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LEASE AGREEMENT
dated as of March 18, 1996
and
AMENDED AND RESTATED
as of July 7, 1997
between
FIRST SECURITY BANK, NATIONAL ASSOCIATION
not in its individual capacity
(except as otherwise specified)
but solely as Owner Trustee under the 1997 Trust Agreement,
as Lessor,
and
WESTERN PACIFIC AIRLINES, INC.
as Lessee
One Used Boeing Model B737-3S3 Aircraft,
current United States Registration Xxxx N375TA (to be changed to
N954WP) and
Manufacturer's Serial No. 23787 with
two CFM International, Inc. Model CFM 56-3B2 Engines,
Manufacturer's Serial Nos. 720890 and 721734, Respectively
ONLY THE ORIGINAL COUNTERPART CONTAINS THE RECEIPT THEREFOR
EXECUTED BY FIRST SECURITY BANK, NATIONAL ASSOCIATION, AS OWNER
TRUSTEE, AS LESSOR ON THE SIGNATURE PAGE THEREOF
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TABLE OF CONTENTS
PAGE
1. Definitions.......................................................... 1
2. Lease; Lease Term; Delivery of Aircraft.............................. 6
(a) Lease; Lease Term.............................................. 6
(b) [Intentionally left blank.].................................... 6
(c) Condition of Aircraft at Delivery.............................. 6
3. Security Deposit and Other Payments.................................. 6
(a) Security Deposit............................................... 6
(b) Basic Rent..................................................... 7
(c) [Intentionally left blank.].................................... 7
(d) Supplemental Rent.............................................. 7
(e) Manner of Payment.............................................. 7
(f) Late Payments.................................................. 8
(g) No Setoff, Counterclaim, etc................................... 8
4. Conditions Precedent and Other Requirements. ....................... 9
(a) Execution and Delivery of Documents............................ 9
(b) Representations, Warranties, No Default........................ 9
(c) Resolutions, etc............................................... 9
(d) Security Deposit and Basic Rent................................ 9
(e) Side Letter................................................... 10
(f) Insurance Certificate......................................... 10
(g) Filings; Financing Statements................................. 10
(h) Opinions of Counsel........................................... 10
(i) No Event of Loss.............................................. 10
(j) Acceptance by Process Agent................................... 10
(k) Net Worth..................................................... 10
(l) Other Documents............................................... 10
(a) Delivery of Assignments of Warranties................... 10
(b) Resolutions, etc........................................ 10
(c) Consents to Sublease.................................... 11
(d) Extension of Lease...................................... 11
(e) Certificate of No Default............................... 11
(f) Delivery of Lease Supplement............................ 11
(g) Certificate of Airworthiness............................ 11
(h) Acceptance by Process Agent............................. 11
(i) Broker.................................................. 11
5. Disclaimer; Manufacturer and Vendor Warranties...................... 11
(a) Disclaimer by Lessor.......................................... 11
(b) Lessor's Representations, Warranties and Covenants............ 12
(c) Manufacturer and Vendor Warranties............................ 12
6. Maintenance; Alterations, Modifications and Additions............... 13
(a) Maintenance................................................... 13
(b) Maintenance Reserves.......................................... 15
(c) Replacement of Parts.......................................... 17
(d) Pooling of Parts.............................................. 18
(e) Alterations, Modifications and Additions...................... 18
7. Title and Registration; Liens; Possession........................... 19
(a) Title and Registration........................................ 19
(b) Liens......................................................... 20
(c) Operation, Quiet Enjoyment.................................... 20
(d) Possession.................................................... 20
(e) Identification Plates......................................... 22
(f) Reporting Requirements........................................ 22
(g) Inspections................................................... 22
8. Loss, Destruction, Requisition, etc................................. 22
(a) Event of Loss with Respect to the Aircraft.................... 22
(b) Event of Loss with Respect to an Engine....................... 22
(c) Application of Payments from Governmental Authorities......... 23
(d) Requisition for Use of the Aircraft........................... 24
(e) Quiet Enjoyment............................................... 24
9. Insurance........................................................... 25
(a) Liability..................................................... 25
(b) Other Insurance............................................... 25
(c) Terms of Insurance............................................ 26
(d) Application of Insurance...................................... 28
(e) Reports....................................................... 28
(f) Failure to Insure............................................. 29
(g) Additional Insurance.......................................... 29
(h) Notice of Claims.............................................. 29
(i) Stipulated Loss Value......................................... 29
10. Return of Aircraft.................................................. 29
(a) Redelivery upon Termination................................... 29
(b) Condition of Aircraft3/4General............................... 30
(c) Condition of Airframe......................................... 31
(d) Condition of Controlled Components............................ 32
(e) Condition of Engines.......................................... 32
(f) Ground Inspection by Lessor................................... 33
(g) Operational Ground Check...................................... 33
(h) Demonstration Flight.......................................... 33
(i) Ferry Flight.................................................. 33
(j) Deferred Discrepancy Correction............................... 33
(k) Flight Cost................................................... 34
(l) Aircraft Documentation........................................ 34
(m) Service Bulletin Kits......................................... 34
(n) Non U.S. Manufactured Items................................... 34
(o) Lessee's Continuing Obligations............................... 34
11. Representations, Warranties and Covenants of Lessee........... 35
12. Indemnification..................................................... 37
(a) General Indemnity and Expenses................................ 37
(b) General Tax Indemnity......................................... 39
(c) Calculation of Tax Indemnity Payments......................... 42
(d) Contest; Reports.............................................. 42
(e) Payment....................................................... 44
(f) Survival...................................................... 44
13. Assignment; Lease Subject and Subordinate........................... 44
(a) No Impermissible Sublease by Lessee........................... 44
(b) [Intentionally left blank.]................................... 44
(c) Lease Subject and Subordinate................................. 45
(d) Assignments by Lessor......................................... 45
14. Events of Default; Remedies......................................... 45
(a) Events of Default............................................. 45
(b) Remedies...................................................... 47
15. Notices............................................................. 49
16. Governing Law and Jurisdiction...................................... 50
(a) Governing Law................................................. 50
(b) Jurisdiction; Service of Process.............................. 50
(c) Waiver of Immunity............................................ 50
17. Miscellaneous....................................................... 51
(a) Entire Agreement.............................................. 51
(b) English Language.............................................. 51
(c) Lessor's Right to Perform for Lessee.......................... 51
(d) Application of Payments During Existence of Default........... 51
(e) Expenses...................................................... 51
(f) Further Assurances............................................ 51
(g) Judgment Currency............................................. 52
(h) Invalidity of any Provision................................... 52
(i) Changes in Law................................................ 52
(j) Headings...................................................... 52
(k) Consent....................................................... 52
(l) Third Party Beneficiaries..................................... 52
(m) Counterparts.................................................. 52
(n) True Lease.................................................... 52
SCHEDULE I - STIPULATED LOSS VALUE
EXHIBIT A - AIRCRAFT DESCRIPTION
EXHIBIT B - FORM OF ACCEPTANCE CERTIFICATE
EXHIBIT C - FORM OF RETURN ACCEPTANCE CERTIFICATE
EXHIBIT D - FORM OF CERTIFICATES OF SUBLESSEE
EXHIBIT E - FORM OF OPINION OF SUBLESSEE'S COUNSEL
EXHIBIT F - FORM OF MONTHLY REPORT
EXHIBIT G - MAINTENANCE RESERVES ADJUSTMENT FORMULA
This LEASE AGREEMENT, dated as of March 18, 1996, and AMENDED AND RESTATED
as of July 7, 1997, between FIRST SECURITY BANK, NATIONAL ASSOCIATION, a
national banking association with its principal place of business in Salt Lake
City, Utah, not in its individual capacity but solely as trustee under the 1997
Trust Agreement, except as otherwise expressly provided herein, and its
successors and assigns (in such capacity, "LESSOR"; and in its individual
capacity, "FSB"), and WESTERN PACIFIC AIRLINES, INC., a corporation organized
and existing under the laws of Delaware with its principal place of business in
Colorado Springs, Colorado ("Lessee").
RECITALS
WHEREAS, TACA, as sublessor, and Lessee, as sublessee, have executed this
Aircraft Sublease Agreement dated as of March 18, 1996 (as supplemented and
amended, the "SUBLEASE") for the sublease of the Aircraft from TACA, which
together with Sublease Supplement No. 1 thereto dated March 29, 1996 was
recorded by the FAA on May 30, 1996 and assigned Conveyance No. HH011973; and
WHEREAS, the Sublease was amended pursuant to Amendment No. 1 to Sublease
Agreement dated June 11, 1996, and recorded by the FAA on July 31, 1996 as
Conveyance No. BB24106, and supplemented by Supplement No. 2 to Sublease
Agreement dated as of June 11, 1996, and recorded by the FAA on May 31, 1996 and
assigned Conveyance No. BB24107; and
WHEREAS, the Sublease was further amended pursuant to Amendment No. 2 to
Sublease Agreement dated March 22, 1997, which was filed with the FAA on June
10, 1997, but not yet recorded; and
WHEREAS, the Head Lease has been terminated, and the rights and
obligations of TACA under the Sublease have been novated to Lessor pursuant to
the Aircraft Lease Novation dated July __, 1997 (the "Closing Date"), which was
filed with the FAA on the date thereof, but not yet recorded; and
WHEREAS, Lessor has assumed the rights and obligations of TACA under the
Sublease, and Lessor and Lessee desire to amend and restate the Sublease as this
Amended and Restated Lease Agreement with effect from and after the Closing Date
as set forth herein; and
WHEREAS, Lessee desires to lease the Aircraft from Lessor and Lessor is
willing to lease the Aircraft to Lessee upon and subject to the terms,
conditions and covenants herein set forth;
In consideration of and subject to the mutual covenants, terms and
conditions contained in this Lease, Lessor and Lessee agree as follows:
1. DEFINITIONS.
Unless the context otherwise requires the following terms shall have
the following meanings for all purposes of this Lease and shall be equally
applicable both to the singular and plural forms of the terms defined. Any
agreement defined below shall include each amendment, modification and
supplement thereto and waiver thereof in effect from time to time.
"ADDITIONAL INSURANCE" shall have the meaning ascribed to it in
SECTION 9(G) hereof.
"ADDITIONAL INSUREDS" shall have the meaning ascribed to it in
SECTION 9(C) hereof.
"AIRCRAFT" shall mean (i) the Airframe, together with two (2)
Engines initially installed on such Airframe at the Commencement Date or any
Replacement Engine substituted for any such Engine, whether or not any of said
initial Engines or Replacement Engines may from time to time no longer be
installed on such Airframe or may be installed upon another airframe and the
Parts; and (ii) the Aircraft Documentation. As the context requires, "Aircraft"
shall also mean the Airframe, any Engine (including a Replacement Engine), any
Part, the Aircraft Documentation, or any part thereof individually.
"AIRCRAFT DOCUMENTATION" shall mean all (i) log books, aircraft
records, manuals and other data or documents provided to Lessee on or before the
Commencement Date, as evidenced by any Schedule attached to the Acceptance
Certificate as a receipt therefor; and, (ii) any other documents, drawings, or
data which are required to be maintained during the Lease Term pursuant hereto
or by the FAA or the Maintenance Program.
"AIRCRAFT LEASE NOVATION" shall mean the Aircraft Lease Novation
Agreement dated the Closing Date by and among Former Head Lessor, Lessor,
TACA and Lessee.
"AIRFRAME" shall mean that certain Boeing model 737-3S3 airframe
bearing manufacturer's serial number 23787 and United States registration no.
N375TA (to be changed to N954WP).
"AIRFRAME RESERVE AMOUNT" shall have the meaning ascribed to it
in SECTION 6(B).
"AGENT" shall mean ING Aviation Lease, B.V., as agent for the
Lenders, its successors and assigns.
"APPROVED REPAIR FACILITY" shall have the meaning ascribed to it
in SECTION 6(A)(II).
"BASIC RENT" shall have the meaning ascribed to it in SECTION
3(b) hereof.
"COMMENCEMENT DATE" shall mean March 29, 1996, the date upon which
the Aircraft was tendered to Lessee in conformity with the Sublease and the
Lease Supplement was executed and delivered.
"CREDIT AGREEMENT" shall mean the Credit Agreement dated as of
November 4, 1993 between First Security Bank of Utah, National Association, as
owner trustee, as borrower, Amerilease Capital Corporation, as owner participant
and guarantor and the Agent, as may be amended or supplemented from time to
time.
"CYCLE" shall mean any flight of the Aircraft or, in the case of an
engine not attached to an aircraft, any airframe to which an Engine is attached,
consisting of one take-off and one landing regardless of time elapsed between
take-off and landing and distance flown.
"DEBT" shall mean, with respect to any Person, (a) all obligations
of such Person for borrowed money or with respect to deposits and advances of
any kind, whether evidenced by bonds, debentures, notes or other instruments,
(b) all obligations of such Person upon which interest charges are customarily
paid, (c) all obligations of such Person under conditional sale or other title
retention agreements relating to property purchased by such Person, (d) all
obligations of such Person issued or assumed as the deferred purchase price of
property or services, (e) any lease obligation that, in accordance with
generally accepted accounting principles has been or should be capitalized on
the books of such Person, and (f) all guarantees of such Person of the debts or
obligations for borrowed money of any other Person, whether direct or indirect,
absolute, contingent or otherwise.
"DEFAULT" shall mean any event that, with the passage of time or the
giving of notice or both, would become an Event of Default.
"DOLLARS" and "US$" shall mean lawful currency of the United
States of America.
"ENGINE" shall mean (i) each of the two CFM International Inc. Model
CFM 56-3B2 jet aircraft engines bearing manufacturer's serial numbers 720890 and
721734, respectively, whether or not from time to time installed on such
Airframe or installed on any other airframe, and (ii) any Replacement Engine
that may from time to time be substituted as contemplated by SECTION 8(B) for an
Engine leased hereunder; together in each case with any and all Parts
incorporated or installed in or attached thereto or any and all Parts removed
therefrom so long as title thereto shall remain vested in Lessor in accordance
with the terms of SECTION 6(C) after removal from any such Engine. Except as
otherwise set forth herein, at such time as a Replacement Engine shall be so
substituted, such replaced Engine shall cease to be an Engine hereunder. The
term "Engines" means, as of any date of determination, all Engines then leased
hereunder. Each Engine has and any Replacement Engine hereunder will have not
less than 750 rated takeoff horsepower.
"ENGINE LOSS VALUE" shall mean, in respect of each engine, [ ]*
United States Dollars (US$ [ ]*).
"ENGINE RESERVE AMOUNT" shall have the meaning ascribed to it in
SECTION 6(B) hereof.
"EVENT OF DEFAULT" shall have the meaning ascribed to it in
SECTION 14(A) hereof.
"EVENT OF LOSS" with respect to the Aircraft, the Airframe or any
Engine (hereinbelow referred to as "property") shall mean any of the following
events with respect to such property: (i) loss of such property or the use
thereof due to theft, disappearance, destruction, damage beyond repair or
rendition of such property permanently unfit for normal use for any reason
whatsoever; (ii) any damage to such property that results in the receipt of
insurance proceeds with respect to such property on the basis of a total loss;
(D) the condemnation, confiscation or seizure of, or requisition of title to,
such property by any authority, or a requisition for use of such property by any
authority other than a Government Entity of the United States of America; (iv)
as a result of any rule, regulation, order or other action by the FAA, or other
governmental body having jurisdiction thereof, or any other occurrence, the use
of such property in the normal course of air transportation of persons shall
have been prohibited for a period of three consecutive months unless Lessee,
prior to the expiration of such three-month period, shall have undertaken and
shall be diligently carrying forward all steps that are necessary or desirable
to permit the normal use of such property by Lessee or, in any event, if such
use shall have been prohibited for a period of six consecutive months; (v) the
inability for any reason of Lessor to obtain possession of such Aircraft within
30 days after this Lease shall have been declared to be in default pursuant to
SECTION 14, free and clear of all liens (other than Lessor's Liens). An Event of
Loss with respect to the Aircraft shall be deemed to have occurred if an Event
of Loss occurs with respect to the Airframe.
"FAA" shall mean the United States Federal Aviation Administration
and any successor agency thereto.
"FEDERAL AVIATION ACT" shall mean the United States Federal Aviation
Act of 1958 as amended, and the regulations promulgated thereunder.
"FLIGHT HOUR" shall mean each hour or part thereof elapsing from the
moment the wheels of the Airframe (or other airframe on which an Engine is then
installed) leave the ground on takeoff until the wheels of the Airframe (or such
other airframe) touch the ground on landing following such flight. For purposes
of all calculations under this Lease measured in Flight Hours, such hours,
including fractions thereof, shall be measured to two decimal places.
"FORMER HEAD LESSOR" shall mean First Security Bank of Utah,
National Association, not in its individual capacity but solely as owner trustee
under that certain Trust Agreement dated as of November 4, 1993, between FSB and
the owner participant named therein.
"GOVERNMENT ENTITY" means (i) any national, state or local
government of the United States of America or any other country where the
Aircraft may be flown and operated by Lessee, (ii) any board, commission,
department, division, instrumentality, court, agency or political subdivision of
any entity described in (i) above, however constituted, and (iii) any
association, organization or institution of which any entity described in (i) or
(ii) above is a member or to whose jurisdiction any thereof is subject or in
whose activities any thereof is a participant.
"HEAD LEASE" shall mean that certain Aircraft Lease Agreement dated
as of November 4, 1993, between Former Head Lessor and TACA, as originally
executed or as modified, amended or supplemented pursuant to the applicable
provisions thereof.
"INDEMNITEE" shall have the meaning ascribed to it in SECTION
12(A) hereof.
"KGAL" shall mean KG Aircraft Leasing Co., Limited, a corporation
organized and existing under the laws of Ireland.
"LEASE," "this Lease Agreement," "this Lease," "this Agreement,"
"herein," "hereunder," "hereby," or other like words shall mean this Lease as
originally executed or as modified, amended or supplemented pursuant to the
applicable provisions hereof.
"LEASE SUPPLEMENT" shall mean the Sublease Supplement dated March
29, 1996, in form and substance satisfactory to Lessor.
"LEASE TERM" shall have the meaning ascribed to it in SECTION
2(a) hereof.
"LENDERS" shall mean ING Aviation Lease, B.V. and each Person who
shall become a Lender in accordance with the provisions of the Credit
Agreement.
"LESSOR LIEN" shall mean any Lien arising as a result of (i) claims
against Lessor not related to the transactions contemplated by this Lease, (ii)
Taxes imposed against Lessor that are not indemnified against by Lessee pursuant
to SECTION 12(B) or (iii) claims against Lessor arising out of the transfer by
it of all or any part of its interest in the Aircraft, other than by reason of
the occurrence of an Event of Loss or following an Event of Default.
"LIEN" shall mean any mortgage, pledge, lien, charge, encumbrance,
lease, exercise of rights, security interest or claim of any nature whatsoever.
"MAINTENANCE PROGRAM" shall have the meaning ascribed to it in
SECTION 6(A) hereof.
"MAINTENANCE RESERVES" shall have the meaning ascribed to it in
SECTION 6(B) hereof.
"MANUFACTURER" shall mean The Boeing Company, a corporation
organized and existing under the laws of Delaware.
"MORTGAGE" shall mean the Mortgage and Security Agreement, dated as
of November 4, 1993, between Former Head Lessor and Agent relating to the
Aircraft, as the same may be amended, supplemented or modified from time to
time.
"PARTS" shall mean any and all appliances, parts, avionics,
attachments, accessions, instruments, appurtenances, accessories, furnishings
and other equipment of whatever nature (other than complete Engines or engines).
"PAYMENT DATE" shall mean the fifteenth (15) day of each consecutive
calendar month commencing with the calendar month immediately following the
Commencement Date and each consecutive calendar month thereafter during the
Lease Term; provided however that Lessee, on or prior to the Commencement Date,
shall pay Basic Rent in respect of the Aircraft corresponding to the first month
of the Lease Term.
"PERMITTED LIEN" shall have the meaning ascribed to it in SECTION
7(B) hereof.
"PERSON" shall mean an individual, corporation, partnership, joint
venture, trust, unincorporated organization or any other juridical entity, or a
Government Entity.
"POST-DEFAULT RATE" shall mean a rate per annum equal to three
percent (3%) above the rate publicly announced from time to time by Citibank,
N.A., New York, New York (or any successor institution) as its "prime rate" (or,
if no such rate exists, any comparable reference rate established by such
institution) on the basis of the actual number of days elapsed over a 360-day
year.
"PROCESS AGENT" shall have the meaning ascribed to it in SECTION
16(B) hereof.
"RENT" shall mean Basic Rent and Supplemental Rent.
"REPLACEMENT ENGINE" shall mean a CFM International, Inc. CFM 56-3B2
jet aircraft engine (or engine of the same manufacturer of the same or an
improved model) approved by Lessor, that has a value, utility and thrust at
least equal to those of the Engines, together with all Parts relating to such
engine.
"SECURITY ASSIGNMENTS" shall mean an instrument or instruments, in
form and substance satisfactory to Former Head Lessor and Lender, pursuant to
which TACA assigns to Former Head Lessor (and Former Head Lessor further assigns
to Agent) all of TACA's right and interest in and to this Lease.
"SECURITY DEPOSIT" shall have the meaning ascribed to it in
SECTION 3(A) hereof.
"STIPULATED LOSS VALUE" shall mean in respect of the Aircraft as of
any particular date, such amount as is set forth on Schedule 1 hereto.
"SUPPLEMENTAL RENT" shall mean all amounts, sums, monies,
indebtedness, liabilities and obligations (other than Basic Rent) that Lessee
assumes, agrees or otherwise becomes liable to pay to Lessor or others hereunder
or under any other document or agreement entered into by Lessee and Lessor in
connection herewith or with the transactions contemplated hereby and thereby
including, without limitation, payments of Maintenance Reserves, Stipulated Loss
Value and any interest payable with respect to payments pursuant to SECTION
3(D).
"TACA" shall mean TACA International Airlines, S.A., a corporation
organized and existing under the laws of El Salvador.
"TAX" or "TAXES" shall mean any and all fees (including, without
limitation, license and registration fees), taxes (including, without
limitation, gross receipts, income, sales, rental, use, turnover, value added,
property (tangible or intangible), excise and stamp taxes, levies, imposts,
duties, charges, assessments or withholdings of any nature whatsoever, together
with any and all penalties, fines, additions to tax and interest thereon or
computed by reference thereto.
"TAXING AUTHORITY" shall have the meaning ascribed to it in
SECTION 12(B) hereof.
"1997 TRUST AGREEMENT" shall mean the Trust Agreement dated as of
June 15, 1997 between FSB and KGAL, as originally executed or as modified,
amended or supplemented pursuant to the applicable provisions thereof.
2. LEASE; LEASE TERM; DELIVERY OF AIRCRAFT.
(a) LEASE; LEASE TERM. Lessor hereby leases to Lessee, for a
period (the "LEASE TERM") commencing from the Commencement Date and ending,
unless earlier terminated pursuant to the provisions of this Lease, on such date
as shall fall 120 consecutive calendar months following the Commencement Date
(the "EXPIRATION DATE").
(b) [Intentionally left blank.]
(c) CONDITION OF AIRCRAFT AT DELIVERY. Lessee acknowledges
that on the Commencement Date, the Aircraft (i) was in an airworthy condition
and had all systems functioning in accordance with manufacturer's
recommendations, (ii) had a current and valid Certificate of Airworthiness
issued by the FAA, (iii) was painted white, (iv) was fresh from its last
scheduled "C" check, other than hours flown in respect of test and ferry
flights, (v) was in a 136Y (136 seat, single class cabin) configuration, and
(vi) was in accord with the description thereof set forth in EXHIBIT A hereto.
Lessee acknowledges that it inspected and technically accepted the Aircraft on
March 6, 1996, and that Lessee accepted the Aircraft under the terms of this
Lease when duly tendered by Lessor in accordance herewith. Upon such tender,
Lessee executed a Lease Supplement, which is conclusive proof as between Lessor
and Lessee that Lessee has examined the Aircraft, that the Aircraft and the
Aircraft Documentation are satisfactory to Lessee and that Lessee has accepted
the Aircraft for all purposes hereof without any reservations whatsoever (except
as noted therein).
3. SECURITY DEPOSIT AND OTHER PAYMENTS.
(a) SECURITY DEPOSIT. Lessor acknowledges receipt from or for
the account of Lessee of a security deposit (the "Security Deposit") in the
total amount of [ ]* Dollars (US$[ ]*) (the "SECURITY DEPOSIT AMOUNT"). The
Security Deposit shall be held by Lessor during the Lease Term as security for
the full and punctual performance by Lessee of all of its obligations hereunder.
During the Lease Term, the Security Deposit may be commingled by Lessor with
other funds. Interest, if any, earned on the Security Deposit shall be for
Lessor's sole account. Lessor may, but shall not be obligated to, apply the
Security Deposit, in whole or in part for the payment of any Basic Rent owing
hereunder or any other amount owing from time to time by Lessee hereunder, or
utilize the Security Deposit in whole or in part to perform any of Lessee's
obligations hereunder or otherwise remedy any Event of Default, without
prejudice to any other remedy of Lessor. Lessee shall not attempt to subject the
Security Deposit to any Lien or to assign any interest therein to any Person
and, to the extent of its interest therein, Lessee hereby grants to Lessor a
Lien in the Security Deposit and assigns and transfers to Lessor any and all of
Lessee's right, title and interest therein, as security as provided above, and
Lessor shall be entitled to the remedy of offset against and application of the
Security Deposit, without any prior notice to or demand against Lessee (except
to the extent otherwise required by applicable law), all of which are hereby
waived. If Lessor uses or applies all or a portion of the Security Deposit, such
application shall not be deemed a cure of any Event of Default, until and unless
Lessee shall have replenished the amount applied hereunder within the time
period provided herein. Lessee shall replenish any portion or all of the
Security Deposit applied by Lessor to satisfy, in whole or in part, any Event of
Default by depositing with Lessor in immediately available funds an amount
sufficient to restore the Security Deposit to the Security Deposit Amount within
three (3) Business Days after Lessor's demand therefor. Within fifteen (15) days
after redelivery of the Aircraft to Lessor by Lessee, and provided the Aircraft
is delivered in full conformity with the return conditions set forth in SECTION
10 hereof, and that Lessee has paid, in full, all amounts owing by Lessee
hereunder and performed all of its obligations hereunder, Lessor will return to
Lessee the Security Deposit, without interest, less any amounts applied by
Lessor and not replenished by Lessee.
(b) BASIC RENT. Lessee agrees to pay Lessor rent with respect
to the aircraft, monthly, in advance on each Payment Date, in the amount of [ ]*
Dollars (US $[ ]*) per month ("BASIC RENT"). All payments of Basic Rent shall be
made in immediately available funds, in Dollars by 2:00 p.m. New York time on
the date when due; provided, however, that in the event that any payment should
be due on a day that is not a Business Day, then such payment shall be made on
the next succeeding Business Day without any penalty for late payment.
(c) [Intentionally left blank.]
(d) SUPPLEMENTAL RENT. Lessee also agrees promptly to pay to
Lessor any and all Supplemental Rent, as the same shall become due and owing,
and in the event of any failure on the part of Lessee to pay any Supplemental
Rent, Lessor shall have all rights, powers and remedies provided for herein or
by law or equity or otherwise in the case of nonpayment of Basic Rent.
(e) MANNER OF PAYMENT. All Basic Rent and Supplemental Rent
required to be made to Lessor hereunder shall be paid to:
The Bank of Tokyo-Mitsubishi, Ltd., New York
Chips UID: 076 886 ABA No. 026 009632
A/C The Bank of Tokyo-Mitsubishi, Ltd.,
London Branch
00-00 Xxxxxxxx Xxxxxx
Xxxxxx XX0X 0XX
Xxxxxxx
Tel: 00 000 000 0000
Fax: 00 000 000 0000
F/O KG Aircraft Leasing Co., Ltd.
Number 245662 Current Account
or such other bank accounts as Lessor shall specify by written notice to Lessee.
All payments of Supplemental Rent shall be made in immediately available funds
in Dollars by 2:00 p.m. New York time, on the date when due; provided, however,
that in the event that any payment should be due on a day that is not a Business
Day then such payment shall be made on the Business Day next succeeding such day
without any penalty for late payment.
(f) LATE PAYMENTS. As to any (i) amount due under this Lease
that is not paid when due as herein provided, or (ii) advance made by Lessor of
any amount required to be paid by Lessee as herein provided and not so paid by
Lessee, Lessee shall pay to Lessor at the time of payment thereof, as
Supplemental Rent, interest thereon at the Post-Default Rate, from either the
due date thereof (as to amounts referred to in clause (i)) or the date of the
advance by Lessor (as to amounts referred to in clause (ii)), as the case may
be, to the date such late payment is paid in full.
(g) NO SETOFF, COUNTERCLAIM, ETC. Notwithstanding anything to
the contrary herein and except as otherwise set forth in this SECTION 3(G),
Lessee's obligations and liabilities to pay all amounts payable hereunder shall
be absolute and unconditional and shall not be affected by any circumstance,
including, without limitation, (i) any setoff, counterclaim, recoupment, defense
or other right that Lessee may have against Lessor or any other Person for any
reason whatsoever, (ii) any defect in the title caused directly by an act or
omission of Lessee, airworthiness, condition, design, operation or fitness for
use of or any damage to or loss or destruction of, the Aircraft, the Airframe,
any Engine or any Part of any thereof or any interruption or cessation in the
use or possession of any thereof by Lessee for any reason whatsoever, (iii) any
insolvency, bankruptcy, reorganization or similar proceedings by or against
Lessee, (iv) the disaffirmance or rejection of this Lease by Lessor or any
trustee in bankruptcy (or similar party) provided that there shall have been no
change materially adverse to the Lessee in any of the terms or conditions of
this Lease in connection with applicable bankruptcy proceedings, (v) claims
against the Manufacturer or manufacturers of the Aircraft, the Airframe, any
Engine, Part or component thereof, (vi) enforceability or lack of enforceability
of any of the terms or conditions of this Lease, (vii) breach by Lessor of any
warranty, express or implied, with regard to the Aircraft, the Airframe, any
Engine any Part of any thereof, including, without limitation, merchantability
or fitness for any purpose or use relating to or otherwise made or alleged to be
made by Lessor to Lessee or any of its agents, representatives or employees with
regard to the Aircraft, the Airframe, any Engine or any Part of any thereof,
(viii) any right, claim, demand, xxxx, action or suit whatsoever by or against
or on the part of Lessee against Lessor, including, without limitation, whether
arising out of legal action or otherwise (x) at law or in equity, (y) whether
affirmative, negative or defensive in nature for or on account of the legality,
enforceability, validity or other infirmity as to (A) any of the terms or
conditions of this Lease, (B) any express or implied warranty as to the
Aircraft, the Airframe, any Engine or any Part of any thereof or (C) arising out
of or as a result of any contract, agreement, assignment or transaction between
Lessor and Lessee whether direct or indirect, written or oral, (ix) any
interruption or cessation in the use or possession of the Aircraft by or
availability of the Aircraft to Lessee for any reason whatsoever whether arising
out of relating to an act or omission of Lessee; or (x) any other circumstances,
happening or event whatsoever, whether or not similar to any of the foregoing
which but for this provision might have the effect of terminating this Lease, it
being the intention of the Lessor and Lessee that all Rent and other amounts
payable by Lessee hereunder shall be payable in all events unless the obligation
to pay the same shall be terminated pursuant to the express provisions of this
Lease. Lessee hereby waives, to the fullest extent permitted by applicable law
any and all rights it may now have or that at any time hereafter may be
conferred upon it, by statute or otherwise, to terminate, cancel, quit or
surrender this Lease except in accordance with the express terms hereof.
Notwithstanding anything contained in this SECTION 3(G) in the event that as a
result of a breach by Lessor or anyone claiming by through or under Lessor of
its covenant of quiet enjoyment (including any defect in title not caused by an
act or omission of Lessee which defect in title shall have caused the Aircraft
to be deregistered under the Federal Aviation Act), Lessee shall be deprived of
possession or use of the Aircraft under and in accordance with this Lease,
Lessee shall not be required to pay Basic Rent and Maintenance Reserves in
respect of such period of non-possession of or inability to use the Aircraft.
Each payment of Rent made by Lessee shall be final as to Lessor and Lessee, and
Lessee will not seek to recover all or any part of any such payment of Rent from
Lessor or its successors or assigns for any reason whatsoever.
Nothing in this SECTION 3(G) or elsewhere in this Lease shall be construed
to limit Lessee's right to seek a recovery of any payment of Rent or any other
amount which is not due and payable hereunder, or to limit Lessee's rights and
remedies to pursue, in a court of law or otherwise, any claim it may have
against Lessor on account of any failure of Lessor to perform its obligations
hereunder or in connection herewith.
4. CONDITIONS PRECEDENT AND OTHER REQUIREMENTS.
(i) The obligation of Lessor to lease the Aircraft to Lessee
on the terms and conditions herein set forth was subject to the
satisfaction, on or before the Commencement Date, of each of the
following conditions (which the parties hereto agree were satisfied
or waived on or before the Commencement Date):
(b) EXECUTION AND DELIVERY OF DOCUMENTS. Lessee shall have
duly executed and delivered to Lessor (i) this Lease, (ii) an Acceptance
Certificate in the form of EXHIBIT B hereto covering the Aircraft and effective
as of the Commencement Date, (iii) the Lease Supplement, and (iv) a consent or
consents to the Security Assignments in form and substance satisfactory to
Former Head Lessor and Agent.
(c) REPRESENTATIONS, WARRANTIES, NO DEFAULT. (i) All of the
representations and warranties of Lessee contained in this Lease shall be true
and correct on and as of the Commencement Date as though made on such date or,
if they relate solely to an earlier date, as of such date and (ii) no Default or
Event of Default shall have occurred and be continuing or would result from
Lessee's execution, delivery and performance of this Lease, and Lessor shall
have received an Officer's Certificate in form and substance satisfactory to it,
to the effect of each of the foregoing.
(d) RESOLUTIONS, ETC. Lessor shall have received, in form and
substance satisfactory to it: (i) a certificate of the Secretary or an Assistant
Secretary of Lessee with respect to the resolutions of the Board of Directors of
Lessee authorizing the execution, delivery and performance by Lessee of this
Lease and all other documents and certificates contemplated hereby to be
executed on behalf of Lessee, and the authority and signatures of the persons
authorized to execute and deliver such documents on behalf of Lessee; and (ii)
such other documents and evidence with respect to Lessee as Lessor may
reasonably request in order to establish the consummation of the transactions
contemplated by this Lease, the taking of all proceedings in connection
therewith and compliance with the conditions set forth in this SECTION 4.
(e) SECURITY DEPOSIT AND BASIC RENT. On or before the
Commencement Date (i) Lessor shall have received immediately available funds in
the amount of the balance of the Security Deposit Amount and (ii) Agent shall
have received the first Basic Rent payment.
(f) SIDE LETTER. On or before the Commencement Date, Lessor
shall have received all amounts due to it under that certain side letter dated
as of even date herewith.
(g) INSURANCE CERTIFICATE. Lessor shall have received, on or
prior to the Commencement Date, in form and substance satisfactory to it and to
Agent, an insurer's or broker's certificate as to the due compliance by Lessee
with the insurance provisions of SECTION 9.
(h) FILINGS; FINANCING STATEMENTS. Lessor shall have received
evidence satisfactory to it that this Lease and the Security Assignments shall
each have been duly filed for recordation with the FAA pursuant to the Federal
Aviation Act. If requested by Lessor, Lessee shall have executed (as debtor) and
delivered to Lessor one or more precautionary Uniform Commercial Code financing
statements for filing in such places in the United States as, in the Lessor's
opinion, are necessary or desirable.
(i) OPINIONS OF COUNSEL. Lessor shall have received a
favorable opinion or opinions addressed to TACA and Former Head Lessor from
Winthrop, Stimson, Xxxxxx & Xxxxxxx and Sparks, Dix, counsel for Lessee, dated
as of the Commencement Date.
(j) NO EVENT OF LOSS. No Event of Loss shall have occurred
with respect to the Aircraft or any Engine.
(k) ACCEPTANCE BY PROCESS AGENT. CT Corporation System shall
have accepted its appointment as Process Agent on behalf of Lessee by one or
more instruments in writing delivered to Lessor.
(l) NET WORTH. On and as of the Commencement Date Lessee shall
have a net worth of not less than U.S. $[ ]*, as determined in accordance with
generally accepted accounting principles.
(m) OTHER DOCUMENTS. Lessor shall have received such other
documents and matters incident to foregoing as TACA, Former Head Lessor or Agent
may reasonably request and such other agreements as TACA, Former Head Lessor or
Agent may reasonably request, as each deems necessary or desirable to consummate
the transactions contemplated hereby.
(ii) The obligation of Lessee to lease the Aircraft from
Lessor pursuant hereto was subject to the satisfaction, on or before
the Commencement Date, of each of the following conditions (which
the parties hereto agree were satisfied or waived on or before the
Commencement Date):
(a) DELIVERY OF ASSIGNMENTS OF WARRANTIES. Lessee shall have
received from Lessor Assignments of Warranties in form and substance reasonably
acceptable to Lessee, duly accepted by the Manufacturers of the Airframe and the
Engines.
(b) RESOLUTIONS, ETC. Lessee shall have received, in form and
substance reasonably satisfactory to it: (i) a certificate of the Secretary or
an Assistant Secretary of Lessor, in the form attached as part of EXHIBIT D
hereto, with respect to the resolutions of the Board of Directors of Lessor
authorizing the execution, delivery and performance by Lessor of this Lease and
all other documents and certificates contemplated hereby to be executed on
behalf of Lessor, and the authority and signatures of the persons authorized to
execute and deliver such documents on behalf of Lessor; and (ii) such other
documents and evidence with respect to Lessor as Lessee may reasonably request
in order to establish the consummation of the transactions contemplated by this
Lease, the taking of all proceedings in connection therewith and compliance with
the conditions set forth in this SECTION 4.
(c) CONSENTS TO SUBLEASE. Lessee shall have received the written
consents of Former Head Lessor and Agent to this Sublease.
(d) EXTENSION OF LEASE. Lessee shall have received a copy of that
certain Amendment to Lease dated March 29, 1996 pursuant to which the term of
the Head Lease shall have been extended such that it shall be at least
coterminous herewith.
(e) CERTIFICATE OF NO DEFAULT. Lessee shall have received a
certificate of a duly authorized officer of Lessor to the effect that no Default
or Event of Default, as defined therein, has occurred and is continuing under
the Head Lease or the Mortgage.
(f) DELIVERY OF LEASE SUPPLEMENT. Lessor shall have delivered to
Lessee the Lease Supplement.
(g) CERTIFICATE OF AIRWORTHINESS. The Certificate of Airworthiness
for the Aircraft shall not have been withdrawn.
(h) ACCEPTANCE BY PROCESS AGENT. Xxxxxxxxx, Traurig et al. shall
have accepted its appointment as Process Agent on behalf of TACA.
(i) BROKER. Lessee shall have received a letter from Cauff, Xxxxxxx
& Xxxxx Aviation, Inc., addressed to and in form and substance satisfactory to
it, to the effect that Cauff, Xxxxxxx & Xxxxx Aviation will not seek to recover
any amounts in respect of the Aircraft, Engines or Parts from Lessee.
5. DISCLAIMER; MANUFACTURER AND VENDOR WARRANTIES.
(a) DISCLAIMER BY LESSOR. PRIOR TO THE EXECUTION OF THIS
LEASE, LESSEE HAS SELECTED THE TYPE OF AIRCRAFT, AIRFRAME, ENGINES AND PARTS.
EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN SECTION 5(B) BELOW, NEITHER LESSOR,
NOR ANY SUCCESSOR IN INTEREST TO EITHER HAS MADE NOR SHALL BE DEEMED TO HAVE
MADE AND ACCORDINGLY MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO ANY MATTER
WHATSOEVER, INCLUDING THE CONDITION OF THE AIRCRAFT, AIRFRAME, ENGINES AND
PARTS, THEIR MERCHANTABILITY OR THEIR FITNESS FOR ANY PARTICULAR PURPOSE, AND
LESSOR EXPRESSLY DISCLAIMS THE SAME AND AS RESPECTS LESSOR, LESSEE LEASES THE
AIRCRAFT, AIRFRAME, ENGINES AND PARTS "AS IS" AND "WHERE IS". EXCEPT AS
OTHERWISE EXPRESSLY PROVIDED IN SECTION 5(B) BELOW, LESSOR HEREBY EXPRESSLY
DISCLAIMS ANY WARRANTY EITHER EXPRESS OR IMPLIED (WHETHER STATUTORY OR
OTHERWISE) RELATING TO THE CAPACITY, AGE, QUALITY, DESCRIPTION, STATE,
CONDITION, DESIGN, CONSTRUCTION, USE, OPERATION, OR PERFORMANCE OF THE AIRCRAFT
OR THE SUITABILITY OF THE AIRCRAFT OR ITS FITNESS FOR ANY PARTICULAR PURPOSE OR
AS TO ITS AIRWORTHINESS. LESSOR SHALL HAVE NO LIABILITY TO LESSEE FOR ANY CLAIM,
LOSS OR DAMAGE WHATSOEVER INCLUDING, BUT NOT LIMITED TO, INCIDENTAL OR
CONSEQUENTIAL DAMAGES, CAUSED OR ALLEGED TO BE CAUSED DIRECTLY OR INDIRECTLY BY
THE AIRCRAFT OR AIRFRAME, ANY OF THE ENGINES OR PARTS, OR BY ANY INADEQUACY
THEREOF OR DEFICIENCY OR DEFECT THEREIN OR BY ANY INCIDENT WHATSOEVER IN
CONNECTION THEREWITH ARISING IN STRICT LIABILITY, NEGLIGENCE, GROSS NEGLIGENCE
OR OTHERWISE, OR IN ANY ACTION RELATED TO OR ARISING OUT OF THIS LEASE OR ANY
OTHER DOCUMENT AND WHETHER INVOLVING PERSONAL INJURY, PROPERTY DAMAGE OR
OTHERWISE. EXCEPT AS EXPRESSLY PROVIDED IN SECTION 5(B) BELOW, LESSEE HEREBY
WAIVES AS BETWEEN ITSELF, LESSOR AND ANY PERSON CLAIMING BY, THROUGH OR UNDER
LESSOR, ALL ITS RIGHTS, EXPRESS OR IMPLIED (WHETHER STATUTORY OR OTHERWISE),
AGAINST LESSOR OR ANY OTHER SUCH PERSON IN AND TO THE AIRCRAFT RELATING TO THE
CAPACITY, AGE, QUALITY, DESCRIPTION, STATE, CONDITION, DESIGN, CONSTRUCTION,
USE, OPERATION OR PERFORMANCE OF THE AIRCRAFT AND THE LEASING THEREOF BY LESSOR
TO LESSEE, OR TO THE MERCHANTABILITY OR SUITABILITY OF THE AIRCRAFT OR ITS
FITNESS FOR ANY PARTICULAR PURPOSE OR AS TO ITS AIRWORTHINESS. In particular and
without prejudice to the generality of the foregoing, neither Lessor nor any
such other Person shall be under any liability whatsoever and howsoever arising,
whether in contract or tort or both, in respect of any loss, liability, damage
or delay of or to or in connection with any of the Aircraft or any Person or
property whatsoever, whether on board the Aircraft or elsewhere, irrespective of
whether such loss, damage or delay shall arise (x) from the unairworthiness of
the Aircraft, or (y) from any action or omission of Lessor or any other such
Person (other than any action or omission that constitutes willful misconduct or
gross negligence of Lessor).
(b) LESSOR'S REPRESENTATIONS, WARRANTIES AND COVENANTS.
Notwithstanding and as the sole exception to SECTION 5(A), (i) FSB represents
and warrants that it is a national banking association duly organized, validly
existing and in good standing under the laws of the United States and has all
requisite corporate power, authority and legal right to enter into and to
perform its obligations under the 1997 Trust Agreement; (ii) Lessor represents
and warrants that: (A) unless a Default or an Event of Default shall have
occurred and be continuing neither Lessor nor anyone claiming by, under or
through Lessor shall take any actions inconsistent with Lessee's right of quiet
enjoyment; (B) FSB holds all material licenses, certificates and permits
necessary for the conduct of its business as now conducted; (C) the execution,
delivery and performance of this Lease has been duly authorized by all necessary
corporate action of Lessor, and does not and will not (1) result in the
violation of the provisions of the charter documents or bylaws of Lessor as in
effect on the date hereof, (2) require stockholder approval or approval or
consent of any trustee or holders of any indebtedness of Lessor, except such
approvals which have been obtained and are in full force and effect, (3)
contravene any law, rule or regulation or any order of any Government Entity
binding on Lessor, and (4) conflict with or result in a breach of any terms or
provisions of or constitute a default under, or result in or require the
creation or imposition of any Lien upon any material property or assets of
Lessor under, any indenture, mortgage or other agreement or instrument as in
effect on the date hereof to which Lessor is a party or by which it or any of
its property is bound, or any applicable law, rule or regulation, judgment,
order or decree of any Government Entity or court having jurisdiction over
Lessor or any of its properties; and (D) this Lease constitutes the legal, valid
and binding obligation of Lessor, enforceable against Lessor in accordance with
its terms except as may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally and, to the extent that certain remedies require or may require
enforcement by a court of equity, by such principles of equity (regardless of
whether such enforceability is considered in a proceeding at law or in equity)
as a court having jurisdiction may impose.
(c) MANUFACTURER AND VENDOR WARRANTIES. Lessor hereby assigns
to Lessee for the duration of the Lease Term (so long as no Event of Default
shall have occurred and be continuing) all assignable warranties, if any, given
by the Manufacturer and other vendors with respect to the Aircraft and Engines
and shall obtain Manufacturer's consent to such assignment. Lessee will
diligently and promptly pursue any valid claims it may have under such
warranties and will provide notice of the same to Lessor. To the extent that any
warranty given by the Manufacturer or others with respect to the Aircraft or
Engines is not assignable or otherwise made available to Lessee, Lessor agrees,
at its option, either (i) to authorize Lessee to take such action to enforce
such warranty in the name of Lessor as Lessee sees fit or (ii) to exert
reasonable efforts at Lessee's request and expense (and subject to Lessee making
adequate provision to the satisfaction of Lessor with respect to such expense)
to enforce any such warranties for the benefit of Lessee. Effective on the
return of the Aircraft or the termination of this Lease, whichever is earlier,
Lessee hereby assigns any remaining warranties, and any claims thereunder, to
Lessor or its designee. Upon exercise by Lessor or any Party claiming by,
through or under Lessor of any remedies in respect of an Event of Default, and
at the latest, upon expiration of the Lease Term, the benefit of all warranties
referred to herein shall immediately revert and be deemed to have been
reassigned by Lessee to Lessor.
6. MAINTENANCE; ALTERATIONS, MODIFICATIONS AND ADDITIONS.
(a) MAINTENANCE.
(i) So long as Lessor has not committed a breach of its covenant of
quiet enjoyment which shall have the effect of depriving Lessee of the use
or possession of the Aircraft, during the Lease Term and until the
Aircraft is returned to Lessor, Lessee shall, at its sole cost and
expense, service, inspect, test, maintain, overhaul and repair the
Aircraft, the Engines and all of the Parts in accordance with Lessee's FAA
approved airworthiness maintenance and inspection program, a copy of which
has been or will be delivered to Lessor on or prior to the Commencement
Date (the "MAINTENANCE PROGRAM") and in conformity with the rules and
regulations of the FAA, (A) so as to keep the Aircraft in as good
condition (operating and otherwise), appearance and repair as when
delivered to Lessee hereunder, ordinary wear and tear excepted and
otherwise to enable the airworthiness certification of the Aircraft to be
maintained in good standing at all times under applicable law, and to be
and remain registered in the United States pursuant to the Federal
Aviation Act, and (B) in the same manner and with the same care as used by
Lessee with respect to similar aircraft and engines owned or operated by
Lessee (it being the intention of the parties hereto that Lessee shall not
discriminate against the Aircraft in respect of any maintenance matters).
Lessee shall be authorized to amend its Maintenance Program; provided,
however, that notwithstanding such amendment, the Maintenance Program
shall, at all times during the Lease Term, be in full conformity with the
requirements set forth above and, further provided, that Lessee shall have
obtained Lessor's prior written consent to any material amendment or
change in or to the Maintenance Program. All service, inspection,
maintenance, modification, repair and overhaul shall be performed or
caused to be performed by Lessee in accordance with all applicable FAA
requirements and under the Maintenance Program, and shall be accomplished
in accordance with all applicable service, inspection, maintenance,
modification, repair and overhaul manuals and bulletins published by the
Manufacturer or the manufacturers of the Engines or engines, equipment,
accessories or Parts installed on the Aircraft. Without limiting the
generality of the foregoing or the obligations of Lessee hereunder, Lessee
agrees that such maintenance and repairs will include but will not be
limited to each of the following:
(A) to perform in accordance with the Maintenance
Program all routine and non-routine maintenance work;
(B) to comply on a terminating basis with all
outstanding mandatory orders, airworthiness directives and
instructions issued by the FAA affecting the Aircraft that
have an effective date for compliance prior to, or sooner than
one hundred eighty (180) days after, the return date of the
Aircraft;
(C) to incorporate in the Aircraft all service bulletins
of the Manufacturer, the Engine manufacturer and other vendors
which Lessee schedules to incorporate during the Lease Term on
aircraft or engines in its Boeing 737 fleet;
(D) to incorporate in the maintenance schedule for the
Aircraft a corrosion control program as recommended by
Manufacturer and the FAA and to carry out such work as may be
required to comply therewith, including periodic inspections
of fuel tanks, periodic inspection and clean-up under galleys
and lavatories, the cleaning and treating of all mild and
moderate corrosion and the correcting of all severe and
exfoliated corrosion in accordance with the recommendations of
the Manufacturer; and
(E) to maintain, in the English language (1) the
Aircraft Documentation and (2) any other records, logs or
other documents, information or materials relating to the
service, inspection, testing, maintenance, modification,
overhaul and repair of the Aircraft, any Engine and any Part
which are required by the FAA or by applicable law, all of
which shall at all times be kept current and up-to-date, shall
conform with the laws of any Government Entity having
jurisdiction and with normal practices of commercial air
carriers, shall disclose the location of any Engine or Part
not installed on the Airframe and shall be made available for
review by Lessor on reasonable notice.
(ii) Lessee shall have designated persons in its employment
authorized by the FAA to perform service, inspection, modifications repair
and alterations of the Aircraft, and to return the Aircraft to Lessee's
revenue service after such performance has been accomplished by Lessee or
shall have the same performed on its behalf by an FAA approved repair and
overhaul station in conformity with FAR 145 ("Approved Repair Facility").
For purposes hereof, Lessor acknowledges that Lessee's maintenance and
repairs in connection with "C" checks and "D" checks (or the equivalent
thereof) are being performed by Tramco, Inc. of Seattle, Washington. In
the event Lessee has a third party accomplish, on a continuous basis, some
or all of the maintenance requirements under the Maintenance Program
(excluding "A," preflight and transit checks) such maintenance by said
third party must be accomplished in accordance with the provisions of this
SECTION 6(A). Lessor shall be entitled and Lessee shall ensure that Lessor
is permitted to reasonably visit the facilities of any such third party
maintenance performer to inspect the maintenance work performed on and the
maintenance records of the Aircraft including any Engine or Part.
(iii) Lessor may request that Lessee accomplish changes desired by
Lessor to the Aircraft during Lessee's layup of the Aircraft for
maintenance under the Maintenance Program in those circumstances where
such changes are not required under this SECTION 6(A) or initiated by
Lessee under SECTION 6(C). No such request shall be unreasonably denied by
Lessee provided that no such changes shall require Lessee to keep the
Aircraft out of service for any longer period than the period which
Lessee's maintenance of the Aircraft was scheduled to require. With
respect to such requested changes, Lessor, at its expense, shall provide
retrofit kits of parts and installation instructions to Lessee. Lessor
shall, within thirty (30) days (or such earlier period as may be required
by any Authorized Repair Facility performing the requested change(s)) of
receipt of an invoice detailing the same, pay all costs thereof which
costs shall have been agreed upon prior to performance of the requested
changes.
(iv) Lessee shall give Lessor not less than thirty (30) days' prior
written notice of the anticipated date, location and Approved Repair
Facility in respect of any "C"check or "D" check (or its equivalent) to be
performed on the Aircraft.
(v) Repairs will be accomplished as follows: (A) any repair to the
Aircraft shall be accomplished pursuant to the appropriate manufacturer's
repair manual instructions under an FAA approved program; and (B) any
material repair to the Aircraft that is not covered by the appropriate
manufacturer's repair manual instructions shall be subject to Lessor's
prior written approval and shall be made under an FAA approved program.
(vi) Notwithstanding anything to the contrary contained herein and
provided that the same shall not violate the terms of or conflict with any
lease, sublease, credit or security agreement to which such engine, an
aircraft engine that is not an Engine, but that is installed on the
Airframe, shall be maintained in accordance with this SECTION 6(A).
(b) MAINTENANCE RESERVES.
(i) Lessee shall pay Lessor, as Supplemental Rent for the use
of the Aircraft during the Lease Term, within fifteen (15) days
following the last day of each calendar month during the Lease Term
and on the redelivery date, the following sums ("MAINTENANCE
RESERVES"): (A) with respect to each Engine, the sum (the "ENGINE
RESERVE AMOUNT") of (x) the amount determined by multiplying the
number of Flight Hours of operation of such Engine during the
immediately preceding month (irrespective of whether such Engine is
installed on the Airframe or any other airframe) by [ ]* Dollars
(US$[ ]*) which amount shall be applied toward restoration shop
visits (the "SHOP VISIT PORTION") and (y) the amount determined by
multiplying the number of Cycles of operation of such Engine during
the immediately preceding month (irrespective of whether such Engine
is installed on the Airframe or any other airframe) by [ ]* Dollars
(US$[ ]*) which amount shall be applied toward the cost of
life-limited parts (the "LLP Portion"), and (B) with respect to the
Airframe, the amount (the "AIRFRAME RESERVE AMOUNT") determined by
multiplying the number of Flight Hours of operation of the Airframe
during such month by [ ]* Dollars (US$[ ]*). It is the intent of the
parties hereto that the Aircraft and Engines be operated during the
Lease Term at an average Flight Hour/Cycle ratio (the "Ratio") of [
]* Flight Hours to one Cycle ([ ]*:1). During any calendar year
during the Lease Term, the total Engine Flight Hours for each Engine
recorded in respect of the previous twelve months shall be compared
with the Cycles flown for such Engine and the Ratio computed. The
rate payable by way of maintenance reserve in respect of each
complete Flight Hour (pro rata for part thereof) for such Engine
applicable with respect to the Shop Visit Portion of the Engine
Reserve Amount due from Lessee after such annual Ratio computation
and prior to the next annual Ratio computation shall be as provided
in EXHIBIT G hereof for such Ratio. Any excess Maintenance Reserves
remaining at the expiration of the Lease Term or earlier termination
of this Lease shall be retained by Lessor.
(ii) Lessee shall be entitled to reimbursement from the Shop
Visit Portion of the Engine Reserve Amount held for an Engine for
Lessee's actual costs (without xxxx-up) incurred with respect to
heavy maintenance of such Engine requiring a shop visit, excluding
any costs associated with replacement of life limited parts and the
cost of any repairs or maintenance required due to accidents, abuse,
misuse, mishandling, faulty maintenance, foreign object damage,
elective part replacement or any insured event. Such reimbursement
shall be made within ten (10) Business Days after presentation to
Lessor of appropriate written evidence of such expenses (which shall
include a copy of an invoice from an FAA-approved maintenance
facility indicating that the maintenance has been completed and
identifying those engine maintenance tasks accomplished and the
labor and material breakdown thereof, and a receipt from the
maintenance facility for payment of the invoice, or at least such
amount thereof as shall exceed the portion of the Maintenance
Reserves available to Lessee hereunder); PROVIDED, that (A) the
amount reimbursed to Lessee shall not exceed the amount of the
Maintenance Reserves paid by Lessee (and not previously disbursed)
allocable to the Shop Visit Portion of the Engine Reserve Amount for
the Engine requiring a shop visit, and (B) in no event shall Lessee
be entitled to reimbursement for any expenses related to removal or
installation of any Engine for maintenance or any other shipping or
transportation expenses. To the extent that any amount reimbursable
hereunder has not been paid by Lessee, such amount shall be paid
directly to the maintenance facility which performed the services
for which reimbursement is sought.
(iii) Lessee shall be entitled to reimbursement from the LLP
Portion of the Engine Reserve Amount (i) for the full replacement
cost of life limited parts having a remaining life of up to and
including one thousand two hundred fifty (1250) Cycles. Upon
reimbursement of such replacement costs, Lessee shall deliver the
removed life limited parts to Lessor at the overhaul facility and
cause title thereto to vest in Lessor free and clear of all Liens
other than Lessor Liens, and (ii) of such portion of the replacement
cost of life limited parts having a remaining life in excess of one
thousand two hundred fifty (1250) Cycles as corresponds to the
utilized (non-remaining) portion of the life of such life limited
parts as compared to the total life thereof when new, as expressed
in Cycles. With respect to such life limited parts having a
remaining life in excess of one thousand two hundred fifty (1250)
Cycles, title to such life limited parts shall be deemed to vest in
Lessee upon installation of replacement parts on an Engine. Such
reimbursement shall be made within ten (10) Business Days after
presentation to Lessor of appropriate written evidence of such costs
(which shall include a copy of an invoice from an FAA-approved
supplier of such life limited parts, identifying those purchased and
receipt of payment therefor or at least payment for such portion as
shall exceed the LLP Portion of the Engine Reserve Amount available
to Lessee hereunder and of the Approved Repair Facility indicating
that such life limited parts have been installed on an Engine;
provided, that (A) the amount reimbursed to Lessee shall not exceed
the amount of the Maintenance Reserves paid by Lessee (and not
previously disbursed) allocable to the LLP Portion of the Engine
Reserve Amount for the Engine requiring a shop visit, and (B) in no
event shall Lessee be entitled to reimbursement for any expenses
related to removal, shipping or transportation expenses. To the
extent that any amount reimbursable hereunder has not been paid by
Lessee, such amount shall be paid directly to the supplier of the
life limited part(s) for which reimbursement is sought.
(iv) Lessee shall be entitled to reimbursement from the
Airframe Reserve Amount for the costs incurred pursuant to a full
structural and systems "D" check (or its equivalent) to occur during
the Lease Term. Such reimbursement shall be made within ten (10)
Business Days after presentation to Lessor of appropriate written
evidence of such expenses (which shall include a copy of an invoice
from an FAA-approved maintenance facility indicating that the "D"
check (or its equivalent) has been completed and identifying those
maintenance tasks accomplished and the labor and material breakdown
thereof, and a receipt from the maintenance facility for payment of
the invoice, or at least such amount thereof as shall exceed the
portion of the Maintenance Reserves available to Lessee from the
Airframe Reserve Amount hereunder); provided, that (A) the amount
reimbursed to Lessee shall not exceed the amount of the Maintenance
Reserves paid by Lessee (and not previously disbursed) allocable to
the Airframe Reserve Amount, and (B) in no event shall Lessee be
entitled to reimbursement for any expenses related to removal,
shipping or transportation expenses. To the extent that any amount
reimbursable hereunder has not been paid by Lessee, such amount
shall be paid directly to the maintenance facility which performed
the "D" check for which reimbursement is sought.
(v) In respect of any maintenance work to be performed or
replacement of life limited parts for which reimbursement from the
applicable portion of the Maintenance Reserves will be requested,
Lessee, prior to the performance of such maintenance or replacement
of life limited parts, shall deliver to Lessor a detailed workscope
to be performed with an estimate of all costs to be incurred in
connection with such maintenance and/or replacement of life limited
parts, including, without limitation, the estimated cost of labor,
materials and parts for which reimbursement is available under this
SECTION 6(B).
(vi) Provided that no breach by Lessor of Lessor's covenant of
quiet enjoyment depriving Lessee of its use or possession of the
Aircraft has occurred and is continuing, nothing herein shall
modify, limit or otherwise affect Lessee's obligation to maintain
and repair the Aircraft in accordance with the terms of this Lease
and, except as specifically provided herein, any and all maintenance
and repairs on or to the Aircraft shall be at Lessee's sole cost and
expense.
(c) REPLACEMENT OF PARTS. Lessee, at its own cost and expense
(except as otherwise expressly provided herein), will promptly replace all Parts
that may from time to time be incorporated or installed in or attached to the
Aircraft or any Engine and that may from time to time become worn out, lost,
stolen, destroyed, seized, confiscated, damaged beyond repair or permanently
rendered unfit for use for any reason whatsoever, except as otherwise provided
in SECTION 6(E). In addition, Lessee may, at its own cost and expense, remove in
the ordinary course of maintenance, service, repair, overhaul or testing, any
Parts, whether or not worn out, lost, stolen, destroyed, seized, confiscated,
damaged beyond repair or permanently rendered unfit for use; provided that
Lessee, except as otherwise provided in SECTION 6(E), will, at its own cost and
expense, replace such Parts as promptly as possible. All replacement Parts shall
(i) be free and clear of all Liens (except Permitted Liens, as hereinafter
defined, and except for pooling arrangements to the extent permitted by SECTION
6(D)), (ii) be in airworthy and good operating condition and of at least
equivalent model and modification status and have a value and utility at least
equal to, the Parts replaced (assuming such replaced Parts were in the condition
and repair required to be maintained by the terms hereof) and (iii) if
applicable, have a current "serviceable tag" of the manufacturer or maintenance
facility providing such items to Lessee, indicating that such Parts are new,
serviceable or overhauled. All Parts at any time removed from the Aircraft or
any Engine shall remain subject to this Lease, no matter where located, until
such time as such Parts shall be replaced by Parts that have been incorporated
or installed in or attached to the Aircraft or such Engine and that meet the
requirements for replacement Parts specified above. Immediately upon any
replacement Part becoming incorporated or installed in or attached to the
Aircraft or any Engine as above provided, without further act, (i) title to the
replaced Part shall thereupon vest in Lessee, free and clear of Lessor's Liens
and all rights of Lessor, and shall no longer be deemed a Part hereunder
provided, however, that in the case of any Part that is replaced by a
replacement Part subject to a pooling arrangement, title to such replaced Part
shall not vest in Lessee until Lessee has complied with the provisions of
SECTION 6(D), (ii) title to such replacement Part shall vest in Lessor and such
replacement Part shall thereupon become subject to this Lease (subject only to a
pooling arrangement to the extent permitted by SECTION 6(D)) and (iii) such
replacement Part shall be deemed part of the Aircraft or such Engine for all
purposes hereof to the same extent as the Parts originally incorporated or
installed in or attached to the Aircraft or such Engine.
(i) there is not available to Lessee at the time and in the
place that an engine or part is required to be installed on the
Aircraft, a Replacement Engine or, as the case may be, Part
complying with the requirements of SECTION 6(C); (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 SECTION 6(C)
becomes available for installation on the Aircraft; and (iii) as
soon as practicable after installation of the same on the Aircraft
but, in any event, no later than the date of the next major
maintenance check (except as such time may be extended pursuant to
SECTION 8(B)), Lessee removes any such engine or part and replaces
it with an Engine or Part, as the case may be, complying with
SECTION 6(C).
(d) POOLING OF PARTS. Any Part (other than Engines) removed
from the Aircraft as provided in SECTION 6(C) may be subjected by Lessee to a
normal pooling arrangement customary in the airline industry entered into in the
ordinary course of Lessee's business with financially and operationally
responsible air carriers; provided no Default or Event of Default shall have
occurred and be continuing and further provided that the Part replacing such
removed Part shall be incorporated or installed in or attached to the Aircraft
in accordance with SECTION 6(C) after the removal of such removed Part. In
addition, any replacement Part when incorporated or installed in or attached to
the Aircraft in accordance with SECTION 6(C) may be owned by a financially and
operationally responsible air carrier subject to such a normal pooling
arrangement; provided that Lessee, at its expense, either (i) causes such
replacement Part to become subject to this Lease in accordance with SECTION 6(C)
by Lessee acquiring title thereto for the benefit of Lessor free and clear of
all Liens other than Permitted Liens or (ii) replaces such replacement Part by
incorporating or installing in or attaching to the Aircraft a further
replacement Part owned by Lessee free and clear of all Liens other than
Permitted Liens and by causing such further replacement Part to become subject
hereto in accordance with SECTION 6(C).
(e) ALTERATIONS, MODIFICATIONS AND ADDITIONS. EXCEPT FOR SUCH
ALTERATIONS AND MODIFICATIONS TO THE AIRCRAFT AND THE ENGINES AS MAY BE REQUIRED
FROM TIME TO TIME TO MEET THE STANDARDS OF THE FAA OR OTHER GOVERNMENTAL ENTITY
HAVING JURISDICTION AND AS REQUIRED TO CONFORM TO MANUFACTURERS' MANDATORY
SERVICE BULLETINS, LESSEE SHALL MAKE NO ALTERATIONS, MODIFICATIONS OR ADDITIONS
TO THE AIRCRAFT OR ANY ENGINE WITHOUT THE PRIOR WRITTEN CONSENT OF LESSOR.
Lessee, at its own expense, will make such alterations and modifications to the
Aircraft and the Engines as may be required from time to time to meet the
standards of the FAA or other Governmental Entity having jurisdiction and as
required to conform to Manufacturers' mandatory service bulletins, and shall
notify Lessor of the nature and schedule for making such changes and, upon
submission of the Monthly Report for the month during which completion of the
same shall have occurred, of completion thereof. Unless expressly required by
the FAA or Manufacturer's mandatory service bulletins, no alteration,
modification or addition shall diminish the value or utility of the Aircraft or
such Engine, or impair the condition or airworthiness thereof, below the value,
utility, condition and airworthiness thereof immediately prior to such
alteration, modification or addition (assuming the Aircraft or such Engine was
then of the value or utility and in the condition and airworthiness required to
be maintained by the terms of this Lease), it being understood that any such
alteration, modification or addition that adversely affects interchangeability
of Parts shall be deemed to diminish the value of the Aircraft. Promptly upon
request therefor, Lessee shall provide to Lessor copies of all drawings and data
with respect to any proposed alteration, modification or addition not mandated
by the FAA. Lessor may impose as a condition to its consent to all or any part
of such proposed alteration, modification or addition that, prior to the return
of the Aircraft to Lessor in accordance with SECTION 10, such alteration,
modification or addition be removed and the Aircraft returned, all at Lessee's
expense, to the condition it was in prior to such alteration, modification or
addition, and otherwise as required by SECTION 10. All parts incorporated or
installed in or attached or added to the Aircraft or such Engine as the result
of such alteration, modification or addition shall, without further act, become
subject to this Lease. Notwithstanding the foregoing sentence of this SECTION
6(E), so long as no Default or Event of Default shall have occurred and be
continuing, Lessee may remove any Part; provided that (i) such Part is in
addition to, and not in replacement of or substitution for, any Part originally
incorporated or installed in or attached to the Aircraft or any Engine at the
time of delivery thereof hereunder or any Part in replacement of, or
substitution for any such Part, (ii) such Part is not required to be
incorporated or installed in or attached or added to the Aircraft or such Engine
pursuant to the terms of this SECTION 6(E) and (iii) such Part can be removed
from the Aircraft or such Engine without diminishing or impairing the value,
utility, condition or airworthiness required to be maintained by the terms of
this Lease that the Aircraft or such Engine would have had at such time had such
removal not occurred. Upon the removal by Lessee of any Part as above provided,
title thereto shall, without further act, vest in Lessee and such Part shall no
longer be deemed part of the Aircraft or such Engine from which it was removed.
Any Part removed by Lessee in any manner other than as above provided prior to
the return of the Aircraft or such Engine to Lessor hereunder shall remain the
property of Lessor.
Notwithstanding anything herein to the contrary, Lessee shall be
permitted to install and remove, at its sole cost and expense, new galleys,
seats, video and entertainment systems and telephones, provided that Lessee
shall store any galleys and video, entertainment and telephone systems currently
installed on the Aircraft and removed therefrom by Lessee, in a safe manner and
at its sole cost and expense and, provided, except as otherwise agreed between
Lessee and Lessor, that any such equipment installed upon the Aircraft by Lessee
is removed by Lessee at its sole cost and expense and Lessee shall return the
Aircraft with the Lessor's equipment reinstalled thereon or, if lost or damaged,
with the equivalent thereof, satisfactory to Lessor, and further provided that
Lessee shall repair at its sole cost and expense and to Lessor's reasonable
satisfaction, any damage to the Aircraft caused by or in connection with such
installation and removal.
7. TITLE AND REGISTRATION; LIENS; POSSESSION.
(a) TITLE AND REGISTRATION. Lessee acknowledges and agrees
that as between Lessee and Lessor, title shall at all times be and remain vested
solely and exclusively in Lessor, and Lessee shall have no right, title or
interest in the Aircraft except the right to use the Aircraft as provided
herein. The Aircraft has been duly registered, and shall at all times during the
Lease Term remain duly registered, in the name of Lessor under the laws of the
United States, except as otherwise required by the Federal Aviation Act. Lessee,
at its sole cost and expense, shall from time to time do or cause to be done any
and all acts and things then required by law (including the Geneva Convention on
the International Recognition of Rights in Aircraft, if applicable) or by
practice, custom or understanding or as Lessor may reasonably request to
protect, preserve and perfect Lessor's, rights and interests in the Aircraft and
this Lease in the United States or in any other jurisdiction into or over which
Lessee may operate the Aircraft or to which Lessee is subject. Without limiting
the generality of the foregoing, if at any time any filing or recording is
necessary or advisable to perfect, protect and/or preserve the rights and
interests of Lessor in the Aircraft (including Engines and Parts) or this Lease,
Lessee shall, at its own cost and expense, cause this Lease, financing
statements with respect hereto, and any and all additional documents or
instruments which shall be executed pursuant to the terms hereof or thereof, so
far as permitted by applicable law, to be kept, filed and recorded and to be
reexecuted, refiled and rerecorded at all times in the appropriate offices
pursuant or in relation to the applicable laws and regulations of the United
States, and shall furnish to Lessor an opinion of counsel and/or other evidence
satisfactory to Lessor of such registrations, recordation and filings required
hereunder.
(b) LIENS. Lessee will not directly or indirectly create,
incur, assume or suffer to exist any Lien on or with respect to the Airframe or
any Engine, title thereto or any Part or interest therein or in this Lease
except (i) the respective rights of Lessor and Lessee as herein provided, (ii)
the rights of others under agreements or arrangements to the extent expressly
permitted by the terms of SECTION 6(D), (iii) Lessor Liens, (iv) Liens for Taxes
either not yet due or being contested in good faith (and, in respect of such
contest, for the payment of which adequate reserves have been provided) by
appropriate proceedings diligently pursued so long as such proceedings do not
involve any material danger of the sale, forfeiture or loss of the Airframe or
any Engine or Part or interest therein and (v) materialmen's, mechanics',
workmen's, repairmen's, employees' or other like Liens arising in the ordinary
course of business for amounts the payment of which is either not yet delinquent
or is being contested in good faith (and, in respect of such contest, for the
payment of which adequate reserves or other adequate provisions for payment by
way of security or otherwise, have been provided) by appropriate proceedings
diligently pursued so long as such proceedings do not involve any danger of the
sale, forfeiture or loss of the Airframe or any Engine or Part or interest
therein (each of the Liens referred to in clauses (i) to (v) being herein
referred to as "PERMITTED Liens"). Lessee will notify, as soon as reasonably
practicable, Lessor and shall promptly, at its sole cost and expense, take such
action as may be necessary to discharge any such Lien not excepted above if the
same shall arise at any time. Lessee hereby further agrees that no mechanics' or
similar Lien for any labor, services or materials supplied directly by Lessee,
shall attach to or otherwise affect the Aircraft, any Engine or any Part and
Lessee hereby irrevocably waives disclaims and releases any such Lien.
(c) OPERATION, QUIET ENJOYMENT. Lessee shall not operate or
locate the Aircraft, or suffer the Aircraft to be operated or located, (i) in
violation of any applicable law or the Aircraft's certificate of airworthiness,
(ii) other than on regularly scheduled or charter commercial passenger or cargo
flights between any points in the Americas except (inclusive of any landings) in
Cuba except if otherwise required to ferry the Aircraft to an Approved Repair
Facility, (iii) in any area excluded from coverage by any insurance required by
the terms of SECTION 9, or (iv) in any recognized or threatened area of
hostility without Lessor's written consent and unless fully covered to Lessor's
satisfaction by war risk, confiscation and hijacking insurance. Lessee shall not
use the Aircraft for testing or for training of flight crewmembers other than
Lessee's own crewmembers. Except as otherwise provided herein, Lessee shall pay
all costs incurred in the operation of the Aircraft during the Lease Term, for
profit or otherwise, including the costs of flight crews, cabin personnel, fuel,
oil, lubricants, maintenance, insurance, storage, landing and navigation fees,
airport charges, passenger service and any and all other expenses of any kind or
nature, directly or indirectly, in connection with or related to the use,
movement and operation of the Aircraft. Provided no Default or Event of Default
shall occur and be continuing, Lessor shall not take or cause or permit to be
taken any action inconsistent with Lessee's right of quiet enjoyment of, or
otherwise in any way interfere with or interrupt the continuing use, operation
and possession of the Aircraft, the Airframe or any Engine by Lessee.
(d) POSSESSION. EXCEPT AS OTHERWISE PROVIDED IN THIS SECTION
7(D), LESSEE SHALL HAVE NO RIGHT WHATSOEVER TO SUBLEASE THE AIRCRAFT OR ANY
ENGINE TO ANY PERSON WITHOUT HAVING OBTAINED THE PRIOR WRITTEN CONSENT OF
LESSOR. Lessor agrees that it will not unreasonably withhold its consent to a
proposed sublease by Lessee. In addition and notwithstanding anything in this
Lease to the contrary, Lessee will not in any manner without Lessor's prior
written consent deliver, transfer or relinquish possession of the Aircraft, the
Airframe or any Engine or install any Engine, or permit any Engine to be
installed, on any airframe other than the Airframe; provided, that, so long as
no Default or Event of Default shall have occurred and be continuing, and so
long as the action to be taken shall not deprive Lessor of its interest in the
Aircraft, Lessee may, from time to time, take any of the following actions:
(i) deliver possession of the Airframe or any Engine to the
manufacturer thereof or to any organization for testing, service,
repair, maintenance or overhaul work on the Airframe or any Engine
or any Part of any thereof or for alterations or modifications in or
additions to such Airframe or any Engine to the extent required or
permitted by the terms of SECTION 6(E); or
(ii) to the extent permitted by this SECTION 7(D), subject any
appliances, parts or other equipment owned by Lessor and removed
from the Airframe or any Engine to any pooling arrangement referred
to in SECTION 6(D) of the Lease; or
(iii) install the Engines on any airframe owned or leased by
Lessee; provided that, no lien shall attach to any such Engine by
virtue of or in connection with such installation, and the owner,
lessor, or any party having a security interest in any such airframe
grants reciprocal rights to Lessor; and further provided that,
Lessee shall maintain any and all insurance required to be
maintained upon or in respect of the Engines hereunder at all times
during the Lease Term and until redelivery of the same in the
condition required in SECTION 10 hereof, or
(iv) transfer possession of the Airframe or any Engine to any
Government Entity of the United States pursuant to a sublease, a
copy of which shall be promptly furnished to Lessor, provided that
such sublease shall (A) not extend beyond the end of the Lease Term
and (B) Lessee shall have delivered to Lessor signed copies of a
notice of assignment of such sublease in favor of Lessor under the
Assignment of Claims Act of 1940, as amended (31 U.S.C. Section
3727, 41 U.S.C. Section 15) or any superseding or successor
provisions thereto, and in compliance with the applicable provisions
of 32 C.F.R. Section 7-103.8 and 41 C.F.R. Section 1-30.7, or
superseding or successor laws and regulations, and Lessor may at any
time when a Default or Event of Default shall have occurred and then
be continuing, file such sublease and an original and three copies
of such notice of assignment with the proper contracting and
disbursing officers and otherwise comply with all applicable
provisions of 32 C.F.R. Section 7-103.8 or any superseding or
successor provisions thereto.
Any "wet lease" or other similar arrangement under which Lessee
maintains operational control of, and continues to maintain and insure the
Aircraft, for a term not exceeding twelve (12) months (including all extensions
and renewals), shall not constitute a sublease, transfer or relinquishment of
possession for purposes of this SECTION 7(D). Lessee shall notify Lessor
concurrently with entering into any "wet lease" with a term, including renewals
of more than six (6) months.
No sublease, transfer or relinquishment of possession of the
Airframe or any Engine permitted under this SECTION 7(D) shall in any way
discharge or diminish any of Lessee's obligations hereunder, or constitute a
waiver of any of Lessor's rights and remedies hereunder. Notwithstanding any
sublease, transfer or relinquishment of possession permitted under this SECTION
7(D), Lessee shall remain primarily liable hereunder for the performance of all
of the terms of this Lease to the same extent as if any such transfer or
relinquishment of possession had not occurred.
(e) IDENTIFICATION PLATES. Lessee shall at all times maintain
in a prominent position in the cockpit of the Airframe and on each Engine the
identification plates installed thereon or attached thereto. Lessee shall
promptly replace any such identification plate that becomes illegible, lost,
damaged or destroyed for any reason.
(f) REPORTING REQUIREMENTS. Commencing with a report furnished
fifteen (15) days after the end of the calendar month of the Commencement Date,
Lessee will furnish to Lessor a Monthly Report in the form attached hereto as
EXHIBIT F, which report will include (i) the hours/cycles operated for the
Airframe and each of the Engines (and their location by airframe). On at least a
quarterly basis Lessee's report will also contain a list of those service
bulletins, ADs and engineering modifications incorporated on the Aircraft. Each
Monthly Report will be furnished within fifteen (15) days after the end of each
calendar month, except that the Monthly Report pertaining to the last month (or
any portion thereof) of the Lease Term will be furnished to Lessor on the last
day of the Lease Term.
(g) INSPECTIONS. During the Lease Term Lessee shall furnish
Lessor such information concerning the location, condition, use and operation of
the Aircraft as Lessor may reasonably request. Lessee shall give Lessor
reasonable prior notice of the anticipated date of any major maintenance checks,
in order to enable Lessor to inspect the Aircraft (should it choose to do so) at
the time and place such major checks occur. Lessor shall be entitled to have its
technical representatives present during any major maintenance checks. On
reasonable notice, Lessor and/or its authorized agents or representatives shall
have the right to inspect the Aircraft and Aircraft documentation (whether in
connection with scheduled major maintenance checks or otherwise) and/or make
copies of the Aircraft documentation; provided, that such inspections do not
unreasonably disrupt Lessee's commercial operations or operation of the
Aircraft. Lessor shall have no duty to make any such inspection and shall not
incur any liability or obligation by reason of making or not making any such
inspection or by reason of any reports it receives or any reviews it may make of
the Aircraft records.
8. LOSS, DESTRUCTION, REQUISITION, ETC. During the Lease Term except
as otherwise expressly provided herein, Lessee shall bear the entire risk of
loss of or damage to the Aircraft. Accordingly:
(a) EVENT OF LOSS WITH RESPECT TO THE AIRCRAFT. Upon the
occurrence of an Event of Loss with respect to the Aircraft, Lessee shall
forthwith (and, in any event, within seven (7) days after such occurrence) give
Lessor written notice of such Event of Loss. On or before the earlier to occur
of (x) the actual receipt by Lessee of any insurance proceeds in respect of such
Event of Loss and (y) the one hundred twentieth (120th) day after the date of
such Event of Loss, but in no case later than the last day of the Lease Term,
Lessee shall pay to Lessor in immediately available funds the Stipulated Loss
Value, whereupon (l) the obligation of Lessee to pay Basic Rent with respect to
the Aircraft for any period commencing after the date of payment of such
Stipulated Loss Value shall terminate; provided that Lessee shall remain liable
for all payments of Basic Rent due on or before the date of such payment of
Stipulated Loss Value, (2) the Lease Term shall end and (3) Lessor, after
compliance by Lessee with all of its other obligations hereunder, including
without limitation payment of Supplemental Rent then due, will cause Lessor to
transfer to Lessee, without recourse or warranty, title to the Aircraft free and
clear of Lessor Liens.
(b) EVENT OF LOSS WITH RESPECT TO AN ENGINE. Upon the
occurrence of an Event of Loss with respect to an Engine only, Lessee shall give
Lessor prompt written notice thereof and shall, as soon as practical but in any
event within one hundred twenty (120) days after the occurrence of such Event of
Loss, convey or cause to be conveyed to Lessor, as replacement for the Engine
with respect to which such Event of Loss occurred, title to a Replacement Engine
free and clear of all Liens, other than Permitted Liens, and having a value,
utility, mod status at least equal to, and of the same or improved model,
service bulletin status, and maintenance status (I.E. total time, hours/cycles
remaining until next inspection, overhaul or scheduled removal) and in at least
as good operating condition as, the Engine with respect to which such Event of
Loss occurred, assuming such Engine was of the value, utility and remaining life
and in the condition and repair required by the terms hereof immediately prior
to the occurrence of such Event of Loss. Prior to or at the time of any such
conveyance, Lessee, at its own expense, will promptly (i) furnish Lessor with a
xxxx of sale, in form and substance satisfactory to Lessor, with respect to such
Replacement Engine; (ii) cause a supplement hereto, in form and substance
reasonably satisfactory to Lessor, subjecting such Replacement Engine to this
Lease, to be duly executed by Lessee, and recorded pursuant to the Federal
Aviation Act; (iii) furnish Lessor with such evidence of title to such
Replacement Engine and of compliance with the insurance provisions of SECTION 9
with respect to such Replacement Engine as Lessor may reasonably request; (iv)
furnish Lessor with an opinion of Lessee's counsel to the effect that title to
such Replacement Engine has been duly conveyed to Lessor free and clear of all
Liens, encumbrances and rights of others (except Permitted Liens) and is duly
leased hereunder; (v) furnish Lessor with a certificate signed by a duly
authorized financial officer or executive of Lessee certifying that Lessee's
representations and warranties set forth in SECTION 11 are true and accurate on
and as of said date as though made on and as of said date and that upon
consummation of such replacement, no Default or Event of Default will exist
hereunder; (vi) furnish Lessor with such documents and evidence with respect to
Lessee as Lessor may reasonably request in order to establish the consummation
of the transactions contemplated by this SECTION 8(B), the taking of all
corporate proceedings in connection therewith and compliance with the conditions
set forth in this SECTION 8(B), in each case in form and substance satisfactory
to such party; (vii) furnish Lessor with a certificate of a duly authorized
officer of Lessee to the effect that no Event of Default has occurred and is
continuing; and (viii) furnish Lessor with Uniform Commercial Code financing
statements covering such Replacement Engine. Upon full compliance by Lessee with
the terms of this subparagraph (b), such Engine shall no longer be subject to
the terms of this Lease and Lessor will transfer to Lessee title to the Engine
with respect to which the Event of Loss occurred, without recourse or warranty
(except that the Engine is free and clear of Lessor Liens) and shall cause
Lessor to execute and deliver to Lessee an instrument releasing the Engine from
the Lease. For all purposes hereof, each such Replacement Engine shall be deemed
part of the property leased hereunder, shall be deemed an "Engine" as defined
herein and shall be deemed part of the Aircraft as was the Engine replaced
thereby. No Event of Loss covered by this SECTION 8(B) shall result in any
reduction in Basic Rent. Notwithstanding the foregoing, if, as of the one
hundred twentieth (120th) day following the occurrence of the Event of Loss,
Lessee shall not have furnished a Replacement Engine as required hereunder and
conforming to the requirements set forth above, at Lessor's option (i) Lessor
shall extend the time period within which Lessee may perform its obligations to
furnish a Replacement Engine hereunder, or, (ii) Lessee shall forthwith pay to
Lessor, an amount equal to the Engine Loss Value and upon receipt of such
payment Lessor shall, as soon as practicable but in any event prior to the end
of Lease Term, lease to Lessee hereunder, a Replacement Engine complying with
the conditions of this SECTION 8(B). Notwithstanding the provisions of SECTION
6(C) hereof any engine installed by Lessee on the Aircraft following an Event of
Loss to an Engine may remain thereon until replaced by a Replacement Engine as
hereinafter provided.
(c) APPLICATION OF PAYMENTS FROM GOVERNMENTAL Authorities. Any
payments (other than insurance proceeds the application of which is provided for
in SECTION 9) received at any time by Lessor or by Lessee from any Government
Entity or other Person with respect to an Event of Loss resulting from the
condemnation, confiscation, theft or seizure of, or requisition of title to or
use of,
the Aircraft or any Engine, other than a requisition for use by a
Government Entity of the United States not constituting an Event of Loss, will
be applied as follows:
(i) if such payments are received with respect to the Airframe
or the Airframe and one or more Engines or engines installed on the
Airframe, such payments shall be paid to or retained by Lessor and
applied in reduction of Lessee's obligation to pay the Stipulated
Loss Value, if not already paid by Lessee, or, if already paid by
Lessee, shall be paid to or retained by Lessee and applied to
reimburse Lessee for its payment of such Stipulated Loss Value, and
the balance, if any, of such payment remaining thereafter shall be
distributed to Lessee; and
(ii) if such payments are received with respect to an Engine,
such payments shall be held by the Lessor until (A) replacement of
the Engine by Lessee by a Replacement Engine at which time said
payments shall be paid to Lessee; (B) if Lessor shall have elected
to provide a Replacement Engine as provided in SECTION 8(B) said
payments shall be applied in reduction of Lessee's obligation to pay
the Engine Loss Value, if not already paid by Lessee; or if already
paid by Lessee, shall be paid to Lessee and applied to reimburse
Lessee for its payment of such Engine Loss Value; and, (C) the
balance, if any, of such payment remaining thereafter to Lessee.
(d) REQUISITION FOR USE OF THE AIRCRAFT. In the event of the
requisition for use of the Aircraft by a Government Entity of the United States
and one or more related Engines or engines during the Lease Term under
circumstances not constituting an Event of Loss, Lessee shall promptly notify
Lessor of such requisition. All of Lessee's obligations under this Lease with
respect to such Aircraft including, but not limited to Lessee's obligation to
pay Rent, shall continue to the same extent as if such requisition had not
occurred. In the event of a breach of Lessee's obligations pursuant to this
SECTION 8(D), all payments received by Lessor or Lessee from such Government
Entity for the use of such Aircraft and Engines or engines shall be paid over
to, or retained by, Lessor to the extent of Lessee's obligations under this
Lease.
(e) QUIET ENJOYMENT. Notwithstanding the provisions of this
SECTION 8, if (i) Lessee has been deprived of both use and possession of the
Aircraft or any Engine or Part thereof solely as a result of the breach by
Lessor of its covenant of quiet enjoyment set forth herein and (ii) Lessee shall
have provided Lessor written notice to the effect that Lessee has been deprived
of such use and possession and that Lessee intends to cancel its insurance with
respect to the Aircraft or any such Engine or Part on a date specified in such
notice (which date shall not be earlier than thirty (30) days after the date of
Lessor's receipt of such notice), then, from and after the date so specified,
but only during the period that Lessee shall continue to be deprived of both use
and possession of the Aircraft or such Engine or Part (the "Suspension Period"),
(A) Lessor shall bear the entire risk of loss or damage thereof (other than loss
or damage caused by an act or omission of Lessee during the Suspension Period),
and (B) Lessee shall be relieved of its obligation to maintain insurance, as set
forth in SECTION 9 hereof, with respect thereto. In the event of an Event of
Loss of the Aircraft during any such period, the Lease shall terminate and, upon
such termination (i) the Aircraft shall be deemed to have been redelivered to
Lessor in the condition required as of the date on which such deprivation of use
or possession first occurred, (ii) Lessee shall be relieved of all further
obligations hereunder except such as are expressly stated to survive the
termination of this Lease and (iii) Lessor shall, return the Security Deposit to
Lessor as provided in SECTION 3. In the event of an Event of Loss with respect
to an Engine not involving an Event of Loss with respect to the Airframe during
any such period, Lessor shall at its sole cost and expense, as soon as
practicable but in any event within 120 days after the date of such Event of
Loss, provide a Replacement Engine complying with all terms of this Lease and
meeting all conditions otherwise imposed hereunder on Lessee in the event of an
Event of Loss with respect to an Engine. Immediately upon Lessee being restored
use and possession of the Aircraft or any Engine or Part with respect to which
the risk of loss shall have passed from Lessee to Lessor in accordance with this
SECTION 8(E), the entire risk of loss thereof shall again be borne by Lessee in
accordance with the terms of this Lease.
9. INSURANCE. Except as otherwise set forth in SECTION 8(E) hereof
in respect of any Suspension Period, Lessee, at its sole cost and expense, shall
maintain or cause to be maintained throughout the Lease Term and until the
return of the Aircraft to Lessor in such condition as is required under SECTION
10 hereof with insurers of recognized responsibility and good repute and under
policies reasonably satisfactory to Lessor all such insurance as is required to
be procured and maintained pursuant to this SECTION 9. Such insurance shall
include:
(a) LIABILITY. Public liability (including, without
limitation, aircraft third-party, baggage, cargo, contractual and passenger
legal liability including war risks), property damage liability insurance with
respect to the Aircraft and general airline third party legal liability
(including products liability insurance) with insurers of recognized
responsibility and good repute specializing in aviation insurance in the leading
international markets, in form satisfactory to Lessor and in amounts at least
equal to the greater of (a) [ ]* Dollars (US$[ ]*) per occurrence subject to no
deductible except deductibles as to baggage and cargo that are standard in the
airline industry in respect of carriers operating in the countries in which
Lessee operates and (b) the amount of such insurance carried by Lessee
applicable to other aircraft of similar type in Lessee's fleet.
(b) OTHER INSURANCE. (i) all-risk (including, without
limitation, ground and flight) aircraft hull insurance with respect to the
Aircraft in an amount which shall not at any time while the Aircraft is subject
to this Lease be less than Stipulated Loss Value;
(i) hull war-risk insurance with respect to the Aircraft in an
amount which shall not be less than the Stipulated Loss Value of the
Aircraft; provided, further, however, that such insurance shall
include but not be limited to, coverage against (1) war, invasion,
acts of foreign enemies, hostilities (whether war be declared or
not), civil war, rebellion, revolution, insurrection, martial law,
military or usurped power or attempts at usurpation of power, (2)
strikes, riots, civil commotions or labor disturbances, (3) any act
of one or more persons, whether or not agents of a sovereign power,
for political or terrorist purposes and whether the loss or damage
resulting therefrom is accidental or intentional, (4) any malicious
act or act of sabotage, (5) confiscation, nationalization, seizure,
restraint, detention, appropriation, requisition of title or use
(other than requisition for use by a Government Entity of the United
States) by or under the order of any government (whether civil,
military or de facto) or any public or local authority and (6)
hijacking or any unlawful seizure or wrongful exercise of control of
the Aircraft or crew in flight (including any attempt at such
seizure or control) made by any person or persons on board the
Aircraft acting without the consent of Lessee;
(ii) all-risk (including, without limitation, fire, transit
and extended coverage) insurance, and war-risk insurance of the type
specified in SECTION 9(B)(II) to the extent available, with respect
to each Engine when not installed on the Airframe in an amount not
less than the Engine Loss Value of such Engine;
(iii) such other insurance as Lessee carries in respect of
other similar aircraft in its fleet.
Notwithstanding anything in the foregoing to the contrary, no insurance
shall have a deductible in excess of $[ ]*.
(c) TERMS OF INSURANCE.
(i) Without limiting any of Lessee's obligations hereunder,
any policies carried in accordance with SECTION 9(A) of this Lease
covering the Aircraft or the Engines and any policies taken out in
substitution or replacement for any such policies shall:
(A) insure the interests of, and name as additional
insureds, each Indemnitee (the "ADDITIONAL INSUREDS") and
provide that the Additional Insureds bear no liability for the
payment of premiums;
(B) provide that if the insurers cancel such insurance
for any reason whatever, or the same is allowed to lapse for
nonpayment of premium, or if there is any alteration,
termination, or cancellation (whether by Lessee or any other
Person and for whatever reason) of the insurance, such
cancellation, lapse, alteration, termination or cancellation
shall not be effective as to the Additional Insureds for
thirty (30) days (with respect to war risk insurance seven (7)
days or the maximum shorter or longer period available in the
market for any portion of the required war risk coverage)
after receipt by such Additional Insureds of notice from such
insurers thereof;
(C) provide that in respect of the interest of Lessor
and each other Additional Insured in such policies, such
insurance shall not be invalidated by any action or inaction
of Lessee or any other Person and shall insure Lessor's and
the Additional Insureds' interests, regardless of any breach
or violation by Lessee or any other Person of any warranties
declarations or conditions contained in such policies;
(D) shall contain a waiver by the insurers of (i) all
rights of subrogation against any and all of the Additional
Insureds and (ii) any rights of set-off, counterclaim or any
other deductions whether by attachment or otherwise, which
they may have against any Additional Insured;
(E) shall be primary and without right of contribution
from any other insurance carried by any of the Additional
Insureds, and shall expressly provide that all of the
provisions provide that all of the provisions thereof (except
limits of liability) shall operate in the same manner as if
there were a separate policy covering each Additional Insured;
and
(F) shall, with respect to hull risk, hull war risk and
allied perils insurance, include a 50%-50% provision.
(ii) Any policies carried in accordance with SECTION 9(B) of
this Lease covering the Aircraft or the Engines and any policies
taken out in substitution or replacement for any such policies
shall:
(A) insure the interests of, and name as additional
insureds, each Indemnitee (the "ADDITIONAL INSUREDS") and
provide that the Additional Insureds bear no liability for the
payment of premiums;
(B) be made payable in the United States to the extent
of the Stipulated Loss Value to KGAL, as sole "loss payee"
(except that proceeds with respect to partial loss or damage
of less than $[ ]* shall be payable to Lessee subject to the
last sentence of SECTION 9(D));
(C) provide that if the insurers cancel such insurance
for any reason whatever, or the same is allowed to lapse for
nonpayment of premium, or if there is any alteration,
termination or cancellation (whether by Lessee or any other
Person and for whatever reason) of the insurance, such
cancellation, lapse, alteration, termination or cancellation
shall not be effective as to the Additional Insureds for
thirty (30) days (with respect to war risk insurance seven (7)
days or the maximum shorter or longer period available in the
market for any portion of the required war risk coverage)
after receipt by such Additional Insureds of notice from such
insurers thereof;
(D) provide that in respect of the interest of Lessor
and each other Additional Insured in such policies, such
insurance shall not be invalidated by any action or inaction
of Lessee or any other Person and shall insure Lessor's and
the Additional Insureds' interests, regardless of any breach
or violation by Lessee or any other Person of any warranties
declarations or conditions contained in such policies;
(E) shall contain a waiver by the insurers of all rights
of subrogation against any and all of the Additional Insureds;
and
(F) shall be primary and without right of contribution
from any of the Additional Insureds; and
(iii) All amounts payable under policies carried in accordance
with this SECTION 9 shall be paid in immediately available, freely
transferable Dollars in the United States. In the case of a lease or
contract with the United States or any Government Entity thereof in
respect of the Aircraft, a valid agreement duly assigned to Lessor
to indemnify Lessee against the same risks that Lessee is required
under SECTION 9(B) to insure against by the United States or such
Government Entity in an amount at least equal to the Stipulated Loss
Value shall be considered adequate insurance with respect to the
Aircraft to the extent of the risks and in the amounts that are the
subject of any such agreement to indemnify.
(iv) All insurance maintained pursuant to this SECTION 9 shall
be (A) maintained with recognized aircraft and aviation insurance
companies in the United States or international markets that
normally participate in aviation insurance or (B) supported by 99%
reinsurance issued by recognized aircraft and aviation insurance
companies in the international markets that normally participate in
international aviation insurance. Any such reinsurance shall be with
insurers, in form and in amounts reasonably satisfactory to Lessor
and shall be subject to "cut through" endorsements or other
endorsements or agreements satisfactory in form and substance to
Lessor which shall provide that all payments under such reinsurance
in respect of losses shall be paid (x) in the case of insurance
maintained pursuant to SECTION 9(A) hereof, to the applicable
Additional Insured or (y) in the case of insurance maintained
pursuant to SECTION 9(B) hereof, to KGAL as sole "loss payee"
(except as provided in SECTION 9(C)(II)(B)) and not to any such
primary insurance company.
(d) APPLICATION OF INSURANCE. All insurance or indemnity
payments received as the result of the occurrence of an Event of Loss with
respect to the Airframe or an Engine will be applied as follows:
(i) if such payments are received with respect to the
Airframe, the Engines or engines installed thereon, such payments
shall be applied in the following order of priority: (A) to Lessor
in the amount required to be paid by Lessee pursuant to SECTION
8(A), which amount shall be applied in reduction of Lessee's
obligation to pay such amount if not already paid by Lessee or, to
the extent such amount has been paid by Lessee to Lessor, to Lessee
to reimburse Lessee for its payment thereof and (B) to Lessee the
balance, if any, of such payment; and
(ii) if such payments are received with respect to an Engine,
such payments shall be held by the insurer until (A) replacement of
the Engine by Lessee by a Replacement Engine at which time said
payments shall be paid to Lessee; (B) if Lessor shall have elected
to provide a Replacement Engine as provided in SECTION 8(B) said
payments shall be paid to Lessor to be applied in reduction of
Lessee's obligation to pay the Engine Loss Value, if not already
paid by Lessee, or if already paid by Lessee, shall be paid to
Lessee and applied to reimburse Lessee for its payment of such
Engine Loss Value; and (C) the balance of such payment, if any, to
Lessee.
The insurance payments with respect to any property damage loss not
constituting any Event of Loss with respect to the Airframe or an Engine will be
paid to Lessor and applied by Lessor in payment (or to reimburse Lessee) for
repairs to or replacement of property in accordance with the terms of SECTION
6(C) against evidence satisfactory to Lessor that such repairs and replacement
have been made, or, if such repairs or replacement have already been paid for by
Lessee, to reimburse Lessee therefor, and any balance remaining after compliance
with such Section with respect to such loss shall be paid to Lessee. Any amount
referred to in the preceding sentence or in paragraph (i) or (ii) of this
SECTION 9(D) that is payable to Lessee shall not be paid to Lessee if at the
time of such payment an Event of Default or Default shall have occurred and be
continuing, but shall be held by Lessor as security for and may be applied to
the obligations of Lessee under this Lease and, at such time as there shall not
be continuing any such Default or Event of Default, such amount not previously
so applied shall be paid to Lessee. Notwithstanding the provisions of this
paragraph, payments in respect of partial losses of less than [ ]* Dollars (US$[
]*) shall be paid directly to Lessee to be applied by Lessee toward the cost of
repair or replacement of such property in conformity herewith.
(e) REPORTS. On or before the Commencement Date, Lessee will
furnish or cause to be furnished to Lessor a report signed by a firm of
independent aircraft insurance brokers, appointed by Lessee and acceptable to
Lessor, stating the opinion of such firm that the insurance then carried and
maintained on the Aircraft complies with the terms hereof. Lessee will cause
such firm to advise Lessor and each other Additional Insured in writing promptly
of any default in the payment of any premium, of any other act or omission on
the part of Lessee of which such firm has knowledge that might invalidate or
render unenforceable, in whole or in part, any insurance on the Aircraft and of
each claim made by Lessee in respect of the Aircraft. Lessee will also cause
such firm to advise Lessor and each other Additional Insured in writing at least
thirty (30) days prior to the expiration or termination of any insurance carried
and maintained on the Aircraft pursuant to this SECTION 9.
(f) FAILURE TO INSURE. In the event that Lessee shall fail to
maintain or cause to be maintained insurance as herein provided, Lessor may, at
its option, but without liability to Lessee for failure to do so, provide such
insurance and, in such event, Lessee shall, upon written demand, reimburse
Lessor for the cost thereof as Supplemental Rent. At any time while such failure
is continuing, Lessor may require the Aircraft to remain at any airport or (as
the case may be) proceed to and remain at any airport within the United States
as designated by Lessor, until such failure is remedied to Lessor's
satisfaction.
(g) ADDITIONAL INSURANCE. Nothing contained in this Lease
shall prevent Lessor or Lessee, each at its own expense and for its exclusive
benefit, from carrying insurance covering the Aircraft in addition to the
insurance required under this SECTION 9 (any such additional insurance,
"ADDITIONAL INSURANCE"); provided, however, that such Additional Insurance shall
be excess and non-contributory to the insurance required to be procured and
maintained by Lessee hereunder. The insurance payments for any property damage
loss covered by Additional Insurance shall be paid directly to the party
carrying such Additional Insurance. Lessee may carry hull all risks or hull war
and allied perils on the Aircraft in excess of the Stipulated Loss Value only to
the extent such excess insurance which would be payable to Lessee following an
Event of Loss does not prejudice the insurances required herein or the recovery
by Lessor thereunder. Lessee agrees that it will not create or permit to exist
any Liens (other than Lessor Liens) over the insurances required hereunder, or
its interest therein, except as constituted by this Lease.
(h) NOTICE OF CLAIMS. Lessee shall give Lessor notice in
writing of any claim or request for payment of an amount in excess of $[ ]*
under any physical damage insurance policy required to be maintained hereunder
promptly (but in any event within five (5) days) of the filing of such claim or
request for payment.
(i) STIPULATED LOSS VALUE. At any time following the first
anniversary of the Commencement Date, Lessee may propose a revision to the
Stipulated Loss Value Schedule set forth as Schedule I hereof, and, upon receipt
of any such proposal, Lessor and Lessee shall negotiate in good faith a revised
Schedule I of this Lease.
10. RETURN OF AIRCRAFT. The provisions of this SECTION 10 shall apply to
any return of the Aircraft to Lessor upon termination of this Lease (including,
without limitation, such return resulting from an Event of Default); provided,
that if this Lease is terminated pursuant to SECTION 14 and the Aircraft is
repossessed by Lessor, any action that is required to be taken by Lessee
pursuant to this SECTION 10 prior to the return of the Aircraft shall be taken
immediately after the return of such Aircraft.
(a) REDELIVERY UPON TERMINATION. On the date of termination of
this Lease, except as otherwise provided pursuant to SECTION 8(E) hereof, Lessee
shall at its sole cost and expense, return the Aircraft to Lessor, at the
Lessee's facilities in Colorado Springs, Colorado or at those of its FAA
approved maintenance provider performing the pre-redelivery "C" check (provided
that if this Lease shall be terminated as a result of a default by Lessee under
the Lease the Aircraft shall be returned to a point in the United States
reasonably requested by Lessor). At the time of return of the Aircraft to
Lessor, Lessor and Lessee shall execute a Return Acceptance Receipt in
substantially the form of EXHIBIT C hereto.
(b) CONDITION OF AIRCRAFT 3/4 GENERAL. The Aircraft at the
time of its return to Lessor shall have been maintained and repaired in
accordance with the Maintenance Program as if such Aircraft were to be kept in
further service by Lessee, shall be free and clear of all Liens (other than
Lessor Liens) and shall meet the following requirements:
(i) The Aircraft shall be in good operating condition with all
of the Aircraft equipment, components and systems functioning in
accordance with Manufacturer's limitations, irrespective of
deviations or variations authorized by the Minimum Equipment List or
Configuration Deviation List prepared and authorized by the
Manufacturer or authorized by the FAA.
(ii) The interior of the Aircraft shall be in as good
condition as upon delivery (normal wear and tear excepted).
(iii) The brakes and tires shall have a remaining life at
least equal to the remaining life of the brakes and tires installed
upon the Aircraft as of March 6, 1996.
(iv) The Aircraft shall be clean by international commercial
airline standards.
(v) The Aircraft shall have, and be in compliance with, a
current valid standard certificate of airworthiness issued by the
FAA and shall meet the requirements of FAR Part 121 as applied to
Lessee's then current operations without any corrections, repairs,
modifications, alterations or overhauls having to be performed to
meet such standards and rules.
(vi) The Aircraft shall have had accomplished thereon, at
Lessee's sole cost and expense, on a terminating action basis, and
be in compliance with all outstanding airworthiness directives and
mandatory service bulletins issued by the FAA affecting the Aircraft
that have an effective date for compliance prior to, or sooner than
one hundred eighty (180) days after the return date of the Aircraft.
In the event Lessee has obtained a waiver or deviation from the FAA
from having to comply with any such FAA airworthiness directives and
mandatory service bulletins Lessee shall, irrespective of such
waiver or deviation, comply with all such mandatory orders,
airworthiness, directives, service bulletins and instructions
covered by such waiver or deviation prior to return of the Aircraft
to Lessor.
(vii) All outstanding pilot discrepancies and deferred
maintenance items shall have been cleared on a terminating action
basis.
(viii) The Aircraft shall have had accomplished thereon the
cleaning and treating of all mild and moderate corrosion and
correcting of all severe or exfoliated corrosion in accordance with
the provisions of the Manufacturer's Maintenance Planning Document,
Corrosion Prevention Manual or 737 Structural Repair Manual
criteria, in each case, without discrimination as between the
Aircraft and Lessee's other Boeing 737-300 aircraft.
(ix) Except as otherwise permitted in SECTION 6(E) hereto, the
Aircraft shall be in the same configuration and condition with all
equipment installed therein as that in which the Aircraft was
delivered to Lessee by Lessor under this Lease, excepting only
ordinary wear and tear, replacements and substitute parts and
equipment as may have been properly made by Lessee pursuant to this
Lease.
(x) The Aircraft will be free of fuel, oil and hydraulic
leaks. Any temporary fuel leak repairs will have been replaced by
permanent repairs.
(xi) The Aircraft fluid reservoirs (including oil, hydraulic,
water and waste tanks) will be serviced to full in accordance with
Manufacturer's instructions, and each fuel tank shall contain at
least the quantity of fuel as was contained therein when the
Aircraft was delivered to Lessee on the Commencement Date; or, in
the case of any deficiency, Lessee shall pay Lessor for such
deficiency at Lessor's then current cost of fuel.
(xii) No special or unique Manufacturer, Engine manufacturer
or FAA inspection or check requirements which are specific to the
Aircraft or Engines and have which arisen during the Lease Term (as
opposed to all aircraft or engines of their types) will exist with
respect to the Airframe, Engines and Aircraft equipment, components
and systems.
(xiii) All repairs, modifications and alterations made to the
Aircraft or the addition or removal of equipment, systems or
components will have been made in accordance with FAA-approved data
and properly documented in accordance with the rules and regulations
of the FAA.
(xiv) No Part or component of the Airframe shall be older than
the Airframe.
(c) Condition of Airframe. The Airframe at the time of its return to
Lessor shall have a currently effective U.S. certificate of airworthiness, shall
meet the requirements of FAR 121 as applied to Lessee's then current operations,
shall meet the requirements and shall have such hours and cycles remaining under
the Maintenance Program as set forth below:
(i) The Airframe shall have accomplished the next complete
structural and systems "C" check sufficient to clear the Aircraft
for 3,000 hours, 3,000 cycles or, at least twelve (12) months of
operations determined with reference to the Maintenance Program.
(ii) The installed main landing gear and nose landing gear
shall each have at least 8,000 hours or 4,000 cycles remaining
before overhaul.
(iii) Perform an internal and external corrosion inspection as
required pursuant to the pre-return "C" check as per the Maintenance
Program and CPCP and correct any discrepancies in accordance with
the recommendations of Manufacturer and the Structural Repair
Manual.
(iv) Remove Lessee's exterior markings, including all exterior
paint and decals, by scuff/sanding the paint from the Airframe and
repaint the Airframe white.
(v) Permanently repair in accordance with Manufacturer's
Structural Repair Manual damage to the Aircraft that exceeds
Manufacturer's limits and replace any non-flush structural patch
repairs installed on the Airframe by Lessee, unless otherwise
recommended by Manufacturer, if required by Manufacturer's
maintenance and repair guidelines with flush-type repairs.
(d) CONDITION OF CONTROLLED COMPONENTS. Each life-limited part
or component and aircraft hour and/or cycle controlled components of the
Aircraft and of each Engine at the time of redelivery of the Aircraft to Lessor
shall have remaining at least 3,000 hours and/or 3,000 cycles, whichever is more
limiting, between scheduled removals for overhaul, testing, or disassembly. All
components controlled on a calendar basis shall have remaining at least 12
months before scheduled removal for testing or overhaul. Such hour/cycle or
calendar controlled components are defined as those components controlled under
the Maintenance Program. However, if the component or part has a check interval
limit that is less than the above stated hours, cycles or calendar time limit
requirement, the check interval limit shall prevail.
(e) CONDITION OF ENGINES. (i) Each Engine at the time of
return to Lessor whether or not installed on the Airframe shall have been
maintained on an "on-condition" program.
(i) Each Engine shall have no more cycles or hours since the
last shop visit for full performance restoration, as described in
the Aviall Caledonian Workscope definitions, than such Engine had
when delivered.
(ii) Lessee shall perform a full and complete video borescope
on each Engine and its modules in accordance with the Engine
manufacturer's maintenance manual, with Lessor or its
representatives entitled to be present. Lessee will provide evidence
to Lessor's satisfaction that such inspection does not reveal any
condition which would cause the Engine or any module to be
unserviceable, beyond serviceable limits, or serviceable with
limitations under the Engine manufacturer's maintenance manual.
Lessee will correct any discrepancies in accordance with the
guidelines set out by the Engine manufacturer which may be
discovered during such inspection.
(iii) Each Engine shall have an exhaust gas temperature margin
remaining of 15 degrees or higher and shall, at a minimum, meet all
the requirements of the maximum power assurance run criteria for CFM
56-3B2 engines.
(iv) The Aircraft shall be capable of certificated, full rated
performance without limitations throughout the entire operating
envelope as defined in the Manufacturer's flight manual applicable
to the Aircraft which performance compliance will be demonstrated at
the time of the demonstration flight referred to in SECTION 10(H)
and/or by on-wing static inspection and testing of the powerplants
(engines, nacelles and accessories) in accordance with the
maintenance manual applicable to such Engine, at Lessor's option.
(v) The auxiliary power unit or units installed in the
Aircraft at the time of return to Lessor shall have no more than 500
Flight Hours since the last overhaul as per the Garret Workscope
definition, shall be in good operating condition and shall have a
borescope inspection and "on-condition" check performed in
accordance with the Maintenance Program. Satisfactory evidence shall
be provided to Lessor reflecting the correction of any discrepancies
found during such inspection or such check, as the case may be.
(f) GROUND INSPECTION BY LESSOR. The Aircraft (including the
Aircraft documentation and other related documents to be returned therewith as
provided in SECTION 10(L)) shall be made available to Lessor for ground
inspection by Lessor at Lessee's facilities or those of its FAA approved
maintenance provider during the pre-redelivery "C" check. Such inspection shall
commence not less than seven working days prior to the date of return of the
Aircraft to Lessor. Lessee shall remove the Aircraft from scheduled service and
open the areas of the Aircraft as required to perform the necessary checks as
contemplated by this Lease and shall allow Lessor to accomplish its inspection
in order to determine that the Aircraft (including the Aircraft documentation)
and other related documents are in the condition set forth in SECTION 10. During
such pre-redelivery "C" check, Lessor's personnel shall have the right to
reasonably request that adjacent additional panels or areas be opened in order
to allow further inspection by Lessor personnel. Lessee shall promptly correct
any discrepancies from the condition required by the provisions of SECTION 10
that are observed during such inspection and are communicated by Lessor to
Lessee.
(g) OPERATIONAL GROUND CHECK. Promptly after completion of any
corrections required under SECTION 10(F), Lessee shall conduct an operations
ground check (including an engine power assurance run and a flight control
operational and rigging check) in accordance with the Manufacturer's maintenance
manual criteria for the purpose of demonstrating that each of the following
systems meet applicable manufacturer's criteria: (i) full fuel tank leak check;
(ii) altimeter calibration; (iii) ATC transponder system operational check; (iv)
audible ignition check (both systems); (v) pilot and static systems check; (vi)
hydraulic system internal leak check; and (vii) brake wear check. Promptly after
the operational ground check, Lessee shall repair any discrepancies resulting
therefrom.
(h) DEMONSTRATION FLIGHT. Promptly after completion of any
corrections required under SECTIONS 10(F) and 10(G), the Aircraft shall be flown
by Lessee, using qualified flight test personnel and the applicable
Manufacturer's test flight document, for approximately one and one-half hours
for the purpose of demonstrating to Lessor the satisfactory operation of the
Aircraft and its equipment. During such test flight, command, care, custody and
control of the Aircraft shall at all times remain with Lessee. Representatives
of Lessor may participate in such flight as observers. A qualified pilot
designated by Lessor shall occupy the cockpit observer's seat as an observer
during such demonstration flight. Upon completion of such demonstration flight,
the representatives of Lessee and Lessor participating in such demonstration
shall agree in writing upon any discrepancies in the Aircraft required to be
corrected by Lessee in order to comply with the provisions of this SECTION 10
and Lessee shall promptly correct any such discrepancies. Subsequent to
corrections of such discrepancies, Lessor shall inspect and technically accept
the Aircraft for redelivery subject to the requirements of this SECTION 10(H)
and SECTIONS 10(I) and (J) below. If any of the discrepancies referred to in
SECTIONS 10(F) and 10(G) or this SECTION 10(H) continue to persist, Lessor may,
at its option, agree to accept redelivery of the Aircraft and apply the
procedure set forth in SECTION 10(J) for such discrepancies.
(i) FERRY FLIGHT. Upon completion of the demonstration flight
and after Lessee has corrected discrepancies as required to comply with the
provisions of this SECTION 10, or Lessor has agreed to apply the procedure set
forth in SECTION 10(J), the Aircraft shall be ferried by Lessee to the
redelivery point set forth in SECTION 10(A) hereof. Lessee shall, at the
Lessor's request, ferry the Aircraft from the redelivery point set forth in
SECTION 10(A) hereof to any other location within the 48 contiguous United
States of America, as may be designated by the Lessor, at the Lessor's expense.
(j) DEFERRED DISCREPANCY CORRECTION. Any discrepancies found
during the ground inspection, operational ground check, demonstration flight and
ferry flight provided for in SECTIONS 10(F), 10(G), 10(H) and 10(i),
respectively, that were not corrected by Lessee prior to return of the Aircraft
to Lessor may be corrected by Lessor or its designee after return of the
Aircraft and Lessee shall reimburse Lessor for the expenses incurred by Lessor
or its designee for accomplishing such discrepancy corrections. Lessee shall pay
Lessor for such expenses incurred within thirty (30) days of the date of
Lessor's invoice therefor.
(k) FLIGHT COST. All flights pursuant to SECTIONS 10(H) and
10(I) shall be made at Lessee's expense and Lessee shall pay or reimburse Lessor
for any costs associated with such flights including, but not limited to, costs
for fuel, oil, airport fees, insurance, takeoff/landing fees, airway
communication fees and ground handling fees.
(l) AIRCRAFT DOCUMENTATION. Lessee shall return to Lessor at
the time the Aircraft is returned to Lessor, all of the Aircraft records
documents, manuals and data provided to Lessee by Lessor prior to, on or after
the Commencement Date, updated and maintained by Lessee through the date of
return of the Aircraft. In addition, Lessee shall also provide Lessor at the
time the Aircraft is returned to Lessor with all records, documents, manuals
authorizations, drawings and data, in each case in the English language, that
were developed or caused to be developed by Lessee and/or required by the
appropriate governmental agency having jurisdiction updated and maintained by
Lessee for the Aircraft through the date of return of such Aircraft. Any such
Aircraft documentation not already owned by Lessor, when delivered to Lessor
pursuant to this SECTION 10(L), shall thereupon become the property of Lessor.
In the event Lessor requires copies of any of such Aircraft documentation prior
to the return of the Aircraft to Lessor to enable Lessor to plan or accomplish
modifications, recertification, sale, lease or other disposition of or
utilization of the Aircraft upon such return, Lessee shall, promptly upon
receipt of each such Lessor request, provide to Lessor a reasonable number of
copies of such Aircraft documentation requested by Lessor at Lessor's sole cost
and expense.
(m) SERVICE BULLETIN KITS. All vendor and Manufacturer
supplied mandatory service bulletin kits delivered to Lessee for the Aircraft
but not installed therein shall be returned with the Aircraft, as part of the
Aircraft at the time of the return of the Aircraft, and shall be loaded by
Lessee on board the Aircraft as cargo. Title to such kits shall pass to Lessor
concurrently with the delivery of the Aircraft to Lessor.
(n) NON-U.S. MANUFACTURED ITEMS. Lessee shall provide to
Lessor at the time of the return of the Aircraft a complete list, describing by
Part number and name, of all non-United States manufactured equipment,
components and parts, if any, installed on such Aircraft by Lessee during the
Lease Term. Such list shall include quantity, the acquisition price and the
manufacturer's name and country in respect of each such item.
(o) LESSEE'S CONTINUING OBLIGATIONS. In the event that Lessee
does not return the Aircraft to Lessor upon termination of this Lease
(including, without limitation, any termination resulting from an Event of
Default by Lessee) and in the condition required herein for any reason, the
obligations of Lessee under this Lease shall continue; provided, however, that
such failure to return the Aircraft to Lessor in such condition shall not be the
result of a breach by Lessor of its covenant of quiet enjoyment which has
resulted in Lessee having been deprived of use and possession of the Aircraft
immediately prior to such termination, in which case the Aircraft shall be
returned in its then condition provided that, immediately prior to such breach
by Lessor of its covenant of quiet enjoyment such Aircraft shall have been in
such condition as to meet the requirements of SECTION 8 hereof but for such
breach. Such continuation of Lessee's obligations shall not be considered a
renewal of the terms of this Lease or of Lessee's rights to use the Aircraft, an
extension of the Lease Term or a waiver of any Default or Event of Default or
an
right of Lessor hereunder. Until such time as the Aircraft is redelivered to
Lessor as required herein, Lessee agrees, during the first thirty (30) days
following the termination hereof, to pay Basic Rent with interest at the
Post-Default Rate and thereafter to pay twice the amount of Basic Rent for each
day from such thirtieth (30th) day after the termination hereof until redelivery
of the Aircraft in the condition required hereunder (the monthly Basic Rent
payable being prorated based on the actual number of days in the applicable
month).
11. REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSEE.
Lessee represents and warrants to, and covenants with Lessor as follows:
(a) Lessee (i) has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Delaware, (ii) has full corporate power and authority and legal right to own its
properties and to carry on its business as presently conducted and to perform
its obligations under this Lease, (iii) is the holder of an air carrier
certificate duly issued pursuant to the Federal Aviation Act and such
certificate is in full force and effect, and (iv) holds all material licenses,
certificates and permits from all Government Entities of the United States and
other jurisdictions necessary for the conduct of its business as now conducted
and for the operation of the Aircraft.
(b) The execution, delivery and performance of this Lease has
been duly authorized by all necessary corporate action of Lessee, and does not
and will not (i) result in the violation of the provisions of the charter
documents or bylaws of Lessee as in effect on the date hereof, (ii) require
stockholder approval or approval or consent of any trustee or holders of any
indebtedness of Lessee, except such approvals which have been obtained and are
in full force and effect, (iii) contravene any law, rule or regulation or any
order of any Government Entity binding on Lessee, or (iv) conflict with or
result in a breach of any terms or provisions of or constitute a default under,
or result in or require the creation or imposition of any Lien upon any material
property or assets of Lessee under, any material indenture, mortgage or other
agreement or instrument as in effect on the date hereof to which Lessee is a
party or by which it or any of its property is bound, or any applicable law,
rule or regulation, judgment, order or decree of any Government Entity or court
having jurisdiction over Lessee or any of its properties.
(c) No authorization, approval, consent, license or order of,
or registration with, or the giving of notice to, or the taking of any other
action in respect of, any Government Entity is required for the valid
authorization, execution, delivery and performance by Lessee of this Lease or
the consummation of any of the transactions contemplated hereby, except (i)
approvals, authorizations, consents, licenses, certificates and orders of the
FAA and any other regulatory authority having jurisdiction with respect to the
ownership, use and operation of the Aircraft and the transactions contemplated
hereby, all of which have been (or on the Delivery Date will have been) duly
obtained and are (or will on the Delivery Date be) in full force and effect,
(ii) the filing of this Lease or other necessary documentation with the civil
aviation authority of each country (other than the United States) in which the
Aircraft may be operated or located which filings have been made, or will be
made as to each such country prior to such Aircraft being operated or located in
such country and (iii) any normal periodic and other reporting requirements and
renewals and extensions of any of the foregoing, in each case to the extent
required to be given or obtained only after the Delivery Date.
(d) Except for (i) the filing and recording pursuant to the
Federal Aviation Act of this Lease, (ii) the filing of duly executed financing
statements naming Lessee as debtor and Lessor as secured party (and continuation
statements with respect to such financing statements) with the Secretary of
State of the State of Colorado and, if applicable, the appropriate filing
authority in El Paso County Colorado and (iii) the retention by Lessor of the
original counterpart of the Lease to the extent, if any, that the Lease
constitutes chattel paper (as such term is defined in the Uniform Commercial
Code as in effect in any applicable jurisdiction), no further action, including
any filing or recording of any document (including any financing statement in
respect thereof under Article 9 of the Uniform Commercial Code of any applicable
jurisdiction), is necessary in order to establish and perfect Lessor's title to
the Aircraft as against Lessee and any third parties in any applicable
jurisdictions in the United States.
(e) This Lease constitutes the legal, valid and binding
obligation of Lessee, enforceable against Lessee in accordance with its terms
except as may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally and, to
the extent that certain remedies require or may require enforcement by a court
of equity, by such principles of equity (regardless of whether such
enforceability is considered in a proceeding at law or in equity) as a court
having jurisdiction may impose.
(f) There are no suits or proceedings pending or, to Lessee's
knowledge, threatened in any court or before any Government Entity against or
affecting Lessee that would, if adversely determined, (i) prevent or adversely
affect Lessee's ability to perform its obligations under this Lease or (ii)
materially adversely affect the financial condition or operations of Lessee and
its consolidated subsidiaries, taken as a whole.
(g) The chief executive office (as such term is used in
Article 9 of the Uniform Commercial Code) of Lessee and the office where Lessee
will keep its corporate records concerning the Aircraft is located in El Paso
County, Colorado. Lessee will notify Lessor thirty (30) days in advance of
moving either such office to another location.
(h) [Intentionally left blank.]
(i) Neither Lessee nor any of its property has any immunity
from jurisdiction of any court located in the United States or from any legal
process in the United States (whether through service or notice, attachment
prior to judgment, attachment in aid of execution, execution or otherwise).
(j) There is no Tax, levy, impost, deduction, charge or
withholding imposed by the State of Colorado or any Taxing Authority thereof or
therein either (i) on or by virtue of the execution or delivery of this Lease or
(ii) on any payment made or to be made by Lessee under this Lease.
(k) The obligations of Lessee under this Lease rank at least
pari passu in right of payment with all other unsecured obligations of Lessee,
with the exception of such obligations as are mandatorily preferred by law.
(l) Lessee will promptly give notice to Lessor upon obtaining
actual knowledge of any Default or Event of Default; and
(m) Lessee acknowledges that in the event Lessee files a
petition or otherwise seeks relief under the Bankruptcy Code or an involuntary
petition is filed against Lessee, it is the intention of Lessor that Lessor
shall be entitled to the benefits of Title 11 U.S.C. ss. 1110 and any similar or
analogous provisions of any successor statute ("Section 1110") with respect to
the Aircraft and this Lease, and Lessee agrees that it shall not oppose any
motion, petition or application filed by Lessor with any bankruptcy court having
jurisdiction over Lessee whereby Lessor seeks recovery of possession of the
Aircraft under Section 1110 unless Lessee shall have complied with the
requirements of Section 1110 to be fulfilled in order to entitle Lessee to
continue use and possession of the Aircraft hereunder.
(n) Without having obtained the prior written consent of
Lessor, Lessee will not consolidate with or merge into, sell or lease, in one
transaction or a series of transactions, all or substantially all of its assets
to another corporation or other entity unless such other corporation or
subsidiary thereof is engaged in the airline business, the net worth of the
corporation resulting from such merger or consolidation or corporation or other
entity to which such sale or lease is made would be at least equal to the net
worth of Lessee at the date hereof, such corporation or other entity assumes all
of Lessee's obligations under this Lease in a manner and by documents and
agreements satisfactory to Lessor in its sole discretion, such corporation or
other entity immediately subsequent to such merger, consolidation, lease or sale
is not in default hereunder and if Lessor receives an opinion of counsel
satisfactory to it as to such assumption and documentation.
(o) Lessee agrees to furnish to Lessor as soon as practicable,
but in no event later than (i) sixty (60) days after the end of each of the
first three quarterly fiscal periods in each fiscal year of Lessee, a
consolidated balance sheet of Lessee and its subsidiaries prepared by it as of
the close of such period, together with the related consolidated statements of
income and of surplus and statements of changes in financial position for such
period (this requirement may be satisfied by delivery to Lessor of a copy of
Lessee's Form 10-Q), (ii) one hundred and twenty (120) days after the close of
each fiscal year of Lessee, a consolidated balance sheet of Lessee and its
subsidiaries as of the close of such fiscal year, together with the related
consolidated statements of income and of surplus and statements of changes in
financial position for such fiscal year, as certified by independent public
accountants, including their accompanying opinion letter related thereto, (iii)
with each such financial statement, a certificate of Lessee signed by a duly
authorized financial officer of Lessee, to the effect that the signer has
reviewed the relevant terms of this Lease and has made, or caused to be made
under his supervision, a review of the transactions and condition of Lessee
during the accounting period covered by the financial statements and that such
review has not disclosed the existence during such accounting period, nor does
the signer have knowledge of the existence as at the date of such certificate,
of any condition or event that constitutes a Default or Event of Default, or, if
any such condition or event existed or exists, specifying the nature and period
of existence thereof and what action Lessee has taken or is taking or proposes
to take with respect thereto and (iv) from time to time, such other information
as Lessor may reasonably request; provided that such other information is either
in the public domain or is provided to lessors of aircraft to Lessee or to
creditors of Lessee.
(p) Lessee shall, within fifteen (15) days of the end of each
and every calendar month during the Lease Term, deliver to Lessor a monthly
report, in such form and containing such information as set forth in EXHIBIT F
hereof.
(q) Lessee shall, at the end of each calendar quarter, have a
long term debt to equity ratio of not more than 4:1 as determined in accordance
with generally accepted accounting principles consistently applied. For purposes
hereof, debt shall exclude all off balance sheet financing and operating leases.
(r) Lessee shall, at the end of each calendar quarter, have a
ratio of current assets to current liabilities of not less than 1:1 as
determined in accordance with generally accepted accounting principles
consistently applied.
12. INDEMNIFICATION.
(a) GENERAL INDEMNITY AND EXPENSES. Lessee hereby assumes
liability for, and hereby agrees to, indemnify, protect, save and keep harmless
Lessor, KGAL and their respective Affiliates, agents, officers, directors,
employees, successors and permitted assigns (each of the foregoing and their
respective Affiliates, agents, officers, directors, employees, successors and
assigns being hereinafter referred to as an "INDEMNITEE" and any reference
herein to an Indemnitee shall include its respective Affiliates, agents,
officers, directors, employees, successors and permitted assigns) from and
against, and on written demand to pay, or to reimburse each Indemnitee for the
payment of, as the case may be, any and all liabilities, obligations, losses,
damages, penalties, claims (including, without limitation, claims arising out of
negligence or involving strict liability in tort), suits, actions, costs,
expenses and disbursements, including without limitation legal fees and
expenses, of whatsoever kind and nature imposed on, incurred by or asserted
against any Indemnitee relating to or arising out of (A) this Lease, any
payments made pursuant hereto or the exercise of rights or remedies hereunder,
(B) the preparation, negotiation, execution and delivery of any amendments,
modifications or waivers required by this Lease or requested by Lessee (or
resulting from any requests of Lessee) hereunder, (C) the Aircraft, each Engine
and any Part thereof, whether or not arising out of the airworthiness, delivery,
nondelivery, sublease, presence, storage, modification, substitution,
replacement, alteration, maintenance, inspection, failure to inspect, repair,
release, possession, repossession after an Event of Default, registration
(unless, in respect of Lessor, any act or omission of Lessor shall cause the
deregistration of the Aircraft under the Federal Aviation Act), use, operation,
condition, condition upon return, return, exportation, importation, transfer or
other application or disposition thereof (including, in each case and without
limitation, latent or other defects, whether or not discoverable), any claim for
patent, trademark or copyright infringement arising as a result of or in
connection with Lessee's patents, trademarks, copyrights, servicemarks or logos
or those of Lessee's advertisers, sponsors, and others whose designs and/or
logos appear on the Aircraft, at any time, any claim based on strict or absolute
liability, statutory liability or tort and any liability for any injury to or
death of any person or loss of or damage to any property including, without
limitation, any such arising out of any test flight, demonstration flight or
ferry flight performed by Lessee or any entity to which Lessee may have further
subleased the Aircraft pursuant to SECTION 7 hereof and (D) any breach of,
noncompliance with or misrepresentation made or deemed made in, under or in
connection with this Lease or any agreement to which Lessee is a party
concerning the Aircraft or any warranty, certificate or agreement made or
delivered in, under or in connection therewith made or deemed to have been made
by Lessee or anyone claiming by, through or under Lessee; provided, that Lessee
shall not be required to indemnify any Indemnitee hereunder (w) for any
liability attributable to acts or events which occur prior to the Commencement
Date or after the Lease Term or the proper return of the Aircraft to Lessor in
the condition required hereunder whichever shall occur later, (x) for liability
resulting solely and directly from acts of gross negligence or misconduct of
such Indemnitee (other than gross negligence or willful misconduct attributed to
such Indemnitee solely by of its interest in the Aircraft, any Engine or any
Part), it being agreed that gross negligence or willful misconduct of an
Indemnitee shall not affect the rights to be indemnified hereunder of any other
Indemnitee (other than the rights of any Indemnitee that is an Affiliate, agent,
officer, director, employee or successor of any such Indemnitee that is so
grossly negligent or guilty of such misconduct), (y) for any Taxes that Lessee
has not agreed to indemnify against pursuant to the provisions of SECTION 12(B)
or (z) for any liability imposed on any Indemnitee arising as a result of a
disposition of all or any part of such Indemnitee's interest in the Aircraft,
other than by reason of the occurrence of a Default or an Event of Default and
further provided that no indemnification hereunder shall be paid by Lessee to
Indemnitees in respect of any claim arising during any period during which
Lessee is deprived of use and possession of the Aircraft as a result of a breach
by Lessor of its covenant of quiet enjoyment provided that such claim is not
caused by any act or omission of Lessee.
If any Indemnitee shall have knowledge of any claim or liability
required to be indemnified against under this SECTION 12(A), such Indemnitee
shall give prompt written notice thereof to Lessee, but the failure of such
Indemnitee so to notify Lessee shall not relieve Lessee from any liability that
it would otherwise have to such Indemnitee hereunder except to the extent that
Lessee's rights respecting any defense thereto are irrevocably and materially
impaired directly and solely as a result of such failure.
Lessee shall be obligated to each Indemnitee under this SECTION
12(A) irrespective of whether any Indemnitee shall also be indemnified with
respect to the same matter under any other agreement, and each Indemnitee may
proceed directly against Lessee under this SECTION 12(A) without first resorting
to any such other rights of indemnification.
Any payment or indemnity pursuant to this SECTION 12(A) shall
include the amount, if any, necessary to hold each Indemnitee harmless on a net
after-tax basis from all Taxes required to be paid by such recipient with
respect to such payment or indemnity under laws, rules or regulations of any
Government Entity or Taxing Authority. If any Indemnitee is entitled to a
permanent tax benefit (whether by way of deduction, credit or otherwise) not
taken into account pursuant to the preceding sentence as a result of the matter
indemnified against under this SECTION 12(A), such Indemnitee shall promptly pay
to Lessee, after such permanent tax benefit is realized but not before Lessee
shall have made all payments theretofore due to such Indemnitee under this Lease
and any other agreement in respect of the Aircraft, an amount that, after
subtraction of any further tax savings to which such Indemnitee is entitled as a
result of the payment thereof, is equal to the amount of such permanent tax
benefit; provided, however, that such Indemnitee shall not be obligated to make
any payment to Lessee pursuant to this sentence so long as a Default or Event of
Default shall have occurred and be continuing or any Rent or Supplemental Rent
then due and owing shall not have been paid.
Upon the indefeasible payment in full of any indemnities due and
owing under this SECTION 12(A), Lessee shall be subrogated to any right of the
Indemnitee in respect of the matter against which indemnity has been given.
(b) GENERAL TAX INDEMNITY.
(i) Lessee agrees that each payment of Rent or any amount
payable hereunder shall be free of all withholdings of any nature
whatsoever, and in the event that any withholding is required,
Lessee shall pay an additional amount of Rent such that after the
deduction of all amounts required to be withheld, the net amount of
Rent that is actually received by Lessor, will equal the amount of
Rent or any such amount payable hereunder or such other amount, as
the case may be, that would be due absent such withholding,
(ii) Lessee hereby agrees to indemnify and hold harmless from
and against, and on written demand, to pay or reimburse each
Indemnitee for the payment of, as the case may be, any and all Taxes
imposed upon or asserted against any Indemnitee or the Aircraft, the
Airframe, any Engine, or any Part thereof or interest therein, or
this Lease, or the rentals received under this Lease, by any
federal, state or local government or other taxing authority in the
United States, in any territory or possession thereof or by any
foreign government or any political subdivision or taxing authority
thereof or therein (the foregoing being referred to herein
individually as a "TAXING AUTHORITY" and collectively as "TAXING
AUTHORITIES") upon or with respect to (a) the acceptance, rejection,
delivery, transport, insuring, registration, deregistration,
reregistration, assembly, possession, repossession, operation, use,
presence, condition, maintenance, repair, return, abandonment,
preparation, installation, storage, redelivery, manufacture,
subleasing, modification, rebuilding, or importation of, or the
imposition of any Lien (other than a Lessor Lien) (or the incurrence
of any liability to refund or pay over any amount as a result of any
Lien (other than a Lessor Lien)) on the Aircraft, the Airframe, any
Engine or any Part thereof or interest therein, (b) payments of
Basic Rent or Supplemental Rent, (c) the Aircraft, the Airframe, any
Engine, or any Part thereof or any interest therein or the
applicability of this Lease to the Aircraft, the Airframe, any
Engine, or any Part thereof or any interest therein, (d) any or all
of the documents and agreements relating to the Aircraft,
contemplated hereby and amendments or supplements hereto and
thereto, or the execution, delivery, filing or recording thereof, or
(e) otherwise with respect to or in connection with the transactions
effected under this Lease and the documents and agreements
contemplated hereby including the exercise of remedies hereunder.
(iii) The provisions of SECTION 12(B)(I) and (II) shall not
apply to, and Lessee shall have no liability to Lessor or any other
person thereunder with respect to Taxes to the extent excluded under
any of the following provisions or any combination thereof:
(A) Taxes imposed by any country, taxing authority or
governmental subdivision thereof or therein or any
international authority except to the extent that such Taxes
would not have been due (whether or not from the same person
on whom they are actually imposed) but for the transactions
contemplated by this Agreement, provided that the presence or
activities of any person other than Lessor in any jurisdiction
shall not be imputed for purposes of this subparagraph (A);
(B) Taxes (I) imposed as a result of a sale, assignment,
transfer or other disposition (whether voluntary or
involuntary) (a "Transfer") (x) by Lessor or any other person
(other than Lessee or any affiliate or transferee of or
successor to Lessee) of any legal or beneficial interest in
the Aircraft or in or arising under this Agreement or (y) of
any direct or indirect interest in Lessor or any such other
person having any such legal or beneficial interest (any event
described in (x) or (y) being a "Lessor Transfer") or (II) to
the extent such Taxes exceed the amount of Taxes that would
have been imposed and indemnified against by Lessee had there
not been a "Lessor Transfer," provided that the exclusion set
forth in this subparagraph (B) shall not apply to a Transfer
(other than a sale of the Aircraft or any interest therein)
resulting from the exercise of any remedies provided for in
this Agreement in connection with an Event of Default or an
Event of Loss;
(C) Taxes incurred in respect of any period after the
occurrence of any of the following events: (I) the sale or
return of the Aircraft or any part thereof or interest therein
to the extent the Taxes relate solely to such part or
interest) in accordance with the terms of this Agreement; (II)
the termination of this Agreement and the return of the
Aircraft or (III) the sale or other transfer of the Aircraft
and the return of the Aircraft (or any part thereof or
interest therein to the extent the Taxes relate solely to such
part or interest) following a Total Loss with respect to the
Aircraft, provided that the exclusion set forth in this
subparagraph (C) shall not apply to Taxes to the extent such
Taxes relate to periods prior to, or events occurring or
matters arising prior to or simultaneously with, such event;
(D) Taxes to the extent imposed as a result of (I) the
willful misconduct or gross negligence of Lessor, (II) the
breach by Lessor of any of its representations, warranties or
covenants contained in this Agreement or (III) Lessor's Liens;
(E) Taxes either not yet due or being contested in
accordance with the provisions of SECTION 12(D);
(F) Taxes on, based on, measured by or with respect to
the net or gross income, or net or gross receipts, including
any capital gains Taxes, minimum Taxes, Taxes on or measured
by any items of tax preference and withholding Taxes,
including Taxes imposed under Subtitle A of the Internal
Revenue Code of 1986, as amended (the "Code") or Section 3406
of the Code or any successor provisions required to be
withheld from any payment under this Agreement), capital, net
worth, franchise, or conduct of business of Lessor or any
other person (other than Taxes in the nature of sales, use,
rental, property, or value-added Taxes) imposed by any
federal, state or local government or taxing authority in the
United States;
(G) Taxes on, based on, measured by or with respect to
the net or gross income or net or gross receipts (including
any capital gains Taxes, minimum Taxes, Taxes on or measured
by any items of tax preference and withholding Taxes),
capital, net worth, franchise, or conduct of business of
Lessor or any other person (other than Taxes in the nature of
sales, use, rental, property, or value-added Taxes) imposed by
any foreign government, foreign government subdivision or
other foreign taxing authority or by any territory or
possession of the United States, or by any international
authority, provided that the exclusion set forth in this
subparagraph (G) shall not exclude such Taxes if and to the
extent that such Taxes (i) would not have been imposed but for
the operation, presence or registration in such jurisdiction
of the Aircraft or any part thereof, or (ii) would have been
imposed solely as a result of (x) the presence in such
jurisdiction of a permanent establishment or fixed place of
business of Lessee, or any user or person in possession of the
Aircraft or any part thereof, (y) the residence, nationality
or place of management and control of Lessee or any user or
person in possession of the Aircraft or any part thereof, (z)
the payment from such jurisdiction by Lessee or any user or
person in possession of the Aircraft or any part thereof of
any amount due hereunder, or (iii) any combination of clauses
(i) and (ii);
(H) Taxes that would not have been imposed but for any
failure of Lessor to (x) file proper and timely reports or
returns or to pay any Taxes when due, or (y) comply with any
certification, information, documentation, reporting or other
similar requirements concerning the nationality, residence,
identity or connection with the jurisdiction imposing such
Taxes, if such compliance is required to obtain or establish
relief or exemption from or reduction in such Taxes and Lessor
was eligible to comply with such requirement.
(I) Taxes imposed under Section 887 of the Code.
Notwithstanding any provision in this SECTION 12 to the contrary, Lessee shall
in no event be obligated to pay any amount pursuant to this SECTION 12 in excess
of the Taxes Lessee would be required by this SECTION 12 to pay if (i) Lessor
were the lessor of the Aircraft and (ii) no person other than the owner
participant as of the date hereof pursuant to the 1997 Trust Agreement, Lessor,
Lessee or any sublessee or other user or person in possession of the Aircraft or
any part thereof had any interest in the Aircraft or part thereof.
(c) CALCULATION OF TAX INDEMNITY PAYMENTS.
(i) Any payment that Lessee shall be required to make to or
for the account of any Indemnitee with respect to any Tax that is
subject to indemnification under SECTION 12(B) shall include the
amount necessary to hold such Indemnitee harmless on a net after-tax
basis from the net amount of all Taxes required to be paid by such
Indemnitee as the result of such payment pursuant to the laws of any
Taxing Authority.
(ii) If Lessor shall realize a Tax benefit as a result of or
with respect to any Taxes paid or indemnified against by Lessee
under this SECTION 12 (whether by way of deduction, credit or
otherwise), Lessor shall pay to Lessee, promptly after realization
of such Tax benefit, an amount that, prior to the application of any
withholding tax to that payment but after subtraction of any further
Tax savings Lessor realizes as a benefit, provided that if any such
Tax benefit is subsequently disallowed, lost or reduced, Lessee
shall, upon written notice from Lessor, promptly repay the amounts
paid to the Lessee with respect to such Tax benefit, provided
further that Lessor shall not be obligated under this SECTION
12(C)(II) to pay Lessee any amounts with respect to Tax benefits
realized as a result of any Taxes not paid or indemnified against by
Lessee. Notwithstanding anything to the contrary in this SECTION 12,
if, at the time any payments would otherwise be due to Lessee
pursuant to this SECTION 12(C)(II), an Event of Default shall have
occurred and be continuing, Lessor shall hold the amount of such
payment as security for the obligations of the Lessee to Lessor
under the Lease and at such time as there shall not be continuing
any such Event of Default, shall pay such amount to Lessee. Lessor
shall use reasonable efforts in good faith in filing its Tax returns
and in dealing with taxing authorities to seek and to claim any such
Tax benefit or savings and to minimize the Taxes payable or
indemnifiable by Lessee hereunder.
(iii) At Lessee's request, the computation by Lessor of any
amount payable by Lessee pursuant to this SECTION 12 shall be
verified by an independent accounting firm of national reputation
selected by Lessor. The fees of such accountants shall be paid by
Lessee unless such accountants determine that the amount payable to
Lessee is at least 25% more, or the amount payable by Lessee is at
least 25% less, than the amount computed by Lessor, in which case
such fees shall be payable by Lessor.
(d) CONTEST; REPORTS.
(i) If a claim is made in writing against Lessor (whether on
audit or otherwise) for any Taxes that Lessee is required to pay or
indemnify against pursuant to SECTION 12(B), Lessor shall notify
Lessee in writing within 30 Business Days of the receipt of such
claim, provided that a failure to so notify will not diminish or
relieve Lessee of any obligations under SECTION 12(b), except to the
extent Lessee is entitled to contest or to cause Lessor to contest
such Taxes and Lessee's or Lessor's successful defense of such claim
is materially prejudiced or precluded thereby. If the amount of the
claim exceeds $[ ]* and if requested by Lessee in accordance with
this SECTION 12(D) and in writing within 30 Business Days after
receipt by Lessee of the notice described in the preceding sentence,
Lessor shall in good faith and with due diligence contest (including
pursuing all administrative and judicial appeals) in the name of
Lessor or, if permitted by law and requested by Lessee in the name
of Lessee, the validity, applicability or amount of such Taxes in
appropriate administrative or judicial proceedings to be determined
by Lessor, provided that (1) prior to taking such action, Lessee
shall have agreed to pay Lessor all out-of-pocket costs and expenses
that Lessor may incur in connection with contesting such claim,
including, without limitation, all reasonable legal and accountant's
fees and disbursements and costs of administrative and judicial
proceedings, and the amount of any interest or penalties that may be
attributable to and payable as a result of contesting such claim
(or, at Lessor's request, Lessee shall advance to Lessor funds with
which to pay the foregoing amounts, and Lessor's obligation to
contest any Tax shall be suspended during any period Lessee does not
advance sufficient funds to pay such amounts as they accrue or
become payable), (2) if such contest is to be initiated by the
payment of, and the claiming of a refund for such Taxes (and any
interest and penalties that also must be paid), Lessee shall have
advanced Lessor sufficient funds (on an interest-free basis) to make
such payment, (3) no Event of Default has occurred and is
continuing, (4) the action to be taken will not result in a material
risk of sale, forfeiture or loss of Lessor's title to the Aircraft
(unless Lessee provides a bond or other security satisfactory to
Lessor), and (5) at Lessor's request, Lessee shall provide to Lessor
a written opinion in form and substance satisfactory to Lessor of
independent legal counsel satisfactory to Lessor that there is a
reasonable basis for such contest. Notwithstanding that the
conditions set forth in clauses (1), (2), (3), (4) and (5) above may
have been satisfied, Lessor, after consulting in good faith with
Lessee, may elect not to pursue any contest or proceeding pursuant
to the preceding sentence or elect to discontinue (by settlement or
otherwise) any such contest or proceeding commenced pursuant to the
preceding sentence, but such election shall constitute a waiver by
Lessor of any right to payment or indemnification pursuant to
SECTION 12(B) with respect to the adjustment that was the subject of
such proposed contest or proceeding (and any other adjustment the
contest of which is precluded by such failure to contest) and, if
Lessee has theretofore paid or provided Lessor with funds to pay any
amount with respect to such adjustment, Lessor shall promptly repay
such amount to Lessee. If Lessor shall obtain a refund in whatever
form of all or any part of any Taxes that Lessee shall have paid or
reimbursed to Lessor hereunder, Lessor shall, provided that no Event
of Default shall have occurred and be continuing, pay to Lessee an
amount that is equal to the sum of the amount of such refund or
credit, plus any interest received on such refund fairly
attributable to any Taxes paid by or with funds provided by Lessee
prior to receipt of such refund, reduced by any Taxes incurred by
Lessor by reason of the receipt or accrual of such refund and
interest and net of any expenses described in clause (1) of the
second sentence of this SECTION 12(D) that have not been previously
reimbursed, and increased by any Tax benefit realized by Lessor as a
result of any payment by Lessor made pursuant to this sentence,
provided further that, if, at the time of such payment an Event of
Default shall have occurred and be continuing, Lessor shall hold the
amount of such payment as security for the obligations of Lessee to
Lessor under the Lease, and at such time as there shall not be
continuing any such Event of Default, shall pay such amount to the
Lessee. Lessor hereby agrees that it will inform Lessee of the time
and place of, and Lessor will not object to Lessee's presence at,
any proceeding conducted pursuant to this SECTION 12(D), provided
that Lessee's presence also must be allowed by applicable law and
provided further that the conditions set forth in clauses (1), (2),
(3), (4) and (5) above shall have been, and shall continue to be,
satisfied.
(ii) Lessee shall provide Lessor with such information in the
possession of Lessee or otherwise reasonably available to it as
Lessor may reasonably require to enable Lessor to fulfill its tax
filing obligations under this SECTION 12 and any audit information
request arising in connection with the Taxes subject to this SECTION
12. Lessor shall provide Lessee with such information in the
possession of Lessor or otherwise reasonably available to it as
Lessee may reasonably request to fulfill its tax filing requirements
under this SECTION 12 and any audit information request arising in
connection with the Taxes subject to this SECTION 12. If any report
or return is required to be made with respect to any obligation of
Lessee under this SECTION 12, Lessee will make such report or
return, provided that Lessee shall have no obligation to file any
such return or report if (A) Lessor, after Lessee's written request
therefor, shall have failed to furnish Lessee with such information
as is peculiarly within the control of, or reasonably available to
Lessor and is necessary for the filing of such report or return, or
(B) such return or report would or should have been filed by Lessor
even if it had not entered into the Lease.
(iii) Lessor shall furnish from time to time to Lessee or to
such other person as Lessee may designate, such returns, statements
or other documentation ("Tax Forms") (including, without limitation,
if then required, information as to the ultimate beneficial owners
of Lessor and the stock interests in Lessee held actually and
constructively by Lessor, if not otherwise known to Lessee) in such
form and with such substance as are necessary or appropriate to
enable Lessor or Lessee, to claim an available reduction of or
exemption from Taxes which Lessee may be required to pay or
indemnify against hereunder, provided that Lessee shall have
provided Lessor with any information within the Lessee's control or
reasonably available to Lessee that is necessary to prepare such
return, statement or other documentation. Any such Tax Forms shall
be provided promptly after receipt of a written request therefor
from the Lessee.
(e) PAYMENT. Unless otherwise requested by the appropriate
Indemnitee, Lessee shall pay when due any Tax for which it is liable pursuant to
SECTION 12(B) directly to the appropriate Taxing Authority, or, upon written
demand, shall reimburse the appropriate Indemnitee for the payment of any such
Tax made by such Indemnitee. Within 30 days after the date of each payment by
Lessee of any Tax referred to in the preceding sentence, Lessee shall furnish
the appropriate Indemnitee evidence of payment of such Tax acceptable to such
Indemnitee. Lessee shall also cause to be furnished, promptly upon request, such
data as any Indemnitee may reasonably require from Lessee to enable such
Indemnitee to comply with the requirements of any Taxing Authority in respect of
any Tax referred to in SECTION 12(B).
(f) SURVIVAL. The obligations contained in this SECTION 12
shall survive the termination of this Lease, to the extent they have accrued, or
relate to events that have occurred, on or before the date of such termination;
provided that obligations arising as a result of the occurrence of a Default or
an Event of Default shall in any event, without limiting the foregoing, survive
until payment in full and performance of all obligations owing to each
Indemnitee under the foregoing agreements and all other agreements referred to
herein or contemplated hereby. The obligations of Lessee in respect of all such
indemnities, obligations, adjustments and payments are expressly made for the
benefit of, and shall be enforceable by, each Indemnitee entitled thereto at the
option of such Indemnitee without declaring this Lease to be in default or
taking any other action hereunder.
13. ASSIGNMENT; LEASE SUBJECT AND SUBORDINATE.
(a) NO IMPERMISSIBLE SUBLEASE BY LESSEE. EXCEPT AS OTHERWISE
EXPRESSLY PROVIDED HEREIN, LESSEE SHALL NOT ASSIGN OR OTHERWISE TRANSFER IN ANY
MANNER ANY OF ITS RIGHTS OR INTERESTS WITH RESPECT TO THIS LEASE, THE AIRCRAFT,
ANY ENGINE OR ANY PART THEREOF.
(b) [Intentionally left blank.]
(c) LEASE SUBJECT AND SUBORDINATE. Lessee acknowledges and
agrees that this Lease, and Lessee's rights hereunder, are subject and
subordinate in all respects to any Lien that Lessor may grant over the Aircraft
and the benefit of this Lease as provided in SECTION 13(D), including, without
limitation, any rights to repossession of the Aircraft upon a default.
Notwithstanding anything to the contrary herein, upon the occurrence of an event
of default entitling any Assignee (as defined below) to demand return of the
Aircraft by Lessor under the Lease, Lessee shall, if requested to do so by
Lessor or Assignee, as the case may be, return the Aircraft to Lessor or
Assignee, as the case may be.
(d) ASSIGNMENTS BY LESSOR. Subject to Lessee's rights
hereunder and at Lessor's cost and expense, Lessor may at any time and without
Lessee's consent sell, assign or transfer its rights and interest hereunder or
with respect to the Aircraft to a third party and/or xxxxx x Xxxx over the
Aircraft and the benefit of this Lease to any Person as security for Lessor's
obligations to such Person (each such transferee, assignee or other Person, an
"ASSIGNEE"). On request by Lessor, Lessee will execute all such documents (such
as a lease assignment agreement) as Lessor may reasonably require to confirm
Lessee's obligations under this Lease. No sale, assignment or transfer of
Lessor's interest or creation of any Lien by Lessor shall adversely affect
Lessee's rights hereunder or increase Lessee's duties, expenses or the
liabilities of Lessee in respect of any Tax or under any of its indemnification
obligations or otherwise. Lessee will provide all other reasonable assistance
and cooperation to Lessor and any Assignee in connection with any such sale or
assignment or the perfection and maintenance of any Lien granted in connection
therewith, including, at Lessor's sole cost and expense, making all necessary
filings and registrations including filings or registrations of mortgages,
financing statements and re-registration of the Aircraft. Upon any such
assignment or transfer, Lessor shall cause any Assignee to deliver to Lessee
evidence of its corporate authority to enter into any such sale, assignment or
transfer and such Assignee shall grant to Lessee the same covenant(s) of quiet
enjoyment as are set forth herein. Wherever the term "Lessor" is used in this
Lease in relation to any of the provisions relating to disclaimer, title and
registration, indemnity and insurance, such terms shall be construed to include
each Assignee, as applicable.
14. EVENTS OF DEFAULT; REMEDIES.
(a) EVENTS OF DEFAULT. The occurrence of any of the following
events shall constitute an "EVENT OF DEFAULT" (whether any such event shall be
voluntary or involuntary or come about or be effected by operation of law or
pursuant to or in compliance with any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body) and
each such Event of Default shall be deemed to exist and continue so long as it
shall not have been remedied:
(i) Lessee shall fail to make any payment of Basic Rent,
Maintenance Reserves, Stipulated Loss Value or Supplemental Rent
hereunder within five (5) Business Days after the same shall have
become due and payable;
(ii) Lessee shall fail to carry and maintain insurance on or
with respect to the Aircraft in accordance with the provisions of
SECTION 9 hereof or Lessee shall fail to provide an insurer's
certificate evidencing the renewal or replacement of such policy,
upon the renewal or replacement thereof, in accordance with the
terms hereof;
(iii) any document required to be filed or recorded by Lessee
pursuant hereto is not duly filed and recorded by Lessee as required
to perfect and continue the perfection of the interest of Lessor in
the Aircraft or the filings and recordings provided for herein are
not made by the time required; or Lessee shall fail to perform or
observe any other covenant, term, condition or agreement to be
performed or observed by it hereunder or under any instrument,
document or agreement furnished by Lessee to Lessor in connection
with the transactions referred to herein or contemplated hereby, and
such failure shall continue unremedied for a period of thirty (30)
days after written notice thereof to Lessee or thirty (30) days
after Lessee, assuming exercise of reasonable diligence, should have
known of such failure; provided, however, such failure to observe
any covenant, term, condition or agreement does not pose a material
danger to the rights and interests of Lessor in the Aircraft and the
same is of such a nature that it can be cured; and, further provided
that Lessee shall have commenced and shall diligently pursue such
cure, Lessee shall have an additional thirty (30) day period within
which to cure the same;
(iv) any representation or warranty made by Lessee herein or
in any document, or certificate furnished by Lessee in connection
herewith shall at any time prove to have been false or incorrect in
any material respect at the time made;
(v) Lessee shall (A) voluntarily commence any proceeding or
file any petition seeking relief under any applicable bankruptcy,
insolvency, liquidation or similar law now or hereafter in effect,
(B) consent to the institution of, or fail to contravene in a timely
and appropriate manner, any such proceeding or the filing of any
such petition, (C) apply for or consent to the appointment of a
receiver, trustee, custodian sequestrator or similar official for
itself or for a substantial part of its property or assets, (D) file
an answer admitting the material allegations of a petition filed
against it in any such proceeding, (E) make a general assignment for
the benefit of creditors, (F) become unable, admit in writing its
inability or fail generally to pay its debts as they become due or
(G) take corporate action for the purpose of effecting any of the
foregoing;
(vi) an involuntary proceeding shall be commenced or for
involuntary petition shall be filed in a court of competent
jurisdiction seeking (A) relief in respect of Lessee, or of a
substantial part of the property or assets of Lessee under any
applicable bankruptcy, insolvency, receivership or similar law, (B)
the appointment of a receiver, trustee, custodian, sequestrator or
similar official for Lessee or for a substantial part of the
property of Lessee or (C) the winding-up or liquidation of Lessee;
and such proceeding or petition shall continue undismissed, unstayed
or unbonded for sixty (60) days or an order or decree approving or
ordering any of the foregoing shall continue unstayed and in effect
for thirty (30) days;
(vii) Lessee or any subsidiary thereof, the debt of which has
been guaranteed by Lessee thereof shall fail to pay, in accordance
with its terms and when due and payable, the principal of or
interest on any Debt the principal amount of which exceeds $[ ]* and
the maturity of any such Debt, in accordance with the provisions of
any such Debt or any contract evidencing, providing for the creation
of or concerning such Debt shall have been accelerated or any event
shall have occurred and be continuing that would permit any holder
or holders of such Debt, any trustee or agent acting on behalf of
such holder or holders or any other Persons so to accelerate such
maturity;
(viii) final judgment for the payment of money in excess of $[
]* not fully covered by insurance (or the equivalent in another
currency) shall be rendered against Lessee and the same shall remain
undischarged for a period of thirty (30) days during which execution
of such judgment shall not be effectively stayed or bonded in a
manner satisfactory to Lessor;
(ix) Lessee shall fail to remain a "certificated air-carrier"
within the meaning of the Federal Aviation Act;
(x) Lessee shall voluntarily suspend all or substantially all
of its commercial airline operations, or the franchises,
concessions, permits, rights or privileges acquired for the conduct
of the business and operations of Lessee shall be revoked canceled
or otherwise terminated or the free and continued use and exercise
thereof curtailed or prevented;
(xi) except as otherwise permitted pursuant to SECTION 11(N)
hereof, Lessee shall merge with or into or consolidate with or into
or convey, transfer, lease or otherwise dispose of (whether in one
transaction or in a series of transactions) all or substantially all
of its assets (whether now owned or hereafter acquired) to any
Person or fifty-one percent (51%) or more of the capital stock of
Lessee shall be acquired in a single transaction or series of
transactions, directly or indirectly by any Person and/or its
Affiliates not a shareholder of Lessee on the Commencement Date;
(xii) possession of the Aircraft, the Airframe or any Engine
shall be transferred to another Person, other than in accordance
with the express provisions of SECTION 7(D); and/or
(xiii) the Aircraft shall cease to be (or cease to be eligible
to be) registered in the United States as a result of any act or
omission of Lessee .
(b) REMEDIES. Upon the occurrence of any Event of Default and
at any time thereafter so long as the same shall be continuing, Lessor may, at
its option, declare this Lease to be in default by notice to Lessee; and at any
time thereafter, so long as Lessee shall not have remedied all outstanding
Events of Default before Lessor shall have commenced to exercise its rights or
remedies hereunder, Lessor may exercise one or more of the following rights and
remedies with respect to all or any part of the Aircraft, Airframe or any Engine
as Lessor in its sole discretion shall elect, to the extent permitted by, and
subject to compliance with any mandatory requirements of, applicable law then in
effect:
(i) cause Lessee, upon the written demand of Lessor and at
Lessee's expense, to return promptly, and Lessee shall return
promptly (and in no event later than two days after such demand),
all or such part of the Aircraft, the Airframe or any Engine as
Lessor may demand, to Lessor or its order in the manner and
condition required by, and otherwise in accordance with all the
provisions of, SECTION 10 as if such Aircraft, Airframe or Engine
were being returned at the end of the Lease Term, or Lessor, at its
option, may enter upon the premises where all or any part of the
Aircraft, Airframe or any Engine is located and take immediate
possession of and remove the same;
(ii) hold, use, operate, keep idle or lease to others all or
any part of the Aircraft, with or without taking possession thereof
as Lessor in its sole discretion may determine, free and clear of
any rights of Lessee and without any duty to account to Lessee with
respect to such action or inaction or for any proceeds with respect
thereto, except that Lessee's obligation to pay Basic Rent pursuant
to the Lease for any periods in respect of the Aircraft or part
thereof accruing after Lessee shall have been deprived of possession
of such Aircraft or part thereof pursuant to this SECTION 14 shall
be reduced by the net proceeds, if any, received by Lessor from
leasing the Aircraft or part thereof to any Person other than Lessee
for the same periods or any portions thereof;
(iii) Lessor may exercise any other right or remedy that may
be available to it under applicable law or proceed by appropriate
court action to enforce the terms hereof or to recover damages for
the breach or to rescind this Lease;
(iv) Lessor may terminate this Lease; and/or
(v) whether or not Lessor shall have exercised, or shall
thereafter at any time exercise, any of its rights under clauses
(i), (ii), (iii) or (iv) above, Lessor, by written notice to Lessee
specifying a payment date not earlier than five (5) Business Days
after the date of such notice, may terminate this Lease and demand
that Lessee pay to Lessor and Lessee shall pay to Lessor, on the
payment date specified in such notice, as liquidated damages for
loss of a bargain and not as a penalty, the sum of: (A) any unpaid
Basic Rent due under this Agreement for periods ending on or prior
to the payment date specified in such notice and any unpaid
Supplemental Rents due on or prior to such payment date, plus (B),
an amount equal to the aggregate unpaid Basic Rent which would
otherwise have accrued hereunder over the remainder of the Lease
Term but for the Event of Default, discounted to present value as of
the date specified for payment in such notice, less (C), if
applicable, for any period until the expiration of the Lease Term
that Lessor has not been able to sublease the Aircraft but has been
able, in the normal course of its operations to use the Aircraft,
the Basic Rent payable by Lessee to Lessor for the lease of the
Aircraft during any such period of use discounted to present value
as of the date specified for payment in such notice. The amounts
specified in such notice shall bear interest at the Post-Default
Rate from the payment date specified in such notice until payment is
made. In calculating Lessor's damages hereunder upon an Event of
Default, all Basic Rent which would have become due during the
remainder of the Lease Term if an Event of Default had not occurred
will be calculated on a present value basis using a discounting rate
equal to the rate of interest on United States Treasury Bills having
a maturity which will most closely approximate the period equal to
the remainder of the Lease Term, as quoted in the Wall Street
Journal on the date of Lessor's notice.
In addition, Lessee shall be liable, except as otherwise provided
above, for any and all unpaid Basic Rent and Supplemental Rent then due
hereunder before or during or after the exercise of any of the foregoing
remedies and for all legal fees and other costs and expenses incurred by Lessor
by reason of the occurrence of any Event of Default or the exercise of Lessor's
remedies with respect thereto, including all costs and expenses incurred in
connection with the return of all or any part of the Aircraft in accordance with
SECTION 10 or this SECTION 14 or in storing or maintaining the Aircraft or any
part thereof or placing the same in the condition and airworthiness required by
SECTION 10.
Except as otherwise expressly provided above, no remedy referred to
herein is intended to be exclusive, but each shall be cumulative and in addition
to any other remedy referred to herein or otherwise available to Lessor at law
or in equity, and the exercise or beginning of exercise by Lessor of any one or
more of such remedies shall not preclude the simultaneous or later exercise by
Lessor of any or all such other remedies; provided, that Lessor may recover only
once from each element of damages sustained and, provided further, that the
preceding proviso shall not be deemed to require proof of damages actually
sustained in the case of liquidated damages provided for herein. No express or
implied waiver by Lessor of any Default or Event of Default shall in any way be,
or be construed to be, a waiver of any future or subsequent Default or Event of
Default. To the extent permitted by law, Lessee hereby waives any rights now or
hereafter conferred by statute or otherwise (A) that may confer any right to
prior notice or judicial hearing in connection with Lessor's taking possession
or disposing of the Aircraft including, without limitation, any and all prior
notice and hearing for any prejudgment remedy or remedies and any such right
that Lessee might otherwise have under applicable law, (B) except as provided in
this SECTION 14, that impose any requirements as to the time, place or terms of
lease other disposition or other requirements with respect to the enforcement of
Lessor's rights and remedies hereunder, (C) all rights of redemption,
appraisement, valuation, stay, extension or moratorium now or hereafter in
effect under applicable law that may have the effect of delaying the enforcement
of this Lease or the absolute lease or other disposition of the Aircraft, or (D)
except as otherwise provided herein, that may otherwise limit or modify any of
Lessor's rights or remedies hereunder. The failure or delay of Lessor in
exercising any right or remedy granted it hereunder upon any occurrence of any
of the contingencies set forth herein shall not constitute a waiver of any such
right or remedy upon the continuation or recurrence of any such contingencies or
similar contingencies and any single or partial exercise hereunder of any
particular right or remedy of Lessor shall not exhaust the same or constitute a
waiver of any other right provided herein.
Notwithstanding anything contained in this SECTION 14 to the
contrary, Lessor shall use reasonable efforts to mitigate damages.
15. NOTICES. All notices required or permitted hereunder shall be in
writing and shall be delivered in person or sent by telecopier, international
courier service or letter (mailed certified and return receipt requested),
addressed to the parties as follows:
if to Lessor: First Security Bank,
National Association
00 Xxxxx Xxxx Xxxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
Attention: Corporate Trust Department
Telecopier: 000-000-0000
with copies to: KG Aircraft Leasing Co., Limited
0 Xxxxxxxx Xxxxx, Xxxxxxxx Xxxx
Xxxxxx 0, Xxxxxxx
Attention: Managing Director
Telecopier: 353-1-475-7378
Winthrop, Stimson, Xxxxxx & Xxxxxxx
Xxx Xxxxxxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: C. Xxxxxx Xxxxxxx, Esq.
Telecopier: 000-000-0000
if to Lessee: Western Pacific Airlines, Inc.
0000 X. Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxxx Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx Xxxxxx, President & CEO
Telecopier: (000) 000-0000
with a copy to: Xxxxx, Xxxxxxxx & Xxxxxxx
0000 Xxxxxxxxx Xxxxxx XX, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxxxx Xxxxxx, Esq.
Telecopier: 404-815-3509
or at such other address as Lessee or Lessor shall from time to time designate
in writing to the other. In the case of a notice delivered in person or sent by
telecopier or international courier, notice will be deemed received upon actual
receipt. In the case of a mailed letter, notice will be deemed received on the
tenth (10th) Business Day after deposit in the mail, with proper postage for
registered or certified first-class mail prepaid.
16. GOVERNING LAW AND JURISDICTION.
(a) GOVERNING LAW. This Lease shall in all respects be
governed by, and construed in accordance with, the internal laws of the State of
New York, inclusive of all matters of construction, validity and performance.
(b) JURISDICTION; SERVICE OF PROCESS. Lessee and Lessor hereby
irrevocably submit to the jurisdiction of any New York State or federal court
sitting in New York City in any action or proceeding arising out of or relating
to this Lease, and hereby irrevocably agree that all claims in respect of such
action or proceeding may be heard and determined in such New York State court
or, to the extent permitted by law, in such federal court. Lessee and Lessor
hereby irrevocably waive, to the fullest extent they may effectively do so, the
defense of an inconvenient forum to the maintenance of such action or
proceeding. Lessee hereby irrevocably appoints CT Corporation System, with an
office on the date hereof at 0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, and Lessor
hereby irrevocably appoints CT Corporation System, with an office on the date
hereof at 0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the "PROCESS AGENT"), as
their respective agents to receive on their behalf and in respect of their
proper service of copies of the summons and complaint and any other process that
may be served in any such action or proceeding. Such service may be made by
mailing or delivering a copy of such process to Lessee or Lessor, as the case
may be, in care of their respective Process Agents at such Process Agent's above
address, and Lessee and Lessor hereby irrevocably authorize and direct their
respective Process Agents to accept such service on their behalf. As an
alternative method of service, Lessee and Lessor also irrevocably consent to the
service of any and all process in any such action or proceeding by the mailing
of copies of such process to the address specified in SECTION 15. Lessee and
Lessor agree that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Nothing in this SECTION 16(B) shall affect
the right of any Person to serve legal process in any other manner permitted by
law or affect the right of any other party to bring any action or proceeding
against Lessee or Lessor, or their respective properties in the courts of other
jurisdictions. LESSEE AND LESSOR HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL
PROCEEDING TO WHICH THEY ARE PARTIES INVOLVING, DIRECTLY OR INDIRECTLY, ANY
MATTER ARISING OUT OF OR RELATING TO THIS LEASE.
(c) WAIVER OF IMMUNITY. To the extent that Lessor or Lessee
has or hereafter may acquire any sovereign immunity, Lessor and Lessee hereby
irrevocably waive such immunity in respect of their respective obligations under
this Lease and all other documents and agreements relating to the Aircraft and
the transactions referred to or contemplated herein.
17. MISCELLANEOUS.
(a) ENTIRE AGREEMENT. This Lease constitutes the entire
agreement between the parties concerning the subject matter hereof, and
supersedes all previous proposals, agreements, understandings, negotiations and
other written and oral communications in relation hereto. NO LEASE TERM OR
PROVISION OF THIS LEASE MAY BE CHANGED, WAIVED, DISCHARGED OR TERMINATED, EXCEPT
(i) WITH THE PRIOR WRITTEN CONSENT OF LESSOR AND (ii) BY AN INSTRUMENT IN
WRITING SIGNED BY A DULY AUTHORIZED REPRESENTATIVE OF THE PARTY AGAINST WHICH
THE ENFORCEMENT OF THE CHANGE, WAIVER, DISCHARGE OR TERMINATION IS SOUGHT.
Nothing herein shall be construed as conveying to Lessee any right, title or
interest in the Aircraft, the Airframe or any Engine or Part except as Lessee
under this Lease.
(b) ENGLISH LANGUAGE. All notices, communications, reports,
opinions and other documents given under this Lease shall be in the English
language.
(c) LESSOR'S RIGHT TO PERFORM FOR LESSEE. If Lessee fails to
make any payment of Rent or Supplemental Rent required to be made 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 any expenses of
Lessor incurred in connection with such payment or the performance of or
compliance with such agreement, as the case may be, shall be deemed Supplemental
Rent payable by Lessee upon demand; provided, however, that no such payment,
performance or compliance by Lessor shall (i) be deemed to have satisfied the
obligation of Lessee to make such payment or to perform or comply with such
agreement, as the case may be, unless and until Lessee shall have paid all such
Supplemental Rent payable pursuant to this section by reason of such failure or
(ii) be deemed a waiver of Lessor's rights and remedies against Lessee
hereunder.
(d) APPLICATION OF PAYMENTS DURING EXISTENCE OF Default. Any
amount referred to herein that is payable to Lessee shall not be paid to Lessee,
or if it has been previously paid directly to Lessee, shall not be retained by
Lessee, if at the time of such payment a Default or Event of Default shall have
occurred and be continuing, but shall be paid to and held by Lessor as security
for and may be applied to the obligations of Lessee under this Lease and, at
such time as Lessor shall receive evidence in form and substance satisfactory to
it that there is not continuing any such Default or Event of Default, all such
amounts in excess of amounts so paid on obligations of Lessee shall be paid to
Lessee.
(e) EXPENSES. Lessee agrees to reimburse Lessor for its
out-of-pocket costs and expenses, including attorney's fees, incurred in
connection with any amendments, modifications or waivers required by this Lease
or requested by Lessee (or resulting from any requests of Lessee) hereunder.
(f) FURTHER ASSURANCES. Lessee will promptly and duly execute
and deliver to Lessor such further documents and assurances and take such
further action as Lessor may from time to time reasonably request in order to
more effectively carry out the intent and purpose of this Lease and to establish
and protect the rights and remedies created or intended to be created in favor
of Lessor hereunder, including, without limitation, if requested by Lessor, at
the expense of Lessee, the execution and delivery of supplements or amendments
hereto, in recordable form, subjecting to this Lease any Replacement Engine and
the recording or filing of counterparts hereof, and all such other documents and
instruments, in accordance with the laws of such jurisdictions as Lessor may
from time to time deem advisable.
(g) JUDGMENT CURRENCY. The obligations of Lessee in respect of
any sum due from it to Lessor hereunder shall, notwithstanding any judgment in a
currency other than Dollars, be discharged only to the extent that Lessor may in
accordance with normal banking procedures purchase, or cause to be purchased for
its account Dollars with such other currency; if the Dollars so purchased are
less than the sum originally due in Dollars, Lessee agrees to indemnify Lessor
against such loss, and if the Dollars so purchased exceed the sum originally due
to Lessor in Dollars, Lessor agrees to remit to Lessee such excess.
(h) INVALIDITY OF ANY PROVISION. Any provision of this Lease
that is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. To the fullest
extent permitted by applicable law, Lessee hereby waives any provision of law
that renders any provision hereof prohibited or unenforceable in any respect.
(i) CHANGES IN LAW. If there shall be any change (or such
change shall be enacted or made by notice or otherwise and shall be scheduled to
become thereafter effective) in the laws or treaties of the United States that
has a material adverse effect on the validity, legality, perfection or
enforceability of Lessor's rights or interest in the Aircraft or this Lease or
the validity, legality, perfection or enforceability of this Lease, Lessor may
terminate this Agreement, whereupon Lessee shall promptly return the Aircraft to
Lessor or its designee in the condition required hereunder.
(j) HEADINGS. All section and paragraph headings and captions
are purely for convenience of reference only and shall not modify, define,
expand, limit or otherwise affect any of the terms or provisions hereof and all
references herein to numbered sections, unless otherwise indicated, are to
sections of this Lease.
(k) CONSENT. Whenever in this Lease, the consent (whether or
not, in writing) of either Lessor or Lessee is required, such consent shall not
be unreasonably withheld or delayed.
(l) THIRD PARTY BENEFICIARIES. Lessee recognizes that this
Lease confers certain rights and interests on the Indemnitees. Notwithstanding
that the Indemnitees are not parties to this Lease, the Indemnitees are intended
third party beneficiaries of such rights and interests and Lessor hereby
acknowledges that the Indemnitees may enforce such rights and interests
directly, as if they were parties to this Lease.
(m) COUNTERPARTS. This Lease may be executed in any number of
identical counterparts, all of which together will be deemed to be one and the
same instrument. Delivery of an executed counterpart of this Lease by facsimile
will be deemed effective as delivery of an originally executed counterpart. Any
party delivering an executed counterpart of this Lease by facsimile will also
deliver an originally executed counterpart; provided the failure of any party to
deliver an originally executed counterpart of this Lease will not affect the
validity or effectiveness of this Lease.
(n) TRUE LEASE. This Lease shall be treated as a lease for
Federal income tax purposes.
[CONTINUED ON SIGNATURE PAGE]
IN WITNESS WHEREOF, Lessor and Lessee have each caused this Amended and
Restated Lease to be duly executed as of the day and year first above written.
FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in
its individual capacity, except as otherwise
expressly provided, but solely as Owner Trustee
under the 1997 Trust Agreement, as Lessor
By:
Name:
Title:
WESTERN PACIFIC AIRLINES, INC.,
as Lessee
By:
Name:
Title:
IN WITNESS WHEREOF, Lessor and Lessee have each caused this Amended and
Restated Lease to be duly executed as of the day and year first above written.
FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in
its individual capacity, except as otherwise
expressly provided, but solely as Owner Trustee
under the 1997 Trust Agreement, as Lessor
By:
Name:
Title:
WESTERN PACIFIC AIRLINES, INC., as Lessee
By:
Name:
Title:
RECEIPT OF THIS ORIGINAL COUNTERPART OF THE FOREGOING LEASE IS HEREBY
ACKNOWLEDGED ON THIS _____ DAY OF ___________, 1997.
FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its individual capacity,
except as otherwise expressly provided, but solely as Owner Trustee under the
1997 Trust Agreement, as Lessor
By ________________________________
Name:
Title:
SCHEDULE 1
LEASE AGREEMENT
STIPULATED LOSS VALUE
The Stipulated Loss Value as of any date shall be equal to the amount of
U.S. Dollars set forth in the table below and set forth opposite such date.
Stipulated Loss Value
Stipulated
Loss Value
LEASE PERIOD DATES (IN U.S. DOLLARS)
March 18, 1996 - March 17, 1997 $[ ]*
March 18, 1997 - March 17, 1998 [ ]*
March 18, 1998 - March 17, 1999 [ ]*
March 18, 1999 - March 17, 2000 [ ]*
March 18, 2000 - End of Lease Term [ ]*
EXHIBIT A
AIRCRAFT DESCRIPTION
Xxx Xxxxxx Xxxxx X000-0X0 Xxxxxxxx, Xxxxxx Xxxxxx Registration Xxxx N375TA
and Manufacturer's Serial No. 23787 with two CFM International, Inc. Model
CFM 56-3B2 Engines, Manufacturer's Serial Nos. 721734 and 720890,
respectively in a 136-seat, single class configuration.
AIRFRAME*:
Aircraft Total Time (Hours) ______
Aircraft Total Landings (Cycles) ______
Time since last "C" Check ______
Time since last "D" Check ______
ENGINES*:
Time to Next
Total Replacement of
Serial Engine Total Time Since Lowest Life
Number Cycles Time Overhaul Limited Part
------------- ---------- -------- ------------- ----------------
721734
720890
-------------------
*as of March __, 1996
EXHIBIT B
FORM OF ACCEPTANCE CERTIFICATE
WESTERN PACIFIC AIRLINES, INC., a corporation organized and existing under
the laws of ______________ with its principal place of business in Colorado
Springs, Colorado ("Sublessee") does hereby represent, acknowledge, warrant and
agree as follows:
(a) Sublessee and TACA INTERNATIONAL AIRLINES, S.A. ("Sublessor") have
entered into an Sublease of Lease Agreement dated as of March __, 1996
(hereinafter referred to as the "Sublease"). Capitalized words used herein and
not otherwise defined will have the meanings set forth in the Sublease.
(b) Sublessee has this __ day of March, 1996 (Time: ____ ____________), at
El Salvador International Airport, received from Sublessor possession of:
(i) One (1) Boeing 737-3S3 Aircraft bearing Manufacturer's
serial number 23787 and two (2) CFM International, Inc. Model CFM
56-3B2 Engines, Manufacturer's Serial Nos. 721734 and 720890 (the
"Aircraft"); and
(ii) The manuals, logbooks, flight records and historical
information regarding the Aircraft, Engines and Parts listed in
Attachment 1 hereto (the "Aircraft Documentation").
(c) Except as noted on Attachment 2 hereto, Sublessee hereby confirms and
agrees that the above described Aircraft and Aircraft Documentation have been
duly accepted by Sublessee pursuant to the terms and provisions of the Sublease.
(d) As of the date hereof, the Aircraft and Engines had the following
hours/cycles:
AIRFRAME: Aircraft Total Time (Hours) ______
Aircraft Total Landings (Cycles) ______
Time since last "C" Check ______
Time since last "D" Check ______
ENGINES:
Time to Next
Total Replacement of
Serial Engine Total Time Since Lowest Life
Number Cycles Time Overhaul Limited Part
------------- ---------- -------- ------------- ----------------
721734
720890
(e) Quantity of fuel on board the Aircraft at delivery:
------------------.
IN WITNESS WHEREOF, Sublessee has caused this Acceptance Certificate to be
executed by its duly authorized representative as of the day and year set forth
above.
WESTERN PACIFIC AIRLINES, INC.
By:
Name:
Title:
ATTACHMENTS: 1. List of Aircraft Documentation
2. List of Discrepancies
ATTACHMENT 1
TO ACCEPTANCE CERTIFICATE
AIRCRAFT DOCUMENTATION
MANUALS
NAME
FAA Approved Airplane Flight Manual
Manufacturer's Operations Manual - Volume No.
Quick Reference Handbook
Maintenance Manuals
Wiring Diagram Manuals
Structural Repair Manual
Illustrated Parts Catalog
Vendor Illustrated Parts Catalog
Overhaul Manuals
Vendor Overhaul Manuals
Drawings (Major Assembly and Installation)
Weight and Balance Control and Loading Manual)
Weight and Balance Manual Supplement
Actual Weight and Balance Compliance
Rigging Document
AIRCRAFT RECORDS AND HISTORICAL DOCUMENTS
Aircraft log book (current file copies)
Aircraft Readiness Log (revised to time of return)
Maintenance Time Control Report (components, maintenance visit, special items
next due Airframe hours and cycles)
Aircraft previous maintenance visit record including the last inspection
performed.
Airworthiness Directive Compliance Summary
Serviceable Tags for all rotable components installed (Airframe & Engines)
Ads requiring continuous surveillance
Service bulletin terminated accomplishment status
Service bulletin requiring continuous surveillance summary and maintenance
control action
Airframe and component history records
FAA Form 337 for Airframe, repair/overhaul certification of last major visit
FAA Form 337 for each Engine, repair/overhaul certification of last shop visit
Engine Readiness Log for each Engine (components installed)
Summary of Service Bulletin's accomplished for each Engine
Summary of AD's accomplished for each Engine
SB and AD status requiring continuous surveillance with maintenance, control
action for each engine
Engine time summary sheet including life limited items (for each Engine)
Engine log books for each Engine (current and file copies)
Receipt of the foregoing documents, except as noted, is hereby acknowledged.
ATTACHMENT 2
TO ACCEPTANCE CERTIFICATE
DISCREPANCIES
EXHIBIT C
FORM OF RETURN ACCEPTANCE RECEIPT
WESTERN PACIFIC AIRLINES, INC. ("Lessee") and FIRST SECURITY BANK,
NATIONAL ASSOCIATION, not in its individual capacity (except as otherwise
specified) but solely as trustee ("Lessor") have entered into a Lease Agreement
dated as of March 18, 1996 and Amended and Restated as of July 7, 1997 (as
supplemented and amended, referred to as the "Lease"). Capitalized words used
herein and not otherwise defined will have the meanings set forth in the Lease.
(a) Lessor has this __ day of ____________, _____ (Time: ____
____________), at ____________, received from Lessee possession of:
(i) One (1) Boeing 737-3S3 Aircraft bearing Manufacturer's
serial number 23787 and two (2) CFM International, Inc. Model CFM
56-3B2 Engines, Manufacturer's Serial Nos. 721734 and 720890 (the
"Aircraft"); and
(ii) The manuals, logbooks, flight records and historical
information regarding the Aircraft, Engines and Parts listed in
Attachment 1 hereto (the "Aircraft Documentation").
(b) Except as noted on Attachment 2 hereto, the above specified Aircraft
and Aircraft Documentation are hereby accepted by Lessor pursuant to the terms
and provisions of the Sublease.
(c) As of the date hereof, the Aircraft and Engines had the following
hours/cycles:
AIRFRAME: Aircraft Total Time (Hours) ______
Aircraft Total Landings (Cycles) ______
Time since last "C" Check ______
Time since last "D" Check ______
ENGINES:
Time to Next
Total Replacement of
Serial Engine Total Time Since Lowest Life
Number Cycles Time Overhaul Limited Part
------------- ---------- -------- ------------- ----------------
721734
720890
(d) Quantity of fuel on board the Aircraft at redelivery:
------------------.
IN WITNESS WHEREOF, Lessee and Lessor have caused this Return Acceptance
Receipt to be executed by their duly authorized representatives as of the day
and year set forth above.
WESTERN PACIFIC AIRLINES, INC.
By:
Name:
Title:
FIRST SECURITY BANK, NATIONAL ASSOCIATION, not
in its individual capacity but solely as trustee
By:
Name:
Title:
ATTACHMENTS: 1. List of Aircraft Documentation
2. List of Discrepancies
ATTACHMENT 1
TO RETURN ACCEPTANCE RECEIPT
AIRCRAFT DOCUMENTATION
(NOTE: At time of Aircraft return list all of the records, manuals,
documents and data (by title/description, identification number and
quantity) which were provided to Lessee by Lessor with delivery of
the Aircraft under the Lease. Also list all additional records/data
developed for and returned with this Aircraft by Lessee.)
MANUALS
NAME
FAA Approved Airplane Flight Manual
Manufacturer's Operations Manual - Volume No.
Quick Reference Handbook
Maintenance Manuals
Wiring Diagram Manuals
Structural Repair Manual
Illustrated Parts Catalog
Vendor Illustrated Parts Catalog
Overhaul Manuals
Vendor Overhaul Manuals
Drawings (Major Assembly and Installation)
Weight and Balance Control and Loading Manual)
Weight and Balance Manual Supplement
Actual Weight and Balance Compliance
Rigging Document
AIRCRAFT RECORDS AND HISTORICAL DOCUMENTS
Aircraft log book (current file copies)
Aircraft Readiness Log (revised to time of return)
Maintenance Time Control Report (components, maintenance visit, special items
next due Airframe hours and cycles)
Aircraft previous maintenance visit record including the last inspection
performed.
Airworthiness Directive Compliance Summary
Serviceable Tags for all rotable components installed (Airframe & Engines)
Ads requiring continuous surveillance
Service bulletin terminated accomplishment status
Service bulletin requiring continuous surveillance summary and maintenance
control action
Airframe and component history records
FAA Form 337 for Airframe, repair/overhaul certification of last major visit
FAA Form 337 for each Engine, repair/overhaul certification of last shop visit
Engine Readiness Log for each Engine (components installed)
Summary of Service Bulletin's accomplished for each Engine
Summary of AD's accomplished for each Engine
SB and AD status requiring continuous surveillance with maintenance, control
action for each engine
Engine time summary sheet including life limited items (for each Engine)
Engine log books for each Engine (current and file copies)
Receipt of the foregoing documents, except as noted, is hereby acknowledged.
ATTACHMENT 2
TO RETURN ACCEPTANCE RECEIPT
DISCREPANCIES
EXHIBIT D
FORM OF CERTIFICATES OF SUBLESSEE
OFFICER'S CERTIFICATE
Reference is hereby made to the Sublease of Lease Agreement dated as of
March __, 1996, between TACA International Airlines, S.A., as Sublessor and
WESTERN PACIFIC AIRLINES, INC. (the "Sublease"). Capitalized terms used herein
shall, except as otherwise defined herein, have the respective meanings assigned
thereto or incorporated by reference to any other document in the Sublease.
Pursuant to Section 4(a) of the Sublease, in connection with the Sublease, the
undersigned hereby certifies as follows:
1. The undersigned is the duly appointed, qualified and acting President
of WESTERN PACIFIC AIRLINES, INC. (the "Sublessee"), a corporation duly
organized and existing under the laws of [Delaware], with its principal place of
business in Colorado Springs, Colorado;
2. All of the representations and warranties made by Sublessee in the
Sublease are true and accurate as of the date hereof, except to the extent that
such representations and warranties relate solely to an earlier date (in which
case, the undersigned reaffirms that such representations and warranties are
true and accurate as of such earlier date); and
3. No Default or Event of Default has occurred and is continuing, or will
result from Sublessee's execution, delivery and performance of the Sublease.
IN WITNESS WHEREOF, the undersigned has signed this Officer's Certificate
this ____ day ______________, 1996.
Name:
Title:
SECRETARY'S CERTIFICATE
Reference is hereby made to the Sublease of Lease Agreement dated as of
March __, 1996, between TACA International Airlines, S.A., as Sublessor and
WESTERN PACIFIC AIRLINES, INC., as Sublessee, (the "Sublease"). Capitalized
terms used herein, have the respective meanings assigned thereto or incorporated
by reference to any other documents in the Sublease. In connection with the
Sublease and pursuant to Section 4(b) of the Sublease, the undersigned hereby
certifies as follows:
1. The undersigned is the duly appointed, qualified and acting
[Secretary][Assistant Secretary] of Sublessee, a corporation duly organized
under the laws of Delaware, with its principal place of business in Colorado
Springs, Colorado.
2. Attached as Annex A is a true and complete copy of the Articles of
Incorporation and the By-laws of Sublessee, as in effect on the date hereof.
3. There is no pending or contemplated proceeding for the amendment of the
Articles of Incorporation or By-laws of Sublessee.
4. Attached as Annex B is a true and complete copy of resolutions of the
Board of Directors of Sublessee, as duly adopted by the Board of Directors in
accordance with the Articles of Incorporation and By-laws of Sublessee, duly
authorizing the execution, delivery and performance by Sublessee of this
Sublease and all other agreements, documents and certificates contemplated
hereby or thereby to be executed on behalf of Sublessee, and such resolutions
have not been amended, rescinded, modified or revoked and are in full force and
effect on the date hereof.
5. Set forth below are is the genuine signature of the Executive President
of Sublessee, who is the person duly authorized to execute and deliver the
Sublease and such other documents and instruments required to be delivered under
the Sublease, and who continues to hold his office as of the date hereof:
Name Title Signature
------------------------ ----------------------- ----------------------
IN WITNESS WHEREOF, the undersigned has signed this Secretary's
Certificate this ____ day of ___________________, 1996.
Name:
Title:
The undersigned, being one of the officers referred to in the foregoing
Secretary's Certificate, does hereby certify as of the date of the foregoing
Certificate that is the [Secretary/Assistant Secretary]
of WESTERN PACIFIC AIRLINES, INC. and the signature above is his genuine
signature.
Name:
Title:
EXHIBIT E
FORM OF OPINION OF SUBLESSEE'S COUNSEL
To Each Person Listed
on Schedule A Hereto
Gentlemen:
We have acted as counsel for WESTERN PACIFIC AIRLINES, INC., a corporation
organized and existing under the laws of _____________ ("WPA") in connection
with the preparation, execution and delivery of the Sublease of Lease Agreement
dated as of March __, 1996 (the "Sublease"), between TACA International
Airlines, S.A., as Sublessor, and WPA, as Sublessee, relating to the lease of
the Aircraft. Capitalized terms used herein and not otherwise defined shall have
the meanings defined in the Sublease.
In that connection we have examined the following: (i) the Sublease; (ii)
the Lease; (iii) the Security Subleases; (iv) the Mortgage; (v) the Articles of
Incorporation and bylaws of WPA and all amendments thereto (the "Charter"); and
(vi) such other documents, agreements and instruments as we have deemed
necessary as a basis for the opinions hereinafter expressed. We have also
examined originals or copies, certified or otherwise identified to our
satisfaction, of such other records and such other instruments and certificates
of public officials and of officers and representatives of WPA as we have deemed
necessary or appropriate as a basis for the opinions hereinafter expressed.
In arriving at the opinions expressed below, we have assumed the
genuineness of all signatures and the due authorization, execution and delivery
by the parties thereto (other than WPA) of each of the documents listed above.
In addition, we have made such investigations of law as we have deemed
appropriate for the purpose of giving the opinions expressed below.
On the basis of the foregoing, the further assumptions set forth below and
our consideration of such other matters of fact and questions of law as we have
deemed relevant in the circumstances, and subject to the limitations set forth
below, we are of the opinion that:
(a) WPA is a corporation duly organized, validly existing and in good
standing under the laws of ___________ and has the corporate power and authority
to carry on its business as presently conducted and to enter into and perform
its obligations under the Sublease, the Lease and all other documents
contemplated thereby to which it is or will become a party (collectively the
"Documents"), and holds all material licenses, certificates and permits from all
Government Entities of ______________ necessary for the conduct of its business
as now conducted.
(b) The execution, delivery and performance by WPA of the Documents (a)
have been duly authorized by all necessary corporate action on the part of WPA,
(b) do not require any stockholder approval, or approval or consent of any
trustee or holders of any indebtedness or obligations of WPA, (c) do not
contravene any law, rule or regulation of any Government Entity binding on WPA,
(d) do not contravene any order binding on WPA, (e) do not contravene any
provision of the Charter of WPA, and (f) do not contravene the provisions of, or
constitute a default under, or result in the creation of any lien upon any
property or assets of WPA under any indenture, mortgage, contract or other
agreement to which WPA is a party or by which it or its properties may be bound
or affected or any applicable law, rule or regulation, judgment, order or decree
of any Government Entity or court having jurisdiction over WPA or any of its
properties or assets. Each of the Documents has been duly executed and delivered
by WPA.
(c) No authorization or approval (including exchange control approval) or
other action by, and no notice to or filing with, any Governmental Entity is
required for the due execution, delivery and performance by WPA of the
Documents, but the failure so to record or file the Sublease will not affect the
enforceability of WPA's obligations under the Documents. The Documents are in
proper form for filing and recording.
(d) The Documents are the legal, valid and binding obligations of WPA
enforceable against WPA in accordance with their respective terms.
(e) The obligations of WPA under the Documents rank at least PARI PASSU in
all respects with all other unsecured obligations of WPA and are not subject to
any law, rule or regulation of _____________ or any Governmental Entity thereof
with regard to any preference for payment of obligations or any rescheduling of
the payment of any debt or other obligations.
(f) The Lease, as assigned to WPA pursuant to the Sublease, creates a
valid leasehold interest in the Aircraft.
(g) There is no pending or, to the best of our knowledge after due
inquiry, threatened action or proceeding affecting WPA or any of its
subsidiaries before any court, governmental agency or arbitrator, or which
affects or purports to restrain the making or performance of, or affects the
legality, validity or enforceability of the Documents or the transactions
contemplated thereby.
(h) Neither WPA nor any of its property has any immunity from jurisdiction
of any court or from any legal process (whether through service or notice,
attachment prior to judgment, attachment in aid of execution, execution or
otherwise).
(i) There is and will be no Tax, levy, impost, deduction, charge or
withholding imposed by any Taxing Authority of any relevant jurisdiction therein
or thereof either (i) on or by virtue of the execution or delivery of the
Documents or any other document to be furnished thereunder or in connection
therewith or (ii) on any payment made, or to be made, by WPA pursuant to any of
the Documents.
(j) It is not necessary to take any action in Colorado or under the laws
of Ecuador to perfect the interest of the Lessor in the Aircraft or the security
interests in favor of the Lender which the Mortgage or the Security Subleases
purport to create in the Aircraft, the Lease or any other portion of the
Security (as defined in the Mortgage). No person, by performing any act in
Colorado including, without limitation, the execution or recording of a xxxx of
sale or any security interest, can acquire any interest prior in right to the
Lessor or the interests in favor of the Lender which the Mortgage purports to
create in the Aircraft or any other portion of the Security.
(k) It is not necessary under the laws of Colorado (i) in order to enable
the Sublessor to enforce its rights under the Sublease, the Lessor to enforce
its rights under the Lease or the Lender to enforce its rights under the
Mortgage, or (ii) by reason of the execution, delivery and performance of any of
the Documents that the Sublessor, the Lessor, the Lender or any Lender should be
licensed, qualified or otherwise entitled to carry on business in Colorado.
(l) Neither Sublessor, Lessor nor Lender will be deemed to be a resident
domiciled or carrying on business or subject to taxation or other unfavorable
consequences in Colorado by reason only of the execution, delivery, performance
and/or enforcement of the Sublease or the Security Subleases.
(m) Neither WPA nor any of its subsidiaries is, to the best of our
knowledge after due inquiry, in breach of or default under any agreement to
which it is a party or which is binding on it or any of its assets.
(n) The choice of New York law set forth (a) in the Sublease, the Lease,
the Security Subleases and the Mortgage, in each case to govern such respective
document and to control the construction thereof, is in each case, under the
laws of Colorado, a valid, effective and enforceable choice of law.
(o) A judgment obtained against WPA in a court in the State of New York
pursuant to service of process in accordance with the Sublease would be
enforceable in Colorado against WPA's assets located therein, and execution
against WPA's assets in Ecuador to satisfy such a judgment could be obtained in
Ecuador.
(p) WPA has legally, validly, effectively and irrevocably submitted to the
jurisdiction of any United States or state courts in New York City, New York,
and has legally, validly, effectively and irrevocably appointed CT Corporation
System as its authorized agent for the purposes described in the Sublease.
Very truly yours,
EXHIBIT F
FORM OF MONTHLY REPORT
MONTHLY AIRCRAFT UTILIZATION AND STATUS REPORT
To: FIRST SECURITY BANK, NATIONAL ASSOCIATION
as Owner Trustee, (the "Lessor")
00 Xxxxx Xxxx Xxxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
Attention: Corporate Trust Department
with a copy to:
KG AIRCRAFT LEASING CO., LIMITED
0 Xxxxxxxx Xxxxx, Xxxxxxxx Xxxx
Xxxxxx 0, Xxxxxxx
From: WESTERN PACIFIC AIRLINES, INC. (the"Lessee")
0000 X. Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxxx Xxxxxxx, Xxxxxxxx 00000
Re: AIRCRAFT TYPE: Boeing 737-3S3
REGISTRATION:
SERIAL NUMBER: 23787
MONTH OF 19
===============================================================================
AIRCRAFT TOTAL TIME SINCE NEW HRS:
===============================================================================
AIRCRAFT TOTAL CYCLES SINCE NEW CYCLES:
===============================================================================
AIRFRAME FLIGHT HOURS DURING MONTH HRS:
===============================================================================
AIRFRAME BLOCK HOURS DURING MONTH HRS:
===============================================================================
AIRFRAME CYCLES/LANDING DURING MONTH CYCLES:
===============================================================================
TIME REMAINING TO D OR HEAVY MAINTENANCE CHECK
===============================================================================
Date of next scheduled "C" check: __________
================================================================================
ENGINE SERIAL NUMBER ENGINE SERIAL NUMBER
ORIGINAL POSITION ORIGINAL POSITION
---------------------------------------------===================================
ACTUAL LOCATION: ACTUAL LOCATION:
---------------------------------------------===================================
==================================------------------------------------------====
HOURS: HOURS:
==================================-----------------------------------===========
TOTAL TIME SINCE NEW TOTAL TIME SINCE NEW
==================================-----------------------------------===========
TOTAL CYCLES SINCE NEW TOTAL CYCLES SINCE NEW
==================================-----------------------------------===========
FLIGHT HOURS FLOWN DURING MONTH HOURS FLOWN DURING MONTH
==================================-----------------------------------===========
CYCLES DURING MONTH CYCLES DURING MONTH
--------------------------------------==========================================
TIME REMAINING TO HSI TIME REMAINING TO HSI
--------------------------------------==========================================
TIME REMAINING TO EHM TIME REMAINING TO EHM
================================================================================
NOTE: IF LESSOR OWNED ENGINE IS REMOVED OR INSTALLED ON ANOTHER AIRCRAFT IT
MUST BE REPORTED MONTHLY ON THIS FORM.
SERVICE BULLETINS, AIRWORTHINESS DIRECTIVES, ENGINEERING MODIFICATIONS OR
CHANGES SCHEDULED OR COMPLETED (INDICATE DATE SCHEDULED FOR COMPLETION OR
DATE OF COMPLETION, AS APPLICABLE):
WARRANTY CLAIMS MADE OR SETTLED SINCE LAST REPORT (INDICATE NATURE OF CLAIM AND
SETTLEMENT, AS APPLICABLE:
The undersigned, a duly elected officer of Lessee, hereby certifies to Lessor
that (i) the information set forth in the above Monthly Aircraft Utilization and
Status Report is true and correct, and (ii) all airport landing fees and other
charges related to or incurred in connection with the operation of the Aircraft
and all other aircraft in Lessee's fleet, have been paid and are current.
WESTERN PACIFIC AIRLINES, INC.
By:
Its:
EXHIBIT G
MAINTENANCE RESERVES ADJUSTMENT FORMULA
Flight Hour/
CYCLE RATIO RATES
[ ]* - [ ]* $[ ]*
[ ]* - [ ]* [ ]*
[ ]* - [ ]* [ ]*
[ ]* - [ ]* [ ]*
[ ]* - [ ]* [ ]*
[ ]* - [ ]* [ ]*
[ ]* - [ ]* [ ]*
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SCHEDULE I - STIPULATED LOSS VALUE
EXHIBIT A - AIRCRAFT DESCRIPTION
EXHIBIT B - FORM OF ACCEPTANCE CERTIFICATE
EXHIBIT C - FORM OF RETURN ACCEPTANCE CERTIFICATE
EXHIBIT D - FORM OF CERTIFICATES OF SUBLESSEE
EXHIBIT E - FORM OF OPINION OF SUBLESSEE'S COUNSEL
EXHIBIT F - FORM OF MONTHLY REPORT
EXHIBIT G - MAINTENANCE RESERVES ADJUSTMENT FORMULA