capture, seizure, deprivation, confiscation or detention for any
reason of the Aircraft, the Airframe or an Engine by any Government
Entity of the State of Registration or by any other government or
other competent authority, whether de jure or de facto, but
excluding requisition for use or hire not involving requisition of
title by any Governmental Entity for a temporary period ending on
the date fifteen (15) days (or one hundred eighty (180) days if the
requisition for use or hire is by the United States) after such
requisition, or the Expiry Date, whichever first occurs; and
(c) the hijacking, theft, disappearance, condemnation, confiscation or
seizure of the Aircraft, the Airframe or an Engine other than in the
circumstances referred to in (b) above which deprives Lessee of the
use thereof for more than fifteen (15) consecutive days.
17.2 (a) In the event of a Casualty Occurrence with respect to the Aircraft
or Airframe prior to the Delivery
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Date, this Agreement shall immediately terminate with respect to
such Aircraft and neither party shall have any further obligation or
liability hereunder, save that Lessor shall return to Lessee the
Deposit or such part thereof as Lessor shall have received from
Lessee and Lessee shall remain liable to reimburse Lessor for any
amounts specified in Article 8.2(a).
(b) In the event of a Casualty Occurrence with respect to the Aircraft
or Airframe after delivery to Lessee hereunder, Lessee shall pay the
Agreed Value and, if applicable, the Additional Amount pursuant to
Appendix D, Article 2.6, to Lessor on or prior to the earlier of (i)
45 days after the Casualty Occurrence and (ii) the Business Day
after the date of receipt of the insurance proceeds in respect of
the Casualty Occurrence and, provided all other amounts which are
then due and payable by Lessee under this Agreement have been paid
in full to Lessor, Lessee's obligation hereunder for payment of Rent
shall cease as from the date on which Lessor receives payment in
full of the Agreed Value. Rent paid in advance for any days which
occur after such Agreed Value and Additional Amount, if any, is paid
shall be repaid to Lessee, so long as no Default has occurred and is
continuing, on a pro rata basis for each day beyond such date of
payment of Agreed Value. Any excess insurance proceeds from the
insurance obtained by Lessee pursuant to Article 11 remaining after
payment of the foregoing amounts shall, unless a Default shall have
occurred and be continuing, be paid over to Lessee.
(c) Subject to the rights of any insurers and reinsurers or other third
party, upon irrevocable payment in full to Lessor of the Agreed
Value and all other amounts which may be or become payable to Lessor
under this Agreement, Lessor will without recourse or warranty
(except as to Lessor's Liens) and without further act, be deemed to
have transferred to Lessee all of Lessor's rights to any Engines and
Parts not installed when the Casualty Occurrence occurred, all on an
as-is where-is basis, and will at Lessee's expense, execute and
deliver such bills of sale and other documents and instruments as
Lessee may reasonably request to evidence (on the public record or
otherwise) the transfer and the vesting of
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Lessor's rights in such Engines and Parts in Lessee, free and clear
of all rights of Lessor and Lessor Liens.
17.3 Upon the Casualty Occurrence with respect to any Engine not involving a
Casualty Occurrence of the Aircraft, Lessee shall give Lessor prompt
written notice thereof and Lessee shall replace such Engine as soon as
reasonably possible with a replacement Engine in accordance with Article
5.1.2(a). Such replacement shall be deemed an "Engine" as defined herein.
Lessee agrees to take such action as Lessor may reasonably request in
order that any such replacement engine shall be duly and properly titled
in Lessor or the Bank and leased hereunder and subject to the Mortgage to
the same extent as the Engine replaced thereby. Lessee's obligation to pay
the Rent hereunder shall continue in full force and effect, but Lessee
shall be entitled to be reimbursed by Lessor the amount of insurance or
condemnation proceeds, if any, received by Lessor with respect to such
replaced Engine.
17.4 In the event of requisition for hire of the Aircraft or any part thereof
not constituting a Casualty Occurrence, then, subject to the proviso
herein contained, the Rent and other charges payable under this Agreement
shall not be suspended or abated either in whole or in part, and Lessee
shall not be released from any of its other obligations (as to payment,
indemnity or otherwise) hereunder (other than operational obligations with
which Lessee is unable to comply solely by virtue of such confiscation or
requisition). If Lessee shall duly comply with all its obligations under
this Agreement, Lessee shall during the Term be entitled to any hire paid
by the requisitioning or confiscating authority and Lessee shall, as soon
as practicable after the end of any requisition or confiscation, cause the
Aircraft to be put into the condition required by this Agreement. Lessor
shall be entitled to all compensation payable by the requisitioning or
confiscating authority in respect of any change in the structure, state or
condition of the Aircraft arising during the period of requisition or
confiscation, and Lessor shall apply such compensation in reimbursing
Lessee for the cost of complying with its obligations as aforesaid, but so
that, if any Default has occurred and is continuing, Lessor shall be
entitled to apply such compensation in or towards settlement of any
amounts owing by Lessee under this Agreement PROVIDED ALWAYS that if
following
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such requisition or confiscation the Aircraft is treated as an agreed,
constructive, arranged or compromised total loss by the insurers, then the
provisions of Article 17.1 shall apply with effect from the date on which
the insurer so determines.
18. GOVERNING LAW AND JURISDICTION
18.1 This Agreement and further agreements resulting herefrom shall be governed
by and construed in accordance with the internal Laws of the State of New
York and without regard to any conflict of law rules. This Agreement is
being delivered in the State of New York.
18.2 Lessor and Lessee hereby irrevocably agree to submit to the non-exclusive
jurisdiction of, and to waive any objection to the laying of venue in, the
County of New York and that any suit, action or proceedings (collectively,
"Proceedings") may be brought by Lessor in any court of the State of New
York or any U.S. Federal court located in New York County, New York.
18.3 Nothing contained in this Article 19 shall limit the right of either party
to this Agreement to take Proceedings against the other in any other court
of competent jurisdiction, nor shall the taking of Proceedings in one or
more jurisdictions preclude the taking of Proceedings in any other
jurisdiction, whether concurrently or not.
18.4 Promptly after service of any process the Lessor or Lessee shall despatch
a copy thereof to Lessee or Lessor, as the case may be, by registered
mail, postage prepaid but failure of Lessee or Lessor, as the case may be,
to receive such copy shall not invalidate the service of such process.
18.5 To the extent that the parties may in any jurisdiction claim for their or
their assets immunity from suit, execution, attachment (whether in aid of
execution, before judgment or otherwise) or other legal process and to the
extent that in any such jurisdiction there may be attributed to themselves
or their assets such immunity (whether or not claimed) the parties hereby
irrevocably agree not to claim and hereby irrevocably waive any immunity
to the fullest extent permitted by the laws of such jurisdiction with the
intent, inter alia, that the foregoing waiver shall have effect for
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the purposes of the Foreign Sovereign Immunities Act of 1976 of the United
States of America.
18.6 Lessee and Lessor shall each at all times maintain an agent for service of
process in the New York, New York. For Lessee, such agent shall be Winston
& Xxxxxx, Attn: R. Xxxx Xxxxx, 000 Xxxxx Xxxxxx, Xxx Xxxx, XX 00000. For
Lessor, such agent shall be Haight, Gardner, Poor & Xxxxxx, Attn: Xxxx X.
Xxxxxxxxx, 000 Xxxxxxxx, Xxx Xxxx, XX 00000. Any writ, judgment or other
notice of legal process shall be sufficiently served on Lessee or Lessor
if delivered to such agent at its address for the time being. Each of
Lessee and Lessor undertakes that if it shall revoke the authority of its
above agent or if for any reason any such agent no longer serves as agent
to receive service of process, Lessee or Lessor, as the case may be, shall
promptly appoint another such agent and advise Lessor or Lessee, as the
case may be, thereof.
19. MISCELLANEOUS
19.1 The rights of each of Lessor and Lessee under this Agreement are
cumulative, may be exercised as often as it considers appropriate and are
in addition to its rights under general law. The rights of Lessor against
the Lessee or in relation to the Aircraft (whether arising under this
Agreement or the general law) shall not, as against or in favor of Lessor,
be capable of being waived or varied otherwise than by an express waiver
or variation in writing; and in particular any failure to exercise or
delay in exercising any of such rights shall not operate as a waiver or
variation of any other such right; and defective or partial exercise of
any such rights shall not preclude any other or further exercise of that
or any other such right; and no act or course of conduct or negotiation on
Lessor's part or on Lessor's behalf shall in any way preclude Lessor from
exercising any such right or constitute a suspension or any variation of
any such right.
19.2 Save where expressly provided in this Agreement, any certificate or
determination by Lessor as to any rate of interest or as to any other
amount payable under this Agreement shall, in the absence of manifest
error, be conclusive and binding on Lessee.
19.3 If any sum paid or recovered in respect of the liabilities of Lessee under
this Agreement is less than
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the amount then due, Lessor may apply such sum to rental, interest, fees
or any other amount due under this Agreement in such proportions and order
and generally in such manner as Lessor shall determine.
19.4 The terms and conditions of this Agreement shall not be varied otherwise
than by an instrument in writing executed by or on behalf of Lessor and
Lessee.
19.5 If any of the provisions of this Agreement becomes invalid, illegal or
unenforceable in any respect under any law, the validity, legality and
enforceability of the remaining provisions shall not in any way be
affected or impaired.
19.6 Every notice, request, demand or other communication under this Agreement
shall:
(a) be in English;
(b) be in writing and made by mail or by fax or telex transmission or by
reputable courier service;
(c) be deemed to have been received, subject as otherwise provided in
this Agreement, in the case of a telex transmission, at the time of
dispatch with confirmed answerback of the addressee appearing at the
beginning and the end of the communication, in the case of a fax
transmission, at the time safe receipt is confirmed by the addressee
provided that if the date of dispatch is not a business day in the
country of the addressee any telex or fax transmission shall be
deemed to have been received at the opening of business on the next
such business day, in the case of a letter five days after being
deposited in the mail first class postage prepaid and in the case of
a courier three days after being sent; and
(d) be sent:
(1) to Lessee at:
Midway Airlines Corporation
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attention: President
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(2) to Lessor at:
First Security Bank of Utah, N.A.
00 Xxxxx Xxxx Xxxxxx
Xxxx Xxxx Xxxx, Xxxx 00000-0000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attention: Corporate Trust Department
with a copy to FAUSA at:
0000 X. Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Telex: 899462 FAUSA ALE
Fax: (000) 000-0000
Attention: The President.
or to such other address or telex or fax number as is notified by either
party to the other party to this Agreement.
19.7 This Agreement may be executed in any number of counterparts and all of
such counterparts taken together shall be deemed to constitute one and the
same instrument.
19.8 This Agreement is the sole and entire agreement between Lessor and Lessee
in relation to the leasing of the Aircraft, and supersedes all previous
agreements in relation to such leasing. Each of Lessee and Lessor
represents for itself that no broker has been retained by it in connection
with this Agreement or the other Operative Documents.
19.9 This Agreement is intended by the parties to be a lease between Lessor and
Lessee. Any waivers, consents, deferrals of the payment of Rent or Reserve
Rates are not intended to be an agreement by Lessor to make any capital
contribution to the business of Lessee or to share in or have liability
for any of Lessee's losses, profits, liabilities or obligations. Nothing
contained in this Agreement or performed by Lessor in connection herewith
and any other agreement between Lessor and Lessee whether now existing or
entered into in the future shall make Lessor a partner or a joint venturer
of Lessee and shall not for any purpose be construed as a joint-venture
between the parties hereto.
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19.10 [Intentionally Omitted]
19.11 Section 1110: Lessee acknowledges that Lessor would not have entered into
this Agreement unless it had available to it the benefits of a lessor
under Section 1110 of Title 11 of the United States Code. Lessee and
Lessor hereby state that this Agreement is intended to be a true lease for
U.S. Internal Revenue Code purposes. Lessee covenants and agrees with
Lessor that to better ensure the availability of such benefits, Lessee
shall support any motion, petition or application filed by Lessor with any
bankruptcy court having jurisdiction over Lessee, whereby Lessor seeks
recovery of possession of the Aircraft under said Section 1110 and shall
not in any way oppose such action by Lessor unless Lessee shall have
complied with the requirements of said Section 1110 to be fulfilled in
order to entitle Lessee to continued use and possession of the Aircraft
hereunder. In the event said Section 1110 is amended, or if it is repealed
and another statute is enacted in lieu thereof, Lessor and Lessee agree to
amend this Agreement and take such other action not inconsistent with this
Agreement as Lessor reasonably deems necessary so as to afford to Lessor
the rights and benefits as such amended or substituted statute confers
upon owners and lessors of aircraft similarly situated to Lessor.
19.12 First Security Bank of Utah, N.A. ("FSBU") is entering into this Agreement
solely as trustee under the Trust Agreement and not in its individual
capacity and in no case whatsoever shall FSBU (or any entity acting as
successor trustee under the Trust Agreement) be personally liable on, or
for any loss in respect of, any of the statements, representations,
warranties, agreements or obligations of Lessor hereunder as to all of
which the other party hereto agrees to look solely to the Trust Estate,
except for any loss caused by FSBU's own willful misconduct or gross
negligence. FSBU warrants that the Aircraft shall be free of liens
attributable to FSBU in its individual capacity which do not arise from
its actions as lessor under this Agreement and that it shall be personally
liable to Lessee for any Claim against Lessee in respect of any
statements, representations, warranties, agreements or obligations
contained herein which are expressly made in its individual capacity.
19.13 As between Lessor and Lessee, if Lessee fails to make any payment of Rent
or Reserve Rate required to be made
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by it hereunder or fails to perform or comply with any of its agreements
contained herein, Lessor may itself make such payment or perform or comply
with such agreement, and the amount of such payment and the amount of the
reasonable and properly documented expenses of Lessor incurred in
connection with such payment or the performance of or compliance with such
agreement, as the case may be, together with interest thereon at the
interest rate defined in Appendix D, Article 6, shall be deemed
Supplemental Rent, payable by Lessee upon demand.
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IN WITNESS whereof the parties have executed this Agreement the day and
year first herein written.
SIGNED on behalf of SIGNED on behalf of
FIRST SECURITY BANK OF UTAH, N.A. MIDWAY AIRLINES
not in its individual capacity, CORPORATION
except as expressly set forth herein,
but solely as owner trustee
By: /s/Xxxx X. Xxxxxx By:
-------------------------- --------------------------
Xxxx X. Xxxxxx
Its: Assistant Vice President Its: _________________________
IN WITNESS whereof the parties have executed this Agreement the day and
year first herein written.
SIGNED on behalf of SIGNED on behalf of
FIRST SECURITY BANK MIDWAY AIRLINES CORPORATION
OF UTAH, N.A.
not in its individual
capacity, except as
expressly set forth
herein, but solely
as owner trustee
By: By: /s/[SIGNATURE ILLEGIBLE]
-------------------------- --------------------------
Its: _________________________ Its: VP
APPENDIX A
DESCRIPTION OF AIRCRAFT
Number of
Manufacturer Model Serial No. Engines Engines
------------ ----- ---------- ------- -------
Fokker 100 11477 Rolls Royce Two
Xxx XX 650-15
1. On the Delivery Date the Aircraft shall be new and shall comply with
the detailed description contained in this Appendix A, as may be amended from
time to time, and which is attached hereto as Appendix A-1.
2. The Aircraft at delivery will have an FAA Type Certificate and a
Netherlands Certificate of Airworthiness for Export, which will make the
Aircraft eligible for an FAA Standard Airworthiness Certificate. The Aircraft
shall at delivery also meet FAR 121 requirements promulgated or in effect and
known to Lessor or Manufacturer on June 27, 1993.
APPENDIX A-1
AIRCRAFT CONFIGURATION
relating to Fokker 100 aircraft
This Appendix A-1 consists of the following parts:
- Part A: Type Specification.
- Part B: Specification items for Fokker 100
aircraft in addition to the Type
Specification.
- Part C: Seller Furnished Equipment.
Page: 1
APPENDIX A-1, Part A
PART A: TYPE SPECIFICATION
Type Specification as per printed copy supplied by Lessor to Lessee.
Reference document : TD F28:PL-004
Date of issue : February 1, 1983
Date of latest amendment : July 1, 1991
Engine specification : Rolls-Xxxxx Xxx Mk650-15 as affected by
72-00 in Part B
Page: 2
APPENDIX A-1, Part B
PART B: SPECIFICATION ITEMS FOR FOKKER 100 AIRCRAFT--
IN ADDITION TO THE TYPE SPECIFICATION
--------------------------------------------------------------------------------
ATA CHAPTER DESCRIPTION WEIGHT
IN LBS.
--------------------------------------------------------------------------------
02 GENERAL REQUIREMENTS
02-20.02 FAA Certification 0
The aircraft is configured in accordance
with the FAA requirements originating from
the FAA Type Certification. Operational
requirements, possibly requested by local
airworthiness authorities are not included.
02-20.10 FAR 121 Requirements TBD
To comply with FAR 121 requirements the
following changes will be made to the
aircraft:
- Certificate holder (ref. 25-19)
- Medical kit (ref. 25-60)
- Second megaphone (ref. 25-33)
- 3 additional smoke hoods (ref. 35-30)
- Life vests for crew (ref. 25-60)
- Red anti-collision lights (ref. 33-42)
- Seat cushions as flotation devices
(ref. 25-21)
- Placards and markings to comply with FAA
requirements (ref. 11-30)
- At least 50% of aisle seats will have
movable arm rests (ref. 25-21).
02-51.10 Exterior Finish 0
The exterior decorative paint scheme shall
be as specified by customer. Wings will
be white.
Page: 3
APPENDIX A-1, Part B
--------------------------------------------------------------------------------
ATA CHAPTER DESCRIPTION WEIGHT
IN LBS.
--------------------------------------------------------------------------------
02-81.01 SFE i.l.o. BFE 0
All Systems and Components as listed in the
Type Specification as Buyer Furnished Equipment
(BFE) shall be supplied as Seller Furnished
Equipment (SFE). In addition to this all
equipment related to the Specification items
in Part B shall also be Seller Furnished Equipment.
03 STRUCTURAL DESIGN CRITERIA
03-20.01 Increased Design Weights 0
The aircraft shall be certified for operation
with the following design weights:
Maximum Take-off Weight 98,000 lbs.
Maximum Zero Fuel Weight 81,000 lbs.
Maximum Landing Weight 88,000 lbs.
Maximum Taxi Weight 98,500 lbs.
11 PLACARDS AND MARKINGS
11-20.10 Exterior Placards and Markings 0
Exterior placards and markings shall be in
English Units of measurement.
11-30.10 Interior Placards and Markings 0
Interior placards and markings shall be
adapted for FAA/FAR requirements, and
shall be in English Units of measurement
Page: 4
APPENDIX A-1, Part B
--------------------------------------------------------------------------------
ATA CHAPTER DESCRIPTION WEIGHT
IN LBS.
--------------------------------------------------------------------------------
23 COMMUNICATIONS
23-11.01 HF Communication System Provisions 31
The aircraft shall have full provisions for
a single Xxxxxxx XX Communication system according
to ARINC 719 characteristics.
To arrive at an operational system, the
following equipment has to be added to the
Specification:
- (01) Transceiver, Xxxxxxx HFS 700
- (01) Antenna tuner, Xxxxxxx 490S-1
- (01) Control Panel, Gables
23-32.01 Passenger Entertainment System 22
Installation of a pre-recorded announcement
and boarding music system. The system comprises
a Matsushita RDAX 7201 recorder system.
23-33.10 Portable Communications TBD
Installation of one additional megaphone in
the rear of the passenger compartment, in the
left-hand rear stowage.
24 ELECTRICAL POWER
24-55.10 Razor Outlets in Lavatories 0
Installation of 110 V AC razor power outlets
in the aft lavatories (i.l.o. the 220 V AC supply).
Page: 5
APPENDIX A-1, Part B
--------------------------------------------------------------------------------
ATA CHAPTER DESCRIPTION WEIGHT
IN LBS.
--------------------------------------------------------------------------------
25 EQUIPMENT/FURNISHINGS
25-19.10 Certificate Holder Negl.
A certificate holder shall be installed in the
flight compartment on the cockpit door.
25-20.10 Passenger Compartment Lay-out TBD
The Passenger compartment lay-out shall be as
per attached Fokker drawing F100-04-145, sheet 2,
issue B. This lay-out features:
- 100 passengers at 34 (33) inch seat-pitch
- One Half-size Galley 1 (see attached drawing)
- One Full-size Galley 2 (see attached drawing)
- Two Lavatories
- Stowage compartment in forward cabin
- Wardrobe in forward cabin
- 4 Cabin Attendant seats
In the layout, a 13-inch passage-way at the
triple seat side, and a 10-inch passageway at the
double seat side, near the overwing emergency
exits are anticipated to comply with the FAR
regulations. This results in 5 triple seats at 33
inch pitch. It is the Customer's responsibility
to get approval for this layout from the FAA.
Color and materials for seat covers, curtain,
carpet and entrance floor will be as specified
by customer.
25-21.11 Dual Aft Facing Cabin Attendant Seat 29
Installation of a rear facing double cabin
attendant seat in the entrance against forward
wardrobe/stowage wall, on floor hardpoints and
a third top-point, i.l.o. the standard single
seat.
Page: 6
[GRAPHIC DESCRIPTION]
The passenger compartment layout per attached Fokker drawing F100-04-145,
sheet 2, issue B.
The Layout features
- 100 passengers at 34(33) inch seat pitch
- One half-size galley
- One full size galley
- two lavatories
- stowage compartment in forward compartment
- Wardrobe in forward cabin
- 4 cabin Attendants
FOKKER
GALLEYS 100
================================================================================
[GRAPHIC DESCRIPTION]
Fokker drawing of half-size galley and full-size galley.
XXXXXXXX X-0, Part B
--------------------------------------------------------------------------------
ATA CHAPTER DESCRIPTION WEIGHT
IN LBS.
--------------------------------------------------------------------------------
25-21.10 Passenger seats 803
(Delta to
standard)
The passenger seats will be Flight Equipment
FEEL Space Gen III, with leather seat covers.
Due to leather covering, cushion material has to
be changed for fire blocking requirements. Seats
shall have cushions to be used as flotation
devices. Seats will be modified with movable
armrests on aisle side, except near the overwing
emergency exits. The leather seat covers are
priced separately in Specification Change Notice
JE1 25-21.10. Price is US$ 30,000.- per aircraft
(price level Sept. 93), to be paid on or before
delivery of the aircraft.
25-23.01 Window Blinds 57
Installation of a rolling blind in each
window of the passenger compartment.
25-29 Aft Trolley Stowage / Wardrobe 53
The standard wardrobes in the rear of the
aircraft cabin (forward of the lavatories)
shall be made suitable for stowage of one
half size trolley (one on each side) and a
standard container unit.
The stowage shall be closed by means of a door.
A folding panel shall allow the use of the
compartment as wardrobe.
25-31 Curtain between Galley 1 and 2 4
A curtain will be installed between Galley 1
and 2 to be able to close the Galley area from
the passenger entrance and aisle.
Page: 7
APPENDIX A-1, Part B
--------------------------------------------------------------------------------
ATA CHAPTER DESCRIPTION WEIGHT
IN LBS.
--------------------------------------------------------------------------------
26-60.10 Emergency Equipment TBD
Emergency equipment and locations shall be
as per attached drawing. In addition to the
standard aircraft the following equipment has
been added:
- Second megaphone
(p/n S243, Ovenaire-Audio-Xxxxxxxxx)
- Crash axe (p/n 42D8331, Van Dusen)
- Medical kit (p/n TBD)
- Crew life vests (p/n S21850-7300, Switlik)
- Passenger flotation cushions
- Escape slide for forward opening
passenger door
- Additional flashlight for additional
cabin attendant seat in front cabin
- 3 Smokehoods located near the
portable fire extinguishers
(p/n 119003, Puritan Xxxxxxx)
25-61.01 Crash Axe 2
A crash axe shall be installed in the flight
compartment. The axe shall be located on the RH
aft wall, with the blade housed in a protective
cover.
25-63.01 Emergency Locator Transmitter 7
An emergency locator transmitter shall be
installed, comprising the following components:
- Emergency locator transmitter,
located in the ceiling at the rear
of the passenger compartment;
- Antenna, mounted on the upper fuselage;
- Test switch, located on the overhead
panel in the flight compartment.
Page: 8
[GRAPHIC DESCRIPTION]
Layout of emergency equipment and locations.
XXXXXXXX X-0, Part B
--------------------------------------------------------------------------------
ATA CHAPTER DESCRIPTION WEIGHT
IN LBS.
--------------------------------------------------------------------------------
26 FIRE PROTECTION
26-12.01 Audible Fire Warning Horn 4
Installation of a warning horn in the nose
landing gear bay for audible APU fire warning
during APU ground operation.
The function of the warning horn will be
inhibited during an APU fire warning test.
28 FUEL
28-40.10 Fuel Quantity Indication 0
Fuel quantity indication in the flight
compartment and on the fueling control panel
shall be in pounds (lbs.). (Installation of
alternate part number for combined processor
totalizer). Fuel related data on FMS shall
be in pounds (lbs.).
Fuel flow display in the MFDS shall be in
pounds per hour (lbs/hr.).
Magnetic fuel level indicators will be adapted
to read in pounds (lbs.) or U.S. Gallons.
31 INDICATING/RECORDING SYSTEMS
31-00.10 Instrument Calibration 0
Instrument calibration shall be in English units:
- Degrees F i.l.o. Degrees C
- lbs i.l.o. kg
- inches Hg i.l.o. mbar
- feet i.l.o. m
Page: 9
APPENDIX A-1, Part B
--------------------------------------------------------------------------------
ATA CHAPTER DESCRIPTION WEIGHT
IN LBS.
--------------------------------------------------------------------------------
33 LIGHTS
33-28.01 Galley Area Light 2
A light shall be installed int he ceiling
between galley 1 and 2, and shall be controlled
by a switch located on galley 1.
33-42.10 Anti-Collision Lights 0
Two anti-collision lights with red lens i.l.o.
the standard clear lens shall be installed.
33-46.01 Logo Lights 11
Light fixtures will be installed on the inboard
side of the outboard flap track fairings, to
illuminate both sides of the vertical stabilizer.
33-47.01 Strobe Lights 18
Installation of high intensity recognition in
each wing tip and in the tail cone.
34 NAVIGATION
34-16.01 Windshear 2
Windshear detection, alerting and recovery
guidance shall be incorporated. The Flight
Management System shall provide the detection
function. The GPWS and EFIS shall provide
warning, whereas the recovery guidance/automatic
recovery (when selected), is provided by AFCAS.
In combination with the windshear detection
a speedbrake auto retract logic has to be
installed.
Page: 10
APPENDIX A-1, Part B
--------------------------------------------------------------------------------
ATA CHAPTER DESCRIPTION WEIGHT
IN LBS.
--------------------------------------------------------------------------------
34-26.01 Flight Director Presentation - V-bars 0
This provides V-bar Flight Director
presentation instead of the standard
crossbar presentation.
34-28.01 Dual IRS 29
Installation of a dual Inertial Reference
System (IRS) i.l.o. the standard installed
triple Attitude Heading and Reference System
(AHRS). This will comprise the following
Seller Furnished Equipment:
- (02) IRS unit Honeywell
- (01) Mode selector panel Honeywell
- (01) Inertial System Display Unit Honeywell
34-46.10 TCAS II System 66
In combination with the dual ATC S-mode
system in 34-54.10, a Bendix TCAS II system
shall be installed, comprising the following
(Seller Furnished) equipment:
- One TCAS II processor in Avionics bay.
- Two TCAS omni-directional antennas,
on top and bottom of fuselage.
- Combined ATC/TCAS control panel.
- EFIS control panels with TCAS button.
TCAS information shall be displayed on EFIS:
Traffic alerts on Navigation Display,
resolution alerts and vertical escape
guidance on the Primary Flight Displays.
Page: 11
APPENDIX A-1, Part B
--------------------------------------------------------------------------------
ATA CHAPTER DESCRIPTION WEIGHT
IN LBS.
--------------------------------------------------------------------------------
34-54.10 Dual Air Traffic Control System (ATC) (See 34-46.10)
Installation of a dual ATC system with
S-mode i.l.o. the baseline single system.
This will comprise the following Seller
Furnished equipment:
- Two Bendix ARINC 700 mode-S ATC
transponders, located in the aft
rack of the avionics bay (Bendix ATC
needed due to Bendix TCAS).
- Three additional antennas, one
located on the bottom of the fuselage
and two on the top of the fuselage.
- Two program integrating panels, located
in the avionics bay, to provide the
aircraft identification code to the
S-mode transponders.
34-61.10 FMS Airline Option 0
The so-called Airline option in the FMS
will be as developed for US customers. This
option deviates from the standard on the
following points:
- Altitude constraints in climb can not
be cleared by dialing FMP altitude above
constraint altitude.
- Deletion of pilot defined waypoints upon
landing.
- Engine Out Acceleration Altitude (EO
ACCEL ALT) default set at 800 ft AFL
instead of 1000 ft.
- FUEL CONSUMPTION can only be altered
by password input.
- No holding fuel (FINAL/TIME) and no
route reserve % (RTE RES) on CDU, only
dedicated total reserve fuel (RTE RES
FUEL). Default is changeable, but is
set at 3.3 klbs.
Page: 12
APPENDIX A-1, Part B
--------------------------------------------------------------------------------
ATA CHAPTER DESCRIPTION WEIGHT
IN LBS.
--------------------------------------------------------------------------------
38 WATER/WASTE
38-12.02 Water Heater 13
Installation of a water faucet with two
"PUSH" switches for hot/cold (red/blue)
water. The faucet opens when actuated and
automatically closes after approx. 5 seconds.
To provide warm water to the faucet, a heater
is installed in each toilet.
The installation comprises the following Seller
Furnished units:
- (02) Heater Inventum
- (02) Faucet Xxxxx Rite
49 AIRBORNE AUXILIARY POWER
49-10.01 APU TBD
An Auxiliary Power Unit (APU) GTCP36-150 RR
with increased starting and loading
capabilities will be installed instead of
the GTCP36-150R.
52 DOORS
52-13.01 Forward Opening Passenger Door 29
A forward opening passenger door shall be
installed instead of the downward opening
door with integral airstair. In addition, an
escape slide plus cover will be installed.
Page: 13
APPENDIX A-1, Part B
--------------------------------------------------------------------------------
ATA CHAPTER DESCRIPTION WEIGHT
IN LBS.
--------------------------------------------------------------------------------
52-31.01 Enlarged Cargo Compartment Doors 560
The aircraft will be equipped with enlarged,
upward opening cargo doors, i.l.o. the
standard downward opening doors.
52-70.01 Avionics Bay Access Hatch Warning 2
Two micro switches shall be installed on
each of the two avionics hatches to detect
an unlocked (or open) condition. Separate
warnings, one for each hatch, shall be
supplied to the flight warning computer and
displayed on the Multi-Function Display System
(MFDS).
53 FUSELAGE
53-73.01 Scuff Plate Service/Emergency Door 9
A corrosion resistant steel scuff plate shall
be installed around the lower end of the
forward S/E door opening. The scuff plate
shall be easily removable.
53-73.02 Scuff Plate Forward Opening Passenger Door 11
A corrosion resistant steel scuff plate
shall be installed around the lower end of the
opening of the forward opening passenger door.
The scuff plate shall be easily removable.
53.73.03 Scuff Plates Enlarged Cargo Doors 53
A corrosion resistant steel scuff plate shall
be installed around the lower end of each cargo
compartment door opening. The scuff plates shall
be easily removable.
Page: 14
APPENDIX A-1, Part B
--------------------------------------------------------------------------------
ATA CHAPTER DESCRIPTION WEIGHT
IN LBS.
--------------------------------------------------------------------------------
72 ENGINES
72-00.01 Engine Installation 302
Installation of two Rolls-Xxxxx Xxx
Mk650-15 turbofan engines, i.l.o. the
standard Xxx Xx 620-15 engines.
Page: 00
XXXXXXXX X-0, Xxxx X
XXXX X: SELLER FURNISHED EQUIPMENT
(Type Specification Equipment plus adaptions for
Additional Specification items in Part B)
----------------------------------------------------------------------------------------
ATA DESCRIPTION QTY. PART NUMBER VENDOR
----------------------------------------------------------------------------------------
23 COMMUNICATIONS
23-12 VHF Transceiver ARINC 700 2 622-5219-003 Xxxxxxx
23-31 Amplifier type PAU-700 1 662-5342-001 Xxxxxxx
23-32 Passenger entertainment 1 RDAX 7201 Matsushita
Tape reproducer
23-32 Control Panel 1 RDAX 7211 Matsushita
23-33 Megaphone 2 S243 Ovenaire-Audio-
Xxxxxxxxx
23-71 Cockpit Voice Recorder 1 93A100-80 Xxxxxxxxx
type A-100A
23-71 Microphone monitor 1 93A151-20 Xxxxxxxxx
25 EQUIPMENT & FURNISHING
25-21 Passenger Seats, Triple 15 D3111F814-10 Flight Equipment
1 D3111F802-10 Flight Equipment
1 D3111F806-10 Flight Equipment
1 D3111F812-10 Flight Equipment
1 X0000X000-10 Flight Equipment
1 X0000X000-10 Flight Equipment
25-21 Passenger Seats, Double 15 D2111F623-10 Flight Equipment
1 D2111F611-10 Flight Equipment
1 D2111F615-10 Flight Equipment
1 D2111F621-10 Flight Equipment
1 D2111F667-10 Flight Equipment
1 D2111F667-10 Flight Equipment
Page: 16
APPENDIX A-1, Part C
----------------------------------------------------------------------------------------
ATA DESCRIPTION QTY. PART NUMBER VENDOR
----------------------------------------------------------------------------------------
25-21 Seatbelt 100 500810HT14B3AD- American Safely
500810HT14B34-2258
25-31 Galley 1 1 1001X01A00000 Sell
25-31 Container 1 DLH306-16 Xxxxxxxx
25-31 Coffee-maker 2 00000-000 Xxxxxxxx
25-31 Trolley, half-size (KSSU) 3 XXXX00-000 Xxxxxxxx
25-32 Galley 2 1 1001X02A00000 Sell
25-32 Hot/Cold jug 3 XXX000-000 Xxxxxxxx
25-32 Oven 3 8054-01-0000 Sell
25-32 Oven Control Panel 3 7110-26-0000 Sell
25-32 Trolley, full-size (KSSU) 3 DLH621-37 Xxxxxxxx
25-61 Crash Axe 1 42D8331 Van Dusen
00-00 Xxxxxxxxx Xxxxxxx 0 XXXXX0-0 Xxxxx & Xxxxxxxx
Transmitter
31 INSTRUMENTS
31-31 Flight Data Recorder 1 17M800-261 Xxxxxxxxx
34 NAVIGATION
34-28 Inertial Reference Unit 2 HG1050ADO5 Honeywell
34-28 Mode Selector Unit 1 CG1288AC01 Honeywell
34-28 Inertial System Display Unit 1 CG1135AC02 Honeywell
Page: 17
APPENDIX A-1, Part C
----------------------------------------------------------------------------------------
ATA DESCRIPTION QTY. PART NUMBER VENDOR
----------------------------------------------------------------------------------------
34-32 Receiver, ILS, ARINC 700 2 622-5221-002 Xxxxxxx
34-41 Weather Radar Transceiver 1 622-5132-104 Xxxxxxx
34-41 Weather radar control panel 1 622-5129-106 Xxxxxxx
34-41 Weather Radar Antenna 1 622-5137-201 Xxxxxxx
34-41 Antenna Pedestal 1 622-5135-202 Xxxxxxx
34-42 Radio Altimeter Transceiver 2 F6170 TRT
Type AHV530 - Arinc 700
34-42 Radio Altimeter Antenna 4 S67-2002-19 Sensor Systems
34-43 Ground Prox Warning Comp 1 965-0676-003 Sundstrand
Type Mk V
34-46 TCAS II Processor 1 066-50000-8102 Bendix
34-51 VOR Receiver, ARINC 700 2 622-5220-002 Xxxxxxx
34-52 DME Interrogator, ARINC 700 2 622-4540--001 Xxxxxxx
34-53 ADF Receiver, ARINC 700 1 622-5222-002 Xxxxxxx
34-54 ATC Transponder Mode-S 2 066-01127-1101 Bendix
Page: 00
XXXXXXXX X
FURTHER DEFINITIONS AND VALUES
AGREED VALUE : {***} for the first
year of the Term through and
including the first
anniversary date of the
Delivery Date, and for each
subsequent year the Agreed
Value shall be:
Second Year: ${***}
Third Year: ${***}
Fourth Year: ${***}
Fifth Year: ${***}
Sixth Year: ${***}
Seventh Year: ${***}
Eighth Year: ${***}
Ninth Year: ${***}
Tenth Year: ${***}
provided that the Agreed Value
for any of the above years may
be adjusted up to FMV (but
never in excess of {***}
if Lessor provides to Lessee
an independent appraisal (at
Lessor's cost) prior to the
beginning of any such year.
If Lessee does not agree to
such appraised value, Lessee
may follow the Appraisal
Procedure by giving Lessor
written notice of election to
so proceed within 20 days of
receipt of Lessor's independent
appraisal.
ASSUMED RENT : (a) {***} for the
Aircraft during year one
up to and including year
three of the Term; and
: (b) {***} for the
Aircraft during year four
up to and including year
ten of the Term
DEPOSIT : {***}.
ENUMERATED FINANCIAL
MILESTONES : (1) all deferred amounts of
Rent, Reserve Rate and
Deposits under this Agreement
and all Other Aircraft
Agreements have been paid in
full; and (2) Lessor shall
have received evidence
satisfactory to it that Lessee
has had a net income of
$5,000,000 (Dollars Five
Million) as determined in
accordance with generally
accepted United States
accounting principles
consistently applied for each
of three consecutive fiscal
years.
ESCALATED RENT : the Assumed Rent for the
Aircraft adjusted in
accordance with the provisions
of Appendix D Paragraph 2.2.
PARTIAL LOSS AMOUNT : $250,000, provided, however,
that if the Enumerated
Financial Milestones have been
achieved, then $500,000.
RENT : the Escalated Rent for the
Aircraft, (adjusted in
accordance with the provisions
of Appendix D Paragraphs 2.3,
2.6, 2.7 and 2.8).
-2-
RESERVE RATE : (a) {***} for the
months one up to and
including twelve of the
Term;
(b) {***} for
the months thirteen up to
and including twenty four
of the Term; and
(c) {***} for the
months twenty five up to
and including one hundred
twenty of the Term.
-3-
APPENDIX C
CERTIFICATE OF ACCEPTANCE
This Certificate of Acceptance is delivered, on and as of the date set forth
below, by Midway Airlines Corporation (herein referred to as "Lessee") to First
Security Bank of Utah, N.A., not in its individual capacity but solely as
trustee, (herein referred to as "Lessor") pursuant to that Aircraft Operating
Lease Agreement dated as of November 1, 1993 between Lessor and Lessee (herein
referred to as the "Agreement"):
1. Details of Acceptance
Lessee hereby indicates and confirms to Lessor, its successors and
assigns, that the Lessee has at ______ o'clock on this _____ day of
________ 199__ at ________ Airport, _________ accepted the following, in
accordance with the provisions of the Agreement:
(a) Fokker 100 airframe, Manufacturer's serial Number 11477
(b) Rolls Xxxxx Xxx Mk 650-15 Engines (each of which engines has 750 or
more rated takeoff horsepower)
Engine Number Manufacturer's S/N
1. ______
2. ______
(c) Fuel Status: ______ kilos; ______ litres
(d) Loose Equipment Check List: as per list signed by Lessor and Lessee
and attached.
2. Confirmation of Undertakings
The terms used in this Certificate shall have the meanings given to such
terms in the Agreement.
The Lessee confirms that today being the Delivery Date as defined in the
Agreement:
(i) the Aircraft is duly accepted by the Lessee in accordance with and
subject to the provisions of the Agreement and the execution and
delivery of this Certificate constitutes the acceptance of the
Aircraft by the Lessee for all purposes of the Agreement.
DELIVERY BY LESSEE TO LESSOR OF THIS CERTIFICATE OF ACCEPTANCE SHALL
CONSTITUTE CONCLUSIVE PROOF AS BETWEEN LESSOR AND LESSEE THAT ON THE
DELIVERY DATE LESSEE'S TECHNICAL EXPERTS EXAMINED AND INVESTIGATED
THE AIRCRAFT AND EVERY PART THEREOF AND THAT THE AIRCRAFT AND EVERY
PART THEREOF CORRESPOND TO THE DESCRIPTION SPECIFIED IN APPENDIX A
TO THE AGREEMENT AND ARE AIRWORTHY AND IN GOOD WORKING ORDER AND
REPAIR, WITHOUT DEFECT WHETHER OR NOT DISCOVERABLE AS AT THE
DELIVERY DATE AND IN EVERY WAY SATISFACTORY TO LESSEE;
(ii) the Lessee is obliged to pay to the Lessor the amount provided for
in the Agreement with respect to the Aircraft;
(iii) the Aircraft is insured in accordance with the Agreement;
(iv) the representations and warranties contained in Article 13 of the
Agreement remain, and if made at the date of this Certificate of
Acceptance, would be, true and correct in all respects;
(v) there have been affixed to the Aircraft and the Engines the fire
resistant notices required by Article 4.3 of the Agreement;
(vi) the Lessee has no right of set-off, deduction, withholding or
counterclaim against the Lessor whatsoever; and
(vii) no Default is subsisting.
IN WITNESS WHEREOF, Lessee has caused this Certificate of Acceptance to be
executed in its name, by its duly authorized officer(s) or representative(s),
pursuant to due corporate authority, all as of the date written in Paragraph l
above.
MIDWAY AIRLINES CORPORATION
By: ________________________
Title: _____________________
-2-
APPENDIX D
CHARGES
1. Deposit
Lessor has received payment of {***} for the
Aircraft before the date of this Agreement.
Lessee shall pay the balance of the Deposit to Lessor in thirty four (34)
consecutive equal monthly installments for the first time on or before the first
Business Day ninety days after the date of the start of revenue operation by
Lessee and thereafter each time on the corresponding day in following calendar
month and, if that is not a Business Day, then on the last Business Day
preceding such numerically corresponding day.
The Deposit shall be held by Lessor during the Term as security for the full and
punctual performance of all of Lessee's obligations to Lessor under this
Agreement. Lessor may, but shall not be obliged to, apply the Deposit in whole
or in part for the payment of any rent, maintenance accruals, indemnities,
attorneys fees and other expenses, insurance and other casualty payments and any
other amount owing from time to time by Lessee hereunder or any other Operative
Document, between Beneficiary or its affiliate companies, and Lessee, or for the
payment of any loss or damage suffered by Lessor as a result of any Event of
Default or utilize the Deposit in whole or in part to perform any of Lessee's
obligations under this Agreement or otherwise remedy any other Event of Default,
including, without limitation, in the redelivery condition for the Aircraft
without prejudice to any other remedy of Lessor. In any such event Lessee shall
on demand restore the Deposit to the full amount provided for herein by payment
to Lessor of an amount in cash equal to the amount applied or utilized. Lessee
shall not attempt to subject the Deposit to any other lien, security interest,
charge or other encumbrance or assign any interest therein to any other person
and, to the extent of its interest therein, if any, Lessee hereby grants to
Lessor a security interest in the Deposit and assigns and transfers to Lessor
any and all of Lessee's right, title and interest therein, if any, as security
as provided above, and Lessor shall be entitled to the remedy of offset against
and application of the Deposit, without any notice to or demand against Lessee,
all of which are hereby waived. Lessee further agrees that the Deposit may be,
without derogating from the terms of this Agreement, be assigned as security to
the Bank or transferred to any other transferee of Lessor. Should any Event of
Default hereunder occur, the Deposit shall automatically be applied to any sum
due to Lessor or as a prepayment of any sum to become payable to Lessor, unless
Lessor thereafter elects otherwise by notice to Lessee.
Any remaining Deposit shall be repaid by Lessor to Lessee ten (10) days
following the Expiry Date or other date after redelivery of the Aircraft in
accordance with this Agreement. In the event there is a dispute as to whether
Lessee is entitled to a return of any portion of the Deposit, Lessor shall so
return the undisputed amount of the Deposit. Upon a repayment of such Deposit or
portion thereof, Lessor's security interest in and assignment of such Deposit or
portion thereof being repaid shall be deemed released.
Lessor's obligations in respect of the return of the Deposit shall be those of
debtor of Lessee, not of a trustee or other fiduciary.
The Deposit shall bear interest on the amounts then held at a rate of interest
per annum yielding $10,500 (Dollars Ten Thousand Five Hundred) per year payable
annually commencing on the first anniversary of the Delivery Date, and on each
anniversary thereafter unless the Deposit and interest thereon shall have been
applied pursuant to this Agreement. Any reference to the Deposit in this
Agreement shall include the interest accumulated thereon and not paid to Lessee.
2. Rent
2.1 For the purposes of the calculation and payment of Rent, the Term
shall be divided into two sets of periods ("Rental Periods" and
"Rental Adjustment Periods").
Rent shall be due and payable on each Rent Date. If such date is not
a Business Day then Rent shall be due and payable on the last
Business Day preceding such date.
2.2 The Escalated Rent shall be calculated by increasing the Assumed
Rent with a fixed escalation factor of one half of one percent
(0.5%) per month or a pro rata portion thereof as from the month of
September, 1993 up to and
-2-
including the month of delivery of the Aircraft under the One Year
Lease.
2.3.1 The Rent payable in respect of the Rental Periods One (1) up to and
including Thirty Six (36) is based on an assumed three-years US
Treasury Bond Rate of Four point Ten percent (4.10%) per annum. To
the extent that the actual US Treasury Bond Rate varies from 4.10%
per annum on the delivery of the Aircraft, the Rent will be adjusted
up or down with $16,500.00 (Dollars Sixteen Thousand Five Hundred)
per month for each one percent of variation (or pro rated in the
case the variation is less than one Percent (1%)). The amount of
$16,500.00 (Dollars Sixteen Thousand Five Hundred) shall have been,
upon delivery of the Aircraft, adjusted with the escalation factor
mentioned in 2.2 of this Appendix D.
2.3.2 The Rent payable in respect of the Rental Period Thirty Seven (37)
up to and including One Hundred Twenty (120) shall be adjusted
upward or downward calculated as follows:
E + ((L - Y) x N), where
E is the Escalated Rent, and
Y is Three point Twenty Five percent (3.25%)
L means the arithmetic mean expressed as a number (i.e., 40 per
cent is 40 and not 0.4) of the rates of interest per cent per
annum (rounded if not already such a multiple, to the nearest
whole multiple of 1/16th of one per cent.) at which, at or
about 11.00 a.m. (London time) on the day two Business Days
before the beginning of the Rental Adjustment Period in which
such Rental Period falls, deposits in Dollars are offered for
the duration of such Rental Adjustment Period on the REUTERS
"LIBO" page (or such other page as may replace it from time to
time) ("LIBOR"), and
N is $15,318.00 if such Rental Period falls in the seventh
Rental Adjustment Period;
-3-
is $14,927.00 if such Rental Period falls in the eighth
Rental Adjustment Period;
is $14,527.00 if such Rental Period falls in the ninth
Rental Adjustment Period;
is $14,119.00 if such Rental Period falls in the tenth
Rental Adjustment Period;
is $13,702.00 if such Rental Period falls in the eleventh
Rental Adjustment Period;
is $13,277.00 if such Rental Period falls in the twelfth
Rental Adjustment Period;
is $12,842.00 if such Rental Period falls in the
thirteenth Rental Adjustment Period;
is $12,399.00 if such Rental Period falls in the
fourteenth Rental Adjustment Period;
is $11,945.00 if such Rental Period falls in the fifteenth
Rental Adjustment Period;
is $11,482.00 if such Rental Period falls in the sixteenth
Rental Adjustment Period;
is $11,010.00 if such Rental Period falls in the
seventeenth Rental Adjustment Period;
is $10,527.00 if such Rental Period falls in the
eighteenth Rental Adjustment Period;
is $10,034.00 if such Rental Period falls in the
nineteenth Rental Adjustment Period;
-4-
is $9,530.00 if such Rental Period falls in the twentieth
Rental Adjustment Period;
Such N-amounts shall - upon delivery of the Aircraft - be adjusted
with the escalation factor mentioned in Article 2.2. of this
Appendix D.
2.3.3 The monthly Escalated Rent shall also be adjusted upward by an
amount equal to $875 (Dollars Eight Hundred Seventy Five) per month
which shall be payable to Lessor by check annually commencing on the
first anniversary of the Delivery Date, and on each anniversary
thereafter. Lessee may elect to authorize Lessor in writing to
set-off amounts payable pursuant to this Article 2.3.3 against
interest on the Deposit which is payable by Lessor pursuant to
Article 1 of this Appendix D irrespective of whether or not an Event
of Default shall have occurred and be continuing.
2.4 Any notice with respect to rental adjustments given by Lessor shall
set out the basis of calculation of "L" and of the Rent specified
therein and shall, save in the case of manifest error, be
conclusive.
2.5 [INTENTIONALLY DELETED]
2.6 To finance the payments required to be paid by Lessee under Article
8.2(a) (i), the Escalated Rent shall also be adjusted upward in an
amount (the "Adjustment Amount") of $1,551 (Dollars One Thousand
Five Hundred Fifty One) for each Rent Date through and including the
forty eighth Rent Date. If a Casualty Occurrence occurs on or prior
to such forty eighth Rent Date, an amount (the "Additional Amount")
in Dollars equal to the present value (discounted at the interest
rate of six point one percent (6.1%)), of all unpaid Adjustment
Amounts through the Rent Date on or immediately preceding the date
of the Casualty Occurrence shall be due and payable, with interest
thereon at six point one percent (6.1%), on the date on which Agreed
Value is payable pursuant to Article 17.2(b).
2.7 Lessee shall pay to Lessor all reasonable expenses paid to third
parties (including legal, printing and out-of-pocket expenses)
incurred or payable by
-5-
Lessor in connection with the negotiation, preparation and execution
of the first refinancing of the Aircraft and this Agreement by the
initial Lessor and its Beneficiary with a Bank and the related first
assignment by Lessor (in its trust capacity) or its Beneficiary to
another Lessor or Beneficiary with a related Bank financing,
subject, however, that Lessee's obligation to pay such expenses is
limited to $150,000 (Dollars One Hundred Fifty Thousand) for such
first refinancing of the Aircraft and if such first refinancing
transaction includes the first refinancing of aircraft which are the
subject of Other Aircraft Agreements, then Lessee's obligation to
pay such expenses pursuant to this Article 2.7 and Article 2.7 of
Appendix D in each applicable Other Aircraft Agreement, in the
aggregate shall be limited to the foregoing $150,000 plus (x)
$100,000 (Dollars One Hundred Thousand) for a first refinancing
transaction involving one additional aircraft; and (y) $50,000
(Dollars Fifty Thousand) per each further additional aircraft.
Lessor hereby agrees to finance the payments required to be paid by
Lessee under this Article 2.7 as follows: The Escalated Rent shall
be adjusted upward for each Rent Date commencing on the Rent Date
next succeeding the date of the first refinancing described in this
Article 2.7 in an amount equal to the expenses referred to herein
(subject to the maximum amounts referred to herein) plus the product
of such expenses multiplied by an interest rate (the "Aircraft
Refinancing Interest Rate") agreed to by Lessee and Beneficiary and
calculated on an accrual basis using the same method applied by the
Beneficiary in obtaining the monthly Escalated Rent amount set forth
in Article 2.6 above, the sum thereof divided by the total number of
aircraft which are the subject of the first refinancing described
herein (such quotient, the "Aircraft Refinancing Amount") and
further divided by the lesser of forty eight (48) or the total
number of remaining Rent Dates to occur during the Term (each such
amount an "Aircraft Refinancing Installment"). Such amount shall be
payable on each Rent Date commencing on the Rent Date next
succeeding the date of the first refinancing described in this
Article 2.7. If a Casualty Occurrence occurs prior to the payment in
full of the Aircraft Refinancing Amount, an amount (in Dollars)
equal
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to the present value (discounted at the Aircraft Refinancing
Interest Rate) of all unpaid Aircraft Refinancing Amount through the
Rent Date on or immediately preceding the date of the Casualty
Occurrence shall be due and payable, with interest thereon at the
Aircraft Refinancing Interest Rate, on the date on which Agreed
Value is payable pursuant to Article 17.2(b).
3. Reserve Rate
3.1 In addition to installments of Rent, Lessee shall pay to Lessor the
Reserve Rate as follows:
(a) by way of an Airframe maintenance accrual, the sum of
{***} for the months one up to and including
twelve of the Term, {***} for the months
thirteen up to and including twenty four of the Term and
{***} for the months twenty five up to and
including one hundred twenty of the Term for each Flight Hour
the Aircraft is operated during the Term ("Airframe
Maintenance Accrual"), and
(b) by way of an Engine maintenance accrual, in respect of each
Engine the sum of {***} for the months
one up to and including twelve of the Term,
{***} for the months thirteen up to and including twenty four
of the Term and {***} for the months twenty
five up to and including one hundred twenty of the Term for
each Flight Hour operated by each Engine during the Term
("Engine Maintenance Accrual"), and
(c) by way of a landing gear maintenance accrual, the sum of
{***} for the months one up to and
including twelve of the Term, {***} for
the months thirteen up to and including twenty four of the
Term and {***} for the months twenty
five up to and including one hundred twenty of the Term for
each Cycle operated by the landing gear during the Term
("Landing Gear Maintenance Accrual"), and
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(d) by way of an A.P.U. maintenance accrual, the sum of
{***} for the months one up to and including twelve of
the Term, {***} for the months thirteen up
to and including twenty four of the Term and {***}
for the months twenty five up to and including one
hundred twenty of the Term for each Flight Hour operated by
the A.P.U. during the Term ("A.P.U. Maintenance Accrual").
The Airframe, Engine, Landing Gear and A.P.U. Maintenance Accruals
accruing in any Rental Period shall be paid by Lessee to Lessor not
later than ten (10) days after the end of the calendar month in
which such Rental Period shall end. Concurrently with the payment
thereof, Lessee shall report to Lessor (in accordance with Article
7.1 (e)) the number of Flight Hours and Cycles accumulated in
respect of the period for which payment is being made.
The Reserve Rate will be subject to adjustment every six (6) months
during the Term by reference for 65% to the Employment and Earnings
Index for U.S.A. labor cost average hourly earnings of production
(Aircraft Equipment) SIC 3728, table C-2 and for 35% to the Producer
Price Index for U.S.A. material cost commodity groupings (Machinery
and Equipment) Code 11/table 6. In addition the Engine Maintenance
Accrual will be subject to adjustment every six (6) months during
the Term having regard to the Engine Manufacturer recommendations,
industry experience and any change in the operational environment of
the Aircraft.
Any Reserve Rate shall, if requested by either Lessor or (unless an
Event of Default shall have occurred and be continuing) Lessee, be
adjusted to take into account any changes in the maintenance
intervals upon which Reserve Rates are based.
3.2 Maintenance Accruals as defined in paragraph 3.1 above and received
by Lessor shall respectively be credited to funds (collectively
"Maintenance Funds") to be known as the "Airframe Maintenance Fund",
the "Engine Maintenance Fund, the "Landing Gear Maintenance Fund"
and the "A.P.U. Maintenance Fund" which funds shall reduce as monies
are
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released to Lessee therefrom in accordance with Article 7.4.1.
3.3 [INTENTIONALLY DELETED]
3.4 The Reserve Rates shall accrue interest at the applicable six (6)
months US Dollar LIBOR rate minus point twenty five percent (.25%)
per annum, which interest shall be added to the relevant Maintenance
Fund.
3.5 If the Enumerated Financial Milestones have been achieved, then
Lessee's obligation to continue to pay Reserve Rates hereunder shall
be stayed, provided, however, that in connection with the release of
monies to Lessee from the Maintenance Fund pursuant to Article 7.4.1
occurring thereafter, prior to the release of monies, Lessee shall
provide Lessor with evidence, reasonably satisfactory to Lessor,
that Lessee has retained accumulated net earnings (as determined in
accordance with generally accepted United States accounting
principles consistently applied) of not less than $15,000,000
(Dollars Fifteen Million), and provided, further, that if such
evidence cannot be provided or is not reasonably satisfactory to
Lessor, Lessee's obligation to pay Reserve Rates shall recommence
pursuant to the terms hereof and no monies shall be released from
the Maintenance Fund until such time as it shall have been restored
to the level at which it would have been had this paragraph not been
in effect.
If Lessee has achieved the payment in full of all deferred amounts
as set forth in clause (1) of the definition of Enumerated Financial
Milestones, Lessee may, at its election, pay to Lessor the amount
which is necessary to cause monies standing in the Maintenance Fund
to equal $1,500,000 (Dollars One Million Five Hundred Thousand) and
thereafter Lessee shall have no further obligation to make Reserve
Rate payments hereunder, provided, however, that thereafter no funds
shall be released to Lessee from the Maintenance Fund pursuant to
Article 7.4.1. It is understood, for the avoidance of doubt, that
the foregoing terms of this Article 3.5 shall not affect Lessee's or
Lessor's obligations under Article 3.6 of this Appendix D.
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3.6 On the Expiry Date, if there is any Excess (as defined below) in any
Maintenance Fund, such Excess Shall, unless a Default shall have
occurred and be continuing (in which case only after termination,
return of the Aircraft and payment of all amounts due following
exercise of remedies under Article 15), be paid to Lessee, and on
such date, if there is any Shortfall (as defined below) in any
Maintenance Fund, Lessee shall pay such Shortfall to Lessor.
"Excess" in any Maintenance Fund on the Expiry Date shall mean any
positive difference obtained by subtracting (x) from (y) for the
Airframe, Engines, Landing Gears or A.P.U., as the case may be; (x)
shall mean the product of (I) the then market cost from the original
equipment manufacturer and corrected for the experience of all
United States based operators of Fokker 100 aircraft for the
relevant item:
with respect to the Aircraft, to perform a scheduled airframe
heavy maintenance as defined in the Maintenance Program for
12,000 hours and 24,000 hours inspections or any equivalent
thereof with more or less hours ("Airframe Maintenance"), or
with respect to any Engine, to perform a scheduled shop visit
engine maintenance and repair, other than (i) repairs arising
as a result of foreign object damage or operations mishandling
and/or (ii) maintenance and repair of QEC (Quick Engine
Change) kits ("Engine Maintenance"), or
with respect to any nose or main landing gear to perform a
schedule shop visit nose and main landing gear maintenance and
repair, other than repairs arising as a result of foreign
object damage or operational mishandling ("Landing Gear
Maintenance"), or
with respect to Auxiliary Power Unit ("A.P.U.") to perform an
off Aircraft shop A.P.U. maintenance and repair, other than
repairs arising as a result of foreign object damage or
operational mishandling ("A.P.U. Maintenance"), and
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(II) a fraction of which (a) the numerator shall be the difference
between the actual number of hours or cycles (as to landing gear),
as the case may be, of operation remaining on the Airframe, Engine,
Landing Gear or A.P.U., as the case may be, to the next such
Airframe Maintenance, Engine Maintenance, Landing Gear Maintenance
or A.P.U. Maintenance, as the case may be, and the total number of
hours or cycles, as the case may be, of operation allowable between
such Maintenance and (b) the denominator shall be the total number
of hours or cycles, as the case may be, of operation allowable
between such Maintenance.
(y) shall mean the actual dollar amount remaining in the respective
Maintenance Fund.
"Shortfall" in any Maintenance Fund on the Expiry Date shall mean
any negative difference obtained by subtracting (x) above from (y)
above.
4. Payments
All payments due hereunder shall be effected by Lessee to Lessor by
transfer to Chemical Bank in New York, New York, in favor of the
Beneficiary, account number 000-0-00000, Ref. Aircraft MSN 11477,
AOLAF-114, in Dollars and in immediately available funds, and all such
payments shall be initiated adequately in advance of the due dates to
ensure that Lessor receives credit for the full amount of such payment on
the due dates. All such payments shall be made in full without any
deduction or withholding (whether in respect of set-off, counterclaim,
duties, taxes, charges or otherwise howsoever) unless Lessee is prohibited
by Law from doing so, in which event Lessee shall (a) ensure that the
deduction or withholding does not exceed the minimum amount legally
required; (b) forthwith pay to Lessor such additional amount as shall
result in the net amount received by Lessor being equal to the amount
which would have been received by Lessor had such a deduction or
withholding not been made; (c) pay to the relevant taxation or other
authorities within the period for payment permitted by applicable Law the
full amount of the deduction or withholding; and (d) upon request in
writing from Lessor to Lessee furnish to Lessor, within the period for
payment permitted by applicable Law, an official receipt of the relevant
taxation or other authorities involved for all amounts deducted or
withheld as aforesaid.
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5. Currencies
If under any applicable Law, whether as a result of judgment against
Lessee or the liquidation of Lessee or for any other reason, any payment
under or in connection with this Agreement is made or recovered in a
currency other than United States Dollars then, to the extent that the
payment (when converted to United States Dollars at the rate of exchange
on the date of payment or, in the case of the liquidation, the latest date
for the determination of liability permitted by the applicable Law) falls
short of the amount unpaid under this Agreement, Lessee shall, as a
separate and independent obligation, fully indemnify Lessor against the
amount of the short fall; for the purposes of this paragraph, "rate of
exchange" means the rate at which Lessor is able on the relevant date to
purchase United States Dollars in London with that other currency.
6. Default Interest
If any amount payable pursuant to this Agreement is not paid by Lessee on
the due date, Lessee shall pay to Lessor interest (after as well as before
judgment) on such amount, at the rate of LIBOR (as defined in Article
2.3.2 of this Appendix D, but for the duration of six months and as
applicable two Business Days before the Default), plus four per cent (4%)
per annum from the due date to the date of payment in full by Lessee to
Lessor, but in the event such rate shall be in excess of the highest rate
permitted by applicable law, then it shall mean the highest rate allowed
by applicable law. All amounts of interest payable hereunder shall be
calculated on the basis of the actual number of days elapsed and a 360 day
year.
7. Set-off
At any time after a Default shall have occurred and be continuing, Lessor
shall be entitled to set-off or withhold from any amount due and payable
to Lessee under this Agreement or any other Operative Document, or any
amount standing to the credit of Lessee on any account, in or towards the
satisfaction of any amounts from time to time due and payable by Lessee
under this Agreement or any other Operative Document or any liability or
obligation of Lessee under this Agreement or any other Operative Document,
and shall be entitled to do so notwithstanding that any such amount or
amounts may not be expressed in the same currency.
-12-
9. Time at which payments are due
Supplemental Rent shall be due and payable on demand unless otherwise
expressly stated herein.
9. Purchase Option
Lessor grants to Lessee the right to purchase and to take delivery of the
Aircraft on the Expiry Date of this Agreement for a price equal to the
greater of the fair market value (as deferred to the penultimate sentence
of this paragraph, "FMV") of the Aircraft on the Expiry Date and
{***}. If Lessee elects to exercise its
right to purchase the Aircraft, Lessee shall do so by giving to Lessor
written notice of such election at least two hundred seventy (270) days
prior to the Expiry Date. The FMV of the Aircraft on the Expiry Date shall
be established by an independent internationally reputed aircraft
appraiser appointed by mutual agreement of Lessor and Lessee within one
(1) month of the date of receipt by Lessor of Lessee's notice of election
to purchase. If Lessor and Lessee shall be unable to agree on such
aircraft appraiser, FMV shall be established by a mutually agreed
appraisal prepared and delivered by two independent internationally
reputed aircraft appraisers, one of which shall be chosen by Lessor and
one by Lessee. If such appraisers shall be unable to agree on FMV, FMV
shall be equal to the average of the fair market values established by
such appraisers. Any appraisal shall meet internationally accepted
standards and shall be binding upon Lessee and Lessor. The appraisal
procedure outlined in this Article 9 shall be referred to herein as the
"Appraisal Procedure". The FMV shall be equal in amount to the value that
would be obtained as of the Expiry Date in an arms'-length transaction
between an informed and willing purchaser under no compulsion to buy and
an informed and willing seller under no compulsion to sell with the
Aircraft assumed to be in the condition required upon the return thereof
at the end of the Term in accordance with Article 16 without considering
the encumbrance of this Agreement. All costs and expenses of the FMV
appraisal shall be shared equally by Lessor and Lessee.
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XXXXXXXX X
OPERATING CONDITION AT RE-DELIVERY
Upon redelivery of the Aircraft to Lessor, the Aircraft shall, subject to
ordinary wear and tear generally:
1. General Condition
(a) Be clean by airline standards;
(b) Have installed the Engines, and other equipment, Parts and
accessories and loose equipment as would remain installed in such
Aircraft, and shall be in a condition suitable for operation in
commercial service;
(c) Have in existence a valid Certificate of Airworthiness with respect
to the Aircraft issued by the Air Authority of the State of
Registration with a validity of at least nine (9) months after the
date of redelivery of the Aircraft to Lessor;
(d) Comply with the manufacturer's original specifications therefor;
(e) Have undergone, immediately prior to redelivery, a 3000 Check or any
subsequent higher inspection, if due within 3000 hrs, in accordance
with the Approved Maintenance Program, shall be free of any waivers,
and all deferred maintenance, if any, shall have been accomplished;
each engine and A.P.U. shall have had an inspection in accordance
with Article 16 confirming release for its remaining operational
life;
(f) All outstanding airworthiness directives and mandatory orders
affecting such model of Aircraft issued by the Air Authority which
require compliance during the Term shall have been accomplished;
(g) Have installed all applicable vendors' and manufacturers' service
bulletin kits theretofore received by Lessee free of charge that are
appropriate for the Aircraft and to the extent not installed, such
kits shall be furnished free of charge to Lessor;
(h) Stripped of all Lessee's paint scheme and repainted through an
Authorized Maintenance Performer with Manufacturer approved paints
in white or any other basic color requested by Lessor; and
(i) Have been inspected and treated with respect to corrosion as defined
in the Approved Maintenance Program.
2. Airframe and major components
The Airframe and major components shall have not less than the following
hours/cycles/months expected life remaining to the next Major Check and/or
overhaul:
-Airframe : 3000 hours and 12 months to
next Major Check;
-Engine : half life on average to next
Engine shop visit but in no
event less than 3000 hours;
-Main Landing Gear : 3000 cycles to next overhaul;
-Nose Landing Gear : 3000 cycles to next overhaul,.
*The records as to remaining engine life shall be certified by Lessee in
writing to Lessor upon redelivery of the Aircraft to Lessor.
3. Components
(a) Each life-limited Part shall have not less than 3000 (Three
Thousand) flight hours or cycles of the total approved life
remaining to the scheduled replacement, in accordance with the
Approved Maintenance Program;
(b) Each hard-time controlled component shall have not less than 3000
(Three Thousand) Flight Hours or 3000 (Three Thousand) Cycles or 12
(twelve) months whatever is applicable, remaining to the next
scheduled overhaul/inspection, in accordance with the Approved
Maintenance Program;
(c) "On-condition" and "Condition Monitored" components shall be
serviceable;
(d) The A.P.U. shall be serviceable.
4. Fuselage, Windows and Doors
(a) Fuselage shall be free of major dents and abrasions, scab patches
and loose or pulled or missing rivets;
(b) Windows shall be free of delamination, blemishes, crazing and shall
be properly sealed;
-2-
(c) Doors shall be free moving, correctly rigged and be fitted with
serviceable seals.
5. Wings and Empennage
(a) All leading edges shall be free from damage;
(b) All unpainted cowlings, fairings and other surfaces shall be
polished;
(c) Wings shall be free of fuel leaks.
6. Interior
(a) Ceilings, sidewalls and bulkhead panels shall be clean and free of
cracks and stains;
(b) All carpets and seat covers shall be in good condition, clean and
stain free and meet Air Authority fire resistance regulations;
(c) All seats shall be serviceable, in good condition and repainted as
necessary;
(d} All signs and decals shall be clean and legible;
(e) All emergency equipment having a calendar life shall have a minimum
of one year or one hundred per cent of its total approved life,
whichever is less, remaining.
7. Cockpit
(a) All decals shall be clean, secure and legible;
(b) All fairing panels shall be free of stains and cracks, shall be
clean, secure and repainted as necessary;
(c) Floor coverings shall be clean and effectively sealed;
(d) Seat covers shall be in good condition, clean and shall conform to
Air Authority fire resistance regulations;
(e) Seats shall be fully serviceable and shall be repainted as
necessary.
8. Cargo Compartments
(a) All panels shall be in good condition;
-3-
(b) All nets shall be in good condition.
9. Landing Gear and Wheel Xxxxx
(a) Shall be clean, free of leaks and repaired as necessary;
(b) All decals shall be clean, secure and legible.
10. Corrosion
(a) Entire fuselage shall be substantially free from corrosion and shall
be adequately treated and an approved corrosion prevention program
shall be in operation;
(b) Fuel tanks shall be free from contamination and corrosion and a tank
treatment program shall be in operation.
-4-
APPENDIX F
AIRCRAFT DOCUMENTS
FOKKER 100 AIRCRAFT
Aircraft Documents shall include the documents referred to in Table I ("Aircraft
Documentation"), Section (D), Exhibit (D) of the Support Services Agreement No.
ASSAF-110 between FAUSA and Lessee.
Aircraft Documents shall also include all logs, certificates and data, and
inspection, modification and overhaul records, relating to the Aircraft and
required to be maintained by the Air Authority and/or by the Approved
Maintenance Program.
Upon Expiry Date or upon earlier termination of the Agreement all Aircraft
Documents shall be redelivered by Lessee to Lessor complete and fully updated
simultaneously with the redelivery of the Aircraft.
APPENDIX G
LEGAL OPINION
[Certain provisions of this opinion may be given by different law firms or
individuals: revision required if the Bank is a party]
[Closing Date]
[___________________]
0000 X. Xxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Dear Sirs:
We have acted as counsel to Midway Airlines Corporation, a Delaware corporation
("Lessee"), in connection with the execution and delivery by Lessee of the
Aircraft Operating Lease Agreement AOLAF-114, dated as of November 11, 1993
between First Security Bank of Utah, N.A., not in its individual capacity but
solely as trustee ("Lessor") and Lessee (the "Agreement"). Except as otherwise
herein defined, the terms used in this opinion letter have the same meanings as
the terms used in the Agreement.
We have examined the Agreement and the other Operative Documents. We have also
examined the original, or photostatic or certified copies of such agreements and
records of Lessee and of public officials, orders and certificates of regulatory
bodies and courts of competent jurisdiction and such other documents as we have
deemed relevant and necessary. We have relied upon the accuracy of the factual
information set forth in all such documents.
In our examination we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals, the conformity to
original documents of all documents submitted to us as photostatic or certified
copies and the authenticity of the originals of such latter documents.
Based upon our examination, we are of the opinion that:
1. Lessee is a corporation duly incorporated and organized and validly
existing in good standing under the laws of the State of Delaware, and has
all requisite corporate power and authority to carry on its business as
presently conducted and to execute and deliver, and to incur and perform
its obligations under the Agreement and the other Operative Documents and,
to the best of our knowledge, no steps have been taken or are being taken
to appoint a receiver or liquidator over, or to wind up, Lessee.
2. The execution, delivery and performance by Lessee of the Agreement and the
other Operative Documents and the compliance by Lessee with the terms and
provisions thereof have been duly authorized by all necessary corporate
action, do not require any approval of stockholders of Lessee, and will
not violate any provision of law or any governmental rule or regulation or
any judgment, decree, or order binding on Lessee, or of the Certificate of
Incorporation or By-laws of Lessee.
3. Lessee is not in violation of any provision of its Amended and Second
Restated Certificate of Incorporation as that document may be further
amended and/or restated (hereafter referred to as the Certificate of
Incorporation), or By-laws, and to the best of our knowledge, is not in
violation of any provision of any agreement, instrument or document to
which it is a party or by which it is bound, nor has there occurred and is
continuing any event which, under the provision of any such agreement,
instrument, instrument or document, which the lapse of time or giving of
notice, or both, would constitute a default by Lessee. Lessee is not in
violation of any law, rule or regulation, or any order, injunction or
decree of any court or administrative body applicable to it, which
violation could materially and adversely affect its business, property or
assets, operations or condition, financial or otherwise.
4. The Agreement and the other Operative Documents have been duly executed
and delivered by Lessee and constitute the legal, valid and binding
obligations of Lessee, enforceable in accordance with their respective
terms, except as may be limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors' rights
generally (including, without limitation, laws regarding fraudulent
conveyance and equitable subordination) and by general principles of
equity (regardless of whether enforcement is sought in a proceeding in
equity or at law), and (ii) applicable laws which may affect certain of
the remedies provided in the Agreement and the other Operative Documents
but which do not, in our opinion, make the remedies provided therein
inadequate for the practical realization of the benefits afforded thereby.
5. No consent, approval or authorization of, nor registration, qualification,
designation, declaration of filing with, any governmental authority in the
United States of America or any political subdivision or instrumentality
therein or thereof is required in connection with the execution, delivery
or performance by lessee of the Agreement and the other Operative
Documents, or any other document or
-2-
instrument contemplated thereby, except for (i) the registration of the
Aircraft in Lessor's name with the Federal Aviation Administration (the
"FAA") pursuant to the Federal Aviation Act of 1958, as amended (the
"Act"), the Equipment Lease, and the Credit and Security Agreement; the
filing of the Agreement for recordation with the FAA pursuant to, and in
accordance with, the Act; and (iii) the filing of financing statements
with respect to the interest created by the Agreement under the Uniform
Commercial Code with the Secretary of the State of the State of Illinois.
6. No other filing or recording of any document is necessary under the laws
of the United States or [ ] in order to perfect Lessor's title
to the Aircraft under the Agreement and Aircraft Equipment under the
Equipment Lease and to perfect Lessor's security interest in the
Collateral under the Credit and Security Agreement as against Lessee and
any third parties within the United States.
7. No United States Federal withholding taxes will be applicable to the
rentals and other payments made by Lessee under the Agreement and the
other Operative Documents.
8. No tax will be imposed by any state of the United States of America or any
political subdivision thereof on Lessor's interest in the Aircraft solely
by virtue of the execution, delivery and performance of the Agreement and
the other Operative Documents.
9. In any action to enforce the Agreement commenced in courts of the state of
New York or a United States District Court located in New York, such
courts would give effect to the choice of the parties thereto of New York
law as the governing law thereof.
10. The obligations of the Lessee for the payment of money under the Agreement
and the other Operative Documents rank at least equally and ratably (pari
pasu) with respect to priority and security with all other unsecured
obligations of the Lessee.
11. No claims of creditors and/or possessory liens will rank ahead of the
respective rights and interests of the Lessor, Head Lessor and the Bank in
the Aircraft.
We are members of the bar of the state of New York and [_______] and we
are not, and do not purport to be, experts in the laws of any other
jurisdiction other than the Federal laws of the United States of America.
The opinions set forth in this opinion letter are limited solely to the
laws of the
-3-
State of New York, the Uniform Commercial Code, as applicable in the State
of Illinois, the corporate law of the State of Delaware and the United
States of America.
Very truly yours,
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APPENDIX H
CERTIFICATE OF INSURANCE
To: (Lessor)
CERTIFICATE OF INSURANCE
THIS IS TO CERTIFY that we in our capacity as insurance brokers have effected
insurance (reinsurance) on behalf of:
ASSURED ______
(REASSURED) _____
as herein described in respect of:
AIRCRAFT: FOKKER 100 REGISTRATION ______
Subject to policy terms, conditions, limitations and exclusions the insurance
covers:
1) HULL ALL RISKS of loss or damage to the Aircraft for an Agreed Value
of US$______ (United States Dollars ______).
This policy includes Excluded Coverage Endorsement (Aircraft Hull)
AVN51 or equivalent.
This insurance is subject to a deductible (other than total loss,
arranged total loss or constructive total loss) of US$______ (United
States Dollars ______) any one accident.
The geographical limits of the insurance are worldwide and the
insurance is in force during the period ______.
2) If operated outside the United States and Canada, HULL WAR and
ALLIED PERILS insurance for the Aircraft for an Agreed Value of
US$______ (United States Dollars ______) covering the risks excluded
from the Hull All Risks insurance by the terms of the War, Hijacking
and Other Perils Exclusion Clause AVN.48B except paragraph (b)
thereof and includes cover in respect of confiscation,
nationalization, seizure, restraint, detention, appropriation for
title or use by or under the order of the Government or public or
local authority of the State of Registration.
This insurance is not subject to a deductible.
(The insurance for the Aircraft also covers other aircraft of the
Assured's fleet and is subject to an overall limit in respect of all
aircraft insured of ______ in the aggregate.)
The geographical limits of the insurance are worldwide and the
insurance is in force during the period ______
3) Comprehensive Airline Liability including aircraft Third Party
Liability, Passenger and Crew Liability (including Baggage and
Personal Effects), Cargo Liability, Mail Liability, Personal Injury
Liability Contractual Liability, Hangar Keeper's Liability, Aircraft
Products Liability and General Third Party Liability for a combined
single limit of US$______ (United States Dollars ______) any one
occurrence each aircraft but limited in respect of Personal Injury
(as covered by Personal Injury Extension clause AVN.60) to the
equivalent of US$25,000,000.00 (United States Dollars Twenty Five
Million) any one offence and in the aggregate.
This insurance is subject to the War, Hijacking and Other Perils
Exclusion AVN.48B with paragraphs (a) and (c) through (g) deleted
subject to Extended Coverage Endorsement (Aircraft Liabilities)
AVN52C.
This insurance is subject to deductibles in respect of Baggage and
Personal Effects of US$1,250.00 (United States Dollars One Thousand
Two Hundred Fifty) any one claim and in respect of Cargo and Mail
Liability of US$5,000.00 (United States Dollars Five Thousand) any
one claim. Such deductibles do not apply to claims arising from
accidents to the carrying aircraft.
The geographical limits of this insurance are worldwide and the
insurance is in force during the period ______.
4) ALL RISKS INSURANCE in respect of any Engine and Parts while any
such items are not installed on the Aircraft and in respect of which
cover is not provided under the Hull All Risks insurance 1) above
for not less than the full replacement value and/or the Hull War and
Allied Perils Insurance 2) above including cover in respect of War
and Allied Perils except that War cover is provided only in respect
of Marine and Air Transits.
-2-
This insurance is subject to a limit of US$______ (United States
Dollars ______).
This insurance is subject to a deductible of US$______ (United
States Dollars ______) any one accident.
The geographical limits of the insurance are worldwide and the
insurance is in force during the period ______.
THE INSURERS (REINSURERS) have been advised that Lessor has entered
into a lease agreement with Lessee in respect of the Aircraft and
insurers (reinsurers) have agreed to endorse the insurances as
follows:
A) In respect of All Risks Aircraft Hull insurance, Aircraft Hull
War and Allied Perils insurance and All Risks insurance on
Engines and Parts to:
(i) name the Lessor, Head Lessor and the Bank and their
respective successors and assigns as Additional
Assureds;
(ii) provide that all claims in respect of the Aircraft,
Engines and Parts shall be payable to Lessor or as it
may direct, such payee to be named Loss Payee; provided
that partial loss amounts up to $250,000 shall be
payable to Lessee unless the insurers have been given
notice that a Default has occurred;
(iii) if applicable, provide in respect of Hull All Risks and
Hull War and Allied Perils for a 50/50 Claims Settlement
Clause in the form of AVS.103.
B) In respect of Comprehensive Airline Liability insurance to:
(i) name the Lessor, its successors and assigns and its
shareholders, subsidiaries, directors, officers, agents,
employees and the Indemnitees as Additional Assureds.
(ii) provide that the insurance shall operate in all respects
as if a separate policy had been issued covering each
party insured hereunder, but this provision shall not
operate to include any claim howsoever arising in
respect of loss or damage to the Aircraft, Engines and
Parts insured under the All Risks
-3-
Hull, Hull War and Allied Perils or All Risks insurance
of the Assured.
Notwithstanding the foregoing the total liability of
insurers in respect of any and all Assureds shall not
exceed the limits of liability stated in the policy.
C) In respect of all insurances to:
(i) be effective worldwide except for territories approved
in writing by the Lessor.
(ii) provide that insurers waive all rights of subrogation
against the Lessor, its subcontractors, FAUSA, Fokker
Aircraft B.V., the Head Lessor, the Bank, and their
respective officers, directors, employees, servants,
agents, successors and assigns.
(iii) provide that in the event that the insurances are
cancelled (including cancellation for non payment of
premium) or are materially changed such cancellation or
change shall not be effective as to the interest of the
Additional Assureds until thirty (30) days (but seven
(7) days or such lesser period as is customarily
available in accordance with policy conditions in
respect of war and allied perils) after confirmed
receipt by Lessor of written notice by insurers of such
cancellation or change.
(iv) provide that in respect of the interest of the
Additional Assureds the insurances shall not be
invalidated by any act, neglect, omission,
misrepresentation or non-disclosure on the part of the
Lessee or any other party other than the Additional
Assured seeking to make a claim thereunder and shall
insure Lessor, and each Additional Assured regardless of
any breach or violation of any warranties, declarations
or conditions contained in such policies by the Lessee
or any other party other than the Additional Assured
seeking to make a claim thereunder.
(v) provide that the Additional Assureds shall have no
responsibility for premiums and Insurers shall waive any
right of set-off or
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counter claim against the Additional Assureds except in
respect of outstanding premium in respect of the
Aircraft, Engines and Parts subject of a claim.
(vi) not provide for any deductible or self-insurance other
than the deductible allowed above.
(vii) be primary without right of contribution from any other
insurance carried by Lessor, Lessee or any other party.
D) if required, in respect of reinsurance to:
(i) provide that cover shall be identical to the cover
provided by the original insurances and be subject to
the same terms and conditions as the original
insurances.
(ii) provide that so far as the respective interests of the
Additional Assureds are concerned the reinsurance shall
not be invalidated by any act, neglect, omission.
misrepresentation or non-disclosure on the part of the
reinsured party.
(iii) provide that in respect of All Risks Aircraft Hull
insurance, Aircraft Hull War Risk and Allied Perils
insurance as described above and All Risks insurance on
any Engine and Parts as described above, the reinsurers
and the reassured hereby agree that in the event of any
claim arising under the relevant reinsurances the
reinsurers shall in lieu of payment to the reassured,
its successors in interest and assigns pay to the Loss
Payee specified in the primary insurances all sums
payable under or in connection with such reinsurances by
virtue of any reinsured loss of, or damage to, the
Aircraft, Engines or Parts, without any deduction or
deductions whatsoever, other than any outstanding
premium in respect of the Aircraft, Engines or Parts the
subject of the claim, it being understood and agreed
that any such payment by the reinsurers shall fully
discharge and release the reinsurers from any and all
further liability in connection therewith.
-5-
(iv) provide that in respect of Comprehensive Airline
Liability insurance as described above, the reinsurers
and reassured hereby agree that in the event of any
claim arising under the relevant reinsurances, the
reinsurers shall in lieu of payment to the reassured,
its successors in interest and assigns pay to the person
or party who has sustained the relevant loss (or as
reimbursement of any payment made by any Additional
Assured) all sums payable under such reinsurances by
virtue of such reinsured loss, without any deduction or
deductions whatsoever, it being understood and agreed
that any such payment by the reinsurers shall fully
discharge and release the reinsurers from any and all
further liability in connection therewith;
(v) provide that the reinsurers and reassured agree that in
the event that the reassured, its successors in interest
and assigns shall at any time be or become insolvent or
suspend business or file a petition in bankruptcy or be
adjudicated insolvent or bankrupt or admit in writing
its inability to pay its debts as they become due, or
make a general assignment for the benefit of creditors
or that a receiver or liquidator or assignee or trustee
or state commissioner of insurance be appointed in
respect of the reassured its successors in interest or
assigns or any substantial part of its property for the
purpose of liquidation on account of insolvency, then
the reinsurers, in lieu of payment to the reassured its
successors in interest or assigns, shall pay upon demand
that portion of any loss due to the party entitled
thereto under the terms of the original insurance for
which such reinsurers would under the terms of the
reinsurance be liable to pay the reassured, its
successors in interest or assigns, less any amounts
already paid, it being understood and agreed that any
such direct payment by reinsurers shall fully discharge
and release the reinsurers from any and all further
liability for such payment made.
-6-
APPENDIX I
To: (Lessor)
BROKER'S LETTER OF UNDERTAXING
We confirm that insurances (reinsurances) are in effect on and in respect of
aircraft FOKKER 100 REGISTRATION _______ for the period and in respect of the
risks as set out in the attached Certificate of Insurance.
We undertake to hold the insurance (reinsurance) slips or contracts and the
policies or any policies substituted therefore and the benefit of the insurance
(reinsurances) to the extent of your interest therein, to your order.
We further undertake:
1. to pay to the loss payee as stated in the Certificate of Insurance
(Reinsurance) without set off or deduction of any kind any and all
proceeds of the insurance (reinsurance) collected by us from the insurers
(reinsurers) in respect of loss or damage to the Aircraft, Parts, Engines,
components and equipment except for any outstanding premiums due in
respect of the Aircraft and the Parts, Engines, components and equipment.
2. to advise you promptly upon our becoming aware of:
(i) any change or alteration made or proposed to be made to the
insurances (reinsurances) which would be adverse to your interest.
(ii) any act or omission or any event which in our opinion may invalidate
or render unenforceable in whole or in part the insurance
(reinsurance) as far as your interest is concerned.
3. to advise you immediately:
(i) upon our receiving or becoming aware of any notice of cancellation
(including for non payment of premium) or material change given by
insurers (reinsurers) or the Assured.
(ii) if we have not received renewal instructions fifteen (15) business
days prior to the renewal date of the insurances (reinsurances) and
in the event of our receiving instructions to renew to advise you
promptly of the details thereof.
(iii) upon our ceasing to be insurance brokers to the Assured (Reassured).
The above undertakings are given:
a) subject to our lien, if any, on the policies referred to above for
premiums due under such policies in respect of the aircraft and
subject to the insurers' right of cancellation on default in payment
of such premiums, but we undertake to advise you immediately if any
such premiums are not paid to us in due time in accordance with our
accounting procedures with the assured and insurers and to give you
a reasonable opportunity of paying such amounts of such premiums
outstanding before notification of non-payment of premiums to
insurers (reinsurers)
b) subject to our continuing appointment for the time being as
insurance brokers to Assured (Reassured)
All notices or advises given in accordance with the above undertakings shall be
communicated by telefacsimile or telex to the addressee at the above address.
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APPENDIX J
FAA POWER OF ATTORNEY
This POWER OF ATTORNEY in favor of LESSOR [HEAD LESSOR] ("Lessor") dated
_____________, 199__ from MIDWAY AIRLINES CORPORATION ("Lessee") [is consented
to by BANK ("Bank")].
RECITALS:
A. Lessor and Lessee have entered into an Aircraft Operating Lease Agreement
(AOLAF No 114) dated as of November 11, 1993 (the "Lease Agreement") with
respect to the Fokker 100 aircraft, serial no. 11477, U.S. registration
no. _______ (the "Aircraft").
B. Capitalized terms used herein and not otherwise defined shall have the
respective meanings ascribed to such terms in the Lease Agreement.
NOW, THEREFORE, for good and valuable consideration, the adequacy of which
is hereby acknowledged, it is hereby agreed as follows:
Lessee hereby irrevocably constitutes and appoints Lessor, with full power
of substitution, for and in the name and on behalf of Lessee, as the act and
deed or otherwise of Lessee:
to direct, authorize and instruct the insurer or insurance broker with
respect to the Aircraft, as if Lessor were policy holder, pursuant to
Article 11.6 of the Lease Agreement, in order to initiate, process and
settle any insurance claim with respect to the Aircraft, Engines or Parts;
to execute, sign, deliver, authorize and file such instruments legally
necessary for any and all actions necessary to take possession and effect
redelivery of the Aircraft, Engines or Parts upon termination of the Lease
Agreement due to an Event of Default;
to execute, sign, deliver and file all such instruments requested by
Lessor [Head Lessor] that may be required to deregister the Aircraft from
the FAA, or to terminate the Lease for the Aircraft that is recorded at
the FAA, or that may be deemed proper in or in connection with all or any
of the purposes aforesaid, and to appoint substitutes or agents to take
any such action on its behalf.
Lessee hereby ratifies and confirms and agrees to ratify and confirm any
direction, authorization and instruction of Lessor [Head Lessor] taken pursuant
to this Power of Attorney.
This Power of Attorney shall expire on _______ ___, 200__ [11 years from
the Delivery Date of the Aircraft] or earlier termination of the Lease.
IN WITNESS WHEREOF, Lessee has duly caused this Power of Attorney to be
executed on the date first set forth above.
MIDWAY AIRLINES CORPORATION
By: ______________________
Name:
Title:
Consented and Agreed:
[BANK]
By: ____________________
Name:
Title:
[CERTIFIED RESOLUTIONS OF LESSEE AUTHORIZING THIS
POWER OF ATTORNEY TO BE ATTACHED]
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APPENDIX K
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
-----------------------------------x
In Re :
: Chapter 11 Case
JET EXPRESS, INC., : Xxxx Xx. 00 X 00000 (XXX)
:
Debtor. :
-----------------------------------x
ORDER OF CONFIRMATION
Jet Express, Inc., the debtor in this Chapter 11 case (the "Debtor"),
having filed with the Court the Debtor's Plan of Reorganization under Chapter 11
of the United States Bankruptcy Code, dated on or about August 10, 1993, (the
"Plan"; capitalized terms used in this Order and not otherwise defined shall
have the respective meanings ascribed to such terms in the Plan); and the
Debtor's Disclosure Statement, dated September 18, 1993 (the "Disclosure
Statement"), having been filed with and approved by this Court pursuant to this
Court's order (the "Disclosure Statement Order") as containing "adequate
information" pursuant to section 1125 of title 11, United States Code (the
"Bankruptcy Code"); and copies of (a) the Plan, (b) the Disclosure Statement and
(c) the appropriate ballot(s) (for those Creditors entitled to vote on the
Plan), having been transmitted to all Creditors entitled to receive the same
pursuant to the Disclosure Statement Order, the United States Trustee, and those
parties who have filed notices of appearance in the Debtor's Chapter 11 case
pursuant to Bankruptcy Rule 2002, the Securities and Exchange Commission, the
District Director of Internal Revenue for the district in which this Chapter 11
case is pending. and the United
States Attorney for the Southern District of New York, all in accordance with
the Disclosure Statement Order; and the Disclosure Statement Order having fixed
(a) on or before October 8, 1993, as the last date and time by which all
objections must be properly completed, executed, marked and received by the
Debtor at one of the addresses specified for that purpose in the Disclosure
Statement and in the Published Notice described in the Disclosure Statement
Order, in order to be considered as acceptances or rejections of the Plan; and
This Court having set a confirmation hearing on the Plan of Reorganization
filed by Jet Express, Inc., the Debtor in the above captioned case (the
"Debtor") for the 13th day of October, 1993, at 11:00 a.m., to be heard before
this Court at the United States Bankruptcy Court, 67 Merchants Row, Xxxxx Xxxxx,
0xx Xxxxx, Xxxxxxx, Vermont, and this Court having fixed October 8, 1993, as the
date for the filing of any objections to confirmation of the Plan, and an
objection having been filed by Allstate Financial Corporation, and this Court
having heard the evidence of the Debtor in accordance with 11 U.S.C. section
1129 and finding that the objection of Allstate Financial Corporation is denied
as moot, and being otherwise sufficiently advised;
The Court makes the following Findings of Fact and Conclusions of Law
setting forth the reasons for the Court's issuance of this Order confirming the
Plan, overruling the outstanding Objections, and granting the other relief
provided
-2-
for herein:
THE COURT HEREBY FINDS THAT:
1. The Plan of Reorganization proposed by the Debtor, is found to be fair
and equitable and in the best interest of the Debtor and the creditors.
2. The impaired classes entitled to vote upon the Plan of Reorganization,
being Classes B-l, C-l, and C-2, as defined by the Plan of Reorganization, have
voted in favor of the Plan of Reorganization and have accepted the Plan of
Reorganization in conformity with 11 U.S.C. section 1129(7).
3. The Plan complies with the applicable provisions of the Bankruptcy Code
as required by section 1129(a)(l) thereof.
4. The Debtor, as proponent of the Plan, has complied with the applicable
provisions of the Bankruptcy Code as required by section 1129(a)(2) thereof.
5. The Plan has been proposed in good faith and not by any means forbidden
by law as required by section 1129(a)(3) of the Bankruptcy Code.
6. Any payment made or to be made by the Debtor, or by a person issuing
securities or acquiring property under the Plan, for services or for costs and
expenses in or in connection with these Chapter 11 cases, or in connection with
the Plan and incident to these Chapter 11 cases, shall be subject to the
approval of the Court as reasonable as required by section 1129(a)(4) of the
Bankruptcy Code.
-3-
7. At the Confirmation Hearing or in the Disclosure Statement, the Debtor
has disclosed the identity and affiliations of the individuals proposed to
serve, after the Effective Date of the Plan, as directors and officers of the
reorganized Debtor. The continuance or appointment of such individuals as
directors and to such offices is consistent with the interests of Creditors and
Equity Interest Holders and with public policy, and the Debtor has disclosed the
identity of any insider that will be employed or retained by the reorganized
Debtor, and the nature of any compensation for such insider, all as required by
section 1129(a)(5) of the Bankruptcy Code.
8. The Plan has not been accepted by each holder of a Claim or Equity
Interest of every class that is impaired under the Plan; however, each non-
accepting holder of a Claim or Equity Interest of each such class will receive
or retain under the Plan on account of such Claim or Equity Interest property of
a value, as of the Effective Date, that is not less than the amount that such
holder would so receive or retain if each Debtor were liquidated under Chapter 7
of the Bankruptcy Code on such date as required by section 1129(a)(7)(A)
thereof. With respect to any Equity Interest, the Plan is in compliance with
section 1129(a) (7).
9. Except to the extent that the holder of a particular Claim has agreed
to a different treatment of such Claim (including, without limitation, such
agreements relating to
-4-
certain deferrals of rent and certain claims incurred in the ordinary course of
the Debtor's business), the Plan complies with section 1129(a)(9) of the
Bankruptcy Code.
10. In view of the foregoing, the Court finds that the Plan is feasible
and that confirmation and consummation of the Plan is not likely to be followed
by the liquidation, or the need for further financial reorganization of the
reorganized Debtor, all as required by section 1129(a)(11) of the Bankruptcy
Code.
11. All fees payable under 28 U.S.C. SECTION 1930 have been paid, or
the Plan provides for the payment of all such fees on the Effective Date as
required by section 1129(a)(12) of the Bankruptcy Code.
12. The Plan does not discriminate unfairly, and is fair and equitable,
with respect to each Class of Claims or Equity Interests that is impaired
under, and has not accepted, the Plan, as required by section 1129(b)(1) of
the Bankruptcy Code.
13. Holders of Equity Interests will not receive or retain any property
under the Plan on account of such Equity Interests and are deemed to have
rejected the Plan. Such holders would not receive or retain any property on
account of such Equity Interests if each Debtor were liquidated under Chapter
7 of the Bankruptcy Code on the Effective Date.
14. There is no class of Claims or Equity Interests junior to Class C-2.
-5-
15. It appears that the Debtor will satisfy each and every condition
precedent to the effectiveness of the Plan set forth in the Plan.
16. After the Effective Date, the reorganized Debtor shall continue to
engage in business and the Plan does not provide for the liquidation of all or
substantially all of the property of the Debtor's estates.
17. The Debtor has made a careful review of its executory contracts and
unexpired leases, and it is a reasonable exercise of the Debtor's business
judgment for it to reject all such executory contracts and unexpired leases
other than the "Assumed Agreements" referred to in the Plan, i.e., those
executory contracts and unexpired leases that have either already been assumed
pursuant to an order of the court or are the subject of a pending motion to
assume. The assumption on the Effective Date pursuant to section 365 of the
Bankruptcy Code of the agreements identified in the Plan, including those
agreements entered into with Fokker Aircraft U.S.A., Inc., pursuant to a prior
Order of this Court, is the result of the exercise of sound business judgment by
the Debtor, and is in the best interest of the Debtor, its respective bankruptcy
estates, and its creditors.
Therefore, THIS COURT HEREBY CONCLUDES, as a matter of law, that:
1. This is a core proceeding within the meaning of 28 U.S.C. section 1157.
-6-
2. The Court shall confirm a plan if it satisfies all the requirements of
section 1129 of the Bankruptcy Code.
3. Notice and distribution of the Plan and the Disclosure Statement were
appropriate and complied with the applicable provisions of the Bankruptcy Code
and the Bankruptcy Rules. The opportunity for a hearing on these matters was
full and adequate.
4. The Plan complies with the applicable provisions of the Bankruptcy Code
as required by section 1129(a) (1) thereof, and the Debtor, as proponent of the
Plan, has complied with the applicable provisions of the Bankruptcy Code as
required by section 1129(a)(2) thereof.
5. The Plan has been proposed in good faith and not by any means forbidden
by law as required by section 1129(a) (3) of the Bankruptcy Code.
6. The Plan is feasible and provides adequate means for implementation of
the Plan.
7. The Plan of Reorganization proposed by the Debtor is hereby confirmed
according to the terms and conditions set forth therein and the Debtor is hereby
authorized to take any and all actions set forth in the Plan of Reorganization.
8. The Debtor shall file a final accounting under its Plan of
Reorganization on or before the 31st day of March, 1994.
9. The United States Bankruptcy Court for the Southern District of New
York shall retain exclusive jurisdiction
-7-
over all matters arising under, or arising in, or related to the Debtor's
Chapter 11 case or the Debtor's Plan of Reorganization, as confirmed, to the
full extent permitted by 28 U.S.C. section 1334, to hear, and to the full extent
permitted under 28 U.S.C. section 157, to determine, all proceedings in respect
thereof, including, but not limited to, proceedings to supervise the Plan of
Reorganization. Specifically, without limitation, and if applicable law
provides, the Bankruptcy Court shall have jurisdiction:
(a) to hear any and all objections or settlements relating to the
allowance of claims;
(b) to hear any and all applications for payment of fees to
attorneys or other professionals pursuant to sections 5330 or 503 of the
Bankruptcy Code, or for payment of any other fees or expenses authorized to be
paid or reimbursed by the Debtor under the Bankruptcy Code, and any and all
objections thereto;
(c) to hear any and all pending applications for rejection, the
assumption or the assumption and assignment, as the case may be, of unexpired
leases and executory contracts to which the Debtor is a party or with respect to
which they may be liable, and any and all claims arising therefrom;
(d) to hear any and all motions, applications, adversary proceedings
and contested or litigated matters properly before the Bankruptcy Court;
(e) to approve modifications of or amendments to the Plan of
Reorganization;
-8-
(f) to hear disputes regarding the implementation or consummation of
the Plan of Reorganization;
(g) to hear all controversies, disputes, settlements and suits which
may arise in connection with the interpretation or enforcement of this Plan of
Reorganization, the orders of this Court, or in connection with the enforcement
of remedies under this Plan of Reorganization;
(h) to hear during the time period the Chapter 11 case is open, all
controversies, disputes and issues dealing with the discharge of the Debtor or
the dischargeability of any claims;
(i) to approve compromises, settlements, or adjudications of any
objections to claims;
(j) to estimate disputed, contingent and unliquidated claims for
purposes of distribution under the Plan of Reorganization;
(k) to correct any defect, cure any omission, or reconcile any
inconsistency in the Plan of Reorganization;
(l) to resolve issues of disputes relating to the division, title,
sale or liquidation of the assets of the Debtor;
(m) to enter a final decree closing this case; and
(n) to hear and determine such other matters as may arise in
connection with this Plan or Reorganization or the Confirmation Order.
-9-
10. The Debtor and the United States of America, through its Department of
Treasury-Internal Revenue Service, having stipulated that this Confirmation
Order and the Bar Date of October 15, 1993, which has been ordered by this
Court, shall not be effective as to the claims of the United States of America
regarding pre-petition and post-petition taxes alleged to be due and payable,
that this Court shall retain jurisdiction over any claim of the United States of
America and any objections which may be made by the Debtor thereto.
Now, upon the motion of the Debtor and after due deliberation, the Court
hereby ORDERS, ADJUDGES AND DECREES THAT:
1. The Plan be, and it hereby is, confirmed.
2. The Debtor is hereby authorized to assume all executory contracts and
unexpired leases that are the subject of a motion to assume pending on the date
hereof, either without amendment, or with such amendments thereto as shall be
agreed upon between the Debtor party thereto and the non-Debtor parties thereto,
and to reject all executory contracts and unexpired leases that are not assumed
Agreements under the Plan. The agreements identified in the Plan, shall be and
hereby are assumed pursuant to section 365 of the Bankruptcy Code, effective as
of the Effective Date.
3. In accordance with this Court's Interim Order dated September 30, 1993
permitting Debtor to obtain Credit on a superpriority basis (the "Interim
Order") the Interim Order is
-10-
hereby made final.
4. In accordance with section 1141 of the Bankruptcy Code, the Plan and
its provisions shall be binding upon the Debtor and its successors (including
the reorganized Debtor) and any other entity created pursuant to the Plan, any
Person or entity issuing securities under the Plan, any Person or entity
acquiring or receiving property under the Plan, any lessor or lessee of property
to or from the Debtor, and any holder of a Claim against or Equity Interest in
the Debtor, whether or not the Claim or Equity Interest of such Creditor or
Equity Interest Holder is impaired under the Plan and whether or not such
Creditor or Equity Interest Holder has filed, or is deemed to have filed, a
proof of Claim or Equity Interest, or has accepted or rejected the Plan.
5. In accordance with section 1141 of the Bankruptcy Code, and except for
any security interests provided under the Plan or contemplated by the Financing
Transaction, any property transferred or otherwise dealt with in the Plan shall
be free and clear of all Claims against and Equity Interests in the Debtor, and
all such property of the Debtor's estate shall, on the Effective Date, vest in
those entities as designated in and provided for by the Plan. Pending the
occurrence of the Effective Date, all such property shall remain property of
Debtor's bankruptcy estate, and such bankruptcy estate shall continue until the
occurrence of the Effective Date.
-11-
6. In accordance with the Plan and section 1141 of the Bankruptcy Code,
except as otherwise specifically provided in the Plan, upon the occurrence of
the Effective Date the consideration distributed under the Plan shall be in
exchange for and in complete satisfaction, discharge, release, and
termination of, all Claims of any nature whatsoever against any Debtor or any
of its assets or properties and all Equity Interests in any Debtor; and
except as otherwise provided herein or in the Plan, upon the Effective Date
(i) the Debtor shall be discharged and released pursuant to section
1141(d)(1)(A) of the Bankruptcy Code from any and all Claims, including but
not limited to demands and liabilities that arose before the Effective Date,
all Stockholder Actions as they relate to such Debtor, all debts of the kind
specified in section 502(g), 502(h) or 502(i) of the Bankruptcy Code, whether
or not (a) a proof of claim based upon such debt is filed or deemed filed
under section 501 of the Bankruptcy Code; (b) a Claim based upon such debt is
allowed under section 502 of the Bankruptcy Code; or (c) the holder of a
Claim based upon such debt has accepted the Plan, and (ii) all rights and
interests of holders of Equity Interests in each Debtor shall be determined
pursuant to section 1141(d)(1)(B) of the Bankruptcy Code. This Order shall be
a judicial determination, effective on the occurrence of the Effective Date,
of discharge and termination of all liabilities of and all Claims against,
and all Equity Interests in, the Debtor, except as otherwise specifically
-12-
provided in the Plan. On the Effective Date, as to every discharged debt, Claim
or Equity Interest is permanently enjoined and precluded from asserting against
the reorganized Debtor, or against its assets or properties or any transferee
thereof, any other or further Claim or Equity Interest based upon any document,
instrument or act, omission, transaction or other activity of any kind or nature
that occurred prior to the Effective Date, except as expressly set forth in the
Plan.
7. In accordance with section 1142 of the Bankruptcy Code, the Debtor, the
reorganized Debtor, and any other entity created or Person designated pursuant
to the Plan be, and they hereby are, authorized, empowered and directed to
issue, execute, deliver, file and record any document, and to take any action
necessary or appropriate to implement, effectuate and consummate the Plan and
any transactions contemplated thereby in accordance with their respective terms,
including the agreements with Fokker Aircraft U.S.A., Inc., whether or not any
such document is specifically referred to in the Plan, and without further
application to or order of this Court. Pursuant to section 1142(b) of the
Bankruptcy Code, but subject to the retained jurisdiction of the Court to
resolve disputes as provided in the next sentence, all Persons holding Claims or
Equity Interests which are dealt with under the Plan be, and they hereby are,
directed to execute, deliver, file or record any document, and to take any
action necessary to implement, effectuate and consummate
-13-
the Plan in accordance with its terms, and all such Persons shall be bound by
the terms and provisions of all documents to be executed by them in connection
with the Plan, whether or not such documents actually have been executed by such
Persons. The Court retains jurisdiction to hear and determine any dispute
concerning the proposed application of section 1142 of the Bankruptcy Code and
of the preceding sentence. The foregoing shall not, however, in any manner
adversely affect or impair any of the rights of the parties to the Investment
Agreement or the Plan Debt Financing pursuant to, or release any such party from
any condition under, the agreements and instruments relating thereto.
8. All steps necessary (i) for the reorganized Debtor to be duly
incorporated and (ii) to effect the mergers, contributions of assets and
assumptions of liability as contemplated by the Plan be, and they hereby are,
authorized and approved.
9. Pursuant to the Plan, from and after the Effective Date, the
reorganized Debtor my use, operate and deal with their respective assets, and
may conduct and change their businesses, without any supervision by the
Bankruptcy Court or the Office of the United States Trustee, and free of any
restrictions imposed on the Debtors by the Bankruptcy Code or by the Court
during these Chapter 11 cases.
10. All equity Interests in each Debtor be, and they hereby are, canceled
effective as of the Effective Date.
-14-
11. (a) Pursuant to the Plan, and in accordance with section 1142 of the
Bankruptcy Code, the Debtor is hereby authorized to take such corporate action
as may be necessary and appropriate to implement and effectuate consummation of
the Plan, each of the agreements and instrument, referred to therein or
contemplated thereby (including all documents, instruments, certificates and
agreements to be entered into pursuant to the Plan by the Debtor or the
reorganized Debtor and any successors to the Debtor.
(b) This Order shall constitute all approvals and consents,
including without limitation, approvals of the boards of directors and
shareholders of the Debtor, if any, required by the laws of the State of
Delaware (and the laws of any other state) with respect to the implementation
and consummation of the Plan, including without limitation, the election of the
Board of Directors of the reorganized Debtor (which shall consist of the persons
identified as such at the Confirmation Hearing, the adoption of the Restated
Certificate and By-laws of the reorganized Debtor, the adoption of any
certificate of designation for preferred stock to be issued pursuant to the
Plan, the election of the officers of the reorganized Debtor by the Plan, the
adoption of all necessary and appropriate resolutions consistent with the Plan,
the mergers contemplated by the Plan, and the execution, delivery and
performance of any agreement. The Secretary of State of the State of Delaware
(and
-15-
any other state and any other governmental agency, board, bureau or office of
any of the foregoing or the United States or any other state) are authorized and
directed to accept for filing and to file any certificates or articles of
merger, the Merger Agreements, restated certificates of incorporation,
certificates of designation for preferred stock, or other instruments necessary
and to take any and all other actions necessary to give effect to the mergers
and such other transactions contemplated by the Plan.
This Confirmation Order constitutes a final and appealable order of this
Court and is entered on this the 13th day of October, 1993 in Rutland, Vermont.
/s/Xxxxxxx X. Xxxxxx
-------------------------------------
XXX. XXXXXXX X. XXXXXX
JUDGE, UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
TENDERED BY:
ALAGIA, DAY, XXXXXXXXX & XXXXX
BY /s/Xxxxx X. Xxxxxxxx
------------------------------
XXXXX X. XXXXXXXX
0000 XXXXXXXXXX XXXXX
000 XXXX XXXX XXXXXX
XXXXXXXXXX, XXXXXXXX 00000
(000) 000-0000
COUNSEL FOR DEBTOR, JET EXPRESS, INC.
-16-
12. The objection to confirmation of Allstate Financial Corporation is
overruled as moot as Allstate and the Debtor have agreed to an
administrative claim in the amount of $83,000, in full and complete
settlement of Allstate Financial Corporation's administrative claim and in
termination of the Account Receivable Factoring Agreement between Allstate
Financial Corporation and the Debtor. The administrative claim shall be
paid as follows:
a. $48,680, shall be paid by the Debtor to Allstate Financial
Corporation at or before 5:00 p.m. Eastern Standard Time October 14,
1993, by the Debtor; and
b. The Debtor shall pay the remaining $34,314 to Allstate Financial
Corporation on or before the First Distribution Date, as defined by
the Plan.
c. All payments to Allstate Financial Corporation shall be paid by wire
transfer on the dates specified above.
13. The objection to confirmation of Xxxxxxxxx, [ILLEGIBLE], Xxxx and Xxxxx is
overruled as moot, the Debtor having stated that said law firm shall be
paid in full on the First Distribution Date or according to such terms and
conditions as may be agreed to between the parties, as set forth in the
Plan.
14. The joint objection of Concord Asset Management, Inc., and [ILLEGIBLE],
Inc., is withdrawn, the Debtor, [ILLEGIBLE], and Concord having agreed to
resolution of the administrative claim of [ILLEGIBLE] and Concord upon the
terms set forth in the Court record, which shall be subject to written
stipulation between the parties.
The terms of the agreement between the parties are so ordered.
16. The Agreements entered into between the Debtor and Fokker Aircraft USA,
Inc., authorized by order of this Court, dated September 30, 1993, are
approved as finally executed and shall remain legal, valid and binding of
the reorganized Debtor.
AMENDMENT NO. 1
dated as of February 26, 1996
to
AIRCRAFT OPERATING LEASE AGREEMENT
No. 114
dated as of November 11, 1993
between
FIRST SECURITY BANK OF UTAH, N.A.,
not in its individual capacity
but solely as owner trustee, as
Lessor
and
MIDWAY AIRLINES CORPORATION
as
Lessee
Aircraft: Fokker 100
Serial No./RN: 11477/N106ML
THIS AMENDMENT No. 1 dated as of February 26, 1996 (this "Amendment"), is
between FIRST SECURITY BANK OF UTAH, N.A., a national banking association
existing pursuant to the laws of the United States, having its principal place
of business at 00 Xxxxx Xxxx Xxxxxx, Xxxx Xxxx Xxxx, Xxxx 00000-0000, not in its
individual capacity (except as expressly set forth in the Lease) but solely as
Owner Trustee under the Trust Agreement, ("Lessor") and MIDWAY AIRLINES
CORPORATION, a company incorporated under the laws of the State of Delaware,
having its principal place of business at 000 Xxxx Xxxxxx Xxxxxx, Xxxxxx, Xxxxx
Xxxxxxxx 00000 ("Lessee").
WHEREAS, Lessor and Lessee are parties to that certain Aircraft Operating
Lease Agreement No. 114, dated as of November 11, 1993, and recorded by the
Federal Aviation Administration on January 24, 1994 under conveyance number
AA50718 (as amended hereby, the "Lease"; capitalized terms used herein and not
otherwise defined herein shall have the meanings ascribed to them in the Lease);
WHEREAS, debis AirFinance B.V. ("debis") is the beneficial owner of the
Aircraft;
WHEREAS, Lessee is in default under the Lease by reason of its failure to
make certain Rent payments due thereunder in January and February 1996; and
WHEREAS, Lessor and Lessee desire to amend the Lease as hereinafter set
forth.
NOW THEREFORE, for valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto hereby agree as follows:
1. Definitions.
(a) Section 1 of the Lease is hereby amended by deleting sub-sections 1.11
and 1.51 thereof in their entirety and replacing them with the following:
"1.11 Beneficiary shall mean debis AirFinance B.V., beneficiary under the Trust
Agreement, and its successors and permitted assigns.
1.51 Other Aircraft Agreements shall mean all other aircraft operating lease
agreements relating to other aircraft so long as such other aircraft are
leased to Lessee by a lessor for the benefit, directly or indirectly, of
debis or any affiliate of debis. For purposes of this definition,
affiliate shall mean any corporation or other entity that, directly or
indirectly, controls, is
controlled by or is under common control with debis."
(b) Section 1 of the Lease is hereby further amended by deleting "Fokker"
and "FAUSA" from the definition of Indemnitee (subsection 1.39 thereof) and
adding "debis" in their stead. In addition, the references to "Fokker" and
"FAUSA" in Section 11.2(c)(ii) of the Lease are hereby deleted and replaced
with "debis".
2. Inspection.
Section 7 of the Lease is hereby amended by adding a new sub-section
7.6 thereto as follows:
"7.6 Lessee hereby acknowledges that the inspection rights and rights to
information and notice pursuant to this Section 7 shall extend to debis as
well as Lessor. In addition, without in any way limiting the rights
contained elsewhere in the Lease, debis shall have the right to have
observers (who may or may not be employees of debis) on site at Lessee's
premises (provided such observers do not unreasonably interfere with
Lessee's business or operations) and, provided the recipients of any
financial and operational information of Lessee (which recipients may
include employees or other representatives of debis or any of its
affiliates, or agents, attorneys or accountants of debis or any of its
affiliates) keep strictly confidential any such information, debis shall
have the right to inspect and review any internal financial and
operational information of Lessee as debis may reasonably request
(provided such request is made to Lessee's controller or to a vice
president, senior vice president or the president of Lessee) including,
without limitation, cash flow statements, financial books and records, and
any other records relating to the operation of Lessee's fleet. Lessee
covenants that it will fully cooperate with debis regarding any inspection
of Lessee's fleet and records pursuant to the terms of the Lease."
3. Default by Lessee.
Section 15 of the Lease is hereby amended as follows:
(a) Sub-section 15.1 is hereby amended by deleting paragraph (n) thereof
in its entirety and replacing it with the following:
2
"(n) if an event of default (however defined) occurs under (i) any of the
Other Aircraft Agreements, (ii) any other lease agreements between
Lessee and a lessor for the benefit, directly or indirectly, of
Fokker, FAUSA, Daimler- Benz Aerospace A.G. or any affiliate of any
of them, relating to other aircraft ("Fokker Aircraft Agreements")
or (iii) any aircraft maintenance agreement or other agreement
entered into by Lessee in lieu of Reserve Rate payments
("Maintenance Agreements") which event permits acceleration or
termination; or"
(b) Sub-section 15.1 is further amended by deleting the period at the end
of paragraph (q) thereof and replacing it with a semicolon and the word "or" and
by adding new paragraphs (r), (s) and (t) thereto as follows:
"(r) if Lessee's financial performance deviates in any material adverse
way (as determined by debis in its sole, but reasonable discretion)
from the projections set forth on Lessee's Business Plan for
calendar year 1996 (attached hereto as Exhibit A), taken as a whole,
and such deviation is not the result of a natural disaster which
effectively makes it impossible for Lessee to meet such projections;
or
(s) if, prior to satisfaction of Lessee's obligation to pay Default
Payments pursuant to Section 6 of this Amendment, Lessee shall make
(i) any payment of principal or interest on any amounts owed by
Lessee to Xxxx/Chilmark Fund, L.P. ("Xxxx") or any affiliate of
Xxxx, (ii) any redemption of, or any dividend or distribution with
respect to, any shares of Lessee owned by Xxxx or any affiliate of
Xxxx, (iii) any prepayment of principal or interest with respect to
any other subordinated debt owed by Lessee or (iv) any redemption
of, or any dividend or other distribution with respect to, any other
shares of Lessee; or
(t) if Lessee shall fail to fulfill any of the obligations set forth in
paragraphs (c) or (d) of Section 6 of this Amendment."
3
(c) Sub-section 15.2 is hereby amended by adding "(a), (n), (t)" to clause
(i) of paragraph (b) thereof following the word "paragraphs"; it being
understood that the effect of this amendment is to include payment defaults,
cross-defaults with Other Aircraft Agreements, Fokker Aircraft Agreements and
Maintenance Agreements, and failure to fulfill any of the obligations set forth
in paragraphs (c) or (d) of Section 6 of this Amendment as events giving rise to
automatic termination of the Lease without the necessity of any service of
notice thereof upon Lessee; provided, however, that such automatic termination
shall not apply with respect to defaults of the type referred to in paragraphs
(a) or (n) of sub-section 15.1 of the Lease prior to the date hereof or for
payment defaults for Rent Dates occurring in March and April 1996, for so long
as Lessee fulfills the obligations set forth in paragraphs (c) and (d) of
Section 6 of this Amendment.
4. Return of Aircraft.
Section 16 of the Lease is hereby amended by adding a new sub-section 16.8
thereto as follows:
"16.8 Notwithstanding anything to the contrary contained in the Lease, on the
Expiry Date or upon earlier termination of the Term including, without
limitation, any termination of the Lease pursuant to Section 15 (unless a
Casualty Occurrence shall have occurred with respect to the Aircraft),
Lessee shall immediately deliver possession of the Aircraft to Lessor at
Schiphol Airport, the Netherlands (or such other location as Lessor may
require) and hereby covenants that it will not interpose any defense to
any action commenced by Lessor to regain possession of the Aircraft. The
foregoing shall apply whether or not Lessee is or shall subsequently
become a debtor in a case under Title 11, U.S.C., and in such event,
Lessee covenants that it will not oppose, and will join in, any
application by Lessor seeking to regain possession of the Aircraft."
5. Notice.
Section 19 of the Lease is hereby amended by deleting paragraph (d) of
sub-section 19.6 thereof in its entirety and replacing it with the following:
4
"(1) to Lessee at:
Midway Airlines Corporation
000 X. Xxxxxx Xxxxxx
Xxxxxx, Xxxxx Xxxxxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attention: President
(2) to Lessor at:
First Security Bank of Utah, N.A.
00 Xxxxx Xxxx Xxxxxx
Xxxx Xxxx Xxxx, Xxxx 00000-0000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attention: Corporate Trust Department
with a copy to debis at:
Xxxxx van de Xxxxxxxxxx 00,
NL-1118 CL Luchthaven Schiphol,
Amsterdam Airport Schiphol
Tel: 000 0000 000-0000
Fax: 000 0000 000-0000
or to such other address or telex or fax number as is notified by either
party to the other party to this Agreement."
6. Forbearance. Execution of this Amendment shall serve as Lessor's
agreement to forebear from exercising its rights (including, without limitation,
its rights under Section 15 of the Lease) with respect to:
(a) Lessee's failure to make payments of Rent or security deposit amounts
due under the Lease prior to the date of this Amendment and for Rent Dates
occurring in March and April 1996; and
(b) Lessee's failure to make payment of Reserve Rate constituting Engine
Maintenance Accruals due under Other Aircraft Agreements identified as AOLAF
135, 524 and AOLAF 525 on account of Flight Hours and/or Cycles operated prior
to February 1, 1996;
provided, however, that Lessor's agreement to forbear shall be effective
for so long, and only so long, as
5
Lessee otherwise complies with all the terms of the Lease, as amended, and
fulfills the obligations set forth in paragraphs (c) and (d) of this Section 6,
as follows:
(c) Lessee shall pay to Lessor the following amounts (which amounts Lessee
hereby agrees to pay):
(i) {***} on the Rent Date occurring in February 1996;
(ii) {***} on the Rent Date occurring in March 1996;
(iii) {***} on the Rent Date occurring in April 1996; and
(iv) Amounts identified on Exhibit B to this Amendment ("Default
Payments") on the Rent Date occurring in May 1996 and for the next
succeeding forty-seven (47) Rent Dates thereafter; it being
understood that Lessee shall pay such Default Payments together with
Rent and any other amounts otherwise due pursuant to the Lease.
Lessee may satisfy its obligations to pay the Default Payments at
any time by paying the portion of all such Default Payments which
constitutes principal, together with the portion of such Default
Payments which constitutes interest accrued and unpaid as of the
date of payment, all as reflected on Exhibit B to this Amendment.
(d) On or before Xxxxx 0, 0000, Xxxxxx shall pay all unpaid Reserve Rate
owed with respect to Other Aircraft Agreements identified as AOLAF 135, 524 and
525, or shall enter into a maintenance agreement reasonably satisfactory to
debis providing for the maintenance of the engines of the Aircraft which are the
subject of such Other Aircraft Agreements.
Execution of this Amendment shall not constitute a waiver of any Rent payment
defaults or of any other defaults which may have occurred and be continuing or
which may occur in the future. Lessor's agreement to forbear shall terminate
automatically if Lessee fails to fulfill any of the obligations set forth in
paragraphs (c) or (d) of Section 6 of this Amendment or if any Event of Default
occurs or has occurred and is continuing under the Lease (other than an Event of
Default to which this forbearance agreement set forth in Section 6 of this
Amendment applies). For so long, and only so long as Lessor's agreement to
forbear has not terminated, and provided that the obligation set forth in
paragraph (d) of Section 6 of this Amendment has been fulfilled (i) Lessee shall
be entitled to exercise its rights and privileges under Sections 5.1.2(b),
5.1.3, 7.4.1
6
and 13.3 of the Lease and (ii) Lessor shall be deemed to have elected not to
apply the Deposit to sums due or to become due to Lessor pursuant to Section 1
of Appendix D of the Lease, notwithstanding the occurrence and continuation of a
Default or Event of Default under the Lease.
7. Payments
Paragraph 4 of Exhibit D to the Lease is hereby amended by deleting the
first sentence thereof and replacing it with the following:
"All payments due hereunder shall be effected by Lessee to Lessor to Bank
of New York, in New York, New York, ABA # 000-000-000, Account No.
000-0000-000 in favor of Rabobank Nederland, New York Branch, Account No.
14102, in favor of debis AirFinance B.V., or to such other account as
debis may designate in writing, and all such payments shall be in Dollars
and in immediately available funds, and all such payments shall be
initiated adequately in advance of the due dates to ensure that Lessor
receives credit for the full amount of such payment on the due dates."
8. Governing Law. This Amendment shall be governed by and construed in
accordance with the internal laws of the State of New York and without regard to
any conflict of law rules. This Amendment is being delivered in the State of New
York.
9. Miscellaneous. Except as specifically amended or supplemented by this
Amendment, the Lease is hereby ratified, approved, confirmed and continued in
all respects and all provisions of the Lease as heretofore amended shall remain
in full force and effect. The parties hereto acknowledge and confirm that the
Lease is intended to be a true lease and not a financing arrangement. This
Amendment may be executed in any number of counterparts, and all of such
counterparts taken together shall be deemed and constitute one and the same
instrument.
7
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed by their respective officers thereunto duly authorized as of the
day and year first above written.
SIGNED on behalf of
FIRST SECURITY BANK OF UTAH, N.A.,
not in its individual capacity
but solely as owner trustee
By: /s/[SIGNATURE ILLEGIBLE]
------------------------------
Title: Asst. Vice President
SIGNED on behalf of
MIDWAY AIRLINES CORPORATION
By:
------------------------------
Title:
8
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed by their respective officers thereunto duly authorized as of the
day and year first above written.
SIGNED on behalf of
FIRST SECURITY BANK OP UTAH, N.A.,
not in its individual capacity
but solely as owner trustee
By:
------------------------------
Title:
SIGNED on behalf of
MIDWAY AIRLINES CORPORATION
By: /s/Xxxxxxxx X. Xxxxxx
------------------------------
Title: XXXXXXXX X. XXXXXX
SENIOR VICE PRESIDENT
GENERAL COUNSEL
8
EXHIBIT A
{***} (2 pages omitted)
EXHIBIT B
{***} (2 pages omitted)
114
AMENDMENT NO. 2
dated as of January 31, 1997
to
AIRCRAFT OPERATING LEASE AGREEMENT
NO. 114
dated as of November 11, 1993
between
FIRST SECURITY BANK, N.A., formerly known as
FIRST SECURITY BANK OF UTAH, N.A.,
not in its individual capacity
but solely as owner trustee, as
Lessor
and
MIDWAY AIRLINES CORPORATION, as
Lessee
Aircraft: Fokker 100
Serial No. IRN: 11477/N106ML
114
THIS AMENDMENT NO. 2 dated as of January 31, 1997 (this "Amendment"), is
between FIRST SECURITY BANK, N.A., formerly known as First Security Bank of
Utah, N.A., a national banking association existing pursuant to the laws of the
United States, having its principal place of business at 00 Xxxxx Xxxx Xxxxxx,
Xxxx Xxxx Xxxx, Xxxx 00000-0000, not in its individual capacity (except as
expressly set forth in the Lease) but solely as Owner Trustee under the Trust
Agreement ("Lessor"), and MIDWAY AIRLINES CORPORATION, a company incorporated
under the laws of the State of Delaware, having its principal place of business
at 000 Xxxx Xxxxxx Xxxxxx, Xxxxxx, Xxxxx Xxxxxxxx 00000 ("Lessee").
WHEREAS, Lessor and Lessee are parties to that certain Aircraft Operating
Lease Agreement No. 114, dated as of November 11, 1993, (as amended from time to
time, the "Lease"; capitalized terms used herein and not otherwise defined
herein shall have the meanings ascribed to them in the Lease);
WHEREAS, Lessor and Lessee entered into Amendment No. 1 to the Lease,
dated as of February 26, 1996 ("Amendment No. 1");
WHEREAS, debis AirFinance B.V. ("debis AF") is the beneficial owner of the
Aircraft;
WHEREAS, debis AF, Lessee, and Lessor entered into a Deferral Agreement
dated as of October 25, 1996 ("Deferral Agreement"), which provided for the
deferral of certain payments due under the Lease, and amended the Lease in
certain other respects;
WHEREAS, debis AF and Lessee entered into an Amendment to Deferral
Agreements dated as of December 30, 1996, which modified the Deferral Agreement
in certain respects (the "Amendment to Deferral Agreements");
WHEREAS, Lessee has entered into an Agreement and Plan of Merger dated as
of January 17, 1997 (as amended, the "Merger Agreement") with GoodAero, Inc., a
Delaware corporation ("GoodAero") and Xxxx/Chilmark Fund, L.P., a Delaware
limited partnership, whereby it is proposed that GoodAero will be merged into
Lessee to effect a recapitalization of Lessee (the "Merger"), subject to certain
conditions precedent having been satisfied; and
WHEREAS, Lessor and Lessee desire to amend the Lease to become effective
upon the consummation of the Merger and to enter into further agreements as
hereinafter set forth.
NOW THEREFORE, for valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto hereby agree as follows:
1. Amendment of Lease. The Lease is hereby amended as follows:
(a) Section 1 of the Lease is amended by eliminating the period at
the end of Subsection 1.27 thereof, and by inserting in lieu thereof the
following clause:
114
"or such earlier date as may be specified by Lessor pursuant to notice given in
accordance with, and subject to the terms of Section 16.9 hereof."
(b) Section 1.51 of the Lease is amended by deleting the period at
the end of the first sentence and by inserting the following in lieu thereof:
"or any successor or assign thereof.
(c) Section 6.4 of the Lease is amended as follows: (a) by deleting
subsection (i) thereof in its entirety and by inserting in lieu thereof the
following: "(i) any financial reports or projections supplied to the majority
shareholder of Lessee"; and (b) by deleting the words "upon Lessor requesting
the same" from subsection (ii) thereof.
(d) Section 11.1(a) of the Lease is amended by deleting the period
at the end thereof and by inserting the following clause:
provided, however, that the deductible may be $500,000 (Dollars Five
Hundred Thousand) for each accident, but only if Lessee procures and
maintains in favor of debis AirFinance B.V. for the benefit of the
Beneficiary and/or the Lessor under each of the Leases identified on
Schedule 16.9 hereof (as those terms are defined therein) an
irrevocable letter of credit (the "Letter of Credit") in the face
amount of $800,000 (Dollars Eight Hundred Thousand) issued by
Wachovia Bank or another banking institution reasonably acceptable
to debis AirFinance B.V. and in a form reasonably acceptable to
debis AirFinance B.V. containing the terms set forth in Schedule
11.1(a).1 of this Lease; provided, however, that Lessee may reduce
the amount of the Letter of Credit to $400,000 in any year where
Lessee's audited financial statements for the prior year show that
Lessee had net income (as determined in accordance with generally
accepted accounting principles ("Net Income")) greater than the
amount for such prior year identified as "Net Income (1)" on
Schedule 11.1(a).2, but less than the amount for such prior year
identified as "Net Income (2)" on Schedule 11.1(a).2; and Lessee
shall not be required to maintain the Letter of Credit in any year
where Lessee's audited financial statements for the prior year show
that Lessee had Net Income for such prior year greater than the
amount for such prior year identified as "Net Income (2)" on
Schedule 11.1(a).2; and provided, further, that notwithstanding any
reduction or cancellation of the Letter of Credit in accordance with
the terms hereof, Lessee shall be required to restore the Letter of
Credit in any year where Lessee's audited financial statements for
the immediately preceding year show that Lessee's Net Income was
less than the threshold set by Schedule 11.1(a).2 for such prior
year for reduction of the Letter of Credit or in any year in which
audited financials for Lessee for the immediately preceding year
have not been certified on or before April 15 following
-2-
114
such preceding year. For purposes of determining the amount required
for the Letter of Credit in any year, reduction, if any, shall not
be permitted until 30 days after receipt by debis AirFinance B.V. of
the audited financial statements of Lessee for the prior year and,
in the event that the Letter of Credit is to be reinstated or
increased in any year as aforedescribed, such Letter of Credit shall
be required on or before April 15 of such year. Any failure by
Lessee to comply with the provisions of this Section 11.1(a) shall
be an Event of Default under Section 15.1(b) of the Lease.
(e) Section 14.1(b) of the Lease is amended by deleting the
semicolon at the end of such Section and by inserting in lieu thereof the
following clause:
"the failure with which to comply is likely to have a material
adverse effect on Lessee; provided, however, that such failure shall
have no adverse effect on the Aircraft or on the interests of Lessor
the Bank therein or in this Agreement or on the Insurances required
to be maintained pursuant to Article 11."
(f) Section 14.1(p) is amended by deleting the same in its entirety
and by inserting in lieu thereof the following:
"not become the surviving corporation of a merger with any other
entity, or itself consolidate with, or merge into, any other
corporation, or convey, transfer or lease substantially all of its
assets as entirety to any person, without the prior written consent
of Lessor (such consent not to be unreasonably withheld) and the
execution and delivery to Lessor of such agreements, certificates
and legal opinions as Lessor may reasonably request with respect
thereto;"
(g) Section 14.1(q) of the Lease is deleted in its entirety.
(h) Section 15.1(a) of the Lease is amended by deleting the same in
its entirety and by inserting in lieu thereof the following:
"if default shall be made by Lessee in the making of any Rent,
Reserve Rate, or Supplemental Rent payment within five (5) Business
Days after the date when such payment is due and payable under this
Lease."
(i) Section 15.1(e) of the Lease is deleted in its entirety and the
following is inserted in lieu thereof:
"if (i) if Lessee or any of its subsidiaries is in default under any
lease, hire-purchase, conditional sale or credit sale agreement for
equipment having a casualty value in excess of {***} and such
-3-
114
default is not cured or waived within the applicable grace period or
five (5) Business Days (whichever is greater); (ii) (regardless of
the amount of money involved), any event occurs which with or
without notice or lapse of time or both would constitute a default
under any agreement between Lessee and, or promissory note executed
by Lessee in favor of, {***}; (b) Xxxx/Chilmark Fund, L.P.; {***};
(e) any affiliate of any of the foregoing; unless such
default or event of default is cured or waived within the applicable
grace period or five (5) Business Days (whichever is greater); or
(iii) any indebtedness owed by Lessee or any of its subsidiaries in
an amount in excess of {***} is not paid when due or becomes
due or capable of being declared due prior to the date when it would
otherwise become due provided, however, the failure of Lessee to pay
amounts {***} Event of Default hereunder."
(j) Section 15.1(n) is modified by inserting the following clause
alter the word "affiliate": ", successor or assign".
(k) Sections 15.1(o), (p), (q), (r), (s) and (t) are deleted in
their entirety and the following new Sections 15.1(o) and (p) are inserted in
lieu thereof:
"(o) if, an Event of Default shall occur under and as defined in
that certain Promissory Note dated as of January 31, 1997 from the
Lessee to debis AirFinance B.V. or under, and as defined in that
certain Promissory Note dated as of January 31, 1997 from the Lessee
to DASA Aircraft Finance XVI, B.V. (each, a "Note" and collectively,
the "Notes");
(p) if, prior to satisfaction of Lessee's obligations pursuant to
the Notes, Lessee shall make (i) any payment of principal or
interest on any debt owed by Lessee to Xxxx/Chilmark Fund, L.P. or
to any holder of equity in Lessee representing the right to vote
twenty percent (20%) or more of the stock in Lessee on any matter
presented for vote to the shareholders of Lessee (an "Insider") or
any affiliate of an Insider; or (ii) any redemption of, or any
dividend or distribution with respect to, any shares of Lessee owned
by an Insider or any affiliate thereof."
(l) Section 15.2 is amended by deleting clause (i) of paragraph (b)
thereof in its entirety and inserting the following new clause (i) in lieu
thereof:
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114
"(i) serving notice of such termination on Lessee specifying the
occurrence giving rise to such Event of Default or Events of
Default, provided that such notice shall be deemed to have been
served without the necessity of actual service and this Lease shall
terminate automatically without the necessity of any service of
notice thereof upon Lessee upon the occurrence of any Event of
Default described in paragraphs (a), (f), (g), (h), (n) or (o) of
Section 15.1 of this Lease; provided, however, that actual service
of notice of such termination on Lessee shall be required where an
Event of Default described in paragraph (n) of Section 15.1 of the
Lease has occurred solely by reason of occurrence of an event of
default under an Other Aircraft Agreement or under a Fokker Aircraft
Agreement, which event of default does not, under the terms of such
Other Aircraft Agreement or Fokker Aircraft Agreement, result in
automatic termination of such Other Aircraft Agreement or such
Fokker Aircraft Agreement."
(m) Article 16 of the Lease is amended by adding a new Section 16.9
as follows:
"(a) Notwithstanding anything to the contrary contained in this
Lease, Lessor may terminate this Lease by giving not less than six
(6) months' prior written notice of the termination date to Lessee
provided that in no event may Lessor choose a termination date
earlier than September 15, 1998 ("Lessor's Termination Option") and
the termination date specified in such notice shall become the
Expiry Date; provided, however, that (subject to the following
sentence) Lessor shall not be entitled to exercise Lessor's
Termination Option with respect to this Lease where the same would
result in the termination of four (4) or more of the aircraft
operating lease agreements identified in Schedule 16.9 to the Lease
in any twelve (12) month period, taking into account the scheduled
or actual Expiry Date of each such aircraft operating lease
agreement. Nothing herein shall be construed to limit the Lessor's
rights upon the occurrence of any Default or Event of Default or
upon the termination of this Lease as a result thereof or upon the
expiration of any Lease in the absence of the exercise of Lessor's
Termination Option.
(b) Lessee shall in no event be liable for any costs, expenses,
liabilities, losses, damages or amounts incurred by Lessor which
arise solely from the Lessor exercising Lessor's Termination Option
hereunder such as the loss of any tax benefit, or fees or penalties
arising from the breakage of any contract or agreement. Except as
expressly provided in subsection (c) below, Lessor shall in no event
be liable for any costs, expenses, liabilities, losses, damages or
amounts
-5-
114
incurred by Lessee as a result of Lessor exercising Lessor's
Termination Option in accordance with this Section 16.9.
(c) Notwithstanding the terms of clause (b) above, if Lessor
exercises Lessor's Termination Option hereunder in accordance with
this Article 16.9, then Lessee shall be responsible for performing
all of its obligations under and in accordance with the terms of
this Section 16, subject to the following:
(i) the Lessor shall pay or cause to be paid to Lessee for
Lessee's application against the "C Check" completed pursuant
to Appendix E, Item 1(e), an amount equal to the lesser of (x)
$100,000 or (y) an amount equal to the product of the full
cost of the "C Check" completed by Lessee pursuant to Appendix
E, Item 1(e) on the Aircraft multiplied by a fraction, the
numerator of which is the number of hours (including fractions
of an hour) remaining on the Aircraft until Lessee's next
scheduled "C Check" for the Aircraft (assuming Lessor had not
exercised Lessor's Termination Option hereunder) and the
denominator of which is 3000; and
(ii) for purposes of Section 7.4.1(b) and (c), any shop visit
required to meet the conditions of Appendix E shall be deemed
a "scheduled" shop visit."
(n) Section 18.6 of the Lease is amended (i) by deleting the firm of
"Winston & Xxxxxx, Attn: R. Xxxx Xxxxx, 000 Xxxxx Xxxxxx, Xxx Xxxx, XX 00000" as
agent for Lessee and by inserting in lieu thereof the new agent for Lessee as
follows: "Paul, Hastings, Xxxxxxxx & Xxxxxx, Attn: Xxx Xxxxxx, 000 Xxxx Xxxxxx,
Xxx Xxxx, XX 00000; and (ii) by deleting the firm of "Haight, Gardner, Poor &
Xxxxxx, Attn: Xxxxx X.X. Kwoh, 000 Xxxxxxxx, Xxx Xxxx, XX 00000" as agent for
Lessor and by inserting in lieu thereof the new agent for Lessor as follows:
"Xxxxxxx, Calamari & Xxxxxxx, Attn: Xxxxx Xxxxx, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000".
(o) Appendix B to the Lease is hereby amended as follows:
(i) The amount set forth as the "AGREED VALUE" is deleted in its
entirety and the amount of {***} is substituted therefor.
(ii) The Amount set forth as "RENT" is deleted in its entirety and
the amount of {***} is substituted therefor.
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114
(p) Appendix D to the Lease is hereby amended by deleting Sections
2.2 through 2.7 in their entirety and by deleting Section 1 in its entirety and
inserting the following in lieu thereof:
"1. Deposit. Lessee has paid to Lessor the amount set forth on
Schedule B.1 as a Deposit for the Aircraft prior to January 31,
1997. Lessor has applied such Deposit (plus all accrued interest
thereon) to the Default Payments (as defined in Section 6 of
Amendment No. 1 to this Lease) and/or to Default Payments (as
defined in Section 6 of Amendment No. 1 to the Other Aircraft
Agreements)."
(q) Appendix D is hereby amended by (a) deleting the first
word of Section 3.1 thereof and by inserting the following in lieu thereof:
"Lessee shall be relieved of its obligation to pay the Reserve Rate
at any time that the Aircraft Maintenance Agreement between Lessee
and American Airlines, Inc., dated as of November 1, 1993, or any
subsequent aircraft maintenance agreement between Lessee and any
Authorized Maintenance Performer, which in the reasonable opinion of
Lessor, is in substance substantially similar to such Aircraft
Maintenance Agreement is in effect with respect to the Aircraft. At
any time that the above-referenced Aircraft Maintenance Agreement,
or such subsequent aircraft maintenance agreement is not in effect,
then Lessee shall, in"
and (b) by adding the following sentence after subsection (d) of Section 3.1
thereof:
"In the event that Lessee enters into any substitute maintenance
agreement in lieu of paying Engine Maintenance Accrual, such
substitute agreement shall be similar in substance to the Approved
Maintenance Agreement (as that term is defined in Amendment No. 2
and Consent, each dated as of May, 1996, with respect to Aircraft
Operating Lease Agreements Nos. 524, 525, and 135, each between
Midway Airlines Corporation, as Lessor, and First Security Bank of
Utah, N.A., as Lessee (collectively, "Amendment No. 2"); and in such
event Lessee shall pay to Lessor as Reserve Rate, on the date when
Reserve Rate is due, an amount calculated, for the Lease, in the
same manner as Reduced Engine Maintenance Accrual (as that term is
defined in Amendment No. 2)."
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114
(r) Schedule 16.9 attached to this Amendment is hereby attached to
the Lease as Schedule 16.9 thereto and is incorporated therein.
2. Waiver of Default. Lessor agrees that any Default or Event of Default
under Sections 15.1(a), 15.1(e), 15.1(g) or 15.1(r) of the Lease (prior to the
amendment of any such Sections hereunder) which occurred prior to the date of
this Amendment is hereby deemed to have been cured by Lessee and Lessor waives
any rights or remedies it may have had with respect to the occurrence of any
such Default or Event of Default.
3. Representations, Warranties and Covenants
The following shall be, as applicable, representations, warranties or
covenants of Lessee pursuant to Articles 13 and 14 of the Lease:
(a) Representations
(i) This Amendment and the Notes have been duly entered into and
delivered by Lessee, and each constitutes a valid, legal and binding obligation
of Lessee enforceable against Lessee in accordance with its terms.
(ii) As of the date of this Amendment, Lessee has entered, or
will contemporaneously herewith enter, into an agreement with {***} having
terms which are substantially in accordance with the terms set forth under
the heading {***} in Exhibit 6.02(k) to the Agreement and Plan of Merger
dated as of January 17, 1997 by and among GoodAero, Inc., Xxxxx X. Xxxxxxxxx,
Xxxx X. Xxxx, Midway Airlines Corporation and Xxxx/Chilmark Fund, L.P., as
amended, except to the extent otherwise specifically set forth in the letter
dated as of February 10, 1997, from Lessee to Lessor.
(b) Covenants
Lessee covenants that it will not make any prepayment in respect
of the Promissory Note dated February 7, 1997 in the amount of {***} or amend
the {***} to provide for terms more favorable to the payee thereof
(including, without limitation, any increase in the interest rate or
acceleration of payment).
4. Deferral Agreement. Lessor and Lessee agree that the Deferral Agreement
and the Amendment to Deferral Agreements are hereby declared null and void and
shall have no further force or effect with respect to the Lease.
5. Merger. Lessor hereby consents to the Merger.
6. Governing Law. This Amendment shall be governed by and construed in
accordance with the internal laws of the State of New York and without regard to
any conflict of law rules. This Amendment is being delivered in the State of New
York.
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114
7. Miscellaneous. Except as specifically amended or supplemented by this
Amendment, the Lease is hereby ratified, approved, confirmed and continued in
all respects and all provisions of the Lease as heretofore amended shall remain
In full force and effect. The parties hereto acknowledge and confirm that the
Lease is intended to be a true lease and not a financing arrangement. This
Amendment may be executed in any number of counterparts, and all of such
counterparts taken together shall be deemed and constitute one and the same
instrument.
-9-
IN WITNESS WHEREOF, the parties hereto have executed this Amendment on the
day and year first above written.
FIRST SECURITY BANK, N.A., formerly
known as First Security Bank of Utah, N.A.
not in its individual capacity but solely as
owner trustee
By: /s/Xxxx X. Xxxxxx
------------------------------
Name: Xxxx X. Xxxxxx
----------------------------
Title: Vice President
---------------------------
MIDWAY AIRLINES CORPORATION
By: /s/X.X. Xxxxxx
------------------------------
Name:
----------------------------
Title:
---------------------------
114
Schedule 11.1(a).1
The Letter of Credit shall contain the following terms:
debis AirFinance B.V. shall be entitled to draw amounts under the Letter of
Credit upon notice to the issuing bank signed by debis AirFinance B.V. stating
that amounts are due under one or more of the following, and that such amounts
remain unpaid:
Promissory Note dated as of January 31, 1997 executed by Midway Airlines
Corporation in favor of debis AirFinance B.Y.
Promissory Note dated as of January 31, 1997 executed by Midway Airlines
Corporation in favor of Daimler-Benz Aerospace A.G.
Aircraft Operating Lease Agreement No. 111 between Midway Airlines
Corporation, as Lessee, and First Security Bank, N.A. (formerly known as
First Security Bank of Utah, N.A.), as Lessor
Aircraft Operating Lease Agreement No. 112 between Midway Airlines
Corporation, as Lessee, and First Security Bank, N.A. (formerly known as
First Security Bank of Utah, N.A.), as Lessor
Aircraft Operating Lease Agreement No. 113 between Midway Airlines
Corporation, as Lessee, and First Security Bank, N.A. (formerly known as
First Security Bank of Utah, N.A.), as Lessor
Aircraft Operating Lease Agreement No. 114 between Midway Airlines
Corporation, as Lessee, and First Security Bank, N.A. (formerly known as
First Security Bank of Utah, N.A.), as Lessor
Aircraft Operating Lease Agreement No. 135 between Midway Airlines
Corporation, as Lessee, and First Security Bank, N.A. (formerly known as
First Security Bank of Utah, N.A.), as Lessor
Aircraft Operating Lease Agreement No. 136 between Midway Airlines
Corporation, as Lessee, and First Security Bank, N.A. (formerly known as
First Security Bank of Utah, N.A.), as Lessor
Aircraft Operating Lease Agreement No. 524 between Midway Airlines
Corporation, as Lessee, and First Security Bank, N.A. (formerly known as
First Security Bank of Utah, N.A.), as Lessor
Aircraft Operating Lease Agreement No. 525 between Midway Airlines
Corporation, as Lessee, and First Security Bank, N.A. (formerly known as
First Security Bank of Utah, N.A.), as Lessor
114
Aircraft Operating Lease Agreement No. 115-A between Midway Airlines
Corporation, as Lessee, and Wings Aircraft Finance, Inc., as Lessor
Aircraft Operating Lease Agreement No. 116-A between Midway Airlines
Corporation, as Lessee, and Wings Aircraft Finance, Inc., as Lessor
Aircraft Operating Lease Agreement No. 117-A between Midway Airlines
Corporation, as Lessee, and Wings Aircraft Finance, Inc., as Lessor
Aircraft Operating Lease Agreement No. 118-A between Midway Airlines
Corporation, as Lessee, and Wings Aircraft Fin, Inc., as Lessor
114
Schedule 11.1(a).2
Midway Airlines
Net Income Thresholds for Reduction in Amount of Letter of Credit Pursuant to
Section 11.1(a)
US$ millions
Year 1997 1998 1999 2000 2001
Net Income(2) 12.0 18.0 25.2 32.8 41.0
Net Income(1) 8.0 12.0 16.8 21.8 27.3
Year 2002 2003 2004 2005 2006
Net Income(2) 49.1 57.7 67.8 67.8 67.8
Net Income(1) 32.8 38.5 45.2 45.2 45.2
Year 2007 2008 2009 2010 2011
Net Income(2) 67.8 67.8 67.8 67.8 67.8
Net Income(1) 45.2 45.2 45.2 45.2 45.2
Year 2012 2013 2014
Net Income(2) 67.8 67.8 67.8
Net Income(1) 45.2 45.2 45.2
Amount of
Letter of Credit
$800,000 If actual Net Income is less than or equal to Net Income(1)
$400,000 If actual Net Income is greater than Net Income(1) but less
than or equal to Net Income(2)
0 If actual Net Income is greater than Net Income(2)
114
Schedule 16.9
1. Aircraft Operating Lease Agreement No. 111, dated as of November 11, 1993,
between First Security Bank, N.A. and Midway Airlines Corporation.
2. Aircraft Operating Lease Agreement No. 112, dated as of November 11, 1993,
between First Security Bank, N.A. and Midway Airlines Corporation.
3. Aircraft Operating Lease Agreement No. 113, dated as of November 11, 1993,
between First Security Bank, N.A. and Midway Airlines Corporation.
4. Aircraft Operating Lease Agreement No. 114, dated as of November 11, 1993,
between First Security Bank, N.A. and Midway Airlines Corporation.
5. Aircraft Operating Lease Agreement No. AOLAF-115-A, dated as of July 10,
1995, between Wings Aircraft Finance, Inc. and Midway Airlines
Corporation.
6. Aircraft Operating Lease Agreement No. AOLAF-116-A, dated as of July 10,
1995, between Wings Aircraft Finance, Inc. and Midway Airlines
Corporation.
7. Aircraft Operating Lease Agreement No. AOLAF-117-A, dated as of July 10,
1995, between Wings Aircraft Finance, Inc. and Midway Airlines
Corporation.
8. Aircraft Operating Lease Agreement No. AOLAF-118-A, dated as of July 10,
1995, between Wings Aircraft Finance, Inc. and Midway Airlines
Corporation.
9. Aircraft Operating Lease Agreement No. 135, dated as of July 20, 1995,
between First Security Bank, N.A. and Midway Airlines Corporation.
10. Aircraft Operating Lease Agreement No. 136, dated as of December 15, 1995,
between First Security Bank, N.A. and Midway Airlines Corporation.
11. Aircraft Operating Lease Agreement No. 524, dated as of August 1, 1995,
between First Security Bank, N.A. and Midway Airlines Corporation.
12. Aircraft Operating Lease Agreement No. 525, dated as of October 15, 1995,
between First Security Bank, N.A. and Midway Airlines Corporation.
114
Schedule B.1
Security Deposits Paid by Midway
Aircraft AOLAF Deposit
MSN No. Paid
--- --- ----
11321 525 {***}
-----------
11323 524 {***}
-----------
11329 135 {***}
-----------
11330 136 {***}
-----------
11444 111 {***}
-----------
11445 112 {***}
-----------
11475 113 {***}
-----------
11477 114 {***}
-----------
11450 115 {***}
-----------
11484 116 {***}
-----------
11485 117 {***}
-----------
11486 118 {***}
-----------
