AIRCRAFT LEASE AGREEMENT
Dated as of September 5, 2000
BETWEEN
AMERICAN TRANS AIR, INC.
as LESSEE
and
INTERNATIONAL LEASE FINANCE CORPORATION
as LESSOR
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Aircraft Make and Model: New Boeing 737-800
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Aircraft Manufacturer's Serial Number: 28244
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Aircraft Registration Mark: Per Estoppel and Acceptance Certificate
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Make and Model of Engines: CFM56-7B-27
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Serial Numbers of Engines: Per Estoppel and Acceptance Certificate
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NEW BOEING 737-800 AIRCRAFT NO. 5
TABLE OF CONTENTS
ARTICLE 1 SUMMARY OF TRANSACTION.........................................2
1.1 Description of Aircraft........................................2
1.2 Scheduled Delivery Date and Location...........................2
1.3 Lease Term.....................................................2
1.4 Security Deposit...............................................2
1.5 Transaction Fee................................................2
1.6 Rent During Lease Term.........................................2
1.7 Country of Aircraft Registration...............................4
1.8 Maintenance Program............................................4
1.9 Agreed Value of Aircraft.......................................4
1.10 LESSOR's Bank Account..........................................4
ARTICLE 2 DEFINITIONS....................................................5
2.1 General Definitions............................................5
2.2 Specific Definitions...........................................9
ARTICLE 3 PLACE AND DATE OF DELIVERY....................................11
3.1 Place of Delivery.............................................11
3.2 Scheduled Delivery Date.......................................11
3.3 Delivery subject to Manufacturer Delivery.....................11
3.4 No LESSOR Liability...........................................11
3.5 Total Loss of Aircraft prior to Delivery......................11
3.6 Cancellation for Delay........................................11
ARTICLE 4 LEASE TERM....................................................12
4.1 Lease Term....................................................12
4.2 "Expiration Date".............................................12
4.3 "Termination Date"............................................12
ARTICLE 5 SECURITY DEPOSIT, TRANSACTION FEE, RENT AND OTHER
PAYMENTS......................................................13
5.1 Security Deposit..............................................13
5.2 Transaction Fee...............................................14
5.3 Rent..........................................................14
5.4 LESSOR's Bank Account.........................................15
5.5 Default Interest..............................................16
5.6 No Deductions or Withholdings.................................16
5.7 Value Added Taxes.............................................16
5.8 Net Lease.....................................................17
5.9 LESSOR Performance of LESSEE Obligation.......................18
5.10 Consideration for Rent and other Amounts......................18
ARTICLE 6 INVOLVEMENT WITH AIRCRAFT MANUFACTURER........................19
6.1 LESSEE Selection of Aircraft..................................19
6.2 Agency Agreement..............................................19
6.3 Procurement of BFE............................................19
6.4 Assignment of Training........................................19
6.5 LESSEE Inspection of Aircraft.................................19
6.6 Aircraft at Delivery..........................................19
6.7 Delivery of the Aircraft to LESSEE............................20
6.8 LESSEE Acceptance of Aircraft.................................20
ARTICLE 7 PRE-DELIVERY, DELIVERY AND POST-DELIVERY
DOCUMENTARY AND OTHER REQUIREMENTS............................21
7.1 Pre-Delivery Requirements.....................................21
7.2 Delivery Requirements.........................................22
7.3 Post-Delivery Requirements....................................23
ARTICLE 8 DISCLAIMERS...................................................24
8.1 "As Is, Where Is".............................................24
8.2 Waiver of Warranty of Description.............................24
8.3 LESSEE Waiver.................................................25
8.4 Conclusive Proof..............................................25
8.5 No LESSOR Liability for Losses................................25
8.6 No Liability to Repair or Replace.............................25
8.7 No Waiver.....................................................26
ARTICLE 9 MANUFACTURERS' AND VENDORS' WARRANTIES........................27
9.1 Warranties....................................................27
9.2 Reassignment..................................................27
ARTICLE 10 OPERATION OF AIRCRAFT.........................................28
10.1 Costs of Operation............................................28
10.2 Compliance with Laws..........................................28
10.3 Training......................................................28
10.4 No Violation of Insurance Policies............................28
10.5 Flight Charges................................................29
ARTICLE 11 SUBLEASES.....................................................30
11.1 No Sublease without LESSOR Consent............................30
11.2 LESSOR Costs..................................................30
11.3 Any Approved Sublease.........................................30
11.4 Assignment of Sublease........................................30
11.5 Continued Responsibility of LESSEE............................30
ARTICLE 12 MAINTENANCE AND USE OF AIRCRAFT...............................31
12.1 General Obligation............................................31
12.2 Specific Obligations..........................................31
12.3 Replacement of Parts..........................................32
12.4 Removal of Engines............................................33
12.5 Pooling of Engines and Parts..................................34
12.6 Installation of Engines on other aircraft.....................34
12.7 Modifications.................................................35
12.8 Performance of Work by Third Parties..........................36
12.9 Reporting Requirements........................................36
12.10 Information Regarding Maintenance Program.....................36
12.11 LESSOR Rights to Inspect Aircraft.............................36
ARTICLE 13 TITLE AND REGISTRATION........................................37
13.1 Title to the Aircraft During Lease Term.......................37
13.2 Registration of Aircraft......................................37
13.3 Filing of this Lease..........................................37
13.4 Evidence of Registration and Filings..........................37
ARTICLE 14 IDENTIFICATION PLATES.........................................38
14.1 Airframe Identification Plates................................38
14.2 Engine Identification Plates..................................38
ARTICLE 15 TAXES.........................................................39
15.1 General Obligation of LESSEE..................................39
15.2 Exceptions to Indemnity.......................................39
15.3 After-Tax Basis...............................................40
15.4 Claims and Contests...........................................40
15.5 Refunds.......................................................41
15.6 Cooperation in Filing Tax Returns.............................41
ARTICLE 16 INDEMNITIES...................................................42
16.1 General Indemnity.............................................42
16.2 Exceptions to General Indemnities.............................43
16.3 After-Tax Basis...............................................44
16.4 Timing of Payment.............................................44
16.5 Subrogation...................................................44
16.6 Notice........................................................44
16.7 Refunds.......................................................44
16.8 Defense of Claims.............................................45
16.9 Survival of Obligation........................................45
ARTICLE 17 INSURANCE.....................................................46
17.1 Categories of Insurance.......................................46
17.2 Insurance for Indemnities.....................................46
17.3 Insurance required by Manufacturer............................46
17.4 Renewal.......................................................46
17.5 Assignment of Rights by LESSOR................................46
17.6 Deductibles...................................................46
17.7 Other Insurance...............................................47
17.8 Information...................................................47
17.9 Currency......................................................47
17.10 Grounding of Aircraft.........................................47
17.11 Failure to Insure.............................................47
17.12 Limit on Hull in favor of LESSEE..............................47
17.13 Marketplace Limitations.......................................48
ARTICLE 18 LOSS, DAMAGE AND REQUISITION..................................49
18.1 Definitions...................................................49
18.2 Notice of Total Loss..........................................50
18.3 Total Loss of Aircraft or Airframe............................50
18.4 Surviving Engine(s)...........................................51
18.5 Total Loss of Engine and not Airframe.........................51
18.6 Other Loss or Damage..........................................52
18.7 Copy of Insurance Policy......................................53
18.8 Government Requisition........................................53
18.9 Conveyance to LESSEE..........................................53
ARTICLE 19 CRAF PROGRAM..................................................54
19.1 Dedication to CRAF............................................54
19.2 Notice to LESSOR..............................................54
19.3 Requisition of Engine.........................................54
19.4 Government Indemnification....................................54
19.5 No Geographic Limits..........................................54
19.6 Notice of Default.............................................55
19.7 Receipt of Payments...........................................55
ARTICLE 20 REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSEE...........56
20.1 Representations and Warranties................................56
20.2 Covenants.....................................................58
ARTICLE 21 REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSOR...........61
21.1 Representations and Warranties................................61
21.2 Covenant of Quiet Enjoyment...................................62
ARTICLE 22 FINANCIAL AND RELATED INFORMATION.............................63
ARTICLE 23 RETURN OF AIRCRAFT............................................64
23.1 Date of Return................................................64
23.2 Technical Report..............................................64
23.3 Return Location...............................................64
23.4 Full Aircraft Documentation Review............................64
23.5 Aircraft Inspection...........................................64
23.6 Certificate of Airworthiness Matters..........................65
23.7 General Condition of Aircraft at Return.......................66
23.8 Checks Prior to Return........................................69
23.9 Part Lives....................................................72
23.10 Export and Deregistration of Aircraft.........................74
23.11 LESSEE's Continuing Obligations...............................75
23.12 Airport and Navigation Charges................................75
23.13 Return Acceptance Certificate.................................76
23.14 Indemnities and Insurance.....................................76
ARTICLE 24 ASSIGNMENT....................................................77
24.1 No Assignment by LESSEE.......................................77
24.2 Sale or Assignment by LESSOR..................................77
24.3 LESSOR's Lender...............................................79
24.4 LESSEE Cooperation............................................79
24.5 Protections...................................................79
ARTICLE 25 DEFAULT OF LESSEE.............................................80
25.1 LESSEE Notice to LESSOR.......................................80
25.2 Events of Default.............................................80
25.3 LESSOR's General Rights.......................................82
25.4 Deregistration and Export of Aircraft.........................83
25.5 LESSEE Liability for Damages..................................83
25.6 Waiver of Default.............................................84
25.7 Present Value of Payments.....................................84
25.8 Use of "Termination Date".....................................84
ARTICLE 26 NOTICES.......................................................85
26.1 Manner of Sending Notices.....................................85
26.2 Notice Information............................................85
ARTICLE 27 GOVERNING LAW AND JURISDICTION................................86
27.1 California Law................................................86
27.2 Non-Exclusive Jurisdiction in California......................86
27.3 Service of Process............................................86
27.4 Prevailing Party in Dispute...................................86
27.5 Waiver........................................................86
ARTICLE 28 MISCELLANEOUS.................................................87
28.1 Press Releases................................................87
28.2 LESSOR Performance for LESSEE.................................87
28.3 LESSOR's Payment Obligations..................................87
28.4 Application of Payments.......................................87
28.5 Usury Laws....................................................87
28.6 Delegation by LESSOR..........................................87
28.7 Confidentiality...............................................88
28.8 Rights of Parties.............................................88
28.9 Further Assurances............................................88
28.10 Use of Word "including".......................................88
28.11 Headings......................................................88
28.12 Invalidity of any Provision...................................88
28.13 Negotiation...................................................88
28.14 Time is of the Essence........................................89
28.15 Amendments in Writing.........................................89
28.16 Counterparts..................................................89
28.17 Delivery of Documents by Fax..................................89
28.18 Entire Agreement..............................................89
EXHIBIT A AIRCRAFT DESCRIPTION..........................................91
EXHIBIT B AGENCY AGREEMENT..............................................92
EXHIBIT C CERTIFICATE OF INSURANCE......................................96
EXHIBIT D BROKERS' LETTER OF UNDERTAKING...............................102
EXHIBIT E ESTOPPEL AND ACCEPTANCE CERTIFICATE..........................104
EXHIBIT F OPINION OF COUNSEL...........................................111
EXHIBIT G ASSIGNMENT OF RIGHTS (AIRFRAME)..............................114
EXHIBIT H ASSIGNMENT OF RIGHTS (ENGINES)...............................119
EXHIBIT I RETURN ACCEPTANCE RECEIPT....................................123
EXHIBIT J MONTHLY REPORT...............................................134
EXHIBIT K AIRCRAFT DOCUMENTATION.......................................138
EXHIBIT L TECHNICAL EVALUATION REPORT..................................140
AIRCRAFT LEASE AGREEMENT
THIS AIRCRAFT LEASE AGREEMENT is made and entered into as of September 5,
2000.
BETWEEN:
AMERICAN TRANS AIR, INC., a Indiana corporation whose address and principal
place of business is at 7337 West Washington Street, Indianapolis International
Airport, Indianapolis, Indiana 46231, United States of America ("LESSEE") and
INTERNATIONAL LEASE FINANCE CORPORATION, a California corporation whose
address and principal place of business is at 1999 Avenue of the Stars, 39th
Floor, Los Angeles, California 90067, United States of America ("LESSOR").
The subject matter of this Lease is one (1) new Boeing 737-800 aircraft. In
consideration of and subject to the mutual covenants, terms and conditions
contained in this Lease, LESSOR hereby agrees to lease to LESSEE and LESSEE
hereby agrees to lease from LESSOR the aircraft and the parties further agree as
follows:
ARTICLE 1 SUMMARY OF TRANSACTION
The information in this Article 1 is a summary of the lease transaction
between LESSEE and LESSOR. It is set forth for the convenience of the parties
only and will not be deemed in any way to amend, detract from or simplify the
other provisions of this Lease.
1.1 DESCRIPTION OF AIRCRAFT
One new Boeing 737-800 aircraft
1.2 SCHEDULED DELIVERY DATE AND LOCATION
In the month of (CONFIDENTIAL MATERIAL OMITTED) at Seattle, Washington
1.3 LEASE TERM
15 years
1.4 SECURITY DEPOSIT
(CONFIDENTIAL MATERIAL OMITTED)
1.5 TRANSACTION FEE
(CONFIDENTIAL MATERIAL OMITTED)
1.6 RENT DURING LEASE TERM
Payable monthly in advance and equal to the sum of:
(a The following amounts for the following years of the Lease Term:
LEASE PERIOD MONTHLY RENTAL AMOUNT*
(CONFIDENTIAL MATERIAL OMITTED)
*The above base rent is expressed in January 1999 U.S.Dollars and will
increase in the following amounts for the following periods:
PERIOD ESCALATION FACTOR
(CONFIDENTIAL MATERIAL OMITTED)
1.7 COUNTRY OF AIRCRAFT REGISTRATION
U.S.
1.8 MAINTENANCE PROGRAM
LESSEE's Maintenance Program
1.9 AGREED VALUE OF AIRCRAFT
(CONFIDENTIAL MATERIAL OMITTED) The Agreed Value is expressed in March 2001
U.S. Dollars and will increase in accordance with Manufacturer's announced
escalation rate from March 1, 2001 to the Delivery Date. On each annual renewal
date of LESSEE's insurance policy commencing on the renewal date following the
first anniversary of the Lease Term, the Agreed Value will decrease by two
percent (2.0%) of the then existing Agreed Value.
1.10 LESSOR'S BANK ACCOUNT
(Confidential Material Omitted)
ARTICLE 2 DEFINITIONS
Except where the context otherwise requires, the following words have the
following meanings for all purposes of this Lease. The definitions are equally
applicable to the singular and plural forms of the words. Any agreement defined
below includes each amendment, modification, supplement and waiver thereto in
effect from time to time.
2.1 GENERAL DEFINITIONS.
"ACT" means the Federal Aviation Act of 1958, as amended from
time to time, or any successor act thereto.
"AIRCRAFT" means the Airframe, two (2) Engines, Parts and
Aircraft Documentation, collectively. As the context requires, "Aircraft" may
also mean the Airframe, any Engine, any Part, the Aircraft Documentation or any
part thereof individually. For example, in the context of return to LESSOR the
term "Aircraft" means the Airframe, Engines, Parts and Aircraft Documentation
collectively, yet in the context of LESSEE not creating any Security Interests
other than Permitted Liens on the Aircraft, the term "Aircraft" means any of the
Airframe, any Engine, any Part or the Aircraft Documentation individually.
"AIRCRAFT DOCUMENTATION" means all (a) log books, Aircraft
records, manuals and other documents provided to LESSEE in connection with the
Aircraft, (b) documents listed in Exhibits E and K and (c) any other documents
required to be maintained during the Lease Term by the Aviation Authority,
LESSEE's Maintenance Program and this Lease.
"AIRFRAME" means the airframe listed in the Estoppel and
Acceptance Certificate executed at Delivery together with all Parts relating
thereto (except Engines or engines).
"AIRWORTHINESS DIRECTIVES" or "ADS" means all airworthiness
directives (or equivalent) of the FAA and the Aviation Authority applicable to
the Aircraft.
"APU" means the auxiliary power unit of the Aircraft.
"AVIATION AUTHORITY" means the FAA or any Government Entity
which under the Laws of the U.S. from time to time has control over civil
aviation or the registration, airworthiness or operation of aircraft in the U.S.
If the Aircraft is registered in a country other than the U.S., "Aviation
Authority" means the agency which regulates civil aviation in such other
country.
"AVIATION DOCUMENTS" means any or all of the following which at
any time may be obtainable from the Aviation Authority: (a) if required, a
temporary certificate of airworthiness from the Aviation Authority allowing the
Aircraft to be flown after Delivery to the State of Registration, (b) an
application for registration of the Aircraft with the appropriate authority in
the State of Registration, (c) the certificate of registration for the Aircraft
issued by the State of Registration, (d) a full certificate of airworthiness for
the Aircraft specifying transport category (passenger), (e) an air transport
license, (f) an air operator's certificate, (g) such recordation of LESSOR's
title to the Aircraft and interest in this Lease as may be available in the
State of Registration and (h) all such other authorizations, approvals, consents
and certificates in the State of Registration as may be required to enable
LESSEE lawfully to operate the Aircraft.
"BANKRUPTCY CODE" means The Bankruptcy Reform Act of 1978 (11
U.S.C. ss.ss. 101-1330), as amended or supplemented from time to time, and any
successor statute, and all of the rules and regulations issued or promulgated in
connection therewith.
"BASIC ENGINE" means those units and components of the Engine
which are used to induce and convert fuel/air mixture into thrust/power; to
transmit power to the fan and accessory drives; to supplement the function of
other defined systems external to the Engine; and to control and direct the flow
of internal lubrication, plus all essential accessories as supplied by the
Engine manufacturer. The nacelle, installed components related to the Aircraft
systems, thrust reversers, QEC and the primary flight nozzle are excluded.
"BFE" means any equipment which is to be provided by the
purchaser of the Aircraft (whether actually provided by LESSOR as
buyer-furnished equipment or Manufacturer as seller-purchased equipment).
"BUSINESS DAY" means a day other than a Saturday or Sunday on
which the banks in Indianapolis, Indiana and in the city where LESSOR's Bank is
located are open for the transaction of business of the type required by this
Lease.
"CREDITOR" means any lessor, owner, bank, lender, mortgagee or
other Person which is the owner of or has any interest in an aircraft engine or
aircraft operated by LESSEE.
"CREDITOR AGREEMENT" means the applicable agreement between a
Creditor and LESSEE or between Creditors pursuant to which such Creditor owns,
leases or has an interest in either an aircraft operated by LESSEE on which an
Engine may be installed or in an aircraft engine which may be installed on the
Airframe.
"DEFAULT" means any event which, upon the giving of notice, the
lapse of time and/or a relevant determination, would constitute an Event of
Default.
"DELIVERY" means the delivery of the Aircraft from LESSOR to
LESSEE pursuant to Articles 3 and 6.
"DELIVERY DATE" means the date on which Delivery takes place.
"DOLLARS" and "$" means the lawful currency of the U.S.
"ENGINE" means (a) each of the engines listed on the Estoppel
and Acceptance Certificate; or (b) any replacement engine acquired by LESSOR and
leased to LESSEE pursuant to Article 18.5 following a Total Loss of an Engine;
including in each case all Parts installed in or on any of such engines at
Delivery (or substituted, renewed or replacement Parts in accordance with this
Lease) so long as title thereto is or remains vested in LESSOR in accordance
with the terms of Article 12.3.
"EVENT OF DEFAULT" means any of the events referred to in
Article 25.2.
"FAA" means the Federal Aviation Administration of the
Department of Transportation or any successor thereto under the Laws of the U.S.
"FARS" means the U.S. Federal Aviation Regulations embodied in
Title 14 of the U.S. Code of Federal Regulations, as amended from time to time,
or any successor regulations thereto.
"GENEVA CONVENTION" means the Convention on the International
Recognition of Rights in Aircraft signed in Geneva, Switzerland on June 19,
1948.
"GOVERNMENT ENTITY" means any (a) national, state or local
government, (b) board, commission, department, division, instrumentality, court,
agency or political subdivision thereof and (c) association, organization or
institution of which any of the entities listed in (a) or (b) is a member or to
whose jurisdiction any such entity is subject.
"LANDING GEAR" means the installed main and nose landing gear,
components and their associated actuators, side braces and parts.
"LAW" means any (a) statute, decree, constitution, regulation,
order or any directive of any Government Entity, (b) treaty, pact, compact or
other agreement to which any Government Entity is a signatory or party and (c)
judicial or administrative interpretation or application of any of the
foregoing.
"LEASE" means this Aircraft Lease Agreement, together with all
Exhibits hereto.
"LESSOR'S LIEN" means any Security Interest created by LESSOR,
or arising from a claim against LESSOR completely unrelated to this Lease or the
other Operative Documents.
"MAINTENANCE PROGRAM" means LESSEE's maintenance program as
approved by the Aviation Authority or such other maintenance program as LESSOR
may, in its discretion, accept in writing.
"MANUFACTURER" means The Boeing Company, a Delaware corporation.
"MPD" means the Maintenance Planning Document published by
Manufacturer and applicable to the Aircraft.
"OVERHAUL" means the full reconditioning of the Aircraft, an
Engine, APU, Landing Gear, module or Part, as the case may be, in which such
equipment has been fully disassembled; cleaned; thoroughly inspected; and
returned to the highest standard specified by the applicable manufacturer's
manual.
"PART" means the APU, any part, component, appliance, system
module, engine module, accessory, material, instrument, communications
equipment, furnishing, LESSEE-furnished or LESSOR-purchased equipment or other
item of equipment (other than complete Engines or engines) for the time being
installed in or attached to the Airframe or any Engine or which, having been
removed from the Airframe or any Engine, remains the property of LESSOR.
"PERMITTED INSTITUTION" means any Person (other than a
commercial air carrier, a commercial aircraft operator, a freight forwarder, or
an affiliate of any of the foregoing), with either: (a) a combined capital and
surplus or net worth of at least; or (b) have a credit rating on the majority of
its unsecured debt which is at least equal to BBB or its equivalent from
Standard and Poor's Rating Group, a division of The McGraw-Hill Companies, Inc.
or Moody's Investors Service, Inc.
"PERMITTED LIEN" means (a) LESSOR's Liens; (b) Security
Interests arising in the ordinary course of LESSEE's business for Taxes either
not yet due and payable or, if due and payable, being contested in good faith in
accordance with Article 15.4; (c) materialmen's, mechanics', workmen's,
repairmen's, employees' liens or similar Security Interests arising by operation
of Law after the Delivery Date in the ordinary course of LESSEE's business for
amounts which are either not yet due or are being contested in good faith by
appropriate proceedings (and for which adequate reserves have been made or, when
required in order to pursue such proceedings, an adequate bond has been
provided) so long as such proceedings do not involve any material danger of
sale, forfeiture or loss of the Aircraft; (d) the rights of LESSOR and any
LESSOR's Lender and the rights of LESSEE under this Lease and the other
Operative Documents; (e) the rights of others under agreements or arrangements
to the extent permitted by Articles 10 and 11.5; and (f) any Security Interest
against which LESSEE causes to be provided a bond in such amount and under such
terms and conditions as are reasonably satisfactory to LESSOR.
"PERSON" means any individual, firm, partnership, joint venture,
trust, corporation, limited liability company, Government Entity, committee,
department, authority or any body, incorporated or unincorporated, whether
having distinct legal personality or not.
"PRIME RATE" means the rate of interest from time to time
announced by Bank of America Illinois in Chicago, Illinois as its prime
commercial lending rate.
"SECURITY INTEREST" means any encumbrance or security interest,
however and wherever created or arising including (without prejudice to the
generality of the foregoing) any right of ownership, security, mortgage, pledge,
charge, encumbrance, lease, lien, statutory or other right in rem,
hypothecation, title retention, attachment, levy, claim or right of possession
or detention.
"STATE OF REGISTRATION" means the U.S. or such other country or
state of registration of the Aircraft as LESSOR may, in its absolute discretion,
approve in writing.
"U.S." means the United States of America.
"U.S. AIR CARRIER" means any U.S. air carrier who is a Citizen
of the U.S. holding an air carrier operating certificate issued by the Secretary
of Transportation pursuant to chapter 447 of the Act for aircraft capable of
carrying 10 or more individuals or 6000 pounds or more of cargo, and as to whom
there is in force an air carrier operating certificate issued pursuant to FAR
Part 121, or who may operate as an air carrier by certification or otherwise
under any successor or substitute provisions therefor or in the absence thereof.
2.2 SPECIFIC DEFINITIONS. The following terms are defined in the Articles
referenced below:
TERMS ARTICLE
Agreed Value 18.1
CRAF Program 19.1
CRAF Program Requisition 19.1
Period
Default Interest 5.5
Delivery Location 3.1
Expenses 16.1
Expiration Date 4.3
Indemnities 16.1
Lease Term 4.1
LESSEE Customization 5.3.1
Costs
LESSOR's Assignee 24.2.1
LESSOR's Bank 5.4
LESSOR's Lender 24.3
Manufacturer's Escalation 5.3.1
Rate
Modifications 12.7.2
Net Total Loss Proceeds 18.1
Operative Documents 20.1.3
Rent 5.3.1
Return Check 23.8.1
Scheduled Delivery Date 3.2
Security Deposit 5.1.1
Taxes 15.1
Termination Date 4.3
Total Loss 18.1
Total Loss Date 18.1
Total Loss Proceeds 18.1
Transaction Fee 5.2
ARTICLE 3 PLACE AND DATE OF DELIVERY
3.1 PLACE OF DELIVERY. LESSOR will deliver the Aircraft to LESSEE at
Manufacturer's facility at Seattle, Washington or such other place as may be
agreed in writing between the parties (the "DELIVERY LOCATION").
3.2 SCHEDULED DELIVERY DATE. As of the date of this Lease, delivery of the
Aircraft from Manufacturer to LESSOR is scheduled to occur in the month of
(CONFIDENTIAL MATERIAL OMITTED). LESSOR will not agree to reschedule such
delivery without LESSEE's prior written consent. LESSOR will notify LESSEE from
time to time and in a timely manner of the exact date on which LESSOR expects
such delivery to take place (the "SCHEDULED DELIVERY DATE").
3.3 DELIVERY SUBJECT TO MANUFACTURER DELIVERY. LESSOR and LESSEE expressly
acknowledge that Delivery of the Aircraft to LESSEE is subject to and
conditioned upon, and is to occur simultaneously with, delivery of the Aircraft
by Manufacturer to LESSOR.
3.4 NO LESSOR LIABILITY. LESSOR will not be liable for any loss or expense, or
any loss of profit, arising from any delay or failure in Delivery to LESSEE
unless such delay or failure arises as a consequence of the willful misconduct
of LESSOR, and in no event will LESSOR be liable for any delay or failure which
is caused by any breach or delay on the part of Manufacturer or any BFE
supplier.
3.5 TOTAL LOSS OF AIRCRAFT PRIOR TO DELIVERY. If a Total Loss of the Aircraft
occurs prior to Delivery, neither party will have any further liability to the
other except that LESSOR will return to LESSEE the Security Deposit in
accordance with Article 5.1.3 and any prepaid Rent.
3.6 CANCELLATION FOR DELAY. Promptly after LESSOR becomes aware that in
Manufacturer's opinion a delay will cause Delivery to be delayed beyond
(CONFIDENTIAL MATERIAL OMITTED) LESSOR will notify LESSEE. By written notice
given within ten (10) Business Days after LESSEE's receipt of such LESSOR
notice, either party may by written notice to the other party terminate this
Lease and this Lease will terminate on the date of receipt of such notice. In
the event of such termination, neither party will have any further liability to
the other party except that LESSOR will return to LESSEE the Security Deposit in
accordance with Article 5.1.3 and any prepaid Rent. If neither party gives
notice of termination within such ten (10) Business Days, both parties lose all
right to terminate under this Article 3.6 unless otherwise agreed in writing by
the parties.
ARTICLE 4 LEASE TERM
4.1 LEASE TERM. The term of leasing of the Aircraft will commence on the
Delivery Date and continue for a term of fifteen (15) years ("LEASE TERM").
4.2 "EXPIRATION DATE". "EXPIRATION DATE" means the date on which LESSEE is
required to redeliver the Aircraft to LESSOR in the condition required by this
Lease on the last day of the Lease Term.
4.3 "TERMINATION DATE". This Lease may in fact terminate on any of the
dates set forth below:
(a the Expiration Date, provided LESSEE returns the Aircraft to LESSOR on
the Expiration Date in the condition required by Article 23; or
(b a date earlier than the Expiration Date, if:
(i there is a Total Loss of the Aircraft prior to Delivery pursuant to
Article 3.5;
(ii cancellation of this Lease occurs pursuant to Article 3.6;
(iii there is a Total Loss of the Aircraft and payment is made to LESSOR in
accordance with Article 18.3; or
(iv an Event of Default occurs and LESSOR repossesses the Aircraft or
otherwise terminates this Lease pursuant to Article 25.3.
(c a date later than the Expiration Date, if:
(i an Event of Default occurs hereunder by LESSEE returning the Aircraft in
the condition required by this Lease after the Expiration Date; or
(ii an Event of Default occurs and LESSOR repossesses the Aircraft or
otherwise terminates this Lease pursuant to Article 25.3.
The "TERMINATION DATE" is the date on which this Lease terminates because
one of the above has occurred.
ARTICLE 5 SECURITY DEPOSIT, TRANSACTION FEE, RENT AND OTHER PAYMENTS
5.1 SECURITY DEPOSIT.
5.1.1 (CONFIDENTIAL MATERIAL OMITTED)
5.1.2 The Security Deposit may be commingled with LESSOR's general funds
and any interest earned on such Security Deposit will be for LESSOR's account.
If the Security Deposit is reduced below the required amount by application to
meet LESSEE's unperformed obligations under this Lease, LESSEE will replenish
the Security Deposit within ten (10) days after LESSOR's demand therefor. The
Security Deposit will serve as security for the performance by LESSEE of its
obligations under this Lease and any other agreements between LESSEE and LESSOR
relating to aircraft, engines, aircraft equipment or the extension of credit and
may be applied by LESSOR upon the occurrence of a Default or Event of Default
hereunder or of a default by LESSEE under any such other agreements.
5.1.3 Upon termination of this Lease in accordance with Article 4.3 other
than if an Event of Default has occurred and is continuing, LESSOR will return
to LESSEE the amount of the Security Deposit then held by LESSOR (so long as no
default by LESSEE exists under any other agreement between LESSEE and LESSOR
relating to aircraft, engines or aircraft equipment or the extension of credit
by LESSOR to LESSEE), without interest, less an amount determined by LESSOR to
be a reasonable estimate of the costs, if any, which LESSOR will incur to remedy
any unperformed obligations of LESSEE under this Lease, including the correction
of any discrepancies from the required condition of the Aircraft on return of
the Aircraft.
5.2 TRANSACTION FEE. Within two (2) Business Days after execution of this
Lease, LESSEE will pay LESSOR a nonrefundable transaction fee
(CONFIDENTIAL MATERIAL OMITTED)
5.3 RENT.
5.3.1 LESSEE will pay LESSOR the following amounts monthly in advance as
rent for the Aircraft (the "RENT"):
(a The following amounts for the following years of the Lease Term:
LEASE PERIOD MONTHLY RENTAL AMOUNT*
------------ ---------------------
(CONFIDENTIAL MATERIAL OMITTED)
*The above base rent is expressed in January 1999
U.S. dollars and will increase in the following
amounts for the following periods (the
"MANUFACTURER'S ESCALATION RATE"):
PERIOD ESCALATION FACTOR
------------ ---------------------
(CONFIDENTIAL MATERIAL OMITTED)
Any increases to the above base Rent during the Lease
Term will be calculated immediately prior to Delivery.
5.3.2 The first payment of Rent during the Lease Term will be paid
prior to the Scheduled Delivery Date. Each subsequent payment of
Rent will be due monthly thereafter no later than the same day
of the month as the Delivery Date of the Aircraft except that,
if such day is not a Business Day, the Rent will be due on the
immediately preceding Business Day. If Delivery occurred on the
29th, 30th or 31st of the month and in any given month during
the Lease Term there is no such corresponding date, Rent will be
payable on the last Business Day of such month.
5.4 LESSOR'S BANK ACCOUNT. The Security Deposit, Transaction Fee, Rent and any
other payment due under this Lease will be paid by wire transfer of immediately
available U.S. Dollar funds to LESSOR's bank account at:
(CONFIDENTIAL MATERIAL OMITTED)
or to such other bank account in the U.S. as LESSOR may from time to time
designate by written notice ("LESSOR'S BANK"). When it is stated in this Lease
that an installment of the Security Deposit, the monthly Rent or any other
payment is due or must be paid or made by LESSEE by a specific date, then such
payment actually must be received by LESSOR's Bank on or before such specific
date, even if, in order for such payment to be received by LESSOR's Bank by such
specific date, LESSEE must initiate the wire transfer prior to such specific
date.
5.5 DEFAULT INTEREST. If LESSOR's Bank does not receive the Rent or any other
amount on or before the specific date when due, LESSOR will suffer loss and
damage the exact nature and amount of which are difficult or impossible to
ascertain. LESSEE will pay LESSOR as supplemental Rent (by way of agreed
compensation and not as a penalty) interest on any due and unpaid amounts
payable by LESSEE under this Lease. Interest will be calculated at a per annum
rate (based on a 360 day year) which is equal to three percent (3%) plus the
Prime Rate in effect on the date on which the amount was originally due for the
period from the date the amount originally was due through the date the amount
actually is received at LESSOR's Bank or, in the case of LESSOR's performance of
LESSEE's obligations hereunder, from the date of payment by LESSOR through the
date of LESSEE's repayment to LESSOR ("DEFAULT INTEREST"). Default Interest will
accrue on a day-to-day basis and be compounded monthly.
5.6 NO DEDUCTIONS OR WITHHOLDINGS. All payments by LESSEE under this Lease,
including the Security Deposit, Transaction Fee, Rent, Default Interest, fees,
indemnities or any other item, will be made in full without any deduction or
withholding whether in respect of set-off, counterclaim, duties, or Taxes (as
defined in Article 15) imposed in the State of Registration or any jurisdiction
from which such payments are made unless LESSEE is prohibited by Law from doing
so, in which event LESSEE will gross up the payment amount such that the net
payment received by LESSOR after any deduction or withholding equals the amounts
called for under this Lease. LESSEE's requirement to pay the amounts required by
this Article 5.6 is subject to the exceptions provided in Article 15.2.
5.7 VALUE ADDED TAXES. The Rent and other amounts payable by LESSEE under
this Lease are exclusive of any value added tax, turnover tax
or similar tax or duty.
5.8 NET LEASE.
5.8.1 This Lease is a net lease and LESSEE's obligation to pay Rent and
make other payments in accordance with this Lease will be absolute and
unconditional under any and all circumstances and regardless of other events,
including the following:
(a) any right of set-off, counterclaim, recoupment, defense or other right
(including any right of reimbursement) which LESSEE may have against LESSOR,
Manufacturer, the Engine manufacturer or any other person for any reason,
including any claim LESSEE may have for the foregoing;
(b) unavailability or interruption in use of the Aircraft for any reason,
including a requisition thereof or any prohibition or interference with or other
restriction against LESSEE's use, operation or possession of the Aircraft
(whether by Law or otherwise), any defect in title, airworthiness,
merchantability, fitness for any purpose, condition, design, specification or
operation of any kind or nature of the Aircraft, the ineligibility of the
Aircraft for any particular use or trade or for registration under the Laws of
any jurisdiction or Total Loss of the Aircraft;
(c) insolvency, bankruptcy, reorganization, arrangement, readjustment of
debt, dissolution, liquidation, receivership, administration or similar
proceedings by or against LESSOR, LESSEE, Manufacturer, the Engine manufacturer
or any other Person;
(d) invalidity or unenforceability or lack of due authorization of or other
defect in this Lease;
(e) failure or delay on the part of any party to perform its obligations
under this Lease; or
(f) any other circumstance which but for this provision would or might have
the effect of terminating or in any other way affecting any obligation of LESSEE
hereunder.
5.8.2 Nothing in Article 5.8 will be construed to limit LESSEE's rights and
remedies in the event of LESSOR's breach of its warranty of quiet enjoyment set
forth in Article 21.2 or to limit LESSEE's rights and remedies to pursue in a
court of law any claim it may have against LESSOR or any other Person.
5.9 LESSOR PERFORMANCE OF LESSEE OBLIGATION. If LESSEE fails to make any
payment under this Lease to a third party in connection with the Aircraft or
fails to perform any other obligation required under this Lease, LESSOR may (but
is not required to) at its election and without waiver of its rights perform
such obligation and/or pay such amount. Within five (5) Business Days after
written notice to LESSEE of the amount paid by LESSOR on behalf of LESSEE,
LESSEE will repay such amount to LESSOR together with Default Interest. Such
payment to LESSOR will constitute additional Rent payable by LESSEE to LESSOR
hereunder. Any payment, performance or compliance by LESSOR of a LESSEE
obligation hereunder will not affect the occurrence or continuance of a Default
or Event of Default, as the case may be.
5.10 CONSIDERATION FOR RENT AND OTHER AMOUNTS. The amount of the Rent and
other payments contained herein are in consideration of LESSEE's waiver of
warranties and indemnities set forth in Articles 8 and 16, respectively, and the
other provisions of this Lease.
ARTICLE 6 INVOLVEMENT WITH AIRCRAFT MANUFACTURER
6.1 LESSEE SELECTION OF AIRCRAFT. LESSEE ACKNOWLEDGES THAT THE DESCRIPTION OF
THE AIRCRAFT SET FORTH IN THIS LEASE IS BASED UPON INFORMATION SUPPLIED BY
MANUFACTURER. LESSEE COVENANTS TO LESSOR THAT LESSEE HAS USED ITS OWN JUDGMENT
IN SELECTING THE AIRCRAFT AND HAS DONE SO BASED ON ITS SIZE, DESIGN AND TYPE.
LESSEE ACKNOWLEDGES THAT LESSOR IS NOT A MANUFACTURER, REPAIRER OR SERVICING
AGENT OF THE AIRCRAFT.
6.2 AGENCY AGREEMENT. Certain obligations remain to be performed by LESSOR in
connection with the manufacture, fabrication and completion of the Aircraft by
Manufacturer which will be performed by LESSEE (as provided in the Agency
Agreement). LESSEE will act as LESSOR's agent with respect to some of these
matters pursuant to the terms of an Agency Agreement to be entered into between
LESSEE and LESSOR in the form set forth in Exhibit B.
6.3 PROCUREMENT OF BFE. LESSEE's and LESSOR's technical representatives will
meet and determine which of LESSEE or LESSOR will provide specific items of BFE.
Such BFE will then be provided to Manufacturer by LESSEE or LESSOR, as
applicable, within the time frames required by Manufacturer.
6.4 ASSIGNMENT OF TRAINING. LESSOR hereby assigns to LESSEE all rights to
training to which LESSOR is entitled as a result of LESSOR's purchase of the
Aircraft and lease of the Aircraft to LESSEE. If LESSEE fails to take Delivery
of the Aircraft when tendered in accordance with Article 6.7, LESSEE will
immediately pay to LESSOR an amount equal to the Dollar value of such training
based on what the training would have cost LESSEE had LESSEE purchased such
training directly from Manufacturer.
6.5 LESSEE INSPECTION OF AIRCRAFT. During the course of final assembly of the
Aircraft, and at Delivery, LESSEE will have its own representative present to
inspect the Aircraft and to ensure its conformity with LESSEE's needs and the
terms of this Lease. LESSEE will have ground inspection and acceptance flight
rights with respect to the Aircraft. LESSEE acknowledges that, as between LESSEE
and LESSOR, in accepting the Aircraft LESSEE is relying on its own inspection
and knowledge of the Aircraft in determining whether the Aircraft meets the
requirements of this Lease.
6.6 AIRCRAFT AT DELIVERY. At Delivery, the Aircraft will be as set forth in
Exhibit A, as such description may be modified by any change requests agreed to
among LESSEE, LESSOR and Manufacturer (which will be reflected in amendment(s)
to this Lease). In the event of any discrepancies, LESSEE and LESSOR will
cooperate in good faith with one another and with Manufacturer and Engine
manufacturer, as applicable, in order to arrive at a mutually acceptable
resolution of any such discrepancies.
6.7 DELIVERY OF THE AIRCRAFT TO LESSEE. Subject to LESSEE having performed all
of the conditions precedent to Delivery set forth herein, immediately following
delivery of the Aircraft from Manufacturer to LESSOR, LESSOR will deliver the
Aircraft to LESSEE at the Delivery Location. Provided that the Aircraft is in
the condition required by Article 6.6, upon the tender of the Aircraft by LESSOR
to LESSEE, LESSEE will accept the Aircraft and the date of tender by LESSOR to
LESSEE will be deemed to be the Delivery Date for all purposes under this Lease,
including, but not limited to, the commencement of LESSEE's obligation to pay
Rent hereunder.
6.8 LESSEE ACCEPTANCE OF AIRCRAFT. If LESSEE fails to (a) comply with its
obligations set forth in Article 6.2, (b) comply with the conditions contained
in Articles 7.1 and 7.2 so as to allow Delivery to take place immediately
following delivery of the Aircraft by Manufacturer to LESSOR or (c) take
delivery of the Aircraft when properly tendered for delivery by LESSOR in the
condition required hereunder, LESSEE will indemnify LESSOR for all costs and
expenses incurred by LESSOR as a result thereof including (but without
limitation) any payments other than the purchase price which LESSOR becomes
obliged to make to Manufacturer.
ARTICLE 7 PRE-DELIVERY, DELIVERY AND POST-DELIVERY DOCUMENTARY AND OTHER
REQUIREMENTS
7.1 PRE-DELIVERY REQUIREMENTS. LESSEE will do each of the following prior
to the Scheduled Delivery Date of the Aircraft within the time frames set forth
below:
7.1.1 Within one (1) month after execution of this Lease, LESSEE will
deliver to LESSOR each of the following:
(a) copies of resolutions of the Board of Directors of LESSEE or other
written evidence of appropriate corporate action, duly certifying and
authorizing the lease of the Aircraft hereunder and the execution, delivery and
performance of this Lease, together with an incumbency certificate as to the
person or persons authorized to execute and deliver documents on behalf of
LESSEE hereunder; and
(b) an opinion of counsel in the form and substance of Exhibit F.
7.1.2 At least three (3) days prior to the Scheduled Delivery Date, LESSEE
will have delivered to LESSOR a Certificate of Insurance and Brokers' Letter of
Undertaking in the form and substance of Exhibits C and D, respectively, from
LESSEE's insurance brokers evidencing insurance of the Aircraft in accordance
with this Lease from the Delivery Date.
7.1.3 At least three (3) Business Days prior to the Scheduled Delivery
Date, LESSEE will do each of the following:
(a) provide LESSOR with a copy of such Aviation Documents as may be
available prior to the Scheduled Delivery Date;
(b) provide LESSOR with a power of attorney empowering LESSEE's
representative, who may be an officer or employee of LESSEE, to accept the
Aircraft on behalf of LESSEE; and
(c) provide LESSOR with such other documents as LESSOR may reasonably
request.
7.1.4 Prior to the Scheduled Delivery Date, LESSEE will pay LESSOR the
first monthly installment of Rent in accordance with Article 5.3.2.
7.2 DELIVERY REQUIREMENTS. On the Delivery Date of the Aircraft, each of
the following will occur:
7.2.1 LESSEE will execute and deliver to LESSOR an Estoppel and Acceptance
Certificate in the form of Exhibit E covering the Aircraft and effective as of
the Delivery Date.
7.2.2 If not previously done, LESSEE and LESSOR will sign an amendment or
supplement to Exhibit A evidencing all agreed-to changes to the specification of
the Aircraft.
7.2.3 LESSEE will deliver a certificate signed on behalf of LESSEE by an
officer of LESSEE stating all of the following:
(a) the representations and warranties contained in Article 20 are true and
accurate on and as of the Delivery Date as though made on and as of such date
(except to the extent that such representations and warranties relate solely to
an earlier date);
(b) no Default has occurred and is continuing or will result from LESSEE's
lease of the Aircraft hereunder; and
(c) none of the Creditor Agreements contains terms which provide or
contemplate that any Creditor will obtain any right, title or interest in an
Engine which is installed on another aircraft (or, if this is not the case, such
certificate will identify the parties, the aircraft and the Creditor Agreements
for which this statement is untrue).
7.2.4 LESSEE's counsel will deliver opinions confirming the matters set
forth in the opinion of counsel described in Article 7.1 and advising that all
filing and other requirements have been met or concurrently are being met.
7.2.5 If any Creditor Agreement provides or contemplates that such Creditor
will obtain any right, title or interest in an Engine which is installed on such
Creditor's aircraft, LESSEE will deliver to LESSOR an engines cooperation
agreement in form and substance acceptable to LESSOR which is executed by LESSEE
and LESSEE's Creditors (as defined therein).
7.2.6 LESSOR will deliver to LESSEE an assignment of Manufacturer and
Engine manufacturer rights in the form and substance of Exhibits G and H,
respectively, and concurrently therewith LESSOR, to the extent it has not
previously done so, will be deemed to have assigned all training, product
assurance and product support applicable to the owner or operator of the
Aircraft to LESSEE during the Lease Term.
7.3 POST-DELIVERY REQUIREMENTS.
7.3.1 Promptly after Delivery, LESSEE will do each of the following:
(a) provide LESSOR with copies of all Aviation Documents not previously
delivered; and
(b) provide LESSOR with a follow-up opinion of counsel advising that the
Aircraft has been registered in the State of Registration and that all necessary
filings have been made.
ARTICLE 8 DISCLAIMERS
LESSOR HAS COMMITTED TO LESSEE THAT ON THE DELIVERY DATE THE
AIRCRAFT WILL BE IN THE CONDITION REQUIRED BY ARTICLE 6. SUCH COMMITMENT OR
COVENANT ON THE PART OF LESSOR EXPIRES AND THE DISCLAIMERS SET FORTH IN THIS
ARTICLE 8 APPLY UPON LESSEE'S ACCEPTANCE OF THE AIRCRAFT AND EXECUTION OF THE
ESTOPPEL AND ACCEPTANCE CERTIFICATE. AFTER SUCH TIME, THEN AS BETWEEN LESSOR AND
LESSEE:
8.1 "AS IS, WHERE IS". LESSEE AGREES THAT IT IS LEASING THE AIRCRAFT "AS IS,
WHERE IS". LESSEE UNCONDITIONALLY ACKNOWLEDGES AND AGREES THAT NEITHER LESSOR
NOR ANY OF ITS OFFICERS, DIRECTORS, EMPLOYEES OR REPRESENTATIVES HAVE MADE OR
WILL BE DEEMED TO HAVE MADE ANY TERM, CONDITION, REPRESENTATION, WARRANTY OR
COVENANT EXPRESS OR IMPLIED (WHETHER STATUTORY OR OTHERWISE) AS TO (a) THE
CAPACITY, AGE, AIRWORTHINESS, VALUE, QUALITY, DURABILITY, CONFORMITY TO THE
PROVISIONS OF THIS LEASE, DESCRIPTION, CONDITION (WHETHER OF THE AIRCRAFT, ANY
ENGINE, ANY PART THEREOF OR THE AIRCRAFT DOCUMENTATION), DESIGN, WORKMANSHIP,
MATERIALS, MANUFACTURE, CONSTRUCTION, OPERATION, DESCRIPTION, STATE,
MERCHANTABILITY, PERFORMANCE, FITNESS FOR ANY PARTICULAR USE OR PURPOSE
(INCLUDING THE ABILITY TO OPERATE OR REGISTER THE AIRCRAFT OR USE THE AIRCRAFT
DOCUMENTATION IN ANY OR ALL JURISDICTIONS) OR SUITABILITY OF THE AIRCRAFT OR ANY
PART THEREOF, OR THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT
DISCOVERABLE, KNOWN OR UNKNOWN, APPARENT OR CONCEALED, EXTERIOR OR INTERIOR, (b)
THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK, COPYRIGHT OR OTHER
INTELLECTUAL PROPERTY RIGHTS, (c) ANY IMPLIED WARRANTY ARISING FROM COURSE OF
PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE OR (d) EXCEPT AS SET FORTH IN
ARTICLE 21.1, ANY OTHER REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, WITH
RESPECT TO THE AIRCRAFT OR ANY PART THEREOF, ALL OF WHICH ARE HEREBY EXPRESSLY
EXCLUDED AND EXTINGUISHED.
8.2 WAIVER OF WARRANTY OF DESCRIPTION. IN CONSIDERATION OF (a) LESSEE'S RIGHTS
HEREUNDER TO INSPECT THE AIRCRAFT AND (b) LESSOR'S ASSIGNMENT TO LESSEE OF ANY
EXISTING AND ASSIGNABLE WARRANTIES OF MANUFACTURER AND THE ENGINE MANUFACTURER,
LESSEE HEREBY AGREES THAT ITS ACCEPTANCE OF THE AIRCRAFT AT DELIVERY AND ITS
EXECUTION AND DELIVERY OF THE ESTOPPEL AND ACCEPTANCE CERTIFICATE CONSTITUTE
LESSEE'S WAIVER OF THE WARRANTY OF DESCRIPTION, ANY CLAIMS LESSEE MAY HAVE
AGAINST LESSOR BASED UPON THE FAILURE OF THE AIRCRAFT TO CONFORM WITH SUCH
DESCRIPTION AND ANY AND ALL RIGHTS IT MAY HAVE TO THE REMEDIES SET FORTH IN
SECTIONS 10508 THROUGH 10522 OF THE CALIFORNIA COMMERCIAL CODE. EVEN IF AT ANY
TIME THE FAILURE OF THE AIRCRAFT TO CONFORM TO SUCH DESCRIPTION SUBSTANTIALLY
IMPAIRS THE VALUE AND UTILITY OF THE AIRCRAFT AND EITHER (i) LESSEE ACCEPTED THE
AIRCRAFT BASED ON A REASONABLE ASSUMPTION THAT THE NONCONFORMITY WOULD BE CURED
AND IT WAS NOT SEASONABLY CURED OR (ii) LESSEE ACCEPTED THE AIRCRAFT WITHOUT
DISCOVERING THE NONCONFORMITY BUT LESSEE'S ACCEPTANCE OF THE AIRCRAFT WAS
REASONABLY INDUCED EITHER BY LESSOR'S ASSURANCES OR BY THE DIFFICULTY OF
DISCOVERING ANY DEFECT PRIOR TO ACCEPTANCE, LESSEE AGREES NOT TO LOOK TO LESSOR
FOR DAMAGES OR RELIEF ARISING OUT OF THE FAILURE OF THE AIRCRAFT TO CONFORM TO
SUCH DESCRIPTION.
8.3 LESSEE WAIVER. LESSEE hereby waives as between itself and LESSOR and agrees
not to seek to establish or enforce any rights and remedies, express or implied
(whether statutory or otherwise) against LESSOR or the Aircraft relating to any
of the matters mentioned in Articles 8.1 or 8.2.
8.4 CONCLUSIVE PROOF. DELIVERY BY LESSEE TO LESSOR OF THE ESTOPPEL AND
ACCEPTANCE CERTIFICATE WILL BE CONCLUSIVE PROOF AS BETWEEN LESSOR AND LESSEE
THAT LESSEE'S TECHNICAL EXPERTS HAVE EXAMINED AND INVESTIGATED THE AIRCRAFT AND
ENGINES AND (a) EACH IS AIRWORTHY AND IN GOOD WORKING ORDER AND REPAIR AND (b)
THE AIRCRAFT AND ENGINES AND THE AIRCRAFT DOCUMENTATION ARE WITHOUT DEFECT
(WHETHER OR NOT DISCOVERABLE AT DELIVERY) AND IN EVERY WAY SATISFACTORY TO
LESSEE.
8.5 NO LESSOR LIABILITY FOR LOSSES. LESSEE agrees that LESSOR will not be liable
to LESSEE, any sublessee or any Person, whether in contract or tort and however
arising, for any cost, loss or damage (consequential or otherwise) arising out
of the condition of the Aircraft, whether or not due in whole or in part to an
act or omission or the active or passive negligence of LESSOR.
8.6 NO LIABILITY TO REPAIR OR REPLACE. LESSOR will not be liable for any
expense in repairing or replacing any item of the Aircraft or be liable to
supply another aircraft or any item in lieu of the Aircraft or any Part thereof
if the same is lost, confiscated, damaged, destroyed or otherwise rendered unfit
for use.
8.7 NO WAIVER. Nothing in this Article 8 or elsewhere in this Lease will be
deemed to be a waiver by LESSEE of any rights it may have against Manufacturer,
the Engine manufacturer or any other Person.
ARTICLE 9 MANUFACTURERS' AND VENDORS' WARRANTIES
9.1 WARRANTIES. As set forth in Article 7.2.6, at Delivery LESSOR will
assign to LESSEE for the duration of the Lease Term the benefit of all
warranties and indemnities given to LESSOR by Manufacturer and the Engine
manufacturer. Effective on the Delivery Date, all other vendor warranties with
respect to the Aircraft are hereby assigned by LESSOR to LESSEE.
9.2 REASSIGNMENT. On the Termination Date, the benefit of any warranty
assigned by LESSOR to LESSEE pursuant to Article 7.2.6 will be reassigned
automatically to LESSOR or its designee.
ARTICLE 10 OPERATION OF AIRCRAFT
10.1 COSTS OF OPERATION. As between LESSEE and LESSOR, LESSEE will 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. The obligations, covenants and
liabilities of LESSEE under this paragraph arising prior to return of the
Aircraft to LESSOR will continue in full force and effect, notwithstanding the
termination of this Lease or expiration of the Lease Term.
10.2 COMPLIANCE WITH LAWS. LESSEE agrees throughout the Lease Term that all
use of the Aircraft will be in accordance with applicable Laws of the State of
Registration and of any country, state, territory or municipality into or over
which LESSEE may operate. LESSEE will not employ, suffer or cause the Aircraft
to be used in any business which is forbidden by Law or in any manner which may
render it liable to condemnation, destruction, seizure, or confiscation by any
authority. LESSEE will not permit the Aircraft to fly to any airport or country
if so doing would cause LESSEE to be in violation of any Law applicable to
LESSEE or the Aircraft. The foregoing provisions in this Article 10.2 shall not
prohibit any violation of Law (a) during a good-faith contest of the validity,
application, or alleged violation thereof in any reasonable manner so long as
there is no material danger of sale, forfeiture, or loss of the Aircraft
(however, this good faith exception shall not apply in the case of a mandatory
grounding order, the good faith contest of which does not permit LESSEE to
operate the Aircraft during such contest), and which does not extend beyond the
end of the Lease Term if the pendency of such contest would adversely affect the
Aircraft or the remarketing thereof in any material respect; and (b) for minor
or non-recurring violations (with the understanding that minor violations may
cease to be minor if recurring) that LESSEE is diligently trying to rectify
which do not render the Aircraft liable to any risk of condemnation,
destruction, seizure, or confiscation by any Government Entity.
10.3 TRAINING. LESSEE will not use the Aircraft for testing or for training
of flight crew members other than LESSEE crew members and will not use the
Aircraft for training any more than it utilizes for training the other aircraft
in its fleet.
10.4 NO VIOLATION OF INSURANCE POLICIES. LESSEE will not use or permit the
Aircraft to be used in any manner or for any purpose which is not covered by the
insurance policies LESSEE is required to carry and maintain as set forth in this
Lease. LESSEE will not carry any goods of any description that would invalidate
or limit such policies or do any other act or permit to be done anything which
could reasonably be expected to invalidate or limit any such insurance policy.
10.5 FLIGHT CHARGES.
10.5.1 LESSEE will pay promptly when due all enroute navigation charges,
navigation service charges and all other charges payable by LESSEE for the use
of or for services provided at any airport, whether in respect of the Aircraft
or any other aircraft of LESSEE, and will indemnify and hold LESSOR harmless in
respect of the same. This indemnity will continue in full force and effect
notwithstanding the termination or expiration of the Lease Term for any reason
or the return of the Aircraft.
10.5.2 If requested by LESSOR, LESSEE will provide LESSOR with a list of
the airports to which LESSEE regularly operates the Aircraft or its other
aircraft. LESSEE hereby authorizes Eurocontrol or another aviation authority or
airport or creditor claiming rights on the Aircraft to confirm the status of
LESSEE's payments to such creditor for the Aircraft and its other aircraft, as
and when requested by LESSOR.
ARTICLE 11 SUBLEASES
11.1 NO SUBLEASE WITHOUT LESSOR CONSENT. LESSEE WILL NOT SUBLEASE OR PART
WITH POSSESSION OF THE AIRCRAFT (EXCEPT FOR MAINTENANCE AND REPAIR) AT ANY TIME
WITHOUT THE PRIOR WRITTEN CONSENT OF LESSOR (NOT TO BE UNREASONABLY WITHHELD)
AND IN ACCORDANCE WITH SUCH REQUIREMENTS AS MAY FROM TIME TO TIME BE AGREED IN
WRITING BETWEEN LESSOR AND LESSEE. The wet leasing of the Aircraft during the
Lease Term (in which LESSEE and its crews retain operational control of the
Aircraft) will not be considered a sublease of the Aircraft.
11.2 LESSOR COSTS. LESSEE will indemnify LESSOR on demand for all
out-of-pocket expenses (including legal fees) incurred in connection with
LESSOR's assessment of the subleasing proposal (whether or not LESSOR's consent
to such sublease is ultimately given) and implementation of the sublease.
11.3 ANY APPROVED SUBLEASE. Any sublease approved by LESSOR will be for a
term no greater than the remaining Lease Term and contain provisions consistent
with this Lease protecting LESSOR's title to the Aircraft, providing appropriate
LESSOR indemnities, regarding the maintenance and repair standards for the
Aircraft, concerning the insurances which will be carried by the sublessee and
the circumstances which constitute a Total Loss of the Aircraft. Any such
sublease will be subject and subordinate to this Lease. In its sole discretion,
LESSOR may require an opinion of counsel in connection with such sublease,
including LESSOR's right to repossess the Aircraft in the event of an Event of
Default hereunder or under the sublease. LESSEE will not amend the terms of any
approved sublease without the prior written consent of LESSOR, which will not be
unreasonably withheld.
11.4 ASSIGNMENT OF SUBLEASE. Any approved sublease will be assigned to
LESSOR as security. LESSEE will deliver the original counterpart of the sublease
to LESSOR and make any filings necessary to protect LESSOR's security interest.
11.5 CONTINUED RESPONSIBILITY OF LESSEE. LESSEE will continue to be
responsible for performance of its obligations under this Lease during any
period of sublease.
ARTICLE 12 MAINTENANCE AND USE OF AIRCRAFT
12.1 GENERAL OBLIGATION.
12.1.1 During the Lease Term and until the Aircraft is returned to LESSOR,
LESSEE alone has the obligation, at its expense, to maintain and repair the
Aircraft, Engines and all of the Parts (a) in accordance with the Maintenance
Program, (b) in accordance with the rules and regulations of the Aviation
Authority, (c) in accordance with Manufacturer's type design, (d) in accordance
with any other regulations or requirements necessary in order to maintain a
valid Certificate of Airworthiness for the Aircraft and meet the requirements at
all times during the Lease Term and upon return of the Aircraft to LESSOR for
issuance of a Standard Certificate of Airworthiness for transport category
aircraft issued by the Aviation Authority (except during those periods when the
Aircraft is undergoing maintenance or repairs as required or permitted by this
Lease) and (e) in the same manner and with the same care as used by LESSEE or
its sublessee with respect to similar aircraft and engines operated by LESSEE or
its sublessee and without in any way discriminating against the Aircraft.
12.1.2 LESSEE will maintain and repair the Engines in the same manner and
in the equivalent time frame to its other engines and LESSEE will not
discriminate against any of the Engines in respect of the repair and
maintenance.
12.1.3 LESSEE will not enter into any Engine maintenance cost per flight
hour, power-by-the-hour or similar agreement with Engine manufacturer or any
other Engine maintenance facility or organization without LESSOR's prior written
consent.
12.2 SPECIFIC OBLIGATIONS. Without limiting Article 12.1, LESSEE agrees
that such maintenance and repairs will include but will not be limited to each
of the following specific items:
(a) performance in accordance with the Maintenance Program of all routine
and non-routine maintenance work;
(b) incorporation in the Aircraft of all Airworthiness Directives;
(c) incorporation in the Aircraft of all service bulletins of Manufacturer,
the Engine manufacturer and other vendors which LESSEE schedules to adopt within
the Lease Term for the rest of its Boeing 737-800 aircraft fleet. It is the
intent of the parties that the Aircraft will not be discriminated from the rest
of LESSEE's fleet in service bulletin compliance (including method of
compliance) or other maintenance matters. LESSEE will not discriminate against
the Engines with respect to Overhaul build standards and life-limited part
replacements;
(d) incorporation in the Maintenance Program for the Aircraft of a
corrosion prevention and control program;
(e) maintaining in English and keeping in an up-to-date status the records
and historical documents set forth in Attachment 1 of Exhibit I;
(f) maintaining historical records, in English, for on condition,
condition-monitored, hard time and life-limited Parts (including tags from the
manufacturer of such Part or a repair facility which evidence that such Part is
new or overhauled and establish authenticity, total time in service and time
since overhaul for such Part), the hours and cycles the Aircraft and Engines
operate and all maintenance and repairs performed on the Aircraft; and
(g) properly documenting all repairs, Modifications and alterations and the
addition, removal or replacement of equipment, systems or components in
accordance with the rules and regulations of the Aviation Authority and
reflecting such items in the Aircraft Documentation. In addition, all repairs to
the Aircraft will be accomplished in accordance with Manufacturer's Structural
Repair Manual (or FAA-approved data supported by FAA Form 8110-3 or equivalent).
All Modifications and alterations will also be accomplished in accordance with
FAA-approved data supported by FAA Form 8110-3 or equivalent.
12.3 REPLACEMENT OF PARTS.
12.3.1 LESSEE, at its own cost and expense, will promptly replace all Parts
which may from time to time become worn out, lost, stolen, destroyed, seized,
confiscated, damaged beyond repair or rendered unfit or beyond economical repair
(BER) for any reason. In the ordinary course of maintenance, service, repair,
overhaul or testing, LESSEE may remove any Part provided that LESSEE replaces
such Part as promptly as practicable. All replacement Parts will (a) be free and
clear of all Security Interests (except Permitted Liens) of any kind or
description, (b) be in airworthy condition and of at least equivalent model,
service bulletin 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 (c) 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.
So long as a substitution meets the requirements of the Maintenance Program and
Aviation Authority, LESSEE may substitute for any Part a part that does not meet
the requirements of the foregoing sentence if a complying Part cannot be
procured or installed within the available groundtime of the Aircraft and as
soon as practicable the noncomplying part is removed and replaced by a complying
Part.
12.3.2 All Parts removed from the Airframe or any Engine will remain the
property of LESSOR and subject to this Lease no matter where located, until such
time as such Parts have been replaced by Parts (which have been incorporated or
installed in or attached to the Airframe or such Engine) which meet the
requirements for replacement Parts specified above and title to such replacement
Parts has passed to LESSOR under the Laws of the State of Registration and LEX
SITUS. To the extent permitted by the Laws of the State of --- -----
Registration and the LEX SITUS it is the intent of LESSOR and LESSEE that
without further --- ----- act and immediately upon any replacement Part becoming
incorporated, installed or attached to the Airframe or an Engine as above
provided, (a) title to the removed Part will thereupon vest in LESSEE, free and
clear of all rights of LESSOR, (b) title to the replacement Part will thereupon
vest in LESSOR free and clear of all rights of LESSEE and (c) such replacement
Part will become subject to this Lease and be deemed to be a Part hereunder to
the same extent as the Parts originally incorporated or installed in or attached
to the Airframe or such Engine.
12.4 REMOVAL OF ENGINES.
12.4.1 If an Engine is removed for testing, service, repair, maintenance,
Overhaul work, alterations or modifications, title to such Engine will remain
vested in LESSOR.
12.4.2 LESSEE will be entitled to remove any of the Engines from the
Aircraft and install another engine or engines on the Aircraft, provided that
LESSEE complies with each of the following obligations:
(a) the insurance requirements set forth in Article 17 and Exhibit C are in
place;
(b) LESSEE ensures that the identification plates referred to in Article 14
are not removed from any Engine upon such Engine being detached from the
Aircraft; and
(c) title to the Engine remains with LESSOR free from all Security
Interests (except Permitted Liens) regardless of the location of the Engine or
its attachment to or detachment from the Aircraft.
12.5 POOLING OF ENGINES AND PARTS. With LESSOR's prior written consent, not
to be unreasonably withheld, LESSEE may subject the Engines and Parts to normal
interchange or pooling agreements with responsible commercial air carriers
customary in the airline industry and entered into by LESSEE in the ordinary
course of its business with respect to its Boeing 737-800 fleet generally, so
long as (a) in the case of pooling of an Engine, such Engine is returned to
LESSEE within two (2) months, (b) no transfer of title to the Engine occurs, (c)
all other terms of this Lease continue to be observed with respect to the
Engines or Parts, including but not limited to Articles 8, 10, 12, 13, 14, 15,
16, 17 and 18 and (d) LESSEE continues to be fully responsible to LESSOR for the
performance of all of its obligations hereunder.
12.6 INSTALLATION OF ENGINES ON OTHER AIRCRAFT. Any Engine removed from the
Aircraft may be installed on another airframe in LESSEE's fleet which utilizes
engines of the same type as the Engine only if one of the situations described
in this Article 12.6 exists:
12.6.1 LESSEE or LESSOR has title to such other aircraft free and clear of
all Security Interests (except Permitted Liens).
12.6.2 LESSEE, LESSOR and all of the Creditors of LESSEE of such aircraft
enter into an engines cooperation agreement in form and substance acceptable to
LESSOR in which each party agrees to recognize one another's rights in the
engines. LESSEE will reimburse LESSOR and LESSOR's Lender for their reasonable
attorneys' fees and costs in negotiating and finalizing engine cooperation
agreement arrangements with LESSEE and its Creditors.
12.6.3 Such other aircraft is subject to a Creditor Agreement (but no other
Security Interests except Permitted Liens) which by its terms expressly or
effectively states that such Creditor and its successors and assigns will not
acquire any right, title or interest in any Engine by reason of such Engine
being installed on such aircraft. LESSEE hereby agrees that if LESSOR's title to
an Engine is in fact impaired under any such Creditor Agreement, such impairment
will be a Total Loss of such Engine and the provisions of Article 18.5 will
apply. To the extent another Creditor Agreement contains such provisions, then
LESSOR hereby agrees for the benefit of the Creditor of such Creditor Agreement
that neither LESSOR nor its successors or assigns will acquire or claim any
right, title or interest in any engine in which LESSEE or another Creditor has
an interest as a result of such engine being installed on the Airframe.
12.7 MODIFICATIONS.
12.7.1 No modification, alteration, addition or removal to the Aircraft
("MODIFICATION") expected to cost over Five Hundred Thousand U.S. Dollars
(US$500,000) or deviation from the Aircraft's original type design or
configuration will be made without the prior written consent of LESSOR, which
consent will not be unreasonably withheld. "Modifications" do not include
Airworthiness Directives or Manufacturer's recommended service bulletins, for
which LESSOR's consent is not required.
12.7.2 LESSOR may review LESSEE's proposed designs, plans, engineering
drawings and diagrams, and flight and maintenance manual revisions for any
proposed Modification. If requested by LESSOR, LESSEE will furnish LESSOR (at
LESSEE's expense) with such documents in final form and any other documents
required by Law, as a result of such Modification. All Modifications
incorporated on the Aircraft will be properly documented in the Aircraft
Documentation and be fully approved by the Aviation Authority.
12.7.3 Notwithstanding any other provision of this Lease, no Modification
will be made which has the effect of decreasing the utility or value of the
Aircraft.
12.7.4 No Modification will be made by LESSEE if an Event of Default exists
and is continuing hereunder.
12.7.5 Unless otherwise agreed by LESSOR in writing, all non-severable or
structural Modifications will forthwith become a part of the Aircraft and LESSEE
relinquishes to LESSOR all rights and title thereto. However, all severable
Modifications will remain the property of LESSEE or the third-party owner and,
at LESSOR's request and LESSEE's cost, will be removed from the Aircraft prior
to return of the Aircraft, with LESSEE restoring the Aircraft to the condition
it was in prior to the Modification. Notwithstanding the foregoing, no such
removal will be permitted without LESSOR's permission after the occurrence of an
Event of Default hereunder and immediately upon the occurrence of an Event of
Default hereunder, without the requirement of any further act or notice, all
right, title and interest in such Modifications will immediately vest in LESSOR.
12.7.6 LESSOR will bear no liability for the cost of Modifications of the
Aircraft whether in the event of grounding or suspensions of certification, or
for any other cause.
12.8 PERFORMANCE OF WORK BY THIRD PARTIES. Whenever maintenance and repair
work on the Aircraft or Engines will be regularly performed by a Person other
than LESSEE, such Person will be an FAA-authorized repair station.
12.9 REPORTING REQUIREMENTS.
12.9.1 Commencing with a report furnished ten (10) days after the end of
the calendar month in which Delivery occurs, LESSEE will furnish to LESSOR a
Monthly Report in English in the form attached hereto as Exhibit J. Each Monthly
Report will be furnished within ten (10) 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
Termination Date.
12.9.2 On each anniversary of the Delivery Date, LESSEE will provide LESSOR
with a Technical Evaluation Report for the Aircraft in the form and substance of
Exhibit L, as revised.
12.10 INFORMATION REGARDING MAINTENANCE PROGRAM. LESSEE will provide LESSOR
with a copy of or information regarding the Maintenance Program for the
Aircraft, as requested by LESSOR.
12.11 LESSOR RIGHTS TO INSPECT AIRCRAFT. On reasonable notice, LESSOR
and/or its authorized agents or representatives will have the right to inspect
the Aircraft and Aircraft Documentation. LESSOR agrees that such requests will
be coordinated with LESSEE so as to cause the minimum practical disturbance to
LESSEE's operation or its personnel. LESSEE agrees to cooperate with LESSOR in
making the Aircraft and Aircraft Documentation available to such authorized
technical teams. No such inspection shall include opening panels, bays, or the
like (although LESSOR may observe those that are then open), or disassembling
any item. LESSOR will have no duty to make any such inspection and will not
incur any liability or obligation by reason of (and LESSEE's indemnity
obligations pursuant to Article 16 will apply notwithstanding) not making any
such inspection or by reason of any reports it receives or any reviews it may
make of the Aircraft records.
ARTICLE 13 TITLE AND REGISTRATION
13.1 TITLE TO THE AIRCRAFT DURING LEASE TERM. Title to the Aircraft will be
and remain vested in LESSOR. LESSOR and LESSEE intend this Lease to be a "true
lease". LESSEE will have no right,
title or interest in the Aircraft except as provided in this Lease.
13.2 REGISTRATION OF AIRCRAFT. LESSEE at its sole cost and expense will (a)
register and maintain registration of the Aircraft in the name of LESSOR at the
register of aircraft in the State of Registration and (b) from time to time take
all other steps then required by Law (including the Geneva Convention if
applicable) or by practice, custom or understanding or as LESSOR may reasonably
request to protect and perfect LESSOR's interest in the Aircraft and this Lease
in the State of Registration or in any other jurisdictions in or over which
LESSEE may operate the Aircraft.
13.3 FILING OF THIS LEASE. To the extent permitted by Law and in accordance
with the requirements of the Law from time to time, LESSEE at its sole cost and
expense will cause this Lease to be kept, filed, recorded and refiled or
rerecorded in the State of Registration and in any other offices necessary to
protect LESSOR's rights hereunder.
13.4 EVIDENCE OF REGISTRATION AND FILINGS. As LESSOR may reasonably request
from time to time, LESSEE will furnish to LESSOR an opinion of counsel or other
evidence reasonably satisfactory to LESSOR of the registrations and filings
required hereunder.
ARTICLE 14 IDENTIFICATION PLATES
LESSOR will affix and LESSEE will at all times maintain on the Airframe and
each Engine the identification plates containing the following legends or any
other legend reasonably requested by LESSOR in writing:
14.1 AIRFRAME IDENTIFICATION PLATES.
Location: One to be affixed to the Aircraft structure
above the forward entry door adjacent to
and not less prominent than that of
Manufacturer's data plate and another in a
prominent place on the flight deck.
Size: No smaller than 4" x 6".
Legend: "THIS AIRCRAFT IS OWNED BY INTERNATIONAL LEASE
FINANCE CORPORATION.
MANUFACTURER'S SERIAL NO: 28244
OWNER'S ADDRESS:
INTERNATIONAL LEASE FINANCE CORPORATION
1999 Avenue of the Stars, 39th Floor Los
Angeles, California 90067 United States of
America
Fax: (310) 788-1990"
14.2 ENGINE IDENTIFICATION PLATES.
Location: The legend on the plate must be visible.
Size: No smaller than 2" x 6".
"THIS ENGINE IS OWNED BY INTERNATIONAL LEASE
FINANCE CORPORATION, LOS ANGELES, CALIFORNIA, USA."
ARTICLE 15 TAXES
15.1 GENERAL OBLIGATION OF LESSEE. Except as set forth in Article 15.2,
LESSEE agrees to pay promptly when due, and to indemnify and hold harmless
LESSOR on a full indemnity basis from, all license and registration fees and all
taxes, fees, levies, imposts, duties, charges or withholdings of any nature
whatsoever (including without limitation any value added, franchise, transfer,
sales, gross receipts, use, business, occupation, excise, personal property,
real property, stamp or other tax) together with any assessments, penalties,
fines, additions to tax or interest thereon, however or wherever imposed
(whether imposed upon LESSEE, LESSOR, on all or part of the Aircraft, the
Engines or otherwise), by any Government Entity or taxing authority in the U.S.,
any State thereof, or any foreign country or by any international taxing
authority, upon or with respect to, based upon or measured by any of the
following (collectively, "TAXES"):
(a) the Aircraft, the Engines or any Parts.
(b) the use, operation or maintenance of the Aircraft or carriage of
passengers or freight during the Lease Term.
(c) this Lease, the payments due hereunder and the terms and conditions
hereof.
(d) the return of the Aircraft to LESSOR or other use or disposition of the
Aircraft by LESSEE.
15.2 EXCEPTIONS TO INDEMNITY. The indemnity provided in Article 15.1 does
not extend to any of the following Taxes:
(a) Imposed by the U.S. (including without limitation any taxes collected
by withholding) or any state or local government or governmental subdivision or
state or local taxing authority in the U.S. (including any possession or
territory of the U.S.) or by any foreign government, taxing authority or
governmental subdivision of a foreign country which are based on, or measured
by, the receipts, gross or net income, capital, net worth, franchises, excess
profits, or conduct of business (including minimum taxes, withholding taxes and
taxes on or measured by any items of tax preference) of LESSOR, except to the
extent that such Tax would not have been imposed on or payable by LESSOR but for
the location, use, registration or operation of the Aircraft or any part
thereof, or any place of business or any activity of LESSEE in the jurisdiction
imposing such Tax.
(b) Imposed as a result of LESSOR's transfer, mortgage, pledge, financing
or other disposition by LESSOR of all or a portion of its interest in the
Aircraft or this Lease except a transfer or sale resulting from an exercise of
remedies pursuant to Article 25.3 hereunder or in connection with a termination
of the Lease pursuant to Article 18 hereof.
(c) Attributable to the period prior to the Delivery Date or after return
of the Aircraft to LESSOR in accordance with this Lease.
(d) Attributable to LESSOR's gross negligence, willful misconduct or breach
of this Lease.
15.3 AFTER-TAX BASIS. The amount which LESSEE is required to pay with
respect to any Taxes indemnified against under Article 15.1 is an amount
sufficient to restore LESSOR on an after-tax basis to the same position LESSOR
would have been in had such Taxes not been incurred.
15.4 CLAIMS AND CONTESTS. If a written claim is received by LESSOR for
Taxes, which claim, if sustained, would require the payment of an indemnity by
LESSEE pursuant to this Article 15, LESSOR shall notify LESSEE of such claim
within thirty (30) days after its receipt, provided that failure to provide such
notice within thirty (30) days will not relieve LESSEE of any indemnification
obligation pursuant to this Article 15 if such failure does not preclude LESSEE
from exercising its contest rights hereunder. Payments due from LESSEE to LESSOR
pursuant to this Article 15 shall be made directly to LESSOR within thirty (30)
days of written demand by LESSOR to LESSEE. If requested by LESSEE in writing,
LESSOR shall upon receipt of indemnity reasonably satisfactory to it and at the
expense of LESSEE (including, without limitation, all reasonable costs,
expenses, legal and accountants' fees, and disbursements, penalties, interest
incurred in contesting such claim, and additions to tax) in good faith, in the
name of LESSOR or, if requested by LESSEE, in the name of LESSEE (or permit
LESSEE, if desired by LESSEE, to contest in the name of LESSEE) if permissible
under applicable laws, the validity, applicability or amount of such Taxes by
(i) resisting payment thereof if practicable only if adequate reserves have been
made for such Taxes or, if required, an adequate bond has been posted, (ii)
paying the same under protest, if protest shall be necessary and proper, (iii)
if payment shall be made, using reasonable efforts to obtain a refund thereof in
appropriate administrative and judicial proceedings, and (iv) taking such other
action as is reasonably requested by LESSEE from time to time including not
paying such Taxes only if adequate reserves have been made for such Taxes or, if
required, an adequate bond has been posted. LESSOR shall determine the method of
any contest and (in good faith consultation with LESSEE) control the conduct
thereof. Notwithstanding anything contained in this Article 15.4, LESSOR will
not be required to contest, or to continue to contest, the validity,
applicability or amount of any Tax (or portion thereof) (x) if such contest
would result in any material risk of criminal penalties or any material risk of
sale, forfeiture or loss of the Aircraft, (y) if an Event of Default has
occurred and is continuing, or (z) in the case of a contest of a Tax reflected
on a return of LESSOR with other taxes of LESSOR that are not indemnified by the
LESSEE hereunder, if LESSEE shall not have furnished an opinion of independent
tax counsel selected by the LESSEE, and reasonably satisfactory to LESSOR, that
a reasonable basis exists for such contest. If LESSOR shall obtain a refund of
all or any part of such Taxes for which an indemnity was paid by LESSEE, LESSOR
shall pay LESSEE the amount of such refund; PROVIDED, HOWEVER, that such amount
shall not be payable before such time as LESSEE shall have made all payments or
indemnities to LESSOR then due under this Article 15 and under the Lease or
while an Event of Default shall have occurred and be continuing. If in addition
to such refund LESSOR shall receive an amount representing interest on the
amount of such refund, LESSEE shall be paid that proportion of such interest
which is fairly attributable to Taxes paid with an indemnity payment by LESSEE
prior to the receipt of such refund or interest and increased by any taxes saved
by reason of the deductibility of such payment by LESSOR. LESSEE shall not be
deemed to be in default under any of the indemnification provisions under this
Article 15 so long as it or LESSOR shall diligently prosecute such contest and
LESSEE has indemnified LESSOR to LESSOR's reasonable satisfaction. In case any
report or return is required to be made with respect to any obligation of LESSEE
under this Article 15.4 or arising out of this Article 15.4, LESSEE will either
timely make such report or return in such manner as will show the ownership of
the Aircraft in LESSOR, and will as soon as possible send a copy of such report
or return to LESSOR, or will notify LESSOR of such requirement and prepare and
deliver such report or return to LESSOR in such manner as shall be satisfactory
to LESSOR.
15.5 REFUNDS. Upon receipt by LESSOR of a refund of all or any part of any
Taxes (including any deductions or withholdings referred to in Article 15.1)
which LESSEE has paid, LESSOR will pay to LESSEE the net amount of such Taxes
refunded.
15.6 COOPERATION IN FILING TAX RETURNS. LESSEE and LESSOR will cooperate
with one another in providing information which may be reasonably required to
fulfill each party's tax filing requirements and any audit information request
arising from such filing.
ARTICLE 16 INDEMNITIES
16.1 GENERAL INDEMNITY. Except as set forth in Article 16.2, LESSEE agrees
to indemnify and hold harmless LESSOR and its officers, directors, employees,
agents and shareholders (individually an "INDEMNITEE" and collectively
"INDEMNITEES") from any and all liabilities, obligations, losses, damages,
penalties, claims, actions, suits, costs, disbursements and expenses (including
legal fees, costs and related expenses) of every kind and nature, whether or not
any of the transactions contemplated by this Lease are consummated (collectively
"EXPENSES"), which are imposed on, incurred by or asserted against any
Indemnitee and which are in any way relating to, based on or arising out of any
of the following:
(a) this Lease or any transactions contemplated hereby;
(b) the operation, possession, use, non-use, control, leasing, subleasing,
maintenance, storage, overhaul, testing, inspections or acceptance flights at
return of the Aircraft, any Engine or any Part during the Lease Term by LESSEE,
any sublessee or any other Person, whether or not the same is in compliance with
the terms of this Lease, including without limitation claims for death, personal
injury, property damage, other loss or harm to any Person and claims relating to
any Laws, including without limitation environmental control, noise and
pollution laws, rules or regulations;
(c) the manufacture, design, acceptance, rejection, delivery, return, sale
in connection with an Event of Default, import, export, condition, repair,
modification, servicing, rebuilding, enforcement of warranties whether in
LESSOR's or LESSEE's name, customer and product support provided by Manufacturer
and other vendors, airworthiness, registration, reregistration, performance,
sublease, merchantability, fitness for use, substitution or replacement of the
Aircraft, Engine or any Part under this Lease or other transfer of use or
possession of the Aircraft, Engine or any Part, including under a pooling or
interchange arrangement, including without limitation latent and other defects,
whether or not discoverable and patent, trademark or copyright infringement;
(d) any non-compliance by LESSEE with any term of this Lease or the falsity
or inaccuracy of any representation or warranty of LESSEE set forth herein;
(e) the prevention or attempt to prevent the arrest, confiscation, seizure,
taking in execution, impounding, forfeiture or detention of the Aircraft, or in
securing the release of the Aircraft; or
(f) as a consequence of any Default in payment by LESSEE of any sum to be
paid by LESSEE when due under this Lease or any other Default by LESSEE in the
due and punctual performance of its obligations under this Lease.
The foregoing indemnity by LESSEE is intended to include and cover any
Expense to which an Indemnitee may be subject (in contract, tort, strict
liability or under any other theory) regardless of the negligence, active or
passive or any other type, of such Indemnitee, so long as such Expense does not
fall within any of the exceptions listed in Article 16.2.
16.2 EXCEPTIONS TO GENERAL INDEMNITIES. The indemnity provided for in
Article 16.1 will not extend to Expenses of any Indemnitee to the extent
resulting from or arising out of any of the following:
(a) Expenses which have resulted from the willful misconduct of such
Indemnitee;
(b) Expenses which LESSEE and LESSOR mutually agree or, absent mutual
agreement, are judicially determined to be attributable to acts or events which
occur after the Termination Date and return of the Aircraft to LESSOR in the
condition required hereunder, but in any such case only to the extent not
attributable to acts or omissions of LESSEE;
(c) Expenses representing Taxes, it being acknowledged that the terms of
Article 15 apply exclusively to LESSEE's indemnity obligations with respect to
Taxes;
(d) Expenses due to the breach by LESSOR of its covenant of quiet enjoyment
pursuant to Article 21.2 (except to the extent covered by LESSEE's insurances);
(e) Expenses which arise in connection with the transfer by LESSOR of any
interest in the Aircraft or this Lease, except for any transfer in connection
with any Event of Default or a Total Loss of the Aircraft or an Engine.
(f) Expenses which are solely attributable to the representation or
warranty of LESSOR contained in or made pursuant to any Operative Document being
untrue;
(g) Expenses which are solely related to the failure of such Indemnitees to
perform or observe any agreement, covenant, or condition on its part to be
performed or observed in any Operative Document;
(h) Expenses which are solely an ordinary and usual internal customary
operating expense; or
(i) Expenses which are solely related to a breach of Article 21.1.6, or
(j) Expenses which are solely related to a LESSOR's Lien.
16.3 AFTER-TAX BASIS. The amount which LESSEE will be required to pay with
respect to any Expense indemnified against under Article 16.1 will be an amount
sufficient to restore the Indemnitee, on an after-tax basis, to the same
position such Indemnitee would have been in had such Expense not been incurred.
16.4 TIMING OF PAYMENT. It is the intent of the parties that each
Indemnitee will have the right to indemnification for Expenses hereunder as soon
as a claim is made and as soon as an Expense is incurred, whether or not such
claim is meritorious and whether or not liability is established (but subject to
Articles 16.2 and 16.8). LESSEE will pay an Indemnitee for Expenses pursuant to
this Article 16 within ten (10) days after receipt of a written demand therefor
from such Indemnitee accompanied by a written statement describing in reasonable
detail the basis for such indemnity (but not before payment is due from such
Indemnitee).
16.5 SUBROGATION. Upon the payment in full of any indemnity pursuant to
this Article 16 by LESSEE, LESSEE will be subrogated to any right of the
Indemnitee in respect of the matter against which such indemnity has been made.
16.6 NOTICE. Each Indemnitee and LESSEE will give prompt written notice one
to the other of any liability of which such party has knowledge for which LESSEE
is, or may be, liable under Article 16.1; provided, however, that failure to
give such notice will not terminate any of the rights of Indemnitees under this
Article 16 except to the extent that LESSEE has been materially prejudiced by
the failure to provide such notice.
16.7 REFUNDS. If any Indemnitee obtains a recovery of all or any part of
any amount which LESSEE has paid to such Indemnitee, such Indemnitee will pay to
LESSEE the net amount recovered by such Indemnitee.
16.8 DEFENSE OF CLAIMS.
(a) LESSEE and its insurers will have the right (in each such case at
LESSEE's sole expense) to investigate or, provided that LESSEE or its insurers
have not reserved the right to dispute liability with respect to any insurance
policies pursuant to which coverage is sought, defend or compromise any claim
covered by insurance for which indemnification is sought pursuant to Article
16.1 and each Indemnitee will cooperate with LESSEE or its insurers with respect
thereto. If LESSEE or its insurers are retaining attorneys to handle such claim,
such counsel must be reasonably satisfactory to the Indemnitees. If not, the
Indemnitees will have the right to retain counsel of their choice at LESSEE's
expense.
(b) Unless LESSOR agrees in writing otherwise, no settlement of any claim
hereunder may require LESSOR to agree to any remedy apart from the payment of
money damages (for which such payment of money damages LESSEE will in any event
indemnify the Indemnitees).
(c) In no event shall any Indemnitee enter into a settlement or other
compromise with respect to any Expense without LESSEE's prior written consent
(which shall not be unreasonably withheld or delayed), unless such Indemnitee
waives its right to be indemnified with respect to such Expense under this
Article 16.
(d) To the extent that any Expense indemnified by LESSEE hereunder may be
covered by insurance maintained by LESSEE, at LESSEE's expense, each Indemnitee
agrees to cooperate with the insurers in the exercise of their rights to
investigate, defend, or compromise that Expense as may be required to retain the
benefits of the insurance for that Expense.
(e) If an Indemnitee is not a party to this Lease, LESSEE may require that
Indemnitee to agree in writing to the terms of this Article 16 before making any
payment to such Indemnitee under this Article 16.
16.9 SURVIVAL OF OBLIGATION. Notwithstanding anything in this Lease to the
contrary, the provisions of this Article 16 will survive the Termination Date
and continue in full force and effect notwithstanding any breach by LESSOR or
LESSEE of the terms of this Lease, the termination of the lease of the Aircraft
to LESSEE under this Lease or the repudiation by LESSOR or LESSEE of this Lease.
ARTICLE 17 INSURANCE
17.1 CATEGORIES OF INSURANCE. Throughout the Lease Term and until the
Termination Date LESSEE will, at its own expense, effect and maintain in full
force and effect the types of insurance and amounts of insurance (including
deductibles) described in Exhibit C through such brokers and with such insurers
favorably regarded in the airline industry.
17.2 INSURANCE FOR INDEMNITIES. The insurance referred to in Article 17.1
will in each case include and insure (to the extent of the risks covered by the
policies) the indemnity provisions of Article 16 and LESSEE will maintain such
insurance of the indemnities for a minimum of two (2) years following the
Termination Date.
17.3 INSURANCE REQUIRED BY MANUFACTURER. During the Lease Term, LESSEE will
carry the insurance required by Manufacturer in connection with LESSOR's
assignment of Manufacturer's warranties and product support to LESSEE.
17.4 RENEWAL. Not less than two (2) Business Days before the expiration or
termination date of any insurance required hereunder, LESSEE will provide LESSOR
with fax confirmation from LESSEE's insurance brokers that renewed certificates
of insurance evidencing the renewal or replacement of such insurance and
complying with Exhibit C will be issued on the termination date of the prior
certificate. Within seven (7) days after such renewal, LESSEE will furnish its
brokers' certificates of insurance to LESSOR.
17.5 ASSIGNMENT OF RIGHTS BY LESSOR. If LESSOR assigns all or any of its
rights under this Lease as permitted by this Lease or otherwise disposes of any
interest in the Aircraft to any other Person, LESSEE will, upon request, procure
that (to the extent of the assignment or disposition) such Person hereunder be
added as loss payee and/or additional assured in the policies effected hereunder
and enjoy the same rights and insurance enjoyed by LESSOR under such policies.
To the extent of its retained interest or as provided in Article 24.2.1, LESSOR
will nevertheless continue to be covered by such policies.
17.6 DEDUCTIBLES. If there is a material adverse change in the financial
condition of LESSEE which LESSOR reasonably believes will not enable LESSEE to
pay the deductible upon the occurrence of a partial loss of the Aircraft or an
Engine, then LESSOR may require LESSEE at LESSEE's expense to lower its
deductibles on the insurance maintained hereunder to a level which is available
on commercially reasonable terms in the insurance market.
17.7 OTHER INSURANCE. LESSOR may from time to time by notice to LESSEE
require LESSEE at LESSEE's expense to effect such other insurance or such
variations to the terms of the existing insurance as may then be customary in
the airline industry for aircraft of the same type as the Aircraft and at the
time commonly available in the insurance market.
17.8 INFORMATION. LESSEE will provide LESSOR with any information
reasonably requested by LESSOR from time to time concerning the insurance
maintained with respect to the Aircraft or in connection with any claim being
made or proposed to be made thereunder.
17.9 CURRENCY. All proceeds of insurance pursuant to this Lease will be
payable in Dollars except as may be otherwise agreed by LESSOR.
17.10 GROUNDING OF AIRCRAFT. If at any time any of the insurance required
pursuant to this Lease will cease to be in full force and effect, LESSEE will
forthwith ground the Aircraft and keep the Aircraft grounded until such time as
such insurance is in full force and effect again.
17.11 FAILURE TO INSURE. If at any time LESSEE fails to maintain insurance
in compliance with this Article 17, LESSOR will be entitled but not bound to do
any of the following (without prejudice to any other rights which it may have
under this Lease by reason of such failure):
(a) to pay any premiums due or to effect or maintain substitute insurance
or otherwise remedy such failure in any reasonable manner (and LESSEE will upon
demand reimburse LESSOR in full for any amount so expended in that connection);
or
(b) at any time while such failure is continuing, to require the Aircraft
to remain at any airport or (as the case may be), proceed to and remain at any
airport designated by LESSOR.
17.12 LIMIT ON HULL IN FAVOR OF LESSEE. LESSEE may carry hull all risks or
hull war and allied perils on the Aircraft in excess of the Agreed Value (which
Agreed Value is payable to LESSOR) only to the extent such excess insurance
which would be payable to LESSEE in the event of a Total Loss does not exceed
fifteen percent (15%) of the Agreed Value and only to the extent that such
additional insurance will 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 or encumbrances over the insurances, or its interest therein,
except as constituted by this Lease.
17.13 MARKETPLACE LIMITATIONS. The insurance required by this Lease may be
subject to any limitations generally prevailing in the airline insurance
marketplace at the time (e.g., AVN67B).
ARTICLE 18 LOSS, DAMAGE AND REQUISITION
Throughout the Lease Term and until the Termination Date, LESSEE will bear
all risk of loss, theft, damage and destruction to the Aircraft.
18.1 DEFINITIONS. In this Article 18:
"AGREED VALUE" (CONFIDENTIAL MATERIAL OMITTED) The Agreed Value is set
forth in March 2001 U.S. Dollars and will be increased in accordance with
Manufacturer's announced escalation rate from March 1, 2001 to the Delivery
Date. On each annual renewal date of LESSEE's insurance policy commencing on the
renewal date following the first anniversary of the Lease Term, the Agreed Value
will decrease by two percent (2.0%) of the then-existing Agreed Value.
"NET TOTAL LOSS PROCEEDS" means the Total Loss Proceeds actually received
by LESSOR following a Total Loss, less any legal and other out-of-pocket
expenses or duties incurred by LESSOR in connection with the collection of such
proceeds.
"TOTAL LOSS" means any of the following in relation to the Aircraft,
Airframe or any Engine and "TOTAL LOSS DATE" means the date set forth in
parenthesis after each Total Loss:
(a) destruction, damage beyond repair or being rendered permanently unfit
for normal use for any reason (the date such event occurs or, if not known, the
date on which the Aircraft, Airframe or Engine was last heard of);
(b) actual, constructive, compromised, arranged or agreed total loss (the
earlier of the date on which the loss is agreed or compromised by the insurers
or thirty (30) days after the date of notice to LESSEE's brokers or insurers
claiming such total loss);
(c) requisition of title, confiscation, forfeiture or any compulsory
acquisition of title or other similar event (the date on which the same takes
effect);
(d) sequestration, detention, seizure or any similar event for more than
one hundred eighty (180) consecutive days (the earlier of the date on which
insurers make payment on the basis of a total loss or the date of expiration of
such period);
(e) requisition for use for more than one hundred eighty (180) consecutive
days, except as set forth in Article 18.8 (the earlier of the date on which the
insurers make payment on the basis of a total loss or the date of expiration of
such period);
(f) in the case of an Engine, the event described in Article 12.6.3 (the
date on which the same takes effect);
"TOTAL LOSS PROCEEDS" means the proceeds of any insurance or any
compensation or similar payment arising in respect of a Total Loss.
18.2 NOTICE OF TOTAL LOSS. LESSEE will notify LESSOR in writing within two
(2) Business Days after a Total Loss Date of the Aircraft, Airframe or any
Engine.
18.3 TOTAL LOSS OF AIRCRAFT OR AIRFRAME. If the Total Loss of the Aircraft
or Airframe occurs during the Lease Term, the following will occur:
18.3.1 After the Total Loss Date and until receipt by LESSOR of the Agreed
Value and all other amounts then due under this Lease, LESSEE will continue to
pay Rent and the parties will perform all of their other obligations under this
Lease.
18.3.2 On the date which is the earlier of the following dates:
(a) the date on which the Total Loss Proceeds of the Aircraft or the
Airframe are paid by LESSEE's insurance underwriters or brokers and
(b) the date which falls sixty (60) days after the Total Loss Date,
LESSEE will pay to LESSOR an amount equal to the sum of:
(a) the Agreed Value and
(b) all other amounts then due and payable under this Lease,
less an amount equal to the Net Total Loss Proceeds received by LESSOR by
such date.
18.3.3 LESSOR will apply the Net Total Loss Proceeds and any amounts
received from LESSEE pursuant to Article 18.3.2 as follows:
(a) first, in discharge of any unpaid Rent and any other amounts accrued
and unpaid up to the date of LESSOR's receipt of the Agreed Value;
(b) second, in discharge of the Agreed Value; and
(c) third, payment of the balance, if any, to LESSEE.
18.3.4 Upon receipt by LESSOR of all monies payable by LESSEE in Article
18.3, provided no Default has occurred and is continuing, this Lease will
terminate except for LESSEE's obligations under Articles 10.5, 15 and 16 which
survive the Termination Date and the Security Deposit will be returned to LESSEE
in accordance with Article 5.3.1.
FOR AVOIDANCE OF DOUBT, THE AGREED VALUE OF THE AIRCRAFT WILL BE PAYABLE TO
LESSOR PURSUANT TO THIS ARTICLE 18.3 IF A TOTAL LOSS OF THE AIRFRAME OCCURS EVEN
IF THERE HAS NOT BEEN A TOTAL LOSS OF AN ENGINE OR ENGINES.
18.4 SURVIVING ENGINE(S). If a Total Loss of the Airframe occurs and there
has not been a Total Loss of an Engine or Engines, then provided no Default has
occurred and is continuing, at the request of LESSEE (subject to agreement of
relevant insurers) and on receipt of all monies due under Article 18.3 and
payment by LESSEE of all airport, navigation and other charges on the Aircraft,
LESSOR will transfer all of its right, title and interest in the surviving
Engine(s) to LESSEE, but without any responsibility, condition or warranty on
the part of LESSOR other than as to freedom from any LESSOR's Lien.
18.5 TOTAL LOSS OF ENGINE AND NOT AIRFRAME.
18.5.1 Upon a Total Loss of any Engine not installed on the Airframe or a
Total Loss of an Engine installed on the Airframe not involving a Total Loss of
the Airframe, LESSEE will replace such Engine as soon as reasonably possible by
duly conveying to LESSOR title to another engine (a) free and clear of all
Security Interests (except Permitted Liens) of any kind or description, (b) in
airworthy condition and of the same or improved model, service bulletin and
modification status and having a value and utility at least equal to the Engine
which sustained the Total Loss, and (c) not older (by reference to serial number
or manufacture date) than three (3) years older than the oldest of the two
Engines delivered by LESSOR to LESSEE with the Aircraft on the Delivery Date.
Such replacement engine will be an Engine as defined herein and the Engine which
sustained such Total Loss will cease to be an Engine.
18.5.2 LESSEE agrees at its own expense to take such action as LESSOR may
reasonably request in order that any such replacement Engine becomes the
property of LESSOR and is leased hereunder on the same terms as the destroyed
Engine. LESSEE's obligation to pay Rent will continue in full force and effect,
but an amount equal to the Net Total Loss Proceeds received by LESSOR with
respect to such destroyed Engine will, subject to LESSOR's right to deduct
therefrom any amounts then due and payable by LESSEE under this Lease, be paid
to LESSEE.
18.6 OTHER LOSS OR DAMAGE.
18.6.1 If the Aircraft or any Part thereof suffers loss or damage not
constituting a Total Loss of the Aircraft or the Airframe or any Engine, all the
obligations of LESSEE under this Lease (including payment of Rent) will continue
in full force.
18.6.2 In the event of any loss or damage to the Aircraft or Airframe which
does not constitute a Total Loss of the Aircraft or the Airframe, or any loss or
damage to an Engine which does not constitute a Total Loss of such Engine,
LESSEE will at its sole cost and expense fully repair the Aircraft or Engine in
order that the Aircraft or Engine is placed in an airworthy condition and
substantially the same condition as it was prior to such loss or damage. All
repairs will be performed in accordance with sound airline procedures. LESSEE
will notify LESSOR forthwith of any loss, theft or damage to the Aircraft for
which the cost of repairs is estimated to exceed Seven Hundred Fifty Thousand
U.S. Dollars (US$750,000), together with LESSEE's proposal for carrying out the
repair. In the event that LESSOR does not agree with LESSEE's proposals for
repair, LESSOR will so notify LESSEE within two (2) Business Days after its
receipt of such proposal. LESSEE and LESSOR will then consult with Manufacturer
and LESSEE and LESSOR agree to accept as conclusive, and be bound by,
Manufacturer's directions or recommendations as to the manner in which to carry
out such repairs. If Manufacturer declines to give directions or
recommendations, LESSEE will carry out the repairs in accordance with the
directions of LESSOR.
18.6.3 To the extent that LESSOR has received insurance proceeds from
LESSEE's insurers with respect to any loss or damage, LESSOR will (subject to
LESSOR's right to deduct therefrom any amounts then due and payable by LESSEE
under this Lease and submission by LESSEE of reasonable documentation confirming
the completion of the repairs in accordance with the requirements of this Lease)
pay to LESSEE insurance proceeds received by LESSOR as and when such repair work
is performed on the Aircraft.
18.7 COPY OF INSURANCE POLICY. Promptly after LESSOR's request following
the occurrence of a partial loss or Total Loss of the Aircraft or an Engine,
LESSEE will provide LESSOR with a copy of LESSEE's insurance policy.
18.8 GOVERNMENT REQUISITION. If the Aircraft, Airframe or any Engine is
requisitioned for use by any Government Entity, LESSEE will promptly notify
LESSOR of such requisition. All of LESSEE's obligations hereunder will continue
as if such requisition had not occurred. Except if a Default or an Event of
Default has occurred and is continuing, all payments received by LESSOR or
LESSEE from such Government Entity will be paid over to or retained by LESSEE.
18.9 CONVEYANCE TO LESSEE. Upon compliance by LESSEE with the applicable
terms of Article 18.3 or 18.5, LESSOR will transfer to LESSEE the Airframe or
Engine(s), as applicable, with respect to which such Total Loss.
ARTICLE 19 CRAF PROGRAM
19.1 DEDICATION TO CRAF. LESSEE may transfer possession of the Airframe or
any Engine to the United States of America or any instrumentality or agency
thereof as part of the Civil Reserve Air Fleet Program authorized under 10
U.S.C. ss. 9511 ET SEQ. (or any substantially similar program) ("CRAF PROGRAM")
for a period which includes (collectively, the "CRAF PROGRAM REQUISITION
PERIOD") the entire period of requisition under the CRAF Program. If the CRAF
Program Requisition Period extends beyond the Expiration Date provided by this
Lease, then the Lease will be deemed to continue for six (6) months after the
end of the CRAF Program Requisition Period at a monthly rental rate equal to the
monthly rental rate during the Lease Term. If such extension extends beyond the
Lease Term, then LESSEE will provide LESSOR with written notice of the proposed
redelivery by the earlier of six (6) months prior to the proposed redelivery
date or five (5) Business Days after the date of receipt of the actual notice
given to LESSEE by the government prior to the government's redelivery date and
LESSEE will return the Aircraft to LESSOR in the condition required by Article
23 on LESSEE's proposed redelivery date set forth in such notice.
19.2 NOTICE TO LESSOR. LESSEE will promptly notify LESSOR in writing in the
event of the requisition for use of the Aircraft under CRAF activation by the
U.S. Government. All of LESSEE's obligations under this Lease will continue to
the same extent as if such requisition had not occurred.
19.3 REQUISITION OF ENGINE. If there is a requisition for use of any Engine
(but not the Airframe) by the U.S. Government in connection with the CRAF
Program, LESSEE will replace such Engine by complying with the terms of Article
18.5 hereof.
19.4 GOVERNMENT INDEMNIFICATION. Any provisions of this Lease to the
contrary notwithstanding, if there is a requisition for use of the Aircraft
pursuant to the CRAF Program and/or CRAF activation, LESSOR agrees that LESSEE's
insurances described in Exhibit C may be supplemented by insurances provided
under Title XIII of the Act, and/or U.S. Government indemnification (which Title
XIII insurances and indemnification will be in amounts not less than those
established in Exhibit C); provided, however, that LESSEE will remain
responsible for full compliance with all the provisions of this Lease, including
Articles 14 and 16, to the extent Title XIII and/or the U.S. Government
indemnification do not satisfy LESSEE's obligations under this Lease.
19.5 NO GEOGRAPHIC LIMITS. If there is a requisition for use of the Aircraft
pursuant to the CRAF Program and/or CRAF activation, there will be no limitation
on the geographic area in which the Aircraft may be operated so long as, taken
as a whole, LESSEE's insurance, the Title XIII insurance and/or the
indemnification provided by the U.S. Government fully cover (without any
geographic exclusions) LESSEE's Exhibit C insurance requirements.
19.6 NOTICE OF DEFAULT. If an Event of Default occurs under this Lease and
LESSOR elects to pursue its remedies under Article 25.3(e) to terminate this
Lease and repossess the Aircraft, LESSOR will so notify the U.S. Government by
sending a written communication as follows:
Headquarters Air Mobility Command
AMC Contracting Office -- XOKA
Scott Air Force Base, Illinois 62225-5007
19.7 RECEIPT OF PAYMENTS. Subject to the following sentence, all payments
received by LESSOR or LESSEE from such Government Entity in connection with the
requisition of the Aircraft under the CRAF Program will be paid over to or
retained by LESSEE. If a Default has occurred and is continuing, all payments
received by LESSEE or LESSOR from such Government Entity in connection with the
requisition of the Aircraft under the CRAF Program may be used by LESSOR to
satisfy any obligations owing by LESSEE.
ARTICLE 20 REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSEE
20.1 REPRESENTATIONS AND WARRANTIES. LESSEE represents and warrants the
following to LESSOR as of the date of execution of this Lease and as of the
Delivery Date:
20.1.1 CORPORATE STATUS. LESSEE is a corporation duly incorporated, validly
existing and in good standing under the Laws of Indiana (or, on the Delivery
Date, the state of its incorporation). It has the corporate power and authority
to carry on its business as presently conducted and to perform its obligations
hereunder.
20.1.2 GOVERNMENTAL APPROVALS. No authorization, approval, consent, license
or order of, or registration with, or the giving of notice to the Aviation
Authority or any other Government Entity is required for the valid
authorization, execution, delivery and performance by LESSEE of this Lease,
except as will have been duly effected as of the Delivery Date.
20.1.3 BINDING. LESSEE's Board of Directors has authorized LESSEE to enter
into this Lease, any Side Letters hereto and any other documentation in
connection with the leasing of the Aircraft from LESSOR (collectively, the
"OPERATIVE DOCUMENTS") and perform its obligations under the Operative
Documents. This Lease and the other Operative Documents have been duly executed
and delivered by LESSEE and represent the valid, binding and enforceable
obligations of LESSEE except as enforceability may be limited by bankruptcy,
insolvency, reorganization or other Laws of general application affecting the
enforcement of creditors' rights. When executed by LESSEE at Delivery, the same
will apply to the Estoppel and Acceptance Certificate.
20.1.4 NO BREACH. The execution and delivery of the Operative Documents,
the consummation by LESSEE of the transactions contemplated herein and
compliance by LESSEE with the terms and provisions hereof do not and will not
contravene any Law applicable to LESSEE, or result in any breach of or
constitute any default under or result in the creation of any Security Interest
upon any property of LESSEE, pursuant to any indenture, mortgage, chattel
mortgage, deed of trust, conditional sales contract, bank loan or credit
agreement, corporate charter, by-law or other agreement or instrument to which
LESSEE is a party or by which LESSEE or its properties or assets may be bound or
affected. When executed by LESSEE at Delivery, the same will apply to the
Estoppel and Acceptance Certificate.
20.1.5 FILINGS. Except for any filing or recording that may be required by
the FARs, no filing or recording of any instrument or document (including the
filing of any financial statement) is necessary under the Laws of the State of
Registration in order for this Lease to constitute a valid and perfected lease
of record relating to the Aircraft.
20.1.6 LICENSES. LESSEE holds all licenses, certificates and permits from
applicable Government Entities in the U.S. for the conduct of its business as a
certificated air carrier and performance of its obligations under this Lease.
20.1.7 NO SUITS. There are no suits, arbitrations or other proceedings
pending or threatened before any court or administrative agency against LESSEE
which are reasonably likely to be determined adversely and, if adversely
determined, would have a material adverse effect on the business, assets or
condition (financial or otherwise) of LESSEE or its ability to perform under
this Lease, except as described in the filings provided to LESSOR pursuant to
Article 22.
20.1.8 GENERAL OBLIGATIONS. The obligations of LESSEE under this Lease are
direct, general and unconditional obligations of LESSEE and rank or will rank at
least PARI PASSU with all other present and future unsecured and unsubordinated
obligations (including contingent obligations) of LESSEE, with the exception of
such obligations as are mandatorily preferred by law and not by reason of any
encumbrance.
20.1.9 NO SOVEREIGN IMMUNITY. LESSEE, under the Laws of the U.S. or of any
other jurisdiction affecting LESSEE, is subject to private commercial law and
suit. Neither LESSEE nor its properties or assets is entitled to sovereign
immunity under any such Laws. LESSEE's performance of its obligations hereunder
constitute commercial acts done for commercial purposes.
20.1.10 TAX RETURNS. All necessary federal and state income tax returns
have been delivered by LESSEE to all relevant taxation authorities in the U.S.
or any state thereof and LESSEE is not in default in the payment of any taxes
due and payable as shown on any such returns or on any assessment received by
LESSEE.
20.1.11 NO MATERIAL ADVERSE EFFECT. LESSEE is not in default under any
agreement to which it is a party or by which it may be bound which would have a
material adverse effect on its business, assets or condition.
20.1.12 NO DEFAULT UNDER THIS LEASE. At the time of execution of this
Lease, no Default has occurred and is continuing and the financial statements
provided to LESSOR pursuant to Article 22 fairly present the financial condition
of LESSEE.
20.2 COVENANTS. LESSEE covenants to LESSOR that it will comply with the
following throughout the entire Lease Term:
20.2.1 LICENSING. LESSEE will hold all licenses, certificates and permits
from applicable Government Entities in the U.S. for the conduct of its business
as a certificated air carrier and performance of its obligations under this
Lease. LESSEE will advise LESSOR promptly in the event any such licenses,
certificates or permits are cancelled, terminated, revoked or not renewed.
20.2.2 SOVEREIGN IMMUNITY. LESSEE, under the Laws of the U.S. or of any
other jurisdiction affecting LESSEE, will continue to be subject to private
commercial law and suit. Neither LESSEE nor its properties or assets will be
entitled to sovereign immunity under any such Laws. LESSEE's performance of its
obligations hereunder will constitute commercial acts done for commercial
purposes. LESSEE will advise LESSOR promptly of any change in the foregoing.
20.2.3 INFORMATION ABOUT SUITS. LESSEE will promptly give to LESSOR a
notice in writing of any suit, arbitration or proceeding against LESSEE before
any court, administrative agency or Government Entity which is reasonably likely
to be determined adversely and, if adversely determined, would materially
adversely affect LESSEE's financial condition, affairs, operations or its
ability to perform under this Lease.
20.2.4 MERGER OF LESSEE.
(a) LESSEE shall not consolidate with or merge into any other Person under
circumstances in which LESSEE is not the surviving corporation, or convey,
transfer, or lease in one or more transactions all or substantially all of its
assets to any other Person, unless:
(i) such Person is organized, existing, and in good standing under the Laws
of the U.S., any state of the U.S., or the District of Columbia, and, upon
consummation of such transaction, such Person will be a U.S. Air Carrier;
(ii) such Person executes and delivers to LESSOR a duly authorized, legal,
valid, binding and enforceable agreement, reasonably satisfactory in form and
substance to LESSOR, containing an effective assumption by such Person of the
due and punctual performance and observance of each covenant, agreement and
condition in the Operative Documents to be performed or observed by LESSEE;
(iii) such Person makes such filings and recordings with the FAA pursuant
to the Act as shall be necessary to evidence such consolidation or merger;
(iv) LESSEE furnishes LESSOR an opinion of counsel reasonably satisfactory
to LESSOR to the effect that such consolidation or merger has satisfied at the
closing of such consolidation or merger items (i), (ii) and (iii) above;
(v) immediately after giving effect to such consolidation or merger, no
Default or Event of Default exists;
(vi) unless LESSOR otherwise consents, immediately after giving effect to
such consolidation or merger, such Person will have a tangible net worth of not
less than sixty-five percent (65%) of the LESSEE's tangible net worth
immediately prior to such merger; and
(vii) upon such merger becoming effective, LESSOR will enjoy the same
degree of protection under ss. 1110 of the Bankruptcy Code with respect to the
Aircraft as LESSOR enjoyed prior to such merger.
(b) Upon any such consolidation or merger of LESSEE with or into, or the
conveyance, transfer, or lease by LESSEE of all or substantially all of its
assets to, any Person in accordance with this Article 20.2.4, such Person will
succeed to, and be substituted for, and may exercise every right and power of,
LESSEE under the Operative Documents with the same effect as if such Person had
been named as "LESSEE" therein. No such consolidation, merger, conveyance,
transfer, or lease shall have the effect of releasing LESSEE or such Person from
any of LESSEE's obligations, liabilities, covenants, or undertakings under this
Lease.
20.2.5 RESTRICTION ON RELINQUISHMENT OF POSSESSION. LESSEE will not,
without the prior consent of LESSOR, deliver, transfer or relinquish possession
of the Aircraft except in accordance with Articles 11 and 12.
20.2.6 NO SECURITY INTERESTS. LESSEE will not create or agree to or permit
to arise any Security Interest (other than Permitted Liens) on or with respect
to the Aircraft, title thereto or any interest therein. LESSEE will forthwith,
at its own expense, take all action as may be necessary to discharge or remove
any such Security Interest if it exists at any time. LESSEE will within five (5)
Business Days after becoming aware of the existence of any such Security
Interest give written notice thereof to LESSOR.
20.2.7 REPRESENTATIONS TO OTHER PARTIES. LESSEE will not represent or hold
out LESSOR as carrying goods or passengers on the Aircraft or as being in any
way connected or associated with any operation of the Aircraft.
ARTICLE 21 REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSOR
21.1 REPRESENTATIONS AND WARRANTIES. LESSOR represents and warrants the
following to LESSEE as of the date of execution of the Lease and as of the
Delivery Date and ALL OTHER WARRANTIES, EXPRESS OR IMPLIED HAVE BEEN WAIVED IN
ACCORDANCE WITH ARTICLE 8:
21.1.1 CORPORATE STATUS. LESSOR is a corporation duly incorporated, validly
existing and in good standing under the Laws of the State of California. It has
the corporate power and authority to carry on its business as presently
conducted and to perform its obligations hereunder.
21.1.2 GOVERNMENTAL APPROVALS. No authorization, approval, consent, license
or order of, or registration with, or the giving of notice to any U.S.
Government Entity is required for the valid authorization, execution, delivery
and performance by LESSOR of this Lease.
21.1.3 BINDING. This Lease and the other Operative Documents have been duly
authorized, executed and delivered by LESSOR and represent the valid,
enforceable and binding obligations of LESSOR except as enforceability may be
limited by bankruptcy, insolvency, reorganization or other Laws of general
application affecting the enforcement of creditors' rights.
21.1.4 NO BREACH. The execution and delivery of the Operative Documents,
the consummation by LESSOR of the transactions contemplated herein and
compliance by LESSOR with the terms and provisions hereof do not and will not
contravene any Law applicable to LESSOR, or result in any breach of or
constitute any default under any indenture, mortgage, chattel mortgage, deed of
trust, conditional sales contract, bank loan or credit agreement, corporate
charter, by-law or other agreement or instrument to which LESSOR is a party or
by which LESSOR or its properties or assets may be bound or affected.
21.1.5 TITLE TO AIRCRAFT. On the Delivery Date LESSOR will have good and
valid title to the Aircraft.
21.1.6 CITIZENSHIP. LESSOR is a "citizen of the United States" within the
meaning of 49 U.S. Code 40102(a)(15).
21.1.7 INVESTMENT BY LESSOR. LESSOR is acquiring its interest in the
Aircraft for its own account from its corporate funds, for investment and not
with a view to any resale or distribution thereof that would require
registration under the Securities Act of 1933; PROVIDED, HOWEVER, that subject
to the transfer restrictions in Article 24.2, its disposition of its interest in
the Aircraft shall at all times be within its control.
21.2 COVENANT OF QUIET ENJOYMENT. So long as no Event of Default has
occurred and is continuing hereunder, LESSOR covenants that neither LESSOR nor
any person lawfully claiming through LESSOR will interfere with LESSEE's quiet,
peaceful use and enjoyment of the Aircraft.
ARTICLE 22 FINANCIAL AND RELATED INFORMATION
LESSEE agrees to furnish each of the following to LESSOR:
(a) within sixty (60) days after the end of each fiscal quarter of LESSEE,
the unaudited consolidated financial statements (including a balance sheet and
profit and loss statement) prepared for such quarter in accordance with
generally accepted accounting principles in the U.S.;
(b) within one hundred twenty (120) days after the end of each fiscal year
of LESSEE, the audited consolidated financial statements (including a balance
sheet and profit and loss statement) prepared as of the close of such fiscal
year in accordance with generally accepted accounting principles in the U.S.
LESSEE's chief financial officer will also provide a certificate of LESSEE
stating that, to such officer's knowledge, no Default exists under this Lease
(or if, to such officer's knowledge, a Default does exist, identifying it);
(c) promptly after distribution, all reports and financial statements which
Amtran, Inc. sends or makes generally available to its stockholders or
creditors; and
(d) from time to time, such other reasonable information as LESSOR or
LESSOR's Lender may reasonably request concerning the location, condition, use
and operation of the Aircraft or the financial condition of LESSEE.
ARTICLE 23 RETURN OF AIRCRAFT
23.1 DATE OF RETURN. LESSEE is obligated to return the Aircraft, Engines
Parts and Aircraft Documentation to LESSOR on the Expiration Date, unless a
Total Loss of the Aircraft occurred prior to the Expiration Date and this Lease
was terminated early in accordance with Article 18.3. If LESSEE is in Default
hereunder by failing to return the Aircraft on the Expiration Date or if an
Event of Default occurs prior to the Expiration Date and LESSOR repossesses the
Aircraft, the return requirements set forth in this Article 23 nonetheless must
be met on the date the Aircraft is actually returned to LESSOR or repossessed by
LESSOR.
23.2 TECHNICAL REPORT. Six (6) months prior to the Expiration Date (and in
an updated form at return of the Aircraft), LESSEE will provide LESSOR with a
Technical Evaluation Report in the form and substance of Exhibit L, as revised,
and, in addition upon LESSOR's request, will make copies available of (a)
drawings of the interior configuration of the Aircraft both as it presently
exists and as it will exist at return, (b) an Airworthiness Directive status
list, (c) a service bulletin incorporation list, (d) rotable tracked, hard-time
and life-limited component listings, (e) a list of LESSEE-initiated
modifications and alterations, (f) interior material burn certificates, (g) the
Aircraft Maintenance Program, (h) the complete workscope for the checks,
inspections and other work to be performed prior to return, (i) a list of all
no-charge service bulletin kits with respect to the Aircraft which were ordered
by LESSEE from Manufacturer or Engine manufacturer, (j) current Engine disk
sheets and a description of the last shop visit for each Engine and (k) any
other data which is reasonably requested by LESSOR.
23.3 RETURN LOCATION. LESSEE at its expense will return the Aircraft,
Engines, Parts and Aircraft Documentation to LESSOR at Indianapolis
International Airport, Indianapolis, Indiana or to such other airport as may be
mutually agreed to by LESSEE and LESSOR.
23.4 FULL AIRCRAFT DOCUMENTATION REVIEW. For the period commencing at least
ten (10) Business Days prior to the proposed redelivery date and continuing
until the date on which the Aircraft is returned to LESSOR in the condition
required by this Lease, LESSEE will provide for the review of LESSOR and/or its
representative all of the Aircraft records and historical documents described in
Exhibit K in one central room at the Aircraft return location.
23.5 AIRCRAFT INSPECTION.
23.5.1 During the maintenance checks performed immediately prior to the
proposed redelivery and at the actual return of the Aircraft, LESSOR and/or its
representatives will have an opportunity to conduct a full systems functional
and operational inspection of the Aircraft (and other types of reasonable
inspections based upon the Aircraft type, age, use and other known factors with
respect to the Aircraft) and a full inspection of the Aircraft Documentation
(including records and manuals), all to LESSOR's satisfaction. The inspection
will occur during the Return Check when the panels, bays or the like are open
and certain Parts are disassembled. LESSOR may inspect such opened panels, bays
or the like and the disassembled Parts so long as LESSOR does not disrupt the
Return Check or cause such Return Check to be extended beyond the anticipated
completion date of such Return Check. Any deficiencies from the Aircraft return
condition requirements set forth in this Article 23 will be corrected by LESSEE
at its cost prior to the acceptance flight described in Article 23.5.2.
23.5.2 Immediately prior to the proposed redelivery of the Aircraft, LESSEE
will carry out for LESSOR and/or LESSOR's representatives an Aircraft acceptance
flight in accordance with Manufacturer's standard flight operation check flight
procedures or, if agreed to in writing by LESSOR, in accordance with an airline
acceptance flight procedure, either of which will be for the duration necessary
to perform such check flight procedures but in any event not less than two (2)
hours. Flight costs and fuel will be furnished by and at the expense of LESSEE.
Any deficiencies from the Aircraft return condition requirements set forth in
this Article 23 will be corrected by LESSEE at its cost prior to return of the
Aircraft.
23.5.3 To the extent that the ground inspection and acceptance flight
extend beyond the Expiration Date, the Lease Term will be deemed to have been
automatically extended and the obligations of LESSEE hereunder (including
Article 23.11.3) will continue on a day-to-day basis until the Aircraft is
accepted by LESSOR executing the Return Acceptance Receipt in the form of
Exhibit I.
23.6 CERTIFICATE OF AIRWORTHINESS MATTERS.
23.6.1 The Aircraft will possess a current Certificate of Airworthiness
issued by the Aviation Authority (although this Certificate of Airworthiness may
later be substituted by the Export Certificate of Airworthiness or equivalent if
requested by LESSOR pursuant to Article 23.10). The Aircraft at return must be
in the condition required in order to meet the requirements of a U.S. Standard
Certificate of Airworthiness for transport category aircraft issued by the FAA
in accordance with FAR Part 21 and, in addition, to meet the operating
requirements of FAR Part 121.
23.6.2 LESSEE at its cost will demonstrate that the Aircraft meets the
requirements for issuance of the U.S. Standard Certificate of Airworthiness for
transport category aircraft specified in Article 23.6.1 by delivering to LESSOR
an actual U.S. Standard Certificate of Airworthiness. If there is a dispute in
regards to the condition of the Aircraft or the Aircraft Documentation, then
LESSEE will provide LESSOR with a letter acceptable to LESSOR signed by an FAA
Designated Airworthiness Representative (DAR) or another Person acceptable to
LESSOR stating that the DAR or such Person has inspected the Aircraft and
Aircraft Documentation (including records and manuals) and has found that the
Aircraft meets the requirements for issuance of a U.S. Standard Certificate of
Airworthiness for transport category aircraft in accordance with FAR Part 21
and, in addition, meets the operating requirements of FAR Part 121.
23.6.3 If the Aircraft is to be registered in a country other than in the
U.S. after return from LESSEE, LESSOR may in its sole discretion waive the
requirements of Article 23.6.2 and instead require that LESSEE at its expense
(to the extent such expense is no greater than that which LESSEE would have
incurred pursuant to Articles 23.6.1 and 23.6.2, with any additional expenses
being for LESSOR's account) put the Aircraft in a condition to meet the
requirements for issuance of a Certificate of Airworthiness of the Aviation
Authority of the next country of register.
23.7 GENERAL CONDITION OF AIRCRAFT AT RETURN.
23.7.1 The Aircraft, Engines and Parts will have been maintained and
repaired in accordance with the Maintenance Program, the rules and regulations
of the Aviation Authority and this Lease.
23.7.2 Aircraft Documentation (including records and manuals) will have
been maintained in an up-to-date status, in accordance with the rules and
regulations of the Aviation Authority and the FAA and this Lease and in a form
necessary in order to meet the requirements of Article 23.6.2. The records and
historical documents set forth in Attachment 1 of Exhibit I will be in English.
23.7.3 The Aircraft will be in the same working order and condition as at
Delivery (subject to the other provisions of this Article 23, reasonable wear
and tear from normal flight operations excepted), with all pilot discrepancies
and deferred maintenance items cleared on a terminating action basis.
23.7.4 The Aircraft will be airworthy (conform to type design and be in a
condition for safe operation), with all Aircraft equipment, components and
systems operating in accordance with their intended use and within limits
approved by the Manufacturer, Aviation Authority and FAA.
23.7.5 The Aircraft interior (including cabin and windows) and exterior
will be clean and all compartments will be reasonably free of foreign objects,
dirt, grease, fluids, stains, grime, cracks, tears and rips (with the exception
of normal wear and tear) and ready to be placed into immediate commercial
airline operations.
23.7.6 No special or unique Manufacturer, Engine manufacturer or Aviation
Authority inspection or check requirements which are specific to the Aircraft or
Engines (as opposed to all aircraft or engines of their types) will exist with
respect to the Airframe, Engines and Aircraft equipment, components and systems.
23.7.7 All repairs, modifications and alterations to the Aircraft will have
been accomplished in accordance with Manufacturer's Structural Repair Manual (or
FAA-approved data supported by FAA Form 8110-3) for the Aircraft.
23.7.8 The Aircraft will be returned with LESSOR's Engines installed and
with the same equipment as at Delivery, subject only to those replacements,
additions and Modifications permitted under this Lease. LESSEE will inform
LESSOR of whether LESSEE will be able to redeliver the Engines with the Aircraft
and the proposed replacement engines that LESSEE wants to provide LESSOR in
place of the Engines. LESSEE will provide LESSOR with whatever data, records and
information that LESSOR reasonably requests in order to evaluate the proposed
replacement engines. In the event that LESSEE is unable to return either of the
Engines in the conditions required by this Article 23, then LESSEE may provide a
replacement engine (a "REPLACEMENT ENGINE") for such Engine to LESSOR by duly
conveying to LESSOR as owner hereunder title to another engine of the same
manufacturer and of the same or an improved model as the Engine being replaced
and suitable for installation and use on the Aircraft, which engine shall be
free and clear of all Security Interests, and shall be no more than three (3)
years older by reference to serial number than the replaced Engine and have a
modification status, value and utility at least equal to the Engine which such
Replacement Engine is replacing on the Aircraft assuming that such Engine which
such Replacement Engine is replacing was then of the value, utility, condition,
and airworthiness required to be maintained by the terms of this Lease. Such
Replacement Engine, after approval and acceptance by LESSOR, shall be deemed an
"Engine" as defined herein for all purposes hereunder. LESSEE agrees to take
such action as LESSOR may reasonably request in order that such Replacement
Engine shall be duly and properly titled in the name of LESSOR. Prior to or at
the time of any such conveyance, LESSEE, at its own expense, will promptly:
(a) furnish LESSOR with a warranty bill of sale, in form and substance
satisfactory to LESSOR, with respect to such Replacement Engine,
(b) furnish LESSOR with such evidence of title to such Replacement Engine
as reasonably requested by LESSOR, and
(c) 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 Security Interests of any kind or nature and that such exchange qualifies
for tax free treatment under the Internal Revenue Code of 1986, as amended.
Upon full compliance with this Article, LESSOR shall transfer to LESSEE all
of LESSOR's right, title and interest, on an "AS-IS", "WHERE-IS" basis in and to
the Engine being replaced by such Replacement Engine, without recourse or
warranty, express or implied, except that LESSOR has good and marketable title
to such Engine and such Engine shall be free and clear of LESSOR's Liens.
23.7.9 All Airworthiness Directives which are issued prior to the date of
return of the Aircraft and require compliance (either by means of repetitive
inspections, modifications or terminating action) prior to return of the
Aircraft to LESSOR or within one (1) year after the Termination Date will have
been complied with on the Aircraft on a terminating action basis at LESSEE's
cost. Airworthiness Directives which do not have a terminating action will be
accomplished at the highest level of inspection or modification possible. If,
after using best efforts, LESSEE is unable to acquire the material, parts or
components necessary to accomplish such Airworthiness Directive, LESSEE will pay
to LESSOR upon return of the Aircraft the estimated cost of terminating such
Airworthiness Directive. If the estimated cost cannot be mutually agreed upon by
LESSEE and LESSOR, LESSEE and LESSOR will each obtain an estimate from a
reputable FAA-approved maintenance facility (unaffiliated with LESSEE or LESSOR)
and the estimated cost will be the average of the two estimates.
23.7.10 The Aircraft will be in compliance with the Corrosion Prevention
and Control Program (CPCP) specified in LESSEE's Maintenance Program.
23.7.11 If any waivers, deviations, dispensations, alternate means of
compliance, extensions or carry-overs with respect to maintenance or operating
requirements, repairs or Airworthiness Directives are granted by the Aviation
Authority or permitted by the Maintenance Program, LESSEE at its sole cost and
expense will nonetheless perform such maintenance or operating requirements,
repairs or Airworthiness Directives as if such waivers, deviations,
dispensations, alternate means of compliance, or extensions or carry-overs did
not exist.
23.7.12 The Aircraft will be free from any Security Interest except
LESSOR's Liens and no circumstance will have so arisen whereby the Aircraft is
or could become subject to any Security Interest or right of detention or sale
in favor of the Aviation Authority, any airport authority, or any other
authority.
23.7.13 All no-charge vendor and Manufacturer's service bulletin kits
received by LESSEE for the Aircraft but not installed thereon will be on board
the Aircraft as cargo. At LESSOR's request, any other service bulletin kit which
LESSEE paid for will also be delivered to LESSOR on board the Aircraft, but
LESSOR will reimburse LESSEE for its actual out-of-pocket costs for such kit,
unless LESSEE purchased such kit as part of its implementation of a service
bulletin on its fleet of aircraft of the same type as the Aircraft but had not
yet installed such kit on the Aircraft, in which case such kit will be furnished
free of charge to LESSOR.
23.7.14 The Aircraft will be free of any leaks and any damage resulting
therefrom. All repairs will have been performed on a permanent basis in
accordance with the applicable manufacturer's instructions.
23.7.15 The Aircraft fluid reservoirs (including oil, oxygen, hydraulic and
water) will be serviced to full and the waste tank serviced in accordance with
Manufacturer's instructions. (Fuel tanks will be at least as full as at
Delivery.)
23.8 CHECKS PRIOR TO RETURN. Immediately prior to return of the Aircraft to
LESSOR, LESSEE at its expense will do each of the following:
23.8.1 Have performed, and completed, by an FAA-approved repair station,
all maintenance tasks specified in LESSEE's Maintenance Program and the MPD
which (a) are necessary to clear the Aircraft of all such tasks for eighteen
(18) months, five thousand (5,000) hours, and three thousand (3,000) cycles from
the date of return of the Aircraft, and (b) are required to be performed at
lesser intervals than eighteen (18) months, five thousand (5,000) hours or three
thousand (3,000) cycles (all such work collectively referred to as the "RETURN
CHECK"). If a maintenance task is specific to LESSEE's Maintenance Program and
not required or recommended to be performed by the MPD, then LESSEE will not be
required to perform such maintenance task so long as the Return Check is
performed in such a manner that clears the Aircraft of all maintenance tasks in
accordance with the requirements of the preceding sentence. As part of the
Return Check, all non-routine tasks generated as a result of the performance of
the work included in the Return Check and any other discrepancies revealed
during the Return Check must also be performed in accordance with the FAA
approved procedures. LESSEE will also weigh the Aircraft. LESSEE agrees to
perform during the Return Check any other work reasonably required by LESSOR
(and not otherwise required under this Lease) and LESSOR will, promptly upon
receipt of an invoice from LESSEE, reimburse LESSEE for such work at LESSEE's
preferred customer rates.
23.8.2 Have the Aircraft in compliance with Corrosion Prevention and
Control Program (CPCP) as specified in the MPD and LESSEE's Maintenance Program.
23.8.3 Remove LESSEE's exterior markings, including all exterior paint, by
stripping (or, at LESSOR's option, pneumatically scuff/sanding) the paint from
the fuselage, empennage, wings and Engine cowlings, and clean, reseal, refinish,
prepare (including application of alodine or another corrosion inhibitor) and
prime the surfaces to be painted, all in accordance with Manufacturer's and
paint manufacturer's recommendations. LESSEE will then repaint the fuselage,
empennage, wings and Engine cowlings in the colors and logo specified by LESSOR
; PROVIDED, HOWEVER, that LESSEE will be responsible for only paying the amount
that it would cost to strip or scuff/sand (whichever is performed on the
Aircraft at return) and properly paint the Aircraft in LESSEE's colors and logo
and LESSOR will be responsible for the excess cost to paint the Aircraft in the
next lessee's colors and logo. Such painting will be accomplished in such a
manner as to result in a uniformly smooth and cosmetically acceptable
aerodynamic surface. All external placards, signs and markings will be properly
attached, free from damage, clean and legible.
23.8.4 Clean the exterior and interior of the Aircraft.
23.8.5 If reasonably required by LESSOR, apply touch up to paint to the
interior of the Aircraft, including flight deck, and replace any missing or
broken placards.
23.8.6 In accordance with Article 23.7.7, permanently repair damage to the
Aircraft that exceeds Manufacturer's limits and replace any non-flush structural
patch repairs installed on the Aircraft with flush-type repairs, so long as the
Manufacturer or the Manufacturer's Structural Repair Manual permits flush-type
repairs on the portion of the Aircraft where the non-flush structural repairs
were made.
23.8.7 With LESSOR or its representatives present, perform a full and
complete hot and cold section videotape borescope on each Engine and its modules
in accordance with the Engine manufacturer's maintenance manual.
23.8.8 If the Engine historical and technical records and/or condition
trend monitoring data of any Engine (including the APU) indicate an acceleration
in the rate of deterioration in the performance of an Engine, LESSEE will
correct, to LESSOR's satisfaction, such conditions which are determined to be
causing such accelerated rate of deterioration.
23.8.9 With LESSOR or its representatives present, accomplish a maximum
power assurance run on the Engines. LESSEE will evaluate the Engine performance
and record the Engine maximum power assurance test conditions and results on the
Return Acceptance Receipt.
23.8.10 LESSEE will provide evidence to LESSOR's satisfaction that the
Engine historical and technical records, borescope inspection, trend monitoring
and other checks specified in Article 23.8.9 do not reveal any condition which
would cause the Engines or any module to be unserviceable, beyond serviceable
limits or serviceable with an increased frequency of inspection or with calendar
time, flight hour or flight cycle restrictions 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.
23.8.11 In the event the Engine historical and technical records, borescope
inspection, trend monitoring and other checks specified in Article 23.8.9 result
in a dispute regarding the conformity of an Engine with the requirements of this
Article 23, LESSEE and LESSOR will consult with Engine manufacturer and follow
Engine manufacturer's recommendations (including the accomplishment of an Engine
test cell operational check) with regard to determining if such Engine complies
with the requirements of this Article 23 and the manner in which any
discrepancies from the requirements of this Article 23 will be rectified.
23.9 PART LIVES. At return, the condition of the Aircraft will be as
follows:
(CONFIDENTIAL MATERIAL OMITTED)
23.10 EXPORT AND DEREGISTRATION OF AIRCRAFT. At LESSOR's request, LESSEE at
its cost will (a) provide an Export Certificate of Airworthiness or its
equivalent from the State of Registration so that the Aircraft can be exported
to the country designated by LESSOR, (b) assist with deregistration of the
Aircraft from the register of aircraft in the State of Registration, (c) assist
with arranging for prompt confirmation of such deregistration to be sent by the
registry in the State of Registration to the next country of registration and
(d) perform any other acts reasonably required by LESSOR in connection with the
foregoing. If any Aircraft work which LESSEE is not otherwise required to
perform hereunder, including engineering, is required in order to obtain such
Export Certificate of Airworthiness, LESSEE will perform such work and LESSOR
will reimburse LESSEE for such work at LESSEE's preferred customer rates.
23.11 LESSEE'S CONTINUING OBLIGATIONS. In the event that LESSEE does not
return the Aircraft to LESSOR on the Expiration Date and in the condition
required by this Article 23 for any reason (whether or not the reason is within
LESSEE's control):
23.11.1 the obligations of LESSEE under this Lease will continue in full
force and effect on a day-to-day basis until such return. This will not be
considered a waiver of LESSEE's Event of Default or any right of LESSOR
hereunder.
23.11.2 Until such return, the Agreed Value will be an amount equal to the
Agreed Value on the day the Aircraft should have been returned to LESSOR
pursuant to this Lease.
23.11.3 LESSEE will fully indemnify LESSOR on demand for all losses
(including consequential damages), liabilities, actions, proceedings, costs and
expenses thereby suffered or incurred by LESSOR and, in addition, if a delay in
return of the Aircraft was due to reasons within LESSEE's reasonable control,
then until such time as the Aircraft is redelivered to LESSOR and put into the
condition required by this Article 23, instead of paying the Rent specified in
Article 5.3, LESSEE will pay twice the amount of Rent for each day from the
scheduled Expiration Date until the Termination Date (the monthly Rent payable
under Article 5.3.1 will be prorated based on the actual number of days in the
applicable month). Payment will be made upon presentation of LESSOR's invoice.
23.11.4 LESSOR may elect, in its sole and absolute discretion, to accept
the return of the Aircraft prior to the Aircraft being put in the condition
required by this Article 23 and thereafter have any such non-conformance
corrected at such time as LESSOR may deem appropriate (but within ninety (90)
days following the return of the Aircraft) and at commercial rates then-charged
by the Person selected by LESSOR to perform such correction. Any direct expenses
incurred by LESSOR for such correction will become additional Rent payable by
LESSEE within fifteen (15) days following the submission of a written statement
by LESSOR to LESSEE, identifying the items corrected and setting forth the
expense of such corrections. LESSEE's obligation to pay such supplemental Rent
will survive the Termination Date.
23.12 AIRPORT AND NAVIGATION CHARGES. LESSEE will ensure that at return of
the Aircraft any and all airport, navigation and other charges which give rise
or may if unpaid give rise to any lien, right of detention, right of sale or
other Security Interest in relation to the Aircraft, Engine or any Part have
been paid and discharged in full and will at LESSOR's request produce evidence
thereof satisfactory to LESSOR.
23.13 RETURN ACCEPTANCE CERTIFICATE. Upon return of the Aircraft in
accordance with the terms of this Lease, LESSEE will prepare and execute two (2)
Return Acceptance Certificates in the form and substance of Exhibit I and LESSOR
will countersign and return one such Return Acceptance Certificate to LESSEE. In
addition, LESSEE and LESSOR will execute a Lease Termination for filing with the
FAA evidencing termination of this Lease.
23.14 INDEMNITIES AND INSURANCE. The indemnities and insurance requirements
set forth in Articles 16 and 17, respectively, will apply to Indemnitees and
LESSOR's representatives during return of the Aircraft, including the ground
inspection and acceptance flight. With respect to the acceptance flight,
LESSOR's representatives will receive the same protections as LESSOR on LESSEE's
Aviation and Airline General Third Party Liability Insurance.
ARTICLE 24 ASSIGNMENT
24.1 NO ASSIGNMENT BY LESSEE. EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED BY
THE TERMS OF THIS LEASE, NO ASSIGNMENT, NOVATION, TRANSFER, MORTGAGE OR OTHER
CHARGE MAY BE MADE BY LESSEE OF ANY OF ITS RIGHTS WITH RESPECT TO THE AIRCRAFT,
ENGINE OR PART OF THIS LEASE.
24.2 SALE OR ASSIGNMENT BY LESSOR.
24.2.1 Subject to LESSEE's rights pursuant to this Lease, LESSOR may at any
time and without LESSEE's consent sell, assign or transfer its rights, interest
and obligations hereunder or with respect to the Aircraft to a third party
("LESSOR'S ASSIGNEE"), but only if:
(a) LESSOR's Assignee has full power, authority, and legal right to
execute, deliver, and perform the obligations of LESSOR under the Operative
Documents and provides reasonably satisfactory evidence of such power and
authority to LESSEE;
(b) LESSOR's Assignee enters into one or more legal, valid, binding and
enforceable agreements effective to confirm that LESSOR's Assignee agrees to be
bound by all the terms of, and to undertake all of the obligations arising after
such transfer of LESSOR in, the Operative Documents, and in which it makes
representations and warranties substantially the same as those in Article 21.1
of this Lease;
(c) upon such transfer LESSEE shall not be obligated to pay any greater
amount or incur any greater obligation (other than indemnifying additional
indemnitees, insuring additional insureds and other minor ministerial matters)
than that which it would have been obliged to pay or incur under the Operative
Documents if no transfer or assignment had taken place, and upon such transfer
the terms and conditions of the Operative Documents insofar as they relate to
the rights and obligations of LESSEE are not altered;
(d) LESSOR shall cause LESSOR's Assignee to deliver to LESSEE an opinion of
counsel reasonably satisfactory to LESSEE to the effect that such agreement or
agreements referred to in clause (2) and, if applicable, clause (6) are legal,
binding, and enforceable in accordance with its or their terms, subject to the
typical exceptions.
(e) the transfer shall relate to LESSOR's entire interest as owner or
lessor;
(f) LESSOR's Assignee is a citizen of the United States under 49 U.S. Code
ss.40102(a)(15) (such status to be determined without considering FAR ss.47.9 or
any other provision that may restrict LESSEE's use or operation of the
Aircraft), or shall use a voting powers trust or similar arrangement in order to
hold an interest in the Aircraft such that the Aircraft can be registered in the
U.S. (without considering FAR ss.47.9 or any other provision that may restrict
LESSEE's use or operation of the Aircraft);
(g) LESSOR's Assignee is a single Person and is either (i) a Permitted
Institution, or (ii) or an affiliate of a Permitted Institution, if such
affiliate's obligations under the Operative Documents are guaranteed by such
Permitted Institution pursuant to a written guaranty, in form and substance
reasonably satisfactory to LESSEE; and
(h) LESSOR shall give written notice to LESSEE at least five (5) days
before any such transfer, specifying the name and address of the proposed
LESSOR's Assignee, and providing reasonably satisfactory evidence that the
proposed LESSOR's Assignee meets the requirements described in Article
24.2.1(g)(i) or (ii).
For a period of two (2) years after such sale or assignment and at LESSEE's
cost, LESSEE will continue to name LESSOR as an additional insured under the
Aviation and Airline General Third Party Liability Insurance required pursuant
to Article 17 and Exhibit C.
24.2.2 The term "LESSOR" as used in this Lease means the lessor of the
Aircraft at the time in question. In the event of the sale of the Aircraft and
transfer of LESSOR's rights and obligations under this Lease, LESSOR's Assignee
will become "LESSOR" of the Aircraft under this Lease and the transferring party
(the prior "LESSOR") will be relieved of all liability to LESSEE under this
Lease for obligations arising on and after the date the Aircraft is sold. LESSEE
will acknowledge and accept LESSOR's Assignee as the new "LESSOR" under this
Lease and will look solely to LESSOR's Assignee for the performance of all
LESSOR obligations and covenants under this Lease arising on and after the
Aircraft sale date.
24.3 LESSOR'S LENDER. Subject to LESSEE's rights pursuant to this Lease,
LESSOR may at any time and without LESSEE's consent grant security interests
over the Aircraft and assign the benefit of this Lease to a lender ("LESSOR'S
LENDER") as security for LESSOR's obligations to LESSOR's Lender. Accordingly,
if LESSOR's Lender requires, as a condition to providing financing, any
nonsubstantive modification of this Lease, LESSEE agrees to enter into an
agreement so modifying this Lease.
24.4 LESSEE COOPERATION. On request by LESSOR, LESSOR's Assignee or
LESSOR's Lender, LESSEE will execute all such documents (such as a lease
assignment agreement) as LESSOR, LESSOR's Assignee or LESSOR's Lender may
reasonably require to confirm LESSEE's obligations under this Lease and obtain
LESSEE's acknowledgment that to the best of LESSEE's knowledge, LESSOR is not in
breach of this Lease. LESSEE will provide all other reasonable assistance and
cooperation to LESSOR, LESSOR's Assignee and LESSOR's Lender in connection with
any such sale or assignment or the perfection and maintenance of any such
security interest, at LESSOR's cost, including making all necessary filings and
registrations in the State of Registration and providing all opinions of counsel
with respect to matters reasonably requested by LESSOR, LESSOR's Lender or
LESSOR's Assignee. LESSOR will reimburse LESSEE for its reasonable out-of-pocket
costs in reviewing documents required by LESSOR or LESSOR's Lender.
24.5 PROTECTIONS.
24.5.1 LESSOR will obtain for the benefit of LESSEE an acknowledgment from
any LESSOR's Assignee or LESSOR's Lender that, so long as no Event of Default
has occurred and is continuing hereunder, such Person will not interfere with
LESSEE's quiet, peaceful use and enjoyment of the Aircraft.
24.5.2 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 contained in Articles 8, 13, 16 and 17, respectively, or with respect
to Article 20.2.7, the term "LESSOR" will be deemed to include LESSOR's Assignee
and LESSOR's Lender, if applicable. For avoidance of doubt, in the event of
LESSOR's sale or financing of the Aircraft, the disclaimer and indemnity
provisions contained in Articles 8 and 16 will continue to be applicable after
the sale or assignment to International Lease Finance Corporation, as well as
being applicable to LESSOR's Assignee and LESSOR's Lender.
ARTICLE 25 DEFAULT OF LESSEE
25.1 LESSEE NOTICE TO LESSOR. LESSEE will promptly notify LESSOR if LESSEE
becomes aware of the occurrence of any Default.
25.2 EVENTS OF DEFAULT. The occurrence of any of the following will
constitute an Event of Default and material breach of this Lease by LESSEE:
(a) LESSEE fails to take delivery of the Aircraft when obligated to do so
under the terms of this Lease;
(b) LESSEE fails to make a Rent or other payment due hereunder in the
manner and by the date provided herein and fails to make such payment within
five (5) Business Days after its receipt of notice that such payment is due;
(c) LESSEE fails to obtain or maintain the insurance required by Article
17;
(d) LESSEE fails to return the Aircraft to LESSOR on the Expiration Date in
accordance with Article 23;
(e) LESSEE fails to observe or perform any of its other obligations
hereunder and fails to cure the same within thirty (30) days after written
notice thereof to LESSEE; provided, that LESSEE will have up to a total of sixty
(60) days to cure such failure so long as it uses diligent efforts to do so;
(f) any representation or warranty of LESSEE herein proves to have been
untrue in any material respect when made; provided, that, if the effect of such
falsity is curable, LESSEE shall have thirty (30) days after LESSEE has
knowledge that the representation or warranty is untrue;
(g) the registration of the Aircraft is cancelled other than as a result of
an act or omission of LESSOR;
(h) LESSEE abandons the Aircraft or Engines;
(i) LESSEE or an approved sublessee no longer has unencumbered control
(other than Permitted Liens) or possession of the Aircraft or Engines, except as
otherwise permitted by this Lease;
(j) LESSEE temporarily or permanently discontinues business or
(except as permitted by Article 20.2.4) sells or otherwise
disposes of all or substantially all of its assets;
(k) a material adverse change occurs in the financial condition of LESSEE;
(l) LESSEE no longer possesses the licenses, certificates and permits
required for the conduct of its business as a certificated air carrier in the
U.S.;
(m) LESSEE (i) suspends payment on its debts or other obligations
generally, (ii) is unable to or admits its inability to pay its debts or other
obligations generally as they fall due, (iii) is adjudicated or becomes bankrupt
or insolvent or (iv) enters into any composition or other arrangement for the
benefit of its creditors generally;
(n) any proceedings, resolutions, filings or other steps are instituted
with respect to LESSEE relating to the bankruptcy, liquidation, reorganization
or protection from creditors of LESSEE or at least half of LESSEE's property. If
instituted by LESSEE, the same will be an immediate Event of Default. If
instituted by another Person, the same will be an Event of Default if not
dismissed, remedied or relinquished within sixty (60) days;
(o) any order, judgment or decree is entered by any court of competent
jurisdiction appointing a receiver, trustee or liquidator of LESSEE or at least
half of its property, or if at least half of LESSEE's property is to be
sequestered. If instituted by or done with the consent of LESSEE, the same will
be an immediate Event of Default. If instituted by another Person, the same will
be an Event of Default if not dismissed, stayed, remedied or relinquished within
sixty (60) days; PROVIDED, HOWEVER, that if such proceeding is stayed, then such
proceeding will become an immediate Event of Default if such stay is removed or
terminates and the proceeding is not dismissed, remedied or relinquished when
such stay is removed or terminates.
(p) any indebtedness for borrowed moneys or a guarantee or similar
obligation owed by LESSEE with an unpaid balance of CONFIDENTIAL MATERIAL
OMITTED is declared due before its stated maturity or LESSEE is in default of
payment obligations CONFIDENTIAL MATERIAL OMITTED under any other purchase
agreement, lease, conditional sale agreement or other agreement pursuant to
which LESSEE has possession of any aircraft;
(q) Eurocontrol has notified LESSOR that there are unpaid Eurocontrol
charges due from LESSEE (unless such charges are being contested in good faith
and by appropriate proceedings, an adequate bond has been provided and such
proceedings do not involve any danger of the detention, interference with the
use or operation, sale, forfeiture or loss of the Aircraft) and such charges
remain outstanding for a period of thirty (30) days from the date of
Eurocontrol's notice to LESSOR provided that such thirty (30) day grace period
will not apply if there is a danger of detention, interference with the use or
operation, sale, forfeiture or loss of the Aircraft; or
(r) LESSEE is in default under any other lease or agreement between LESSEE
and LESSOR and the same is not cured within its specified cure period.
25.3 LESSOR'S GENERAL RIGHTS. Upon the occurrence of any Event of Default,
LESSOR may do all or any of the following at its option (in addition to such
other rights and remedies which LESSOR may have by statute or otherwise but
subject to any requirements of applicable Law):
(a) terminate this Lease by giving written notice to LESSEE;
(b) require that LESSEE immediately move the Aircraft to an airport or
other location designated by LESSOR;
(c) for LESSEE's account, do anything that may reasonably be required to
cure any default and recover from LESSEE all reasonable costs, including legal
fees and expenses incurred in doing so and Default Interest;
(d) proceed as appropriate to enforce performance of this Lease and to
recover any damages for the breach hereof, including the amounts specified in
Article 25.5;
(e) terminate this Lease by taking possession of the Aircraft or by serving
notice requiring LESSEE to return the Aircraft to LESSOR at the location
specified by LESSOR. If LESSOR takes possession of the Aircraft, it may enter
upon LESSEE's premises where the Aircraft is located without liability. Upon
repossession of the Aircraft, LESSOR will then be entitled to sell, lease or
otherwise deal with the Aircraft as if this Lease had never been made. LESSOR
will be entitled to the full benefit of its bargain with LESSEE; or
(f) apply all or any portion of the Security Deposit and any other security
deposits held by LESSOR pursuant to any other agreements between LESSOR and
LESSEE to any amounts due.
25.4 DEREGISTRATION AND EXPORT OF AIRCRAFT. If an Event of Default has
occurred and is continuing, LESSOR may take all steps necessary to deregister
the Aircraft in and export the Aircraft from the State of Registration.
25.5 LESSEE LIABILITY FOR DAMAGES. If an Event of Default occurs, in
addition to all other remedies available at law or in equity, LESSOR has the
right to recover from LESSEE and LESSEE will pay LESSOR within two (2) Business
Days after LESSOR's written demand, all of the following:
(a) all amounts which are then due and unpaid hereunder and which become
due prior to the earlier of LESSOR's recovery of possession of the Aircraft or
LESSEE making an effective tender thereof;
(b) any losses suffered by LESSOR because of LESSOR's inability to place
the Aircraft on lease with another lessee or to otherwise utilize the Aircraft
on financial terms as favorable to LESSOR as the terms hereof or, if LESSOR
elects to dispose of the Aircraft, the funds arising from a sale or other
disposition of the Aircraft are not as profitable to LESSOR as leasing the
Aircraft in accordance with the terms hereof would have been (and LESSOR will be
entitled to accelerate any and all Rent which would have been due from the date
of LESSOR's recovery or repossession of the Aircraft through the Expiration
Date);
(c) all costs associated with LESSOR's exercise of its remedies hereunder,
including but not limited to repossession costs, legal fees, Aircraft storage
costs, Aircraft re-lease or sale costs and LESSOR's internal costs and expenses
(including the cost of personnel time calculated based upon the compensation
paid to the individuals involved on an annual basis and a general LESSOR
overhead allocation);
(d) any amount of principal, interest, fees or other sums paid or payable
on account of funds borrowed in order to carry any unpaid amount;
(e) any loss, premium, penalty or expense which may be incurred in repaying
funds raised to finance the Aircraft or in unwinding any financial instrument
relating in whole or in part to LESSOR's financing of the Aircraft;
(f) any loss, cost, expense or liability sustained by LESSOR due to
LESSEE's failure to redeliver the Aircraft in the condition required by this
Lease; and
(g) any other loss, damage, expense, cost or liability which LESSOR suffers
or incurs as a result of the Event of Default and/or termination of this Lease,
including an amount sufficient to fully compensate LESSOR for any loss of or
damage to LESSOR's residual interest in the Aircraft caused by LESSEE's default.
25.6 WAIVER OF DEFAULT. By written notice to LESSEE, LESSOR may at its
election waive any Default or Event of Default and its consequences and rescind
and annul any prior notice of termination of this Lease. The respective rights
of the parties will then be as they would have been had no Default or Event of
Default occurred and no such notice been given.
25.7 PRESENT VALUE OF PAYMENTS. In calculating LESSOR's damages hereunder,
upon an Event of Default all Rent and other amounts which would have been due
hereunder during the Lease Term if an Event of Default had not occurred will be
calculated on a present value basis using a discounting rate of six percent (6%)
per annum discounted to the earlier of the date on which LESSOR obtains
possession of the Aircraft or LESSEE makes an effective tender thereof.
25.8 USE OF "TERMINATION DATE". For avoidance of doubt, it is agreed that
if this Lease terminates and the Aircraft is repossessed by LESSOR due to an
Event of Default, then, notwithstanding the use of the term "Termination Date"
in this Lease, the period of the Lease Term and the "Expiration Date" will be
utilized in calculating the damages to which LESSOR is entitled pursuant to
Article 25.5. For example, it is agreed and understood that LESSOR is entitled
to receive from LESSEE the Rent and the benefit of LESSEE's insurance and
maintenance of the Aircraft until expiration of the Lease Term.
ARTICLE 26 NOTICES
26.1 MANNER OF SENDING NOTICES. Any notice, request or information required
or permissible under this Lease will be in writing and in English. Notices will
be delivered in person or sent by fax, letter (mailed airmail, certified and
return receipt requested), or by expedited delivery addressed to the parties as
set forth in Article 26.2. In the case of a fax, notice will be deemed received
upon actual receipt (and the date of actual receipt will be deemed to be the
date set forth on the confirmation of receipt produced by the sender's fax
machine immediately after the fax is sent). In the case of a notice sent by
expedited delivery, notice will be deemed received on the date of delivery set
forth in the records of the Person which accomplished the delivery. If any
notice is sent by more than one of the above listed methods, notice will be
deemed received on the earliest possible date in accordance with the above
provisions.
26.2 NOTICE INFORMATION. Notices will be sent:
If to LESSOR: INTERNATIONAL LEASE FINANCE CORPORATION
1999 Avenue of the Stars, 39th Floor Los Angeles,
California 90067, U.S.A.
Attention: Legal Department
Fax: 310-788-1990
Telephone: 310-788-1999
If to LESSEE: AMERICAN TRANS AIR, INC.
7337 West Washington Street
Indianapolis International Airport
Indianapolis, Indiana 46231
United States of America
Attention: Ken Wolff
Executive Vice President
and Chief Financial Officer
Fax: 317-240-7091
Telephone: 317-247-4000
or to such other places and numbers as either party directs in writing to the
other party.
ARTICLE 27 GOVERNING LAW AND JURISDICTION
27.1 CALIFORNIA LAW. This Lease is being delivered in the State of
California and will in all respects be governed by and construed in accordance
with the Laws of the State of California (notwithstanding the conflict Laws of
the State of California).
27.2 NON-EXCLUSIVE JURISDICTION IN CALIFORNIA. As permitted by Section
410.40 of the California Code of Civil Procedure, the parties hereby irrevocably
submit to the non-exclusive jurisdiction of the Federal District Court for the
Central District of California and the State of California Superior or Municipal
Court in Los Angeles, California. Nothing herein will prevent either party from
bringing suit in any other appropriate jurisdiction.
27.3 SERVICE OF PROCESS. The parties hereby consent to the service of
process (a) out of any of the courts referred to above, (b) in accordance with
Section 415.40 of the California Code of Civil Procedure by mailing copies of
the summons and complaint to the person to be served by certified or registered
mail to the address set forth in Article 26.2, postage prepaid, return receipt
requested or (c) in accordance with the Hague Convention, if applicable.
27.4 PREVAILING PARTY IN DISPUTE. If any legal action or other proceeding
is brought in connection with or arises out of any provisions in this Lease, the
prevailing party will be entitled to recover reasonable attorneys' fees and
other costs incurred in such action or proceedings. The prevailing party will
also, to the extent permissible by Law, be entitled to receive pre- and
post-judgment Default Interest.
27.5 WAIVER. LESSEE AND LESSOR HEREBY WAIVE THE RIGHT TO A TRIAL BY JURY.
LESSEE AND LESSOR HEREBY IRREVOCABLY WAIVE ANY OBJECTION WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATED TO THIS LEASE BROUGHT IN ANY OF THE COURTS REFERRED TO
IN ARTICLE 27.2, AND HEREBY FURTHER IRREVOCABLY WAIVE ANY CLAIM THAT ANY SUCH
SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM.
ARTICLE 28 MISCELLANEOUS
28.1 PRESS RELEASES. The parties will give copies to one another, in
advance if possible, of all news, articles and other releases provided to the
public media regarding this Lease.
28.2 LESSOR PERFORMANCE FOR LESSEE. The exercise by LESSOR of its remedy of
performing a LESSEE obligation hereunder is not a waiver of and will not relieve
LESSEE from the performance of such obligation at any subsequent time or from
the performance of any of its other obligations hereunder.
28.3 LESSOR'S PAYMENT OBLIGATIONS. Any obligation of LESSOR under this
Lease to pay or release any amount to LESSEE is conditioned upon (a) all amounts
then due and payable by LESSEE to LESSOR under this Lease or under any other
agreement between LESSOR and LESSEE having been paid in full and (b) no Default
or Event of Default having occurred and continuing hereunder at the time such
payment or release of payment is payable to LESSEE.
28.4 APPLICATION OF PAYMENTS. Any amounts paid or recovered in respect of
LESSEE liabilities hereunder may be applied to Rent, Default Interest, fees or
any other amount due hereunder in such proportions, order and manner as LESSOR
determines.
28.5 USURY LAWS. The parties intend to contract in strict compliance with
the usury Laws of the State of California and, to the extent applicable, the
U.S. Notwithstanding anything to the contrary in the Operative Documents, LESSEE
will not be obligated to pay Default Interest or other interest in excess of the
maximum non-usurious interest rate, as in effect from time to time, which may by
applicable Law be charged, contracted for, reserved, received or collected by
LESSOR in connection with the Operative Documents. During any period of time in
which the then-applicable highest lawful rate is lower than the Default Interest
rate, Default Interest will accrue and be payable at such highest lawful rate;
however, if at later times such highest lawful rate is greater than the Default
Interest rate, then LESSEE will pay Default Interest at the highest lawful rate
until the Default Interest which is paid by LESSEE equals the amount of interest
that would have been payable in accordance with the interest rate set forth in
Article 5.5.
28.6 DELEGATION BY LESSOR. LESSOR may delegate to any Person(s) all or any
of the rights, powers or discretion vested in it by this Lease and any such
delegation may be made upon such terms and conditions as LESSOR in its absolute
discretion thinks fit.
28.7 CONFIDENTIALITY. The Operative Documents and all non-public
information obtained by either party about the other are confidential and are
between LESSOR and LESSEE only and will not be disclosed by a party to third
parties (other than to such party's auditors or legal advisors or as required in
connection with any filings of this Lease in accordance with Article 13) without
the prior written consent of the other party. If disclosure is required as a
result of applicable Law, LESSEE and LESSOR will cooperate with one another to
obtain confidential treatment as to the commercial terms and other material
provisions of this Lease.
28.8 RIGHTS OF PARTIES. The rights of the parties hereunder are cumulative,
not exclusive, may be exercised as often as each party considers appropriate and
are in addition to its rights under general Law. The rights of one party against
the other party are not capable of being waived or amended except by an express
waiver or amendment in writing. Any failure to exercise or any delay in
exercising any of such rights will not operate as a waiver or amendment of that
or any other such right any defective or partial exercise of any such rights
will not preclude any other or further exercise of that or any other such right
and no act or course of conduct or negotiation on a party's part or on its
behalf will in any way preclude such party from exercising any such right or
constitute a suspension or any amendment of any such right.
28.9 FURTHER ASSURANCES. Each party agrees from time to time to do and
perform such other and further acts and execute and deliver any and all such
other instruments as may be required by Law, reasonably requested by the
auditors of the other party or requested by the other party to establish,
maintain or protect the rights and remedies of the requesting party or to carry
out and effect the intent and purpose of this Lease.
28.10 USE OF WORD "INCLUDING". The term "INCLUDING" is used herein without
limitation.
28.11 HEADINGS. All article and paragraph headings and captions are purely
for convenience and will not affect the interpretation of this Lease. Any
reference to a specific article, paragraph or section will be interpreted as a
reference to such article, paragraph or section of this Lease.
28.12 INVALIDITY OF ANY PROVISION. If any of the provisions of this Lease
become invalid, illegal or unenforceable in any respect under any Law, the
validity, legality and enforceability of the remaining provisions will not in
any way be affected or impaired.
28.13 NEGOTIATION. The terms of this Lease are agreed by LESSOR from its
principal place of business in Los Angeles, California.
28.14 TIME IS OF THE ESSENCE. Time is of the essence in the performance of
all obligations of the parties under this Lease and, consequently, all time
limitations set forth in the provisions of this Lease will be strictly observed.
28.15 AMENDMENTS IN WRITING. The provisions of this Lease may only be
amended or modified by a writing executed by LESSOR and LESSEE.
28.16 COUNTERPARTS. This Lease may be executed in any number of identical
counterparts, each of which will be deemed to be an original, and all of which
together will be deemed to be one and the same instrument when each party has
signed and delivered one such counterpart to the other party.
28.17 DELIVERY OF DOCUMENTS BY FAX. Delivery of an executed counterpart of
this Lease or of any other documents in connection with this Lease by fax will
be deemed as effective as delivery of an originally executed counterpart. Any
party delivering an executed counterpart of this Lease or other document by fax
will also deliver an originally executed counterpart, but the failure of any
party to deliver an originally executed counterpart of this Lease or such other
document will not affect the validity or effectiveness of this Lease or such
other document.
28.18 ENTIRE AGREEMENT. The Operative Documents constitute the entire
agreement between the parties in relation to the leasing of the Aircraft by
LESSOR to LESSEE and supersede all previous proposals, agreements and other
written and oral communications in relation hereto. The parties acknowledge that
there have been no representations, warranties, promises, guarantees or
agreements, express or implied, except as set forth herein and in the other
Operative Documents.
IN WITNESS WHEREOF, LESSEE and LESSOR have caused this Lease to be executed
by their respective officers as of September 5, 2000.
INTERNATIONAL LEASE FINANCE CORPORATION AMERICAN TRANS AIR, INC.
By: By:
Its: Its:
EXHIBIT A AIRCRAFT DESCRIPTION
Aircraft Manufacturer and Model: Boeing 737-800
Specification:
Seating Configuration:
Manufacturer's Serial Number: 28244
Registration Mark: ____
Engine Manufacturer and Model: CFM56-7B-27
Engine Serial Numbers: _______ and ________
Engine Thrust Rating: 27,300 pounds
Maximum Gross Takeoff Weight: 160,000 pounds
EXHIBIT B AGENCY AGREEMENT
(Limited Authority)
Relating to Boeing 737-800 Aircraft
THIS AGENCY AGREEMENT ("AGREEMENT") is made and entered into as of
____________________.
BETWEEN:
AMERICAN TRANS AIR, INC., a Indiana corporation whose address and principal
place of business is at 7337 West Washington Street, Indianapolis International
Airport, Indianapolis, Indiana 46231, United States of America ("AGENT") and
INTERNATIONAL LEASE FINANCE CORPORATION, a California corporation, whose
address and principal place of business is at 1999 Avenue of the Stars, 39th
Floor, Los Angeles, California 90067, U.S.A. ("BUYER").
RECITAL
The Boeing Company ("MANUFACTURER") and Buyer have entered into Purchase
Agreement 1830, dated as of June 27, 1995 (such purchase agreement as may be
amended in accordance with the provisions thereof is hereinafter referred to as
the "PURCHASE AGREEMENT") under which Manufacturer has agreed to manufacture and
sell and Buyer has agreed to purchase certain Boeing 737-800 aircraft. Buyer has
agreed to lease one (1) of such aircraft bearing manufacturer's serial number
28244 (the "AIRCRAFT") to the Agent pursuant to an Aircraft Lease Agreement
between Buyer and Agent dated as of September 5, 2000 (the "LEASE").
The Agent is engaged in business as a commercial air carrier and intends to
lease the Aircraft from Buyer, and Buyer is desirous of utilizing the expertise
of the Agent as Buyer's agent in all matters to which the Purchase Agreement
relates with respect to the Aircraft except certain items as indicated below,
and the Agent, as Buyer's agent, is willing to make such expertise available to
Buyer.
Accordingly, the parties agree as follows:
1. Buyer hereby appoints the Agent as Buyer's sole and exclusive agent with
authority to perform the following, on behalf of Buyer, as the Agent may in its
discretion determine to be necessary or desirable:
(a) monitor Manufacturer's production, testing and delivery of the Aircraft
in accordance with the Purchase Agreement and
(b) do all such other things permitted by the Purchase Agreement related to
the technical and engineering aspects of Manufacturer's production of the
Aircraft, except Buyer limits Agent's authority to perform on behalf of Buyer on
any defect that occurs during manufacture that is considered significant in
nature by Buyer as measured by the criteria set forth below. Buyer retains the
sole authority to perform on any defect meeting such criteria.
(i) Deviations from the drawing configuration that could affect future
modifications, maintenance, repair or overhaul of the Aircraft;
(ii) Defects that are obvious appearance items;
(iii) Rework that requires stress concurrence to satisfy Manufacturer's
Material Review Board (MRB) requirements;
(iv) A high quantity of defects normally considered minor on a singular
basis;
(v) Major rework requiring extensive repair or modification, E.G.
replacement of ---- skin panels, extensive use of oversize fasteners, repair of
damaged areas and significant structural modifications;
(vi) Rework that affects the aerodynamic drag coefficient of the Aircraft;
or
(vii) Rework that involves areas known to be sensitive to Buyer.
2. Notwithstanding anything in the provisions of paragraph 1, nothing in
this Agreement will confer authority upon or otherwise permit the Agent:
(a) to exercise any power of termination under the Purchase Agreement or
(b) to make any payments due from Buyer to Manufacturer or to receive on
behalf of Buyer any payments due from Manufacturer under the Purchase Agreement,
or to alter any of the terms and conditions of the Purchase Agreement or the
Detail Specifications of the Aircraft.
3. Buyer will not revoke the appointment of and authority granted under
this Agreement to the Agent unless a termination of the Purchase Agreement or
Lease has occurred with respect to the Aircraft or the Agent has failed to
perform a material obligation under this Agreement. Notice of any such
revocation will be provided in accordance with the provisions of Article 14 of
the Purchase Agreement and given to both Manufacturer and the Agent.
4. Manufacturer acknowledges the appointment of the Agent for the purpose
set forth hereunder and Manufacturer and Buyer agree that due performance by
Manufacturer or Agent of an obligation under the Purchase Agreement will
constitute due satisfaction of such obligation by such party and Buyer agrees to
be bound by the acts of the Agent.
5. Buyer and Agent agree to identify the technical organization and/or
person(s) with the limited authority to act for Agent during production of the
Aircraft. Buyer will, if possible, provide such identification to Manufacturer
in writing, along with office space requirements for Agent, if required, prior
to or at the time of Manufacturer's acknowledgment of this Agreement.
6. Nothing in this Agreement will subject Manufacturer to any liability
under the Purchase Agreement which it would not otherwise be subject to, or
modify Manufacturer's rights thereunder, or require Manufacturer to divest
itself of title to or possession of Aircraft or any other property which is
subject to the Purchase Agreement until payment therefor and delivery thereof in
accordance with the Purchase Agreement.
7. None of the parties hereto will be entitled to assign to any third party
any of their rights under this Agreement.
8. The Agent will not delegate to any third party the performance of the
obligations imposed on it by this Agreement or appoint a sub-agent.
9. References to Manufacturer in this Agreement will include any
wholly-owned subsidiary of Manufacturer to which Manufacturer assigns any of its
rights and obligations under the Purchase Agreement pursuant to the terms and
conditions thereof.
10. This Agreement will be governed by the laws of the State of California;
however, the Purchase Agreement shall remain governed by the laws of the State
of Washington.
This Agreement has been executed by the parties hereto as of the day and
year first above written.
INTERNATIONAL LEASE FINANCE CORPORATION AMERICAN TRANS AIR, INC.
By: By:
Its: Its:
The Boeing Company acknowledges the appointment of AMERICAN TRANS AIR, INC. as
agent of International Lease Finance Corporation in connection with the above
referenced Aircraft as set forth in this Agreement.
THE BOEING COMPANY
By:
Its:
EXHIBIT C CERTIFICATE OF INSURANCE
[Refer to Aircraft Lease Agreement dated as of September 5, 2000 between LESSEE
and LESSOR (the "Lease"). If applicable, insurance certificates from both the
insurers and reinsurers will be provided. If there is a LESSOR's Lender, include
references to it where appropriate after references to LESSOR.]
To: INTERNATIONAL LEASE FINANCE CORPORATION ("LESSOR")
------
1999 Avenue of the Stars, 39th Floor
Los Angeles, California 90067
United States
Re: AMERICAN TRANS AIR, INC. ("LESSEE")
Boeing 737-800
Manufacturer's Serial No.: 28244
Registration Mark: ____ (the "AIRCRAFT")
The following security has subscribed to the insurance and/or
reinsurance policies:
[LIST COMPANIES & PERCENTAGES]
THIS IS TO CERTIFY THAT, as Insurance Brokers, we have effected Fleet
Insurance in respect of aircraft owned or operated by LESSEE (including the
Aircraft), and that insurance in respect of the Aircraft is as specified below.
AIRCRAFT HULL ALL RISKS
COVERING:
All risks of physical loss or damage to the Aircraft from any cause
(subject only to the exclusions as specified below), for an Agreed Value of
Aircraft in the amount of [list amount calculated in accordance with Article
18.1]
DEDUCTIBLES:
(CONFIDENTIAL MATERIAL OMITTED) each and every loss (or such lesser amount
as generally applicable to the rest of LESSEE's 737-800 fleet). Not applicable
to Total Loss/Constructive Total Loss or Arranged Total Loss
GEOGRAPHICAL COVERAGE:
Worldwide [subject to customary exclusions]
AVIATION AND AIRLINE GENERAL THIRD PARTY LIABILITY
COVERING:
Aircraft Third Party, Passenger, Baggage, Cargo and Mail Liability and
Airline General Third Party Liability (including Premises, Hangarkeepers and
Products Liability) for combined single limit of not less than (CONFIDENTIAL
MATERIAL OMITTED) (or such higher amount as LESSEE may carry generally on other
737-800 aircraft in its fleet) any one accident/occurrence (but in the aggregate
in relation to Products Liability), extended to cover LESSEE's liability under
the Lease to the extent of the risks covered by the policy including war and
allied perils under Extended Coverage Endorsement as per AVN 52 subject only to
exclusions as specified below
GEOGRAPHICAL LIMITS:
Worldwide [subject to customary exclusions]
HULL WAR AND ALLIED PERILS COVERING:
Hull War Risks as per LSW555.B, but including (a) confiscation or
requisition (including by State of Registration and state where airline is
domiciled), (b) hijacking or other unlawful seizure or wrongful exercise of
control of the Aircraft or crew in flight (including any attempt at such seizure
or control) and including "All Risks" Continuation Clause and Extortion Risks
(including expenses) and covering claims excluded from Hull All Risks Policy
while Aircraft outside Assured's control by reason of perils insured under this
policy, for an Agreed Value of Aircraft in the amount of [list amount calculated
in accordance with Article 18.1]
DEDUCTIBLE:
No deductible
GEOGRAPHICAL LIMITS:
Worldwide
AIRCRAFT SPARES ALL RISKS INSURANCE
COVERING:
All risks of physical loss or damage to Aircraft Parts or spares or
Engines at all times when removed from the Aircraft from whatever
cause, subject only to the exclusions specified below, including the
risks set down in AVN 48B other than paragraphs (a) and (b) thereof
(but including paragraph (a) in respect of transit risks) for limits of
not less than:
CONFIDENTIAL MATERIAL OMITTED
and covering:
With respect to an Engine, an agreed value (CONFIDENTIAL
MATERIAL OMITTED) or, with LESSOR's written concurrence,
replacement cost
With respect to Parts, replacement cost
DEDUCTIBLE:
(CONFIDENTIAL MATERIAL OMITTED)
GEOGRAPHICAL COVERAGE:
Worldwide
INSURANCE REQUIRED BY MANUFACTURER
LESSEE will carry the insurance required by Manufacturer in connection
with LESSOR's assignment of Manufacturer's warranties and product support to
LESSEE
CONTRACTUAL INDEMNITY
To the extent of the risks covered by the policies, LESSEE has
insurance coverage for the indemnities agreed to by LESSEE pursuant to Article
16 of the Lease, subject to AVN67B or equivalent
PERIOD OF COVERAGE (ALL POLICIES)
From the Delivery Date of Aircraft to [END OF POLICY PERIOD]
It is further certified that LESSOR has an interest in respect of the
Aircraft under the Lease. Accordingly, with respect to losses occurring during
the period from the Effective Date until the expiry of the Insurance or until
the expiry or agreed termination of the Lease or until the obligations under the
Lease are terminated by any action of the Insured or LESSOR and in consideration
of the Additional Premium it is confirmed that the Insurance afforded by the
Policy is in full force and effect and it is further agreed that the following
provisions are specifically endorsed to the Policy.
1. UNDER THE HULL (ALL RISKS AND HULL WAR AND ALLIED RISKS)
AND AIRCRAFT SPARES INSURANCES
(a) In respect of any claim on the Aircraft that becomes payable
on the basis of a Total Loss, payment of any settlement will be made
to, or to the order of LESSOR as sole loss payee, up to the Agreed
Value. With respect to repairable damage to an Aircraft or Engine,
LESSOR will receive all insurance proceeds in excess of CONFIDENTIAL
MATERIAL OMITTED provided that upon receipt by the insurance broker of
written notice of a material default on the part of LESSEE (and until
notice that it has been cured), all insurance proceeds which otherwise
would be payable to LESSEE will be made directly to LESSOR. In respect
of any other claim, payment of any settlement (net of any relevant
policy deductible) will be made with such party(ies) as may be
necessary to repair the Aircraft unless otherwise agreed after
consultation between the Insurers and the Insured and, where necessary
under the terms of the Lease, LESSOR. Such payments will only be made
provided they are in compliance with all applicable laws and
regulations.
(b) Insurers agree on a 50/50 settlement in terms of AVS 103.
(c) Insurers have no right to replace the Aircraft on a Total
Loss (arranged, constructive or otherwise).
(d) Insurers confirm that under the insurance policies, if the
Insured installs an engine owned by a third party on the Aircraft,
either (i) the hull insurance will automatically increase to such
higher amount as is necessary in order to satisfy both LESSOR's
requirement to receive the Agreed Value in the event of a Total Loss,
Constructive Total Loss or Arranged Total Loss and the amount required
by the third party engine owner, or (ii) separate additional insurance
on such engine will attach in order to satisfy separately the
requirements of the Insured to such third party engine owner.
2. UNDER THE LEGAL LIABILITY INSURANCE
(a) Subject to the provisions of this Endorsement, the Insurance
will operate in all respects as if a separate Policy had been issued
covering each party insured hereunder, but this provision will not
operate to include any claim arising howsoever in respect of loss or
damage to the Aircraft insured under the Hull or Spares Insurance of
the Insured. Notwithstanding the foregoing the total liability of
Insurers in respect of any and all Insureds will not exceed the limits
of liability stated in the Policy.
(b) The Insurance provided hereunder will be primary and without
right of contribution from any other insurance which may be available
to LESSOR.
3. UNDER ALL INSURANCES
(a) LESSOR, its successors and assigns, and (with respect to
Aviation and Airline General Third Party Liability only) its directors,
officers and employees for their respective rights and interests, are
included as Additional Insureds.
(b) The cover afforded to LESSOR by the Policy in accordance
with this Endorsement will not be invalidated by any act or omission
(including misrepresentation and non-disclosure) of any other person or
party which results in a breach of any term, condition or warranty of
the Policy.
(c) LESSOR will have no responsibility for premium and insurers
will waive any right of set-off or counterclaim against LESSOR except
in respect of outstanding premium in respect of the Aircraft, provided
that Insurer may only set-off for premiums against the proceeds of the
hull insurance for outstanding premiums in connection with hull all
risks and hull war and allied perils insurance.
(d) Upon payment of any loss or claim to or on behalf of LESSOR,
Insurers will to the extent and in respect of such payment be thereupon
subrogated to all legal and equitable rights of LESSOR indemnified
hereby (but not against LESSOR). Insurers will not exercise such rights
without the consent of those indemnified, such consent not to be
unreasonably withheld. At the expense of Insurers LESSOR will do all
things reasonably necessary to assist the Insurers to exercise said
rights.
(e) Except in respect of any provision for Cancellation or
Automatic Termination specified in the Policy or any endorsement
thereof, cover provided by this Endorsement may only be cancelled or
materially altered in a manner adverse to LESSOR by the giving of not
less than thirty (30) days notice in writing to LESSOR. Notice will be
deemed to commence from the date such notice is given by the Insurers.
Such notice will NOT, however, be given at normal expiry date of the
Policy or any endorsement.
4. EXCEPT AS SPECIFICALLY VARIED OR PROVIDED BY THE TERMS
OF THIS CERTIFICATE
(a) LESSOR IS COVERED BY THE POLICY SUBJECT TO ALL TERMS,
CONDITIONS, LIMITATIONS,WARRANTIES, EXCLUSIONS AND CANCELLATION
PROVISIONS THEREOF.
(b) THE POLICY WILL NOT BE VARIED BY ANY PROVISIONS CONTAINED IN
THE LEASE WHICH PURPORT TO SERVE AS AN ENDORSEMENT OR AMENDMENT TO THE
POLICY.
SUBJECT (save as specifically stated in this Certificate) to policy
terms, conditions, limitations and exclusions.
Yours faithfully,
[BROKERS]
EXHIBIT D BROKERS' LETTER OF UNDERTAKING
To: INTERNATIONAL LEASE FINANCE CORPORATION
1999 Avenue of the Stars, 39th Floor
Los Angeles, California 90067
United States
Date: Our Ref:
Re: AMERICAN TRANS AIR, INC. ("LESSEE")
------
Boeing 737-800
Manufacturer's Serial No.: ____
Registration Mark: ____ (the "AIRCRAFT")
Dear Sirs:
We confirm that insurance has been effected for the account of [LESSEE]
(the "OPERATOR") covering all aircraft owned or operated by them, including the
above-referenced aircraft (the "Aircraft"). [Also confirm, if applicable, the
amount of any hull all risks or hull war and allied perils on the Aircraft which
LESSEE is carrying in excess of the Agreed Value (which excess insurance would
be payable to LESSEE). Such excess insurance may not exceed ten percent (10%) of
the Agreed Value.]
Pursuant to instructions received from the Operator and in
consideration of your approving the arrangement of the Operator's "Fleet Policy"
(under which the above-referenced Aircraft is insured) through the intermediary
of ourselves as Brokers in connection with the insurance (the "INSURANCE")
mentioned in our Certificate of Insurance (Reference No. [ ] dated [ ] and
attached hereto), we undertake as follows:
1. In relation to the Hull and War Risks Insurance to hold to your
order the insurance Slips or Contracts and any Policies which may be issued or
any policies substituted (with your consent) therefor (but only insofar as the
same relate to the Aircraft only) and the benefit of the Hull and War Risks
Insurance thereunder, but subject to our requirements to operate the Fleet
Policy insofar as it relates to any other aircraft insured thereunder.
2. To advise you of any of the following:
(a) If any insurer cancels or gives notice of cancellation of
any of the Insurance at least thirty (30) days (or such lesser period
as may be available in the case of War and Allied Perils) before such
cancellation is to take effect in respect of the Aircraft.
(b) Of any act or omission or of any event (including
non-payment of premium) of which we have knowledge or are notified and
which might invalidate or render unenforceable in whole or in part any
of the Insurance, insofar as the same relate to the Aircraft.
(c) If we do not receive instructions to renew all or any of the
Insurance at least thirty (30) days prior to their expiration.
(d) If any of the Insurance are not renewed on the same terms
(save as to premium and period of cover and as you might otherwise have
notified us to be acceptable to you) seven (7) days prior to expiry
thereof.
The above undertakings are given subject to our continuing appointment
for the time being as Insurance Brokers to the Operator.
We also undertake to advise you if we cease to be Insurance Brokers to
the Operator.
Yours faithfully,
EXHIBIT E ESTOPPEL AND ACCEPTANCE CERTIFICATE
AMERICAN TRANS AIR, INC. ("LESSEE"), a corporation organized under the laws
of Indiana does hereby represent, acknowledge, warrant and agree as follows:
1. LESSEE and INTERNATIONAL LEASE FINANCE CORPORATION, as LESSOR, have
entered into an Aircraft Lease Agreement dated as of September 5, 2000
(hereinafter referred to as the "LEASE"). Words used herein with capital letters
and not otherwise defined will have the meanings set forth in the Lease.
2. LESSEE has this ____ day of __________, ____ (Time: __________) at
____________________ received from LESSOR possession of:
(a) One (1) Boeing 737-800 aircraft bearing Manufacturer's serial number
____ and U.S. registration mark ____, together with two (2) CFM56-7B-27 engines
bearing manufacturer's serial numbers _______ and ________ (each of which has
750 or more rated take-off horsepower), all in airworthy condition.
(b) All Aircraft Documentation, including the usual and customary manuals,
logbooks, flight records and historical information regarding the Aircraft,
Engines and Parts.
3. All of the foregoing has been delivered and accepted on the date set
forth above to LESSEE's full satisfaction and pursuant to the terms and
provisions of the Lease.
4. The Agreed Value of the Aircraft is US$_______________.
5. The amount of fuel on board at Delivery is __________ (circle one)
pounds/kilos (________ gallons).
6. The Aircraft, Engines, Parts and Aircraft Documentation as described in
the Lease have been fully examined by LESSEE and have been received in a
condition fully satisfactory to LESSEE and in full conformity with the Lease in
every respect.
7. The Lease is in full force and effect, LESSEE has no claims, offsets,
deductions or set-off of any kind or nature in connection with the Lease, except
for any claims against LESSOR set forth on the attached List of Discrepancies.
8. LESSOR's Lender may rely upon all of the foregoing in granting
substantial financial accommodations to LESSOR and LESSEE understands and agrees
that any funds being advanced by LESSOR's Lender will be made in reliance upon
the foregoing.
9. LESSEE has obtained all required permits, authorizations, licenses and
fees of the State of Registration or any Government Entity thereof necessary in
order for LESSEE to operate the Aircraft as permitted by the terms of the Lease.
Dated on the date set forth above
AMERICAN TRANS AIR, INC.
By:
Title:
ATTACHMENTS:
1. List of Aircraft Documentation
2. List of Loose Equipment
3. List of Discrepancies
ATTACHMENT 1 TO ESTOPPEL AND ACCEPTANCE CERTIFICATE
LIST OF AIRCRAFT DOCUMENTATION
MANUALS
1. FAA Approved Flight Manual
2. Airplane Flight Operation Manual
3. Aircraft Recover Manual
4. Quick Reference Handbook (QRH)
5. Weight and Balance Manual
6. Aircraft Fueling Manual
7. Aircraft Maintenance Manual (MM)
8. Aircraft Maintenance Manual Supplement
9. Ramp Maintenance Manual (RMM)
10. Cargo Loading Manual
11. Fault Reporting Manual (FRM)
12. Fault Isolation Manual (FIM)
13. Illustrated Parts Catalog (IPC)
14. Life Limited Parts Manual
15. Structural Repair Manual (SRM)
16. Master Minimum Equipment List
17. Wiring Diagram Manual (WD)
18. Wiring Practices Manual
19. System Schematics Manual
20. B.I.T.E. Manual
21. Non-Destructive Test Manual
22. Corrosion Prevention Manual
23. Component Maintenance Manual
24. APU Log Book
25. Engine Maintenance Manual
26. Engine Log Book
27. Engine Illustrated Parts Catalog
28. Engine Data Submittal Book
29. Engine Overhaul Manual
30. Power Plant Build-up Manual
AIRCRAFT RECORDS AND HISTORICAL DOCUMENTS
1. Copies of original Certificates delivered by Boeing:
a. Airworthiness Certificate for Export
b. Radio installation conformity certificate
c. Noise limitation certificate
2. Copies of original Documents delivered by Boeing:
a. Airworthiness Directive Compliance list
b. Aircraft inspection report
c. Aircraft Readiness Log
d. Weighing report
3. Copies of current Certificates:
a. Airworthiness Certificate
b. Noise limitation
c. Radio license
d. Interior material burn certificates
e. Certificate of Export
f. Aircraft deregistration confirmation
e. Aircraft Registration
4. Letters signed and stamped by Quality Assurance:
a. Current aircraft hours and cycles
b. Current engines hours and cycles
c. Accident and Incident report
d. Summary of Maintenance Program
e. AD compliance during the lease term
5. Aircraft log books and Aircraft readiness log.
6. Aircraft Hard Time (HT) inspection status.
7. One year forecast for HT inspection.
8. Aircraft Modification status, including service bulletins.
9. Last weighing report prior to redelivery.
10. AD compliance report with original signoffs.
11. Routine and non-routine job cards of the last "C" and "D" checks.
12. Past year pilots and maintenance discrepancies.
13. Major and Minor structural repairs with applicable approvals.
14. Compass Swing report of the last three years.
15. Cabin Configuration drawing (LOPA).
16. Emergency equipment location drawing.
17. Last X-RAYs
ENGINES RECORDS
1. Last test cell run reports.
2. Life Limited Parts status and traceability.
3. AD compliance report with original signoffs.
4. Engine Modification/service bulletin/inspection report and applicableforms.
5. Last heavy maintenance records for each module.
6. Engine log books.
7. Engine removal history.
8. Past year trend monitoring reports.
9. Historical borescope reports.
10. Engine component report.
APU RECORDS
1. APU status (FH, FC, limits).
2. Life limited Part status and traceability.
3. AD compliance with original signoffs.
4. Modification status.
5. Last heavy maintenance documents.
6. APU log books.
7. Last test cell report.
COMPONENT RECORDS
1. Aircraft component inventory.
2. Hard time component inventory.
3. All serviceable tags.
4. Landing Gear status with last overhaul and life limited Part status.
5. AD compliance with original signoffs.
6. Modification status.
ATTACHMENT 2 TO ESTOPPEL AND ACCEPTANCE CERTIFICATE
LIST OF LOOSE EQUIPMENT
ATTACHMENT 3 TO ESTOPPEL AND ACCEPTANCE CERTIFICATE
LIST OF DISCREPANCIES
EXHIBIT F OPINION OF COUNSEL
TO BE GIVEN BY INDEPENDENT OUTSIDE COUNSEL OF LESSEE OR OTHER LAWYERS
ACCEPTABLE TO LESSOR
To: International Lease Finance Corporation
1999 Avenue of the Stars, 39th Floor
Los Angeles, California 90067
United States
Gentlemen:
This opinion is furnished to you pursuant to Article 7 of the Aircraft
Lease Agreement dated as of September 5, 2000 (the "LEASE") between AMERICAN
TRANS AIR, INC. ("LESSEE") and INTERNATIONAL LEASE FINANCE CORPORATION
("LESSOR"). Defined terms in this opinion are used herein as defined in the
Lease.
I have acted as counsel for LESSEE in connection with the preparation,
execution and delivery of the Lease.
In that connection I have examined:
(a) The Lease and Estoppel and Acceptance Certificate;
(b) The charter of LESSEE and all amendments thereto (the "CHARTER"); and
(c) Such other documents, agreements and instruments, and such treaties,
laws, rules, regulations, decrees and the like, as I have deemed necessary as a
basis for the opinions hereinafter expressed.
[ (d) All of the agreements and any amendments thereto between LESSEE and
all other lessors and lenders of LESSEE covering other aircraft operated by
LESSEE on which the Engines can be installed.]
Based upon the foregoing and having regard for legal considerations
which I deem relevant, I am of the opinion that:
1. LESSEE is a corporation duly incorporated, validly existing and in good
standing under the Laws of Indiana. It has the corporate power and authority to
carry on its business as presently conducted and to perform its obligations
under the Lease.
2. No authorization, approval, consent, license or order of, or
registration with, or the giving of notice to the Aviation Authority or any
other regulatory body or authority is required for the valid authorization,
execution, delivery and performance by LESSEE of the Lease.
3. The Lease and the Estoppel and Acceptance Certificate have each been
duly authorized, executed and delivered by LESSEE. Each such instrument is a
valid, enforceable and binding obligation of LESSEE except as enforceability may
be limited by bankruptcy, insolvency, reorganization or other Laws of general
application affecting the enforcement of creditors' rights.
4. The execution and delivery of the Lease and the Estoppel and Acceptance
Certificate, the consummation by LESSEE of the transactions contemplated therein
and compliance by LESSEE with the terms and provisions thereof do not contravene
any Law applicable to LESSEE, or result in any breach of or constitute any
default under or result in the creation of any lien, charge or encumbrance upon
any property of LESSEE, under any indenture, mortgage, chattel mortgage, deed of
trust, conditional sales contract, bank loan or credit agreement, corporate
charter, by-law or other agreement or instrument to which LESSEE is a party or
by which LESSEE or its properties or assets is bound.
5. Except for any filing or recording that may be required with the [NAME
OF AIRCRAFT REGISTER] and except for [DESCRIBE SUCH OTHER FILINGS OR
RECORDINGS], no filing or recording of any instrument or document (including the
filing of any financial statement) is necessary under the laws of the U.S. in
order for the Lease to constitute a valid and perfected lease of record relating
to the Aircraft, it being understood that such counsel expresses no opinion as
to the nature of LESSOR's title to the Aircraft on the Delivery Date.
6. LESSEE holds all licenses, certificates and permits from applicable
governmental authorities in the U.S. necessary for the conduct of its business
as a certificated air carrier and performance of its obligations under the
Lease.
7. To my knowledge, there are no suits or proceedings pending or threatened
against LESSEE before any Government Entity against or affecting LESSEE which
are reasonably likely to be adversely determined and, if adversely determined,
would have a material adverse effect on the financial condition or business of
LESSEE or its ability to perform under the Lease, except as described in the
filings provided to LESSOR pursuant to Article 22.
8. The obligations of LESSEE under the Lease are direct, general and
unconditional obligations of LESSEE and rank or will rank at least PARI PASSU
with all other present and future unsecured and unsubordinated obligations
(including contingent obligations) of LESSEE, with the exception of such
obligations as are mandatorily preferred by law.
9. LESSEE, under the laws of the U.S. or of any other jurisdiction
affecting LESSEE, is subject to private commercial law and suit. Neither LESSEE
nor its properties or assets have the right of immunity from suit or execution
on the grounds of sovereignty in such jurisdictions and the performance by
LESSEE of its obligations under the Lease constitute commercial acts done for
commercial purposes.
10. There is no applicable usury or interest limitation Law in Indiana
which may restrict the recovery of payments in accordance with the Lease.
11. LESSOR will not violate any Law or become liable to any tax in Indiana
or the U.S. by reason of entering into or performing its obligations under the
Lease and it is not necessary to establish a place of business in Indiana in
order to enforce any provisions of the Lease.
Very truly yours,
EXHIBIT G ASSIGNMENT OF RIGHTS (AIRFRAME)
[DATE]
Boeing Commercial Airplane Group
P.O. Box 3707
Seattle, Washington 98124-2207
Attention: Vice President-Contracts
Mail Code 21-34
Subject: Full Assignment of Rights and Obligations - International Lease
Finance Corporation as Lessor and AMERICAN TRANS AIR, INC. as Lessee of Model
Boeing 737-800 aircraft bearing manufacturer's serial number 28244
Ladies and Gentlemen:
In connection with International Lease Finance Corporation's lease to
AMERICAN TRANS AIR, INC. ("Lessee") of a Boeing aircraft (more fully described
below), reference is made to the following documents:
A. Purchase Agreement 1830, dated as of June 27, 1995, between The
Boeing Company ("Boeing") and International Lease Finance Corporation ("ILFC")
(the "Boeing Agreement") under which ILFC purchased a certain Boeing Model
737-800 aircraft bearing manufacturer's serial number 28244 (the "Aircraft").
B. Aircraft Lease Agreement (the "Lease") for the Aircraft dated as of
September 5, 2000 between ILFC and Lessee.
Capitalized terms used herein without definition will have the same
meaning as in the Boeing Agreement.
In connection with ILFC's lease of the Aircraft under the Lease, ILFC
is transferring to Lessee certain rights of ILFC related to the Aircraft under
the Boeing Agreement. To accomplish this transfer of rights, as authorized by
the provisions of the Boeing Agreement:
1. Lessee acknowledges that it has received copies of the following
specific provisions of the Boeing Agreement applicable to the Aircraft and
agrees to be bound by and comply with all the terms, conditions, and limitations
contained in such provisions, including without limitation the disclaimer and
release, exclusion of liabilities, indemnity and insurance provisions thereof:
Boeing Agreement
Article 6 - Excusable Delay
6.1 General
Article 10 - Assignment, Resale or Lease
10.1 Assignment
10.3 Sale by Buyer after Delivery
10.4 Lease by Buyer after Delivery
10.5 No Increase in Boeing Liability
10.6 Exculpatory or Indemnity Clause in Post-delivery Sale or Lease
Article 12 - Product Assurance; Disclaimer and Release; Exclusion of
Liabilities; Customer Support; Indemnification and Insurance
(in its entirety)
Article 14 - Contractual Notices and Requests
Article 15 - Miscellaneous
15.4 Governing Law
Exhibit B - Product Assurance Document
Part A Boeing Warrant
Part B Warranty Repairs and Modifications by Buyer
Part C Boeing Service Life Policy
Part D Boeing Indemnity Against Patent Infringement
Part D-1 Boeing Indemnity Against Copyright Infringement
Part E Supplier Warranties and Patent Indemnities
Part G Boeing Interface Commitment
Part H General
Exhibit C-1 - Customer Support Document
Part B Boeing Customer Support Services
Part D Technical Data and Documents
Part E Buyer's Indemnification of Boeing and Insurance
Part F Alleviation or Cessation of Performance
Exhibit E - Buyer Furnished Equipment Provisions Document
Paragraph 8 Indemnification of Boeing
Paragraph 9 Patent Indemnity
Paragraph 10 Definitions
Letter Agreement No. 1830-3 - Seller Purchased Equipment
Paragraph 6 Buyer's Indemnification of Boeing
2. Lessee recognizes that Boeing's obligation to provide training,
support and services to Lessee pursuant to Exhibit C of the Boeing Agreement is
conditioned on the receipt by Boeing of evidence of compliance by Lessee with
the insurance requirements set forth in paragraph 2 of Part E of Exhibit C or in
such other form as may be satisfactory to Boeing, prior to the commencement of
such training, support and services.
3. ILFC reserves to itself all rights, claims and interests it may have
under the Boeing Agreement not expressly assigned to Lessee hereunder. ILFC will
remain responsible to Boeing for any amounts with respect to the Aircraft owed
to Boeing under the Boeing Agreement prior to the effective date of this letter,
including any amounts owed by ILFC to Boeing under the specific articles and
paragraphs of the Boeing Agreement referenced in paragraph 1 above based upon
events or incidents relating to the Aircraft occurring prior to the effective
date of this letter.
4. ILFC hereby assigns to Lessee the sole authority to exercise in
Lessee's name all rights and powers of ILFC with respect to the Aircraft under
the specific portions of the Boeing Agreement referenced in paragraph 1 above.
Such authorization will continue until Boeing receives from ILFC written notice
that the Lease has been cancelled or terminated, addressed to Boeing's Vice
President, Contracts, P.O. Box 3707, MC 21-34, Seattle, Washington 98124-2207,
U.S.A. Until Boeing receives such notice, Boeing will be entitled to deal
exclusively with Lessee with respect to the Aircraft under the specific portions
of the Boeing Agreement referenced in paragraph 1 above and, with respect to the
rights, powers, duties or obligations under such portions of the Boeing
Agreement, any and all actions taken by Lessee or agreements entered into by
Lessee during the period prior to Boeing's receipt of such notice will be final
and binding on ILFC.
5. Lessee hereby accepts the authorization set forth in paragraph 4
above and agrees to be bound by and to comply with all the terms, conditions and
limitations of the portion of the Boeing Agreement referenced in paragraph 1
above.
6. This Assignment may be signed by the parties hereto in separate
counterparts, each of which when executed and delivered shall be an original,
but all such counterparts shall together constitute but one and the same
instrument.
7. This Assignment shall be governed by, and construed in accordance
with,the laws of the State of Washington, including all matters of construction,
validity and performance.
We request that Boeing, upon receipt of this letter, acknowledge
receipt thereof and the transfer of rights set forth above by signing the
acknowledgment and forwarding one copy of this letter to each of the
undersigned.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment
Agreement to be duly executed as of the dates written below.
INTERNATIONAL LEASE FINANCE AMERICAN TRANS AIR, INC., as Lessee
CORPORATION, as Lessor and Buyer
By: By:
Its: Its:
BOEING ACKNOWLEDGMENT AND CONSENT TO ASSIGNMENT
Receipt of the above letter is acknowledged and transfer of certain rights as
described above under the Boeing Agreement is confirmed, effective as of this
date.
THE BOEING COMPANY
By:
Its:
Date:
EXHIBIT H ASSIGNMENT OF RIGHTS (ENGINES)
[DATE]
CFM INTERNATIONAL, INC.
1 Neumann Way, F-17
Cincinnati, Ohio 45215
Attention: Commercial Contracts -
Warranty Assignment Administrator
Dear Warranty Assignment Administrator:
Reference is hereby made to that Consent to Assignment made as of April
29, 1988 (the "CONSENT TO ASSIGNMENT"), by and between CFM INTERNATIONAL, INC.
("CFMI") and INTERNATIONAL LEASE FINANCE CORPORATION ("ILFC"). Terms defined in
the Consent to Assignment are used herein with the same meaning as in the
Consent to Assignment.
As of ________________ ___, ______, ILFC has assigned all of its rights
and interest in, to and under the Engine Warranties to AMERICAN TRANS AIR, INC.
("ASSIGNEE") in connection with its lease to Assignee of a Boeing 737-800
aircraft (the "AIRCRAFT") together with two (2) CFMI Model CFM56-7B-27 engines
bearing Manufacturer's Serial Numbers _______ and ________ (the "ENGINES") as of
the date each such Engine was delivered to Assignee. Such assignment shall be
effective from such date until ILFC notifies CFMI that the Lease has been
cancelled or terminated.
The Assignee has accepted such assignment and all the limitations and
liabilities pertaining to the Engine Warranties as stated in the provisions of
the GTA listed in Schedule 2 to the Consent to Assignment.
A copy of the aforesaid assignment is attached hereto.
Very truly yours,
INTERNATIONAL LEASE FINANCE CORPORATION
By:
Title:
cc: Ruben M. Cabrera
Director, Commercial Contracts
ASSIGNMENT OF WARRANTIES
[DATE]
In consideration of AMERICAN TRANS AIR, INC. ("LESSEE") leasing from
International Lease Finance Corporation ("ILFC") one (1) Boeing 737-800 aircraft
together with two (2) CFMI Model CFM56-7B-27 engines bearing manufacturer's
serial numbers _______ and ________, it is hereby agreed as follows:
1. ILFC hereby assigns and transfers to Lessee all of ILFC's respective
rights and interest in and to and in and under the Engine Warranties set forth
in and subject to the limitations and liabilities set forth in Exhibit B
Warranty, Section X (the "ENGINE WARRANTIES") of CFM International, Inc. - ILFC
General Terms Agreement No. 6-3987 dated 22 June 1984 (the "GTA") during the
term of such leases so long as Lessee is not in default thereunder.
2. Lessee hereby accepts such assignment including all the limitations and
liabilities pertaining to said Engine Warranties as stated in the provisions of
Exhibit B Warranty, Section X of the GTA.
3. This Agreement shall be binding upon and inure to the benefit of each of
the parties hereto and their respective successors and assigns to the extent
permitted by the GTA and hereunder.
4. This Agreement shall be governed by and construed in accordance with the
laws of the State of California.
5. This Agreement may be executed in any number of counterparts, each of
which when executed and delivered is an original but all of which taken together
constitute one and the same instrument and any party may execute this Agreement
by signing any counterpart.
IN WITNESS WHEREOF, the authorized representative of the parties hereto
have executed this Agreement as of the day and year first above written.
For and on behalf of For and on behalf of
INTERNATIONAL LEASE FINANCE AMERICAN TRANS AIR, INC.
CORPORATION
By: By:
Its: Its:
EXHIBIT I RETURN ACCEPTANCE RECEIPT
Date: _________________ ___, ____
1. AMERICAN TRANS AIR, INC., as LESSEE, and INTERNATIONAL LEASE FINANCE
CORPORATION, as LESSOR, have entered into an Aircraft Lease Agreement dated as
of September 5, 2000 (the "LEASE"). Words used herein with capital letters and
not otherwise defined will have the meanings set forth in the Lease.
2. LESSOR has this ____ day of __________, ____ (Time: __________) at
____________________ received from LESSEE possession of:
(a) One (1) Boeing 737-800 Aircraft bearing Manufacturer's serial number
____, together with two (2) CFM56-7B-27 engines bearing manufacturer's serial
numbers _______ and ________, and all Parts attached thereto and thereon in an
airworthy condition and
(b) All Aircraft Documentation, including the usual and customary manuals,
logbooks, flight records and historical information regarding the Aircraft,
Engines and Parts, as listed in the Document Receipt attached hereto.
3. The Airframe, Engines and Parts had the following hours/cycles at
return:
(a) AIRFRAME:
Total hours: _______________ Total Landings: _______________
(b) ENGINES:
POSITION SERIAL NO. TOTAL HOURS TOTAL CYCLES HRS/CYCLES SINCE
LAST SHOP VISIT
Time Remaining to Next
LIFE LIMITED PART REMOVAL
PART NAME HOURS CYCLES
MSN
MSN
(c) APU: MSN __________
Total hours: __________
______ hours/ ______ cycles since last Overhaul
______ hours/ ______ cycles remaining on APU life-limited Parts
(d) LANDING GEARS:
POSITION SERIAL NO. Total Hrs/Cycles since Date of last
HRS/CYCLES LAST OVERHAUL OVERHAUL
Nose
Right Main
Left Main
(e) FUEL ON BOARD AT RETURN: ______ (circle one) pounds/kilos (______
gallons)
4. Other technical information regarding the Aircraft and its components
are correctly set forth on the Technical Evaluation Report (in the form of
Exhibit L) attached hereto.
5. The above specified aircraft, engines and documentation are hereby
accepted by LESSOR subject to correction by LESSEE (or procurement by LESSEE at
LESSEE's cost) as soon as reasonably possible of the discrepancies specified in
Attachment 2 hereto.
6. Subject to the following paragraph, the leasing of the Aircraft by
LESSOR to LESSEE pursuant to the Lease is hereby terminated without prejudice to
LESSEE's continuing obligations under the Lease including, without limitation,
paragraph 6 above and Articles 10.5, 15 and 16.
7. LESSEE represents and warrants that during the term of the Lease all
maintenance and repairs to the Airframe and Engines were performed in accordance
with the requirements contained in the Lease. LESSEE further confirms that all
of its obligations under the Lease whether accruing prior to the date hereof or
which survive the termination of the Lease by their terms and accrue after the
date hereof, will remain in full force and effect until all such obligations
have been satisfactorily completed.
8. This Return Acceptance Supplement is executed and delivered by the
parties in [place].
IN WITNESS WHEREOF, the parties hereto have caused this Return
Acceptance Receipt to be executed in their respective corporate names by their
duly authorized representatives as of the day and year first above written.
INTERNATIONAL LEASE FINANCE CORPORATION AMERICAN TRANS AIR, INC.
By: By:
Its: Its:
ATTACHMENTS:
1. List of Aircraft Documentation
2. List of Loose Equipment
3. List of Discrepancies
4. Engine Maximum Power Assurance Test Conditions and Results
5. Dent and Damage Chart
6. Form of No Accident/Incident Letter
7. Technical Evaluation Report (in the form of Exhibit L)
ATTACHMENT 1 TO RETURN ACCEPTANCE RECEIPT
LIST OF AIRCRAFT DOCUMENTATION
[The (a) manuals and (b) Aircraft records and historical documents set
forth below are to be returned with the Aircraft in a current, up-to-date and
correct status]
MANUALS
1. FAA Approved Flight Manual
2. Airplane Flight Operation Manual
3. Aircraft Recover Manual
4. Quick Reference Handbook (QRH)
5. Weight and Balance Manual
6. Aircraft Fueling Manual
7. Aircraft Maintenance Manual (MM)
8. Aircraft Maintenance Manual Supplement
9. Ramp Maintenance Manual (RMM)
10. Cargo Loading Manual
11. Fault Reporting Manual (FRM)
12. Fault Isolation Manual (FIM)
13. Illustrated Parts Catalog (IPC)
14. Life Limited Parts Manual
15. Structural Repair Manual (SRM)
16. Master Minimum Equipment List
17. Wiring Diagram Manual (WD)
18. Wiring Practices Manual
19. System Schematics Manual
20. B.I.T.E. Manual
21. Non-Destructive Test Manual
22. Corrosion Prevention Manual
23. Component Maintenance Manual
24. APU Log Book
25. Engine Maintenance Manual
26. Engine Log Book
27. Engine Illustrated Parts Catalog
28. Engine Data Submittal Book
29. Engine Overhaul Manual
30. Power Plant Build-up Manual
AIRCRAFT RECORDS AND HISTORICAL DOCUMENTS
1. Copies of original Certificates delivered by Boeing:
a. Airworthiness Certificate for Export
b. Radio installation conformity certificate
c. Noise limitation certificate
2. Copies of original Documents delivered by Boeing:
a. Airworthiness Directive Compliance list
b. Aircraft inspection report
c. Aircraft Readiness Log
d. Weighing report
3. Copies of current Certificates:
a. Airworthiness Certificate
b. Noise limitation
c. Radio license
d. Interior material burn certificates
e. Certificate of Export
f. Aircraft deregistration confirmation
e. Aircraft Registration
4. Letters signed and stamped by Quality Assurance:
a. Current aircraft hours and cycles
b. Current engines hours and cycles
c. Accident and Incident report
d. Summary of Maintenance Program
e. AD compliance during the lease term
5. Aircraft log books and Aircraft readiness log.
6. Aircraft Hard Time (HT) inspection status.
7. One year forecast for HT inspection.
8. Aircraft Modification status, including service bulletins.
9. Last weighing report prior to redelivery.
10. AD compliance report with original signoffs.
11. Routine and non-routine job cards of the last "C" and "D" checks.
12. Past year pilots and maintenance discrepancies.
13. Major and Minor structural repairs with applicable approvals.
14. Compass Swing report of the last three years.
15. Cabin Configuration drawing (LOPA).
16. Emergency equipment location drawing.
17. Last X-RAYs
ENGINES RECORDS
1. Last test cell run reports.
2. Life Limited Parts status and traceability.
3. AD compliance report with original signoffs.
4. Engine Modification/service bulletin/inspection report and applicable forms.
5. Last heavy maintenance records for each module.
6. Engine log books.
7. Engine removal history.
8. Past year trend monitoring reports.
9. Historical borescope reports.
10. Engine component report.
APU RECORDS
1. APU status (FH, FC, limits).
2. Life limited Part status and traceability.
3. AD compliance with original signoffs.
4. Modification status.
5. Last heavy maintenance documents.
6. APU log books.
7. Last test cell report.
COMPONENT RECORDS
1. Aircraft component inventory.
2. Hard time component inventory.
3. All serviceable tags.
4. Landing Gear status with last overhaul and life limited Part status.
5. AD compliance with original signoffs.
6. Modification status.
ATTACHMENT 2 TO RETURN ACCEPTANCE RECEIPT
LIST OF LOOSE EQUIPMENT
ATTACHMENT 3 TO RETURN ACCEPTANCE RECEIPT
LIST OF DISCREPANCIES
ATTACHMENT 4 TO RETURN ACCEPTANCE RECEIPT
ENGINE MAXIMUM POWER ASSURANCE TEST CONDITIONS AND RESULTS
ATTACHMENT 5 TO RETURN ACCEPTANCE RECEIPT
DENT AND DAMAGE CHART
ATTACHMENT 6 TO RETURN ACCEPTANCE RECEIPT
FORM OF NO ACCIDENT/INCIDENT LETTER
EXHIBIT J MONTHLY REPORT
(SEE FOLLOWING SHEET)
MONTHLY AIRCRAFT UTILIZATION AND STATUS REPORT
Page 1 of 2
Report Due Date:
To: INTERNATIONAL LEASE FINANCE CORPORATION Fax: (310) 788-1990
1999 Avenue of the Stars, 39th Floor
Los Angeles, California 90067, United States
Attn: Finance Department
From: AMERICAN TRANS AIR, INC.
Contact: Fax:
AIRCRAFT TYPE: BOEING 737-800
ENGINE TYPE: CFM56-7B-27 REGISTRATION: ____
SERIAL NUMBER: ____ MONTH OF:
NOTE: PLEASE RECORD TIME IN HOURS AND MINUTES NOT DECIMALS.
Aircraft Total Time Since New As Of Last Month: Hours: Min:
Aircraft Total Time Since New: Hours: Min:
Aircraft Total Cycles Since New: Cycles:
Airframe Hours Flown During Month: Hours: Min:
Airframe Cycles/Landings During Month: Cycles:
Time Remaining to "D" or Heavy Maintenance Check:
HOURS OR US$ PER
CYCLES FLOWN HOUR OR
DURING MONTH (AS CYCLE (AS
APPLICABLE) X APPLICABLE) = RESERVES
TOTAL AIRFRAME: HRS: X =
TOTAL LANDING GEAR: HRS: X =
TOTAL APU: HRS: X =
ORIGINAL ENGINE SERIAL
NUMBER: Hrs: Min: x =
Cycles(for Engine
LLP Reserves): x =
ORIGINAL ENGINE SERIAL
NUMBER: Hrs: Min: x =
Cycles (for Engine
LLP Reserves): x =
ORIGINAL ENGINE SERIAL
NUMBER: Hrs: Min: x =
Cycles (for LLP x =
Reserves):
ORIGINAL ENGINE SERIAL
NUMBER: Hrs: Min: x =
Cycles (for Engine
LLP Reserves): x =
TOTAL AMOUNT OF RESERVES (US$) PAID THIS MONTH: US$
Monthly Aircraft Utilization and Status Report
From: AMERICAN TRANS AIR, INC. PAGE 2 OF 2
ENGINE SERIAL NUMBER: ENGINE SERIAL NUMBER:
ORIGINAL POSITION: ORIGINAL POSITION:
ACTUAL LOCATION: ACTUAL LOCATION:
CURRENT THRUST RATING: CURRENT THRUST RATING:
HOURS:/MIN: HOURS:/MIN:
Total Time Since New As Of Total Time Since New As Of
Last Month: Last Month:
Total Time Since New: Total Time Since New:
Total Cycles Since New: Total Cycles Since New:
Hours Flown During Month: Hours Flown During Month:
Cycles During Month: Cycles During Month:
IMPORTANT: IF ILFC-OWNED ENGINE IS REMOVED OR INSTALLED ON ANOTHER
AIRCRAFT, IT MUST BE REPORTED MONTHLY ON THIS FORM.
EXHIBIT K AIRCRAFT DOCUMENTATION
AIRCRAFT RECORDS
1. Copies of original Certificates delivered by Boeing:
a. Airworthiness Certificate for Export
b. Radio installation conformity certificate
c. Noise limitation certificate
2. Copies of original Documents delivered by Boeing:
a. Airworthiness Directive Compliance list
b. Aircraft inspection report
c. Aircraft Readiness Log
d. Weighing report
3. Copies of current Certificates:
a. Airworthiness Certificate
b. Noise limitation
c. Radio license
d. Interior material burn certificates
e. Certificate of Export
f. Aircraft deregistration confirmation
e. Aircraft Registration
4. Letters signed and stamped by Quality Assurance:
a. Current aircraft hours and cycles
b. Current engines hours and cycles
c. Accident and Incident report
d. Summary of Maintenance Program
e. AD compliance during the lease term
5. Aircraft log books and Aircraft readiness log.
6. Aircraft Hard Time (HT) inspection status.
7. One year forecast for HT inspection.
8. Aircraft Modification status, including service bulletins.
9. Last weighing report prior to redelivery.
10. AD compliance report with original signoffs.
11. Routine and non-routine job cards of the last "C" and "D" checks.
12. Past year pilots and maintenance discrepancies.
13. Major and Minor structural repairs with applicable approvals.
14. Compass Swing report of the last three years.
15. Cabin Configuration drawing (LOPA).
16. Emergency equipment location drawing.
17. Last X-RAYs
ENGINES RECORDS
1. Last test cell run reports.
2. Life Limited Parts status and traceability.
3. AD compliance report with original signoffs.
4. Engine Modification/service bulletin/inspection report and applicable forms.
5. Last heavy maintenance records for each module.
6. Engine log books.
7. Engine removal history.
8. Past year trend monitoring reports.
9. Historical borescope reports.
10. Engine component report.
APU RECORDS
1. APU status (FH, FC, limits).
2. Life limited Part status and traceability.
3. AD compliance with original signoffs.
4. Modification status.
5. Last heavy maintenance documents.
6. APU log books.
7. Last test cell report.
COMPONENT RECORDS
1. Aircraft component inventory.
2. Hard time component inventory.
3. All serviceable tags.
4. Landing Gear status with last overhaul and life limited Part status.
5. AD compliance with original signoffs.
6. Modification status.
EXHIBIT L TECHNICAL EVALUATION REPORT
(SEE FOLLOWING SHEETS)