* CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE BEEN
OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
PURCHASE AGREEMENT
FOR
TWELVE (12) JETSTREAM 4100 AIRCRAFT
BETWEEN
AERO INTERNATIONAL (REGIONAL)
as agent for and on behalf of
British Aerospace (Operations) Limited
and
ATLANTIC COAST AIRLINES
Dated: February 23, 1997
TABLE OF CONTENTS
PURCHASE AGREEMENT 3
SECTION 1. DEFINITIONS 4
SECTION 2. THE AIRCRAFT 7
SECTION 3. PURCHASE PRICE AND PAYMENT TERMS 9
SECTION 4. BUYER FINANCING 11
SECTION 5. [RESERVED] 14
SECTION 6. RESIDUAL VALUE GUARANTEE 15
SECTION 7. DELIVERY AND ACCEPTANCE 16
SECTION 8. TRANSFER OF TITLE AND FERRY 18
SECTION 9. INSURANCE 20
SECTION 10. EXCUSABLE AND INEXCUSABLE DELAY 22
SECTION 11. AIRCRAFT WARRANTY AND GUARANTEES 25
SECTION 12. TRAINING AND TECHNICAL REPRESENTATIVE 26
SECTION 13. [RESERVED] 28
SECTION 14. QUALIFIED ROTABLE SPARES FINANCING 29
SECTION 15. TAXES AND LICENSES 30
SECTION 16. REPRESENTATIONS AND WARRANTIES 32
SECTION 17. CONDITIONS PRECEDENT 35
SECTION 18. FURTHER ASSURANCES 36
SECTION 19. EVENT OF TERMINATION 37
SECTION 20. MISCELLANEOUS 40
EXHIBIT A - Jetstream 41 Aircraft Delivery Schedule
EXHIBIT B - Aircraft Warranty and Supplier Warranties
EXHIBIT B-1 - Addenda to Aircraft and Supplier Warranties
EXHIBIT C - Change Orders
EXHIBIT D - Form of Operating Lease Agreement
EXHIBIT D-1 - Backstop Terms
EXHIBIT E - Payment Instructions
EXHIBIT F-1 - Form of Residual Value Agreement
EXHIBIT F-2 - Form of Put Agreement
EXHIBIT F-3 - Table of Residual Values
EXHIBIT G - Amendments to the Product Support Agreement and
*
EXHIBIT H - Certificate of Acceptance
EXHIBIT I-1 - Amendments to Jetstream 32 Return Conditions
EXHIBIT I-2 - Amendments to Jetstream 32 Return Conditions
EXHIBIT I-3 - Amendments to Jetstream 32 Return Conditions
EXHIBIT J - Additional Product Support
EXHIBIT K - Purchase Price Revision
EXHIBIT L - Confirmation of Sale
EXHIBIT M - Dispute Resolution
EXHIBIT N - Jetstream 32 Aircraft
PURCHASE AGREEMENT FOR
JETSTREAM 41 AIRCRAFT
This PURCHASE AGREEMENT (the "Agreement") by and between
AERO
INTERNATIONAL (REGIONAL) a Soci,t, par Actions Simplifi,e,
having a share capital of FF
300,000, whose registered office is situated at 1 All,e
Pierre Nadot, 31712 Blagnac Cedex,
France, registered at the Companies' Registry in Toulouse
under No B 402 685 507, acting as
agent for and on behalf of British Aerospace (Operations)
Limited, (hereinafter referred to as
"the Seller"); and ATLANTIC COAST AIRLINES, a California
corporation located at 515A Shaw
Road, Dulles, Virginia 20166 ("Buyer") is dated as of
February 23, 1997.
WHEREAS Buyer has agreed to purchase certain additional
Jetstream 41 aircraft from
Seller (as hereinafter defined); and
WHEREAS in connection with Buyer's agreement to purchase the
Jetstream 41 aircraft
Seller has agreed to provide certain backstop financing
pending, or in certain cases, in the absence
of, Buyer's completion of permanent financing; and
* ; and
WHEREAS Seller will provide or will cause to be provided to
Buyer certain product
support services and spare parts financing as provided for
herein in connection with the new
Jetstream 41 aircraft acquired by Buyer; and
WHEREAS Seller will provide or will cause to be provided
certain residual value
guarantees with respect to the Jetstream 41 aircraft
purchased by Buyer under this Agreement; and
WHEREAS Buyer and Manufacturer have entered into an
agreement concerning the
refinancing of certain Jetstream 41 aircraft existing in
Buyer's fleet,
NOW THEREFORE, for good and valuable consideration, the
receipt and sufficiency of
which are hereby acknowledged, and based upon the mutual
premises and promises herein
contained, the parties hereto do hereby agree as follows:
SECTION 1.- DEFINITIONS
Except as otherwise specified, the following terms have the
respective meanings set forth
below:
Acceptance Flight Tests: Those flight tests as defined in
Section 7.2.1 of this Agreement.
Adjusted Base
Purchase Price: Has the meaning assigned to it in
Section 3.2.
Affiliated Company: means any corporation, entity or
individual which directly or
indirectly, controls, or is controlled by, or is under a
common
control with, such person or entity. For purposes of this
definition,
"control" (including "controlled by" and "under common
control")
shall mean the power, directly or indirectly, to direct or
cause the
direction of the management and policies of such person,
whether
through the ownership of voting securities or by contract or
otherwise.
AIRAMS: means AI(R) Customer Support, Inc., a
company incorporated in
Delaware and located at 13850 McLearen Road, Herndon, VA.
Aircraft: Jetstream Aircraft Limited Jetstream
Series 4100 twin engined
turboprop transport aircraft, including the airframe and two
(2)
installed engines and propellers.
Backstop Financing Means the lease financing described
in Exhibit D-1.
Base Purchase Price: Has the meaning assigned to it
in Section 3.1.
Business Days: Means any day other than a Saturday
or Sunday or a day on
which commercial banks are required or authorized to close
in
New York, New York or Washington D.C.
CAA: The Civil Aviation Authority of the
United Kingdom and any
successor agency.
Certificate of Acceptance: A certificate in respect of
each Aircraft substantially in the form
attached hereto as Exhibit H.
Change Order: A written amendment to the
Manufacturer's Specification.
Conditions Precedent: Those events as defined in
Section 17 of this Agreement.
Customer Specification: The Manufacturer's Specification as
modified by Change Orders (i)
executed in conjunction with this Agreement and attached
hereto as
Exhibit C and (ii) executed subsequent to the date hereof
and
incorporated as of such subsequent date.
Delivery Date: With respect to each Aircraft, the
actual date of delivery thereof.
Event of Termination: Those events as defined in
Section 19 of this Agreement.
Excusable Delay: A failure or delay in performance
as defined in Section 10.1 of this
Agreement.
FAA: The Federal Aviation Administration of
the United States of
America and any successor agency.
FARs: The Federal Aviation Regulations of
the FAA.
JACO means Jet Acceptance Corporation, a
Delaware corporation.
Inexcusable Delay: Has the meaning assigned to it in
Section 10.4.
Lease Agreement: Is a lease agreement substantially in
the form of Exhibit D pursuant
to which Seller shall provide Backstop Financing on the
terms and
subject to the conditions set forth in Exhibit D-1 of this
Agreement.
LIBOR means as applicable to each period indicated, the
per annum rate for
deposits in dollars for six months quoted two Business Days
prior to
the first day of such period as such rate is published as
the "British
Banker's LIBOR Fixing" for dollar deposits as of 11:00 am on
such
date.
Manufacturer: Means British Aerospace
(Operations) Limited, a company
incorporated under the laws of England and Wales under the
Companies Act of 1985 having its registered office at
Warwick
House, P.O. Box 87, Farnborough Aerospace Centre,
Farnborough
Hants GU14 6YU.
Manufacturer's Facility: Means the Manufacturer's facility
at Prestwick, Scotland.
Manufacturer's Specification: The Jetstream Aircraft Type
Specification DV/M 490.262/96
(SEP94), Issue 6, dated June 1995.
Modification Program: Has the meaning assigned to it
in Section 3.4.1.
Purchase Price: Has the meaning assigned to it in
Section 3.3.
Qualified First Officer: Any pilot with at least one
thousand five hundred (1,500)
total flight hours (including a minimum of five hundred
[500] flight
hours on multi-engined aircraft) who possesses multi-
engined,
commercial aircraft and flight instrument ratings.
Qualified Flight Captain: Any pilot with at least two
thousand five hundred (2,500) total flight
hours (including a minimum of one thousand [1,000] flight
hours on
turboprop or turbojet aircraft) who possesses multi-engined,
commercial aircraft, flight instrument and ATP ratings.
Qualified Rotable Spares: Any new and unused item of
special tooling uniquely required to
maintain the Aircraft or any new and unused serial numbered
rotable
spare part or component for the Aircraft (excluding engines
and
engine related parts) with an individual current list price
at time of
delivery of Two Thousand U.S. Dollars (U.S. $2,000) or more;
excluding however any consumable item or items and any quick
engine change kits.
Regulatory Change: Has the meaning assigned to it in
Section 2.3.
Return Payment: Has the meaning assigned to it in
Section 13.4.
Scheduled Delivery Date: With respect to each Aircraft, that
date specified in the notice
provided pursuant to Section 7.1.2 of this Agreement.
Sublease Agreement Means a sublease agreement between
Buyer, or its Affiliated
Company, and Jet Acceptance Corporation ("JACO"), or its
Affiliated Company in respect of a Jetstream 32 aircraft.
SECTION 2 - THE AIRCRAFT
2.1 Each Aircraft shall be manufactured and offered for
delivery to Buyer in a manner
conforming to the Customer Specification.
2.2 Each Aircraft shall be offered for delivery to Buyer
with a CAA Certificate of
Airworthiness for Export which shall qualify for the
issuance of a United States FAA
Certificate of Airworthiness.
2.3 Buyer acknowledges and agrees that in the event any
requirement, regulation or mandate of
the CAA or of the FAA or any law or any interpretation
thereof becomes effective between
the date of this Agreement and the Delivery Date of an
Aircraft which has the effect of
requiring any changes or modifications to the Customer
Specification or to any work carried
out or to be carried out in the manufacture of such Aircraft
or to the testing with respect
thereto ("Regulatory Change"), * Seller shall, without
any obligation or requirement to
secure the permission or consent of Buyer, provided,
however, that Seller shall consult with
Buyer on the proposed change or modification, make such
changes or modifications to the
Customer Specification, or to the Aircraft or carry out such
testing, or if such modifications
or changes shall be embodied following the Delivery Date of
an Aircraft, Seller shall
consult and agree with Buyer on a schedule for such
Regulatory Change to be embodied.
2.3.1 Seller shall undertake all modifications,
changes and testing required by such
Regulatory Change at Seller's expense if such Regulatory
Change is exclusively
required for the Aircraft * and not generally
applicable to turboprop passenger
transport aircraft certificated under the category
applicable to the Aircraft.
2.3.2 In the case of a Regulatory Change applicable
to the Aircraft * plus any other
turboprop passenger transport aircraft certified under the
category applicable to the
Aircraft, the Base Purchase Price for the Aircraft may be
increased to reflect the cost
of all changes, modifications and testing required by such
Regulatory Change,
provided, however, that (i) * (ii) the cost shall not
exceed the cost charged for
the same changes on aircraft of other best customer
operators of Jetstream 41
aircraft or (ii) in order to standardize with other aircraft
already in Buyer's fleet,
Buyer may elect to embody the Regulatory Change on the
Aircraft at its own cost
by providing sufficient notice to Seller.
2.3.3 Seller shall provide Buyer with written
notice of each such Regulatory Change and
shall issue to Buyer a Change Order executed by Seller
stating the change or
modifications to the Aircraft or the testing required and
the adjustment to the Base
Purchase Price, to the extent permitted by this Agreement,
necessitated by such
change, modification or testing, which Change Order
automatically shall be binding
on both parties hereto notwithstanding the absence of
Buyer's signature thereon.
2.3.4 Prior to the delivery of each Aircraft,
Seller shall be entitled to fly each Aircraft and
to use any part thereof for such period or periods as shall
be necessary in connection
with CAA or FAA requirements related to the Aircraft and
Seller shall be under no
liability to Buyer in respect of any reasonable use or
depreciation of the Aircraft
occasioned thereby. Seller shall minimize its use of any
Aircraft or part or parts
thereof as provided for in this Section 2..3.4.
SECTION 3 - PURCHASE PRICE AND PAYMENT TERMS
3.1 The Base Purchase Price for each Aircraft is * .
3.2 The Base Purchase Price shall be adjusted to determine
the "Adjusted Base Purchase
Price", as follows:
3.2.1 To include the cost of changes to the Customer
Specification required by Buyer
after the date hereof.
3.2.2 To include the cost of Regulatory Changes
pursuant to the terms of Clause 2.3.2,
except those paid directly by Buyer.
3.3 The Adjusted Base Purchase Price shall be adjusted to
determine the "Purchase Price" to reflect changes in
economic conditions * and (iii) the Adjusted Base
Purchase Price shall not be adjusted for any period of delay
of an Aircraft which is due to *
3.4 Buyer shall pay to Seller the Purchase Price for each
Aircraft upon execution by Buyer of
the Certificate of Acceptance for such Aircraft, provided,
however, that with respect to any
Aircraft delivered under a Lease Agreement, Buyer shall pay
all amounts specified in the
Lease Agreement due upon delivery of such Aircraft.
3.4.1 Subject to the conditions specified herein,
the first Aircraft delivered under this
Agreement shall be delivered to Buyer under a Lease
Agreement. Buyer's
obligation to pay the lease rentals due under such Lease
Agreement shall be waived
until the later of (i) March 1, 1997 or (ii) the date of
completion of the J41
modification program currently being performed by Seller on
Buyer's existing fleet
of Jetstream 41 aircraft (the "Modification Program"),
subject to the provisions of
Section 3.4.2.
3.4.2 In the event the date of completion of the
Modification Program is delayed due to
reasons resulting from the acts or omissions of Buyer, the
obligation to pay the
lease rentals for such Aircraft shall occur on the date the
Modification Program
would have been completed if such acts or omissions of Buyer
had not occurred.
3.5 Upon (i) delivery, acceptance and payment in full of
the Purchase Price for each Aircraft in accordance with the
terms of this Agreement, or, (ii) execution of a Lease
Agreement on the Delivery Date for each Aircraft, *
3.6 All amounts payable by one party to the other pursuant
to this Agreement shall be payable
in U.S. Dollars in immediately available funds, by Federal
Funds transfer or same day book
entry transfer to the accounts specified in Exhibit E
attached hereto.
SECTION 4 - BUYER FINANCING
4.1 Buyer shall use commercially reasonable efforts to
arrange financing for each Aircraft and shall, upon
Seller's request, provide a written statement to Seller
that it has used commercially reasonably efforts to
secure financing for such Aircraft and provide
reasonable detail on the extent and results of such
efforts *
4.1.1 With respect to each Aircraft for which Buyer
has not arranged financing:
(i) if Backstop Financing is available (as
provided for in Exhibit D-1) Buyer shall,
upon execution of the Certificate of
Acceptance in accordance with Section 8.1,
enter into a Lease Agreement for such
Aircraft and comply with the terms and
satisfy the conditions thereof and, subject
to (i) the absence of a matured or unmatured
Event of Termination or event described in
Section 19.2, (ii) the conditions precedent
in Section 17, and (iii) Buyer's satisfaction
of the conditions precedent to the lessor's
obligations under such Lease Agreement
(including the absence of a Default or an
Event of Default thereunder), Seller, or its
designee, will enter into the Lease Agreement
for such Aircraft or cause its designee to
enter into such Lease Agreement.
(ii) if Backstop Financing is not available (as
provided for in Exhibit D-1), Seller shall at
its option, either delay or cancel the
delivery of such Aircraft pursuant to the
terms and conditions of this Section 4.
4.2 Buyer shall keep Seller informed of its efforts to
arrange financing for the Aircraft and shall respond to
all reasonable requests for information from Seller
concerning the status of Aircraft financing. Buyer
shall use a financial advisor selected by Buyer and
acceptable to Seller to assist in arranging the
financing for the Aircraft. Seller shall have the
right to discuss the financing status with Buyer's
advisor and with any potential financing parties
identified by Buyer, the advisor, or Seller, provided
such discussions shall not in the reasonable judgment
of Buyer interfere with Buyer's efforts to secure such
financing and provided further that Buyer shall not be
required to provide Seller with pricing or other
confidential details regarding the financing, except to
the extent necessary for Seller to determine whether
the financing is likely to be available and whether
Buyer is using commercially reasonable efforts to
obtain such financing.
4.3 With respect to each Aircraft scheduled to be delivered
* Buyer shall use reasonable efforts to notify Seller
at least * in advance of the Scheduled Delivery Date as
to whether it believes that third party financing will
be available to allow it to purchase the aircraft upon
delivery. In the event Buyer has not arranged
financing as of the Delivery Date, the Backstop
Financing shall be used for such Aircraft if available
as provided in Section 4.1.1 and Exhibit D.1 hereof.
The decision as to whether third party financing is
likely to be available will be made in good faith to
minimize delays in delivery and to minimize costs to
both parties. *
4.4 With respect to each Aircraft scheduled to be delivered
* Buyer and Seller shall review Buyer's efforts to
secure financing for each Aircraft not less than * of
delivery for each Aircraft.
4.4.1 In the event (i) Buyer fails to demonstrate
to Seller's satisfaction that * financing
commitments are, or shall be, in place for such
Aircraft * and (ii) there is no Backstop Financing
available, Seller, shall, at its sole discretion,
either (i) delay the * for such Aircraft until
such time that Buyer can demonstrate to Seller's
satisfaction that financing commitments are in
place for such Aircraft (subject to the
limitations provided in Section 4.5), or
(ii) terminate this Agreement with respect to such
Aircraft, or (iii) continue toward delivery of
such Aircraft * with actual delivery of such
Aircraft subject to the terms of Section 4.4.2.
4.4.2 In the event that, (a) * Seller did not elect
to delay or cancel the delivery of an Aircraft,
and (b) financing is not available to Buyer as of
the * and (c) provided further that Backstop
Financing is not available, Seller shall at its
sole discretion, either (i) delay the * for such
Aircraft until such time that Buyer can
demonstrate to Seller's satisfaction that
financing commitments are in place for such
Aircraft (subject to the limitations provided in
Section 4.5), or (ii) terminate this Agreement
with respect to such Aircraft.
4.5 With respect to any Aircraft scheduled for delivery *
in the event (i) Backstop Financing is not available,
and (ii) Seller has elected to delay * such Aircraft in
accordance with the terms of Section 4.4, and
(iii) third party financing is not available to Buyer
on terms acceptable to Buyer, and provided further that
such conditions are in existence for a period of *,
then this Agreement shall automatically terminate with
respect to such Aircraft.
4.6 In the event of a termination of an Aircraft pursuant
to Section 4.4 or 4.5, neither party will have any
liability or be subject to any additional penalty to
the other as a result of such cancellation.
4.7 Any delay * of an Aircraft pursuant to Section 4 shall
be excluded from Excusable Delay and Inexcusable Delay
as provided in Section 10 herein.
4.8 Buyer shall be under no obligation to accept any
financing (other than Backstop Financing * in Section
D.1 of Exhibit D herein) which is not acceptable to it
in its sole, but good faith, discretion.
4.9 Seller shall provide prompt written notice to Buyer of
its election to terminate or delay any Aircraft
pursuant to this Section and shall consult with Buyer
on any revised delivery schedule for any delayed
Aircraft.
SECTION 5 - RESERVED
This Section intentionally left blank.
SECTION 6 - RESIDUAL VALUE GUARANTEE
6.1 The Seller shall cause the Manufacturer to issue to
Buyer or its designated assignee
(subject to the limitations on assignment by Buyer provided
in the residual value
guarantee) for each Aircraft on the Delivery Date, (or such
subsequent date within one (1)
year of the Delivery Date) as requested by Buyer, for such
Aircraft a residual value
guarantee (guaranteed by British Aerospace plc, if
requested) which shall be substantially
in the form and substance of either (i) the Residual Value
Agreement attached hereto as
Exhibit F-1 or the Put Agreement attached hereto as Exhibit
F-2, as Buyer may elect with
respect to each Aircraft. The value shall be based upon the
term of the residual value
guarantee and the amounts as provided in Exhibit F-3
attached hereto.
6.2 Seller agrees to enter into discussions in good faith
as reasonably requested by Buyer with
parties designated by Buyer on the forms in Exhibit F-1 and
F-2.
SECTION 7 - DELIVERY AND ACCEPTANCE
7.1 Each Aircraft shall be offered to Buyer for acceptance
and delivery in accordance with the
Customer Specification at the Manufacturer's Facility.
7.1.1 The Aircraft shall be delivered to Buyer in
accordance with the schedule contained
in Exhibit A attached hereto and incorporated herein and
each delivery is subject to
satisfaction of the Conditions Precedent specified in
Section 17 of this Agreement.
7.1.2 Seller shall provide Buyer initial notice of
the Scheduled Delivery Date for each
Aircraft not less than forty five (45) days prior thereto
and final notice not less than
ten (10) days prior thereto which such notice shall, in
addition to the general
requirement for notice herein, be sent via facsimile message
to Buyer's Senior Vice
President of Operations which notice shall specify it is
being provided in accordance
with this Section 7.1.2, provided, however, that notice for
the first two (2) Aircraft
shall be provided within five (5) Business Days of the date
hereof, and provided
further that such Scheduled Delivery Date shall be during
the month specified in
Exhibit A attached hereto.
7.1.3 Buyer acknowledges and agrees that the
delivery schedule for the Aircraft as set
forth in Exhibit A attached hereto is subject to
modification on account of any
change by Buyer to the Customer Specification subsequent to
the date of this
Agreement or as a result of a Regulatory Change.
7.2 Buyer shall have the right during the five (5) days
following the Scheduled Delivery Date of
each Aircraft to perform a ground inspection and a flight
inspection of each Aircraft to
enable Buyer to ascertain that such Aircraft is in
compliance with the terms of this
Agreement.
7.2.1 Buyer may, as part of such inspection,
request Seller to operate each Aircraft for a
period not to exceed three (3) hours (each an "Acceptance
Flight Test") to
demonstrate in ambient conditions at such location as
specified in Section 7.1 that
the Aircraft complies with the requirements of this
Agreement in respect of those
requirements which can only be demonstrated in flight.
7.2.1.1 Buyer may designate not more than three (3)
representatives to participate at
Buyer's expense and risk in the Acceptance Flight Tests and
Seller hereby
indemnifies and holds Buyer (together with its respective
directors, officers
and employees) harmless against any and all liability
arising therefrom,
except in cases of gross negligence or willful misconduct by
Buyer or its
representatives.
7.2.1.2 The Aircraft shall be operated only by
Seller's nominees during the
Acceptance Flight Tests, although Seller's nominees shall
follow the
reasonable instructions of Buyer during the Acceptance
Flight Tests.
7.2.2 In the event following such ground and flight
inspection, Buyer ascertains that any
Aircraft is not in compliance with the requirements of this
Agreement, Buyer shall
immediately notify Seller in writing of each such
noncompliance whereupon Seller
shall investigate the noncompliance and shall, at Buyer's
option, either rectify or
have rectified the same within a reasonable period of time
or agree to rectify the
noncompliance after delivery of the Aircraft to Buyer. Upon
Seller's rectification of
the noncompliance, Seller shall demonstrate to Buyer that
the Aircraft meets the
contractual requirements of this Agreement, including
permitting Buyer to conduct
additional ground or flight inspection, or both, as
necessary. Upon satisfactory
demonstration by Seller that the Aircraft complies with the
requirements of this
Agreement, or upon Seller agreeing to rectify any
noncompliance to the satisfaction
of Buyer after delivery of the Aircraft to Buyer, Buyer
shall accept the Aircraft and
execute a Certificate of Acceptance in respect to that
Aircraft in accordance with
Section 8.1 (noting any noncompliance to be rectified after
delivery).
7.3 Buyer may refuse to accept any Aircraft by reason of
Seller's failure to meet the
requirements of this Agreement unless such failure is minor
and does not materially affect
the performance, economic operation, appearance, or
maintenance of the Aircraft; provided
however, Seller shall remedy such failure by a date to be
agreed between the parties.
7.4 Subject to the exclusions in Section 10.6, if Seller
has provided Buyer notice in accordance with Section 7.1.2
and otherwise through no fault of Seller, Buyer fails to
carry out an inspection of any Aircraft within ten (10) days
following the Scheduled Delivery Date, *
SECTION 8 - TRANSFER OF TITLE AND FERRY
8.1 Upon delivery of each Aircraft in compliance with this
Agreement, Buyer shall accept each
Aircraft and shall execute a Certificate of Acceptance with
respect thereto.
8.2 With respect to each Aircraft purchased at delivery by
Buyer, property in, title to and risk
of loss of or damage to each Aircraft shall pass to Buyer
upon acceptance by Buyer of the
Aircraft and payment to the Seller of the balance of the
Purchase Price for each Aircraft
in accordance with the provisions of Section 3.4.
8.3 With respect to each Aircraft purchased at delivery by
Buyer, each Aircraft shall be
delivered by Seller to Buyer with good, legal and marketable
title free and clear of all
liens, encumbrances and rights of others of any nature
whatsoever and Seller will warrant
and defend such title forever against all claims and demands
whatsoever. Seller shall
issue an executed confirmation of sale to Buyer in the form
attached hereto as Exhibit L.
8.4 Upon transfer of title, or, in the case of a lease,
execution of the Lease Agreement, and receipt of all require
permission to ferry the Aircraft, *
8.5 If Buyer fails to make the necessary arrangements, or
fails to comply with its obligations
under this Agreement to accept an Aircraft, * except
in cases due to reasons which are
not within Buyer's reasonable control, then without
prejudice to any other remedies and
rights of Seller, Buyer shall, in respect of any subsequent
period during which the Aircraft
remains at the Manufacturer's Facility, promptly reimburse
Seller for all reasonable costs
and pay Seller's costs for storage, maintenance,
preservation and insurance accruing in
consequence of Buyer's failure to take delivery of such
Aircraft.
8.6 Seller shall assist Buyer as reasonably requested to
file any applications and secure all
necessary approvals for the purpose of ferrying the Aircraft
to a location in the Eastern
United States as designated by Buyer.
SECTION 9 - INSURANCE
9.1 At all times following delivery of an Aircraft *
the Buyer shall obtain and maintain at
its own expense Third Party and Passenger Legal Liability
Insurance Policies as
hereinafter provided in respect of the Aircraft to be
effective on transfer of title in
accordance with Section 8.2. For each Aircraft delivered to
Buyer under a Lease
Agreement, Buyer shall comply with all insurance
requirements of the Lease Agreement.
Prior to the transfer of title, or the execution of the
Lease Agreement, all insurance in
respect of the Aircraft shall be the responsibility of the
Seller.
9.2 Not less than ten (10) days before the Scheduled
Delivery Date of each Aircraft, or such
shorter period as reasonably necessary to review such
insurance certificate, Buyer shall
deliver or cause to be delivered to the Seller a draft
Certificate of Insurance and not less
than two (2) Business Days before the Delivery Date of each
Aircraft the Buyer shall
deliver or cause to be delivered to the Seller a Certificate
of Insurance evidencing the
insurance coverage required by this Section 9.
9.3 At all times following delivery of an Aircraft to
Buyer, that Aircraft shall in all respects
remain at the Buyer's risk and the Buyer hereby:
9.3.1 indemnifies the Seller and the Manufacturer,
except in case of gross negligence or
willful misconduct by Seller or Manufacturer, against any
claims, demands, or
expenses whatsoever without any limitation which may be made
against the Seller,
the Manufacturer, or their servants or agents and which may
arise either directly or
indirectly out of ferry flights made by the Aircraft using
pilots designated by
Seller and accepted by Buyer and waives any claim of its own
against the Seller or
Manufacturer arising out of such flying unless such claim is
made within the terms
of Section 11, and
9.3.2 undertakes to name the Seller and the
Manufacturer in the Buyer's Third Party and
Passenger Legal Liability Insurance Policies (which shall be
taken out and
maintained in a manner and with insurers reasonably
acceptable to Seller) for the
period of such ferry flights in such a manner that the
Seller and Manufacturer are
held harmless under the Hull Policy and are indemnified as
an additional insured
under the Third Party and Passenger Legal Liability
Insurance Policies. The said
policies of insurance shall provide the following minimum
limits of cover:
Public Liability/Property Damage/Passenger
Liability, any one
accident/occurrence/combined single limit: One Hundred Fifty
Million U.S. Dollars
U.S. $150,000,000).
SECTION 10 - EXCUSABLE AND INEXCUSABLE DELAY
10.1 Seller shall not be liable to Buyer for any failure or
delay in carrying out its obligations to
deliver an Aircraft under this Agreement, including but not
limited to, failure of Seller or
Manufacturer to deliver an Aircraft on the Scheduled
Delivery Date due to causes not
within the Seller's or Manufacturer's reasonable control
including, but not limited to, acts of
God or of the public enemy; war; warlike operations,
insurrections or riots; fires, floods or
explosions; epidemics or quarantine restrictions; any act
of government or any
governmental priorities, allocations, regulation or orders
affecting materials seasonably
ordered, facilities or Aircraft; failure of or delays in
transportation; strikes or other
government recognized labor troubles; inability after due
and timely diligence to procure
materials or parts by Seller or Manufacturer; failure of the
engine manufacturer to furnish
engines for the Aircraft provided such failure results from
any cause that is not within the
reasonable control of such engine manufacturer (excluding
all labor troubles other than
strikes); and serious accidents (except accidents caused by
the negligent acts or omissions
of Seller or the Manufacturer), or any other cause beyond
Seller's or Manufacturer's
reasonable control or not occasioned by Seller's or
Manufacturer's fault or negligence and
any such failure or delay shall be considered an "Excusable
Delay".
10.2 In the event of an Excusable Delay, Seller's
obligations under this Agreement shall be
deferred only for such period or periods of time during
which the circumstances giving rise
to the Excusable Delay are present.
10.3 Seller shall notify Buyer of any Excusable Delay within
a reasonable period following
receipt of actual knowledge of such delay and, thereafter,
Seller shall provide Buyer with
reasonable updates of Seller's performance, if any, under
the Agreement with respect to
such delays.
10.4 Buyer acknowledges and agrees that, in the event Seller
fails to deliver any Aircraft on the
Scheduled Delivery Date as provided for in Section 7.1.2
herein for any reason other than
Excusable Delay (as defined in Section 10.1 of this
Agreement) and other than reasons
specified in Section 4 or 10.6, (hereinafter referred to as
"Inexcusable Delay") and such
failure to deliver continues for more than * days
after the Scheduled Delivery Date, such
failure will result in delay damages to Buyer, the sum of
which Buyer and Seller
acknowledge and agree would be impractical or difficult to
ascertain.
10.4.1 As a reasonable estimate of the amount of
damages Buyer shall suffer in the event
of an Inexcusable Delay, Seller shall pay to Buyer as
liquidated damages an amount
equal to * per day for the first * days and *
per day thereafter. Such
damages shall become payable by Seller commencing upon the
* day after the
Scheduled Delivery Date (which, for the purposes of this
Section 10.4, if the Seller
does not notify Buyer pursuant to Section 7.1.2 of a
Scheduled Delivery Date, the
last day of the month shall be automatically deemed to be
the Scheduled Delivery
Date) and continuing for each additional day thereafter
through the earliest of (i) the
actual Delivery Date with respect to such Aircraft, (ii) the
date on which Buyer
improperly refuses or delays acceptance of the Aircraft, or
(iii) the date on which
Buyer obtains the right to terminate this Agreement with
respect to such Aircraft in
accordance with Section 10.4.2 hereof.
10.4.2 In the event the delivery of an Aircraft is
delayed more than * days beyond the
Scheduled Delivery Date as provided for in Section 7.1.2
herein, and such delay is
due to Excusable Delay or an Inexcusable Delay, Buyer shall
have the right to
terminate this Agreement with respect to such Aircraft. Any
termination in
accordance with this Section 10.4.2 shall be by Buyer
providing Seller with written
notice of intent to so terminate within * days after
the expiration of such *
day period. In the event of the termination of this
Agreement with respect to any
Aircraft, Seller shall return to Buyer all deposits and
progress payments theretofore
made by Buyer with respect to such Aircraft.
10.4.3 Buyer acknowledges and agrees that the
remedies as provided in this Section 10.4
are its sole and exclusive remedies with respect to Seller's
failure to deliver any
Aircraft as scheduled due to an Inexcusable Delay and that
any payments made
pursuant to this Section are in full and final settlement of
all claims, liabilities and
damages for late delivery of any Aircraft or failure to
deliver any Aircraft and that in
no event shall Seller be liable to Buyer for damages in
respect of delay in delivery
or nondelivery with respect to any individual Aircraft in
excess of * , except in
cases of gross negligence or willful misconduct.
10.5 Notwithstanding the provisions of Section 10.4 hereof,
if Seller shall delay delivery of * or more Aircraft due
solely to reasons of (i) Inexcusable Delay or (ii) excusable
Delay, and such delays continue for more than * days
beyond the Scheduled Delivery Date for each Aircraft, *
provided, however, that if such delay is due to Excusable
Delay, if Seller can demonstrate to Buyer's reasonable
satisfaction that subsequent delivery dates can be met, *
10.6 Buyer shall not be liable to Seller for any necessary
delay in carrying out its obligations to
accept delivery of an Aircraft under this Agreement on the
Scheduled Delivery Date due to
causes not within Buyer's reasonable control, provided that
such causes significantly impair
Buyer's ability to accept delivery of an Aircraft,
including, but not limited to, acts of God or
of the public enemy; war; warlike operations, insurrections
or riots; fires, floods or
explosions; epidemics or quarantine restrictions; strikes or
other government recognized
labor troubles; or any other similar impairments beyond
Buyer's reasonable control. Any
delay in delivery of an Aircraft due to causes specified in
this Section 10.6 shall be
excluded from Excusable Delay or Inexcusable Delay.
SECTION 11 - AIRCRAFT WARRANTY & GUARANTEES
11.1 Seller shall provide Buyer with (i) a warranty for the
Aircraft delivered under this
Agreement in accordance with Exhibit B attached hereto, (ii)
*
11.2 Seller undertakes to obtain vendors' warranties with
respect to those parts of the Aircraft
excluded from the warranty provided in Exhibit B hereto and,
to the extent assignable,
Seller shall assign to Buyer all such vendor warranties with
respect to the Aircraft.
11.3 Seller and Buyer hereby agree to certain warranty
administration procedures as provided in
Exhibit B-1 and certain dispute resolution measures as
provided in Exhibit M attached
hereto.
11.4 Seller (or its designee) shall provide ongoing product
support services to Buyer with respect to the Aircraft and
with respect to Buyer's other Jetstream 41 aircraft *
including, but not limited to, responding to Buyer's
technical (operational and maintenance) equestions,
conducting investigations concerning repetitive technical
problems and issuing findings and corrective actions,
providing spare parts, ground support and test equipment and
otherwise supporting the Buyer's operation and maintenance
of Jetstream 41 aircraft on terms and conditions and in a
manner consistent with product and customer support
generally prevailing at the time and offered to operators by
aircraft manufacturers of similar aircraft.
11.5 Seller shall provide Buyer with respect to Aircraft and
Buyer's other Jetstream 41 aircraft the additional product
support services as outlined in Exhibit J attached hereto.
*
SECTION 12 - TRAINING AND TECHNICAL REPRESENTATIVE
12.1 Seller shall cause AIRAMS to provide Buyer ground
instruction and flight conversion
training for Buyer's Qualified Flight Crews with respect to
the Aircraft as follows:
12.1.1 Seller shall provide * ground training
course per Aircraft delivered to Buyer, up
to a maximum total of * ground training courses, for
the purpose of familiarizing
with the Aircraft up to * Qualified Flight Captains or
* Qualified First
Officers, or any combination thereof, per Aircraft delivered
to Buyer, up to a
combined maximum of * Qualified Flight Captains or
First Officers.
12.1.2 Seller shall provide flight conversion
training not to exceed * hours per pilot
plus * hours per pilot for check rides for those
pilots who have completed the
training specified in Section 12.1.1. The flight conversion
training shall be
conducted on the FAA approved Jetstream 41 flight simulator
at the Reflectone
Training Center.
12.1.3 The training specified in Sections 12.1.1 and
12.1.2 shall be carried out at such
times as may be mutually agreed between the parties but
timed so as to facilitate the
delivery schedule of the Aircraft and the entry into
commercial service of the
Aircraft.
12.1.4 All ground instruction courses shall be
provided at Reflectone's training facility
located at Sterling, Virginia near Dulles International
Airport.
12.1.5 The training specified above, including the
cost of any course materials, shall be
free-of-charge to Buyer; provided however, all cost of
travel, subsistence, lodging
and other expenses associated with attendance of Buyer's
personnel at such training
courses and the expenses of operating any Aircraft for
training, including the cost of
fuel, fluids, repairs, maintenance and parts, shall be for
Buyer's account. Such
training is for Buyer's personnel and does not include any
training for pilots which
pay for their own training and are hired subsequent to
completing the training.
12.1.6 Seller shall provide Buyer with aircraft
specific manuals for each Aircraft upon
delivery of such Aircraft to Buyer. Seller shall also
provide to Buyer at no
additional charge revision service for (i) a mutually agreed
list of Buyer's Jetstream
41 manuals and a mutually agreed list of Buyer's Jetstream
32 manuals, both
through the period ending * years from the date of
delivery of the first Aircraft
hereunder.
12.2 Seller shall cause AIRAMS to make available to Buyer
the services of a technical
representative, based at AIRAMS' facility in Herndon,
Virginia for a period of one (1)
year from the delivery of the first Aircraft delivered under
this Agreement, provided,
however, that such representative may also be available to
assist any other J41 operator in
the Eastern United States.
SECTION 13
[RESERVED]
SECTION 14 - QUALIFIED ROTABLE SPARES FINANCING
14.1 Seller shall provide or arrange lease or debt financing
on behalf of Buyer for initial
provisioning Qualified Rotable Spares purchased by Buyer
from Seller for the Aircraft.
The maximum aggregate amount of financing available shall be
in the amount of *
with the actual amount of financing, subject to the maximum
amount, to be based upon
the value of initial provisioning, Qualified Rotable Spares
purchased by Buyer.
14.2 The terms and conditions of the Qualified Rotable
Spares financing shall be generally
consistent with the Lease Agreement Covering Aircraft Spare
Parts for Tranche six (6) to
be entered into between Seller's Affiliated Company and
Buyer. The rate of interest
applicable to the financing provided hereunder shall be
based upon the U.S. Prime Rate
published in the Wall Street Journal as of the date of
delivery of the spare parts, plus a
spread of * , provided, however, that if the prime rate
on such date is equal to or
greater than * , the spread added to the Prime Rate
shall be reduced to * .
14.3 Funding of the Qualified Rotable Spares shall take
place in no more than three (3)
tranches, with the first financing tranche being available
to Buyer no earlier than the
Delivery Date of the first Aircraft and the final financing
tranche occurring no later than
the Delivery Date of the last Aircraft and the second
financing tranche to be available on
a date to be mutually agreed.
14.4 Any obligation of Seller to provide Buyer with
financing for Qualified Rotable Spares is
conditional upon and subject to satisfaction of all of the
conditions precedent specified in
Section 17 of this Agreement.
SECTION 15 - TAXES AND LICENSES
15.1 The Seller shall pay all taxes, duties, imposts, or
similar charges imposed on the Seller,
Manufacturer, Buyer, or any of their respective Affiliated
Companies which may be
levied by the Government of the United Kingdom or any
political subdivision thereof in
connection with the manufacture, sale, export, delivery,
assembly, purchase, and storage
of the Aircraft or of any component or part, or services
furnished exclusively under this
Agreement which accrue prior to or on the passing of title
of or execution of a Lease
Agreement on the Delivery Date for each Aircraft (as the
case may be) or of the delivery
date of such service, component or part, provided, however,
that the parties hereby agree
that, as between the parties, nothing in this Agreement, or
in any other agreement
between the parties, shall be taken to impose any duty,
liability or obligation on the Seller
or Buyer to pay any documentary or stamp duty or tax
assessed, payable or levied by the
Government of the United Kingdom on or in connection with
any transfer document,
including a bill of sale for any Aircraft.
15.2 Subject to Clause15.4 hereof, all taxes, duties,
imposts, or similar charges imposed by the
U.S. or any political subdivision thereof, (other than the
amount of those taxes, duties,
imposts, or similar charges based on or measured by the
Seller's, Manufacturer's, or any
of their Affiliated Companies' gross or net income, except
taxes in the nature of sales, use
or transfer taxes) which are imposed on the Seller,
Manufacturer, Buyer or any of their
respective Affiliated Companies in connection with this
Contract shall be the
responsibility of the Buyer. Seller agrees to use
commercially reasonable best efforts to
take such actions as Buyer may reasonably request to
minimize any such taxes, duties,
imposts, or similar charges.
15.3 All other taxes, duties, imposts, or similar charges
which are levied in connection with
this Agreement shall be the responsibility of the person
upon whom the tax is imposed.
15.4 Nothing contained herein shall be construed to override
or supersede any specific
provision providing for indemnification or payment of taxes
contained in any other
document entered into in connection with this Agreement.
15.5 If a claim is made against either party to the
Agreement for any taxes, duties, imposts or
similar charges, which is to be borne by the other party to
this Agreement, the first party
shall promptly notify the second party. If reasonably
requested by the second party, the
first party shall, at the second party's expense, take such
action as the second party may
reasonably direct to contest such claim, including payment
under protest, if such is
necessary or appropriate. If payment is made, the first
party shall, at the second party's
expense, seek to recover such payment and if permitted by
law, permit the second party in
the first party's name to file a claim, or prosecute an
action to recover such payment.
15.6 The obtaining of any import licenses or authorizations
required to import the Aircraft into
the United States, and any associated costs, shall be the
responsibility of Buyer. Seller
shall assist Buyer to obtain necessary import licenses and
authorizations to import the
Aircraft into the United States. The Buyer shall not be
responsible for any costs
associated with obtaining the CAA C of A.
15.7 The Seller shall, at its sole cost and expense, apply
in the name of the Seller or Buyer as
Consignor, whichever is appropriate, for a United Kingdom
export license where such an
export license is required by the United Kingdom Customs
Authorities and be responsible
for the customs documentation and clearance of the Aircraft
on departure from the United
Kingdom. Buyer shall cooperate as reasonably requested by
Seller to provide any
assistance required to permit Seller to comply with this
Section.
SECTION 16 - REPRESENTATIONS AND WARRANTIES
16.1 Buyer represents and warrants to Seller that as of the
date of this Agreement and as of the
Delivery Date of each Aircraft:
16.1.1 Buyer is a corporation organized and existing
in good standing under the laws of
California and has the corporate power to own its property
and to carry on its
business as now being conducted and is duly qualified to do
business and is in good
standing in each jurisdiction in which the character of the
properties owned by it
therein or in which the transaction of its business makes
such qualification
necessary except to the extent that the failure to be so
qualified would not have a
material adverse effect on Buyer's abilities to comply with
its obligations under this
Agreement, taken as a whole.
16.1.2 Buyer has full power and authority to enter
into this Agreement and to incur the
obligations provided for herein which have been duly
authorized by all proper and
necessary corporate action and no consent or approval of
stockholders, lenders or
any other person or consent or approval of, notice to or
filing with, any public
authorities is required as a condition to the execution,
delivery or validity of this
Agreement.
16.1.3 Each person executing this Agreement or any
document delivered in connection
with this Agreement is authorized to do so.
16.1.4 This Agreement constitutes a valid and
legally binding obligation of Buyer
enforceable in accordance with its terms.
16.1.5 There are no proceedings pending or
threatened against Buyer or any affiliate of
Buyer before any court or administrative agency that, in the
opinion of the executive
officers of Buyer, will materially adversely affect the
financial condition or
operations of Buyer.
16.1.6 There is no charter, bylaw or preference
stock provision of Buyer and no provision
of any existing mortgage debenture, contract or agreement
binding on Buyer or
effecting its properties that would conflict with or in any
way prevent the execution,
delivery or carrying out the terms of this Agreement by
Buyer.
16.1.7 There is no material adverse change from the
date hereof or as otherwise
represented to Seller by Buyer or on behalf of Buyer in the
financial condition of
Buyer as evidenced in Buyer's financial statements which
would prevent Buyer
from performing its duties and obligations under this
Agreement or under a Lease
Agreement.
16.1.8 Buyer is in compliance with all the terms
and conditions of this Agreement and
there exists no material, continuing default or Event of
Termination under this
Agreement and no default under any other agreement between
Seller or its
Affiliated Companies, or a Trident company, and Buyer or its
Affiliated Companies,
notice of which has been provided to Buyer.
16.1.9 There is no law or governmental regulation or
order that would be contravened by
the execution, delivery and performance of this Agreement by
Buyer.
16.2 Seller represents and warrants to Buyer that as of the
date of this Agreement and as of the
Delivery Date of each Aircraft:
16.2.1 Seller is a Societe par Actions Simplifiee
duly organized and validly existing
pursuant to the laws of France, has the corporate power and
authority to carry on
its business as now conducted and to enter into and perform
its obligations under
the Agreement and is duly qualified to transact business in
each jurisdiction in
which the conduct of its business requires such
qualification, except to the extent
that the failure to be so qualified would not have a
material adverse effect on
Seller's and its Affiliated Companies' abilities to comply
with their obligations
under this Agreement, taken as a whole.
16.2.2 Seller has full power and authority to enter
into this Agreement and the authority to
bind the Manufacturer, and with respect to each, to incur
the obligations provided
for herein which have been duly authorized by all proper and
necessary corporate
action and no consent or approval of stockholders, lenders
or any other person or
consent or approval of, notice to or filing with, any public
authorities is required as a
condition to the execution, delivery or validity of this
Agreement.
16.2.3 Each person executing this Agreement or any
document delivered in connection
with this Agreement is authorized to do so.
16.2.4 This Agreement constitutes a valid and
legally binding obligation of Seller
enforceable in accordance with its terms.
16.2.5 There are no proceedings pending or
threatened against Seller, or any Affiliated
Company, before any court or administrative agency that, in
the opinion of the
executive officers of Seller, will materially adversely
affect the power or ability of
Seller, or such Affiliated Company, to perform its
obligations under this Agreement.
16.2.6 There is no charter, bylaw or preference
stock provision of Seller and no provision
of any existing mortgage debenture, contract or agreement
binding on Seller or
effecting its properties that would conflict with or in any
way prevent the execution,
delivery or carrying out the terms of this Agreement by
Seller.
16.2.7 There is no law or governmental regulation or
order that would be contravened by
the execution, delivery and performance of this Agreement by
Seller.
SECTION 17 - CONDITIONS PRECEDENT
17.1 As conditions precedent to Seller's obligations under
this Agreement and to the delivery of
each Aircraft:
17.1.1 All representations and warranties of Buyer
contained in this Agreement shall be
true and correct.
17.1.2 All legal matters and documents incident to
this Agreement and to the transactions
contemplated hereby shall be completed and in form and
substance reasonably
satisfactory to Seller.
17.2 As conditions precedent to Buyer's obligations under
this Agreement to accept delivery of
each Aircraft and pay the Purchase Price for each such
Aircraft:
17.2.1 All representations and warranties of Seller
contained in this Agreement shall be
true and correct.
17.2.2 With respect to the Backstop Financing,
Seller has, or has caused its designee, to
provide the financing and enter into the related agreements
as provided for and
subject to the limitations in this Agreement.
17.2.3 *
SECTION 18 - FURTHER ASSURANCES
18.1 Each party shall execute and deliver to the other party
promptly such other documents and
assurances and take such further action as either party may
reasonably request from time to
time in order to effectively carry out the intent and
purposes of this Agreement, including,
but not limited to, (i) Seller's cooperation with Buyer and
Buyer's financial advisor to assist
in the arrangement of Buyer's financing for the Aircraft and
(ii) Buyer providing Seller
copies of such financial information representing the
financial condition and operations of
Buyer as requested by Seller including, but not limited to,
all quarterly financial statements
and audited annual financial statements, and permitting
Seller access to Buyer's principal
financial officers to discuss the affairs, finances and
accounts of Buyer.
18.2 Buyer shall furnish Seller information concerning the
use, operation and maintenance of the
Aircraft as Seller may from time to time reasonably request,
and Buyer shall permit Seller
to inspect the records maintained for the Aircraft, provided
such visits do not interfere
unreasonably with the operations of Buyer.
18.3 Seller agrees to hold in confidence any information
obtained pursuant to this provision
unless such information has been otherwise disseminated to
the public or in the event Seller
is required or compelled by law or by regulatory authorities
to disclose the same.
SECTION 19 - EVENT OF TERMINATION
19.1 Each of the following shall constitute an Event of
Termination and upon the occurrence
thereof Seller may at its option terminate this Agreement:
19.1.1 If Buyer is in default with respect to any of
its obligations under this Agreement,
provided that Seller shall have provided Buyer with written
notice of such default
and provided an opportunity to cure such default (within
five (5) days of receipt of
notice for payment default and within thirty (30) days of
such notice for all other
defaults), or if Buyer is in default under any other
agreements contemplated under
this Agreement, or if Buyer or its Affiliated Companies is
in default under any other
lease or sublease agreement or any other agreement between
Seller, Manufacturer,
or their Affiliated Companies or any Trident company and
Buyer or its Affiliated
Companies, provided that Buyer shall have been notified of
such default and given
time to cure such default in accordance with the relevant
provisions of the
applicable agreement.
19.1.2 If Buyer admits in writing its inability to
pay its debts as they become due or makes
a general assignment for the benefit of creditors;
19.1.3 If Buyer files a voluntary petition under any
state or federal court in bankruptcy or
insolvency laws or if such a petition is filed against Buyer
and such petition is not
dismissed within sixty (60) days;
19.1.4 If Buyer petitions for, or acquiesces in, the
appointment of any receiver, trustee or
similar officer to liquidate or conserve its business or any
substantial part of its
assets;
19.1.5 If Buyer ceases doing business as a going
concern;
19.1.6 If Buyer commences under the laws of any
competent jurisdiction any proceeding
involving its insolvency, readjustment of debt, dissolution,
liquidation or any other
similar proceeding for the relief of financially distressed
debtors;
19.1.7 If Buyer becomes the object of any proceeding
or action of the type described in
Subsections 19.1.3, 19.1.4 or 19.1.6 above relating to a
substantial part of its assets
and such proceeding or action remains undismissed or
unstayed for a period of at
least sixty (60) days; or
19.1.8 If Buyer sells all or a substantial part of
its assets; or
19.1.9 If any material warranty or representation
made or furnished to Seller by or on
behalf of Buyer is false when made or furnished.
19.2 In addition to the foregoing rights of termination,
Seller reserves the right, at its sole option,
to delay or cancel the delivery of any Aircraft, or to
terminate its obligation to provide
Backstop Financing, in the event of any material adverse
change in the financial condition
of Buyer which in the reasonable opinion of Seller would
materially prevent Buyer from
obtaining financing or from meeting its obligations under a
Lease Agreement with respect
to any of the Aircraft in accordance with the terms of this
Agreement. Seller shall notify
Buyer of its intention to delay or cancel the delivery of
any Aircraft pursuant to this Section
at least fifteen (15) days prior to such cancellation. In
the event of a cancellation of delivery
of an Aircraft pursuant to this Section 19.2, no party will
have any liability or be subject to
any additional penalty to the other as a result of such
cancellation.
19.3 If Seller shall terminate this Agreement following the
occurrence of an Event of
Termination, Seller shall not be obligated to reimburse
Buyer for any deposit or other
amounts paid with respect hereto or with respect to any
Aircraft.
19.4 If Buyer is in default under any other agreements
between Seller, Manufacturer, or any of
their Affiliated Companies, and Buyer, which default has
been declared in writing by the
party in interest and is continuing, and which default shall
permit the party in interest to
terminate said other agreement, it shall be deemed a default
under any of such agreements
executed by the parties and shall be deemed a default under
this Agreement; in which event
Buyer will be liable to Seller for repayment of all damages
incurred by Seller in respect of
this Agreement and Seller will have all rights permitted by
law to recover from Buyer such
damages.
19.5 Notwithstanding any termination of this Agreement by
Seller following the occurrence of an Event of Termination,
in no event shall Seller's obligations under (i) Aircraft
warranties and guarantees referenced in Section 11, Exhibits
B, G, J, and M, and (ii) * pursuant to Section 3.5 and
Exhibit N, be terminated with respect to Aircraft which have
already been delivered.
SECTION 20 - MISCELLANEOUS
20.1 EXCEPT AS PROVIDED FOR IN THIS AGREEMENT INCLUDING THE
EXHIBITS
HERETO, SELLER AND MANUFACTURER MAKE NO WARRANTY OR
REPRESENTATION OF ANY KIND, EXPRESS OR IMPLIED, WITH
RESPECT TO
THE AIRCRAFT, OR ANY PART THEREOF, INCLUDING WITHOUT
LIMITATION
ANY WARRANTY OF MERCHANTABILITY OF THE AIRCRAFT OR THE
FITNESS
OF THE AIRCRAFT FOR ANY PARTICULAR PURPOSE AND BUYER
ACKNOWLEDGES AND AGREES THAT THE WARRANTY OBLIGATIONS AND
LIABILITIES OF SELLER AND MANUFACTURER HEREUNDER AND THE
RIGHTS AND REMEDIES OF BUYER HEREUNDER ARE EXCLUSIVE AND IN
SUBSTITUTION FOR, AND BUYER HEREBY WAIVES, ALL OTHER
WARRANTIES, GUARANTEES, OBLIGATIONS RIGHTS AND REMEDIES IN
TORT, (EXCEPT WITH RESPECT TO SELLER'S OR MANUFACTURER'S
WILFUL
MISCONDUCT OR GROSS NEGLIGENCE), CONTRACT OR OTHERWISE,
EXPRESS OR IMPLIED (EXCEPT AS OTHERWISE SPECIFICALLY STATED
IN
THIS AGREEMENT) ARISING BY LAW OR OTHERWISE, INCLUDING, BUT
NOT
LIMITED TO, STRICT LIABILITY IN TORT, NEGLIGENCE, ANY
IMPLIED
WARRANTY OF MERCHANTABILITY, ANY IMPLIED WARRANTY ARISING
FROM COURSE OF PERFORMANCE, DEALING, OR USAGE OF TRADE, AND
ANY IMPLIED WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE.
BUYER ACKNOWLEDGES AND AGREES THAT, EXCEPT AS PROVIDED FOR
HEREIN, NEITHER SELLER, MANUFACTURER, THEIR PARENTS, NOR
THEIR
AFFILIATED COMPANIES OR THEIR RESPECTIVE DIRECTORS, OFFICERS
OR
EMPLOYEES SHALL IN ANY EVENT BE LIABLE PURSUANT TO THIS
AGREEMENT WITH RESPECT TO THE AIRCRAFT FOR SPECIAL,
INCIDENTAL
OR CONSEQUENTIAL DAMAGES, INCLUDING, WITHOUT LIMITATION,
LOSS
OF USE OF THE AIRCRAFT, LOSS OF REVENUES OR PROFITS.
20.2 The acceptance of any payment by Seller after it is due
shall not be deemed to be a waiver
of any breach by Buyer of its obligations under this
Agreement.
20.3 If either party fails to make payments when due, a
service charge on such overdue amount
shall then begin to accrue and be due and payable by the
nonpaying party at a rate equal to
the lesser of * per month or the lawful maximum rate.
20.4 This Agreement may not be amended or modified except in
writing signed by the parties,
except as otherwise provided by this Agreement.
20.5 This Agreement cannot be assigned, in whole or in part,
by any party without the prior
written consent of the other parties, provided, however, the
Buyer (i) may assign the
Aircraft warranty and related product support services and
guarantees without such consent
in connection with the financing of any Aircraft, and (ii)
may assign its rights to purchase
any Aircraft to an entity or trustee on behalf of an entity
which is financing the acquisition
of an Aircraft, provided that Buyer's rights to Backstop
Financing shall not be assignable
and Seller shall be under no greater obligations than those
specified herein; and provided
further that Seller may assign this Agreement to
Manufacturer, or any of their respective
Affiliated Companies. Notwithstanding any assignment of this
Agreement, the assigning
party shall remain fully liable to the other party to
perform all the obligations and duties
of the assigning party hereunder and the exercise by any
assignee of any of the rights
assigned shall not release the assigning party from any of
its duties or obligations to the
other party under this Agreement, save to the extent that
such exercise by the assignee
shall constitute performance of such duties and obligations.
20.6 This Agreement will be governed by and construed in
accordance with the laws of the
Commonwealth of Virginia of the United States of America.
20.7 Any judicial proceeding brought against the Buyer or
Seller involving any matter in any
way arising out of, related to or connected with this
Agreement or the Aircraft may be
brought in the U.S. District Court for the Eastern District
of the Commonwealth of Virginia
or in a state court in the Commonwealth of Virginia in the
Eastern District and, by
execution and delivery of this Agreement, Buyer and Seller
each (a) accept, generally and
unconditionally and irrevocably submit to the exclusive
jurisdiction of such courts and any
related appellate court, and irrevocably agree to be bound
by any final, nonappealable
judgment rendered thereby in any action or proceeding in
connection with this Agreement
and (b) irrevocably waive any objection it may now or
hereafter have as to the venue of any
such suit, action or proceeding brought in such a court or
that such court is an inconvenient
forum or that the party is immune from suit.
20.8 Nothing in this Agreement:
20.8.1 Will convey to Buyer the right to, and Buyer
will not, reproduce or cause or assist in
the reproduction of an aircraft, or material part thereof,
of design identical with or
similar to that of the Aircraft or parts thereof; or
20.8.2 Will give to Buyer a license under any
patents or other rights owned or controlled
by the Manufacturer or Seller.
20.9 Section headings used herein are for convenience of
reference only and will not affect or
limit the interpretation of this Agreement.
20.10 This Agreement may be executed in any number of
counterparts and by different parties
hereto in separate counterparts all of which once executed
and delivered shall be deemed to
be an original and all of which taken together shall
constitute one in the same document.
20.11 The Seller indemnifies and saves harmless the
Buyer against any claims, (excluding,
however, any losses relating to loss of profits or loss of
use) resulting from infringement by
the Aircraft of any United Kingdom or United States patent
provided:
20.11.1 either (a) from the date of design of the
Aircraft, or its relevant component or part,
until the date that the infringement claim is determined,
the United States shall
have been a party to the Chicago Convention on International
Civil Aviation of 7th
December 1944 and are fully entitled to the benefits of
Article 27 thereof or, (b)
from the date of design until the date such infringement
claim is determined the
United States shall have been a party to the International
Convention for the
protection of Industrial Property 20th March 1883 (the Paris
Convention); and
20.11.2 that all claims shall be forthwith reported in
writing to the Seller who shall have
the absolute conduct and control at its expense of all
negotiations and proceedings
in the name of the Buyer; and
20.11.3 that the Buyer shall take all reasonable steps in
cooperation with the Seller to
reduce any royalties, damages and costs arising out of such
claims and shall
furnish to the Seller all data, papers, records and other
assistance within the
Buyer's knowledge, possession or power relevant to resisting
such claims, actions
or proceedings; and
20.11.4 that no condition, warranty, or indemnity, either
express or implied, is given in
respect of patents or registered designs except as stated
herein.
20.12 The patent indemnity provided in Section 20.12
shall not extend to parts or spares not
manufactured by the Manufacturer or pursuant to
Manufacturer's detailed design. The
Seller shall, however, so far as possible and necessary, use
reasonable efforts to obtain, and
to the extent obtained, to assign to the Buyer any rights
the Seller may have against the
manufacturers of such other parts or spares.
20.13 All indemnity obligations of Buyer and Seller under
this Agreement shall survive and
continue in full force and effect notwithstanding delivery
of the Aircraft or expiration or
termination of this Agreement.
20.14 If any provisions of this Agreement shall be held
to be invalid or unenforceable, the validity
and enforceability and the remaining provisions hereof shall
not be affected or impaired in
any way.
20.15 All notices and requests in connection with this
Agreement will be given in writing and
may be given by registered letter, by express delivery or
facsimile, addressed as follows:
Buyer: Atlantic Coast Airlines
515A Shaw Road
Sterling, Virginia 20166
Attention: President
Fax Number: (703) 925-6294
Seller: Aero International (Regional)
1 All,e Pierre Nadot
31712 Blagnac Cedex
France
Attention: SVP Commercial
Fax Number: 33 562 21 6361
or to such other address as the party to receive the
notice or request will designate by notice
to the other. Notices sent by registered letter shall be
deemed to have been received in the
ordinary course of post; notices sent by express delivery
shall be deemed to have been
received on the second Business Day after it was dispatched;
and notices sent by
facsimile shall be deemed to have been received (where
receipt is confirmed by any
addressee by telephone) on the date of transmission.
20.16 This Agreement together with the exhibits,
schedules and appendices referenced herein
(including all Exhibits listed in the Table of Contents and
hereby incorporated by such
reference), constitute the entire agreement of the parties
and supersede all proposals, oral or
written, all prior negotiations and all other communications
between Buyer and Seller with
respect to the subject matters contained herein.
20.17 Seller and Buyer each bear and shall be
responsible for their own costs and expenses
associated with the negotiation, preparation and the
execution of this Agreement together
with any other agreements or documents relating to the
subject matter of this Agreement.
20.18 BUYER HEREBY ACKNOWLEDGES AND AGREES THAT ALL
INFORMATION
REGARDING JETSTREAM AIRCRAFT PRODUCTS, INCLUDING THE
AIRCRAFT
AND SPARES, PRICING, GUARANTEES AND THE TERMS AND CONDITIONS
CONTAINED IN THIS AGREEMENT ARE FURNISHED BY SELLER TO BUYER
AND IS BEING SUBMITTED TO BUYER UNDER AN EXPRESS CLAIM OF
CONFIDENTIALITY FOR THE SOLE AND ABSOLUTE PURPOSE OF
PROVIDING
BUYER WITH JETSTREAM AIRCRAFT, THAT DISCLOSURE OF SUCH
INFORMATION WOULD LIKELY HAVE AN ADVERSE IMPACT ON THE
COMPETITIVE POSITION OF THE MANUFACTURER, SELLER, ITS PARENT
OR
ITS AFFILIATED COMPANIES IN THE AIRCRAFT MANUFACTURING OR
AIRLINE INDUSTRY AND THAT SUCH INFORMATION SHALL BE HELD IN
STRICT CONFIDENCE BY BUYER AND SHALL NOT BE DISCLOSED BY
BUYER
OTHER THAN TO BUYER'S OFFICERS AND EMPLOYEES, BUYER'S
COUNSEL,
FINANCIAL ADVISOR AND OTHER REPRESENTATIVES STRICTLY ON A
NEED-TO-KNOW BASIS OR AS OTHERWISE REQUIRED BY LAW OR
REGULATION. IF BUYER FILES THIS AGREEMENT WITH ANY
GOVERNMENTAL AUTHORITY, BUYER AGREES TO SEEK CONFIDENTIAL
TREATMENT FOR SUCH PORTIONS OF THIS AGREEMENT AS SELLER MAY
REASONABLY REQUEST AND SHALL USE COMMERCIALLY REASONABLE
EFFORTS TO LIMIT DISCLOSURE HEREOF AND THE FILING OF THIS
AGREEMENT TO THE MAXIMUM EXTENT PERMITTED BY LAW OR
REGULATION.
20.19 SELLER HEREBY ACKNOWLEDGES AND AGREES THAT ALL
NONDISCLOSABLE INFORMATION REGARDING BUYER'S BUSINESS,
FINANCES AND OPERATIONS SUBMITTED TO SELLER ARE FURNISHED TO
SELLER UNDER AN EXPRESS CLAIM OF CONFIDENTIALITY, THAT
DISCLOSURE OF SUCH INFORMATION WOULD LIKELY HAVE AN ADVERSE
IMPACT ON THE COMPETITIVE POSITION OF BUYER AND THAT SUCH
INFORMATION SHALL BE HELD IN STRICT CONFIDENCE BY SELLER AND
SHALL NOT BE DISCLOSED OTHER THAN TO SELLER'S OFFICERS,
EMPLOYEES AND AFFILIATED COMPANIES STRICTLY ON A NEED-TO-
KNOW
BASIS OR AS OTHERWISE REQUIRED BY LAW OR REGULATION.
20.20 Neither of the parties may announce the signing of
this Agreement without the prior
approval of the other and further provided that the content
of any notice has been agreed to
in advance by the other party.
20.21 The effective date of this Agreement shall be that
date first set forth in the preamble.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly
executed by their duly authorized officers.
ATLANTIC COAST AIRLINES AERO INTERNATIONAL (REGIONAL)
SAS
as agent for and on behalf of
British Aerospace (Operations), Limited
By:
By:
Its:
Its:
Date:
Date:
EXHIBIT A
JETSTREAM 41 AIRCRAFT DELIVERY SCHEDULE
Aircraft Delivery
Month
1 March 1997
2 March 1997
3 April 1997
4 May 1997
5 June 1997
6 February 1998
7 March 1998
8 April 1998
9 May 1998
10 March 1999
11 April 1999
12 May 1999
EXHIBIT B
PART A - AIRCRAFT WARRANTY
Section 1. The Seller warrants that subject to all the
conditions of this Warranty, the Aircraft,
including, but not limited to parts, components and
assemblies thereof manufactured
or assembled by the Manufacturer, together with all
applicable documentation and
Manuals therefor in hard copy or otherwise (below in this
Warranty collectively
referred to as "Manuals"), shall on the Delivery Date
conform to the Customer
Specification referred to in this Purchase Agreement and
shall be free from defect
due to:
1.1 defective material or
1.2 defective workmanship including process of
manufacture or
1.3 defective design on the part of Manufacturer
including (i) selection of
materials and (ii) process of manufacture having regard to
the state of the art
at the date of such design.
1.4 in the case of Manuals manifest error.
Section 2. The Buyer's remedy and The Seller's
obligations under this Warranty shall be
limited to defects which:
2.1 occur and are discovered by the Buyer within
thirty six (36) months of the
date of the Certificate of Acceptance of the Aircraft in
which the defect
occurs, and
2.2 are notified by the Buyer to the Seller on a
Warranty Report Form within
* of each discovery.
Section 3. This Warranty shall not extend to:
3.1 normal wear and tear.
3.2 any parts not manufactured by the
Manufacturer or to its detailed design, but
it shall extend to any workmanship on the part of the
Manufacturer or Seller
in installing any such part in the Aircraft.
3.3 a part regarded as defective for the sole
reason only that some modification,
alteration or replacement thereof is required by a change in
regulation on the
part of an airworthiness authority after acceptance of the
Aircraft.
3.4 any part of the Aircraft which after
acceptance has been altered otherwise
than by the Seller or with the Seller's written approval
unless it is proved
that such alteration has not been a contributory cause of
the fault.
3.5 any part of the Aircraft from which the
Manufacturer's identification mark,
name or serial number has been removed, unless Buyer can
otherwise verify
such removed information..
3.6 any part of the Aircraft if the Aircraft or
any part thereof has been subjected
to any experimental operation by the Buyer or any type of
operation or use
in contravention of the airworthiness regulations or the
Manufacturer's
design or operational limitations then in force applicable
to the Aircraft or
outside the type of operation or use for which the Aircraft
or the part was
intended, unless it is proved that any such use was not a
contributory cause
of the fault.
3.7 any Manual or part thereof of which the
Seller or Manufacturer is not the
author nor embodiments incorporated in Manuals at the
direction or request
of the Buyer.
3.8 a Manual or part thereof regarded as faulty
for the sole reason only that the
Buyer has not incorporated amendments offered to it by the
Seller or
Manufacturer.
Section 4. If any part of an Aircraft or Manual is
proved to be defective and within the terms of
this Warranty the Seller at its option shall:
4.1 repair the part or rectify without charge, or
4.2 replace such part with a similar part free
from defect, and any part so
replaced shall become the property of the Seller, or
4.3 reimburse the Buyer's costs in rectifying the
defect in accordance with
paragraph 6 below, or
4.4 in respect of defects in design replace such
part without charge with a
modified part or parts and, similarly, supply such modified
part or parts in
respect of all the Aircraft purchased by the Buyer which are
within Warranty
and subject to the same fault.
Section 5. If any part of an Aircraft or Manual is
proved to be defective and within the terms of
this Warranty the Seller shall bear all reasonable costs of
packing, insurance and
transport which may be incurred in sending the said part to
the Seller or
Manufacturer and in returning the repaired or rectified,
replacement or modified part
or parts to the Buyer, provided that the Buyer will make no
charge for such transport
on its own services and the Buyer will bear the labor cost
of component removal
and replacement.
Section 6. Subject to the Seller's agreement which shall
not be unreasonably witheld the Buyer
may carry out rectification by repair of any defect within
the terms of this Warranty.
In that event:
6.1 The Seller shall reimburse to the Buyer the
costs of such rectification which
shall not exceed the product of the Seller's normal direct
manhours for such
rectification and the Seller's then current direct labor
rate, and
6.2 Neither the Seller nor Manufacturer shall be
under any liability whatsoever
in respect of workmanship or material in such rectification.
Section 7. The Seller shall diligently remedy a defect
within the terms of this Warranty and the
provisions of this Warranty shall apply to any repair,
rectification, replacement or
modification pursuant to Section 4, provided however that in
their application to
such replacement, rectification or repair, references to the
date of the Certificate of
Acceptance for an Aircraft shall be construed as referring
either to the date of the
handing back of an Aircraft or part to the Buyer with the
replacement, rectification
or repair incorporated therein, or to the date of the
Seller's election in the case of
local repair, or to the date of delivery of the replacement
to the Buyer, whichever
shall be the earliest date (as the case may require).
Notwithstanding the foregoing
provisions of this Clause, Neither the Seller nor
Manufacturer shall in any
circumstances be under any liability in respect of any such
replacement, rectification
or repair, for defects not discovered within forty-eight
(48) months after the date of
the Certificate of Acceptance for the Aircraft.
PART B - SUPPLIER WARRANTIES
Section 1. The Seller shall require Vendors or Suppliers
of equipment installed in the Aircraft
to offer Warranty protection in respect of such equipment
and the Seller undertakes
to assign to the Buyer the benefits of such Warranties and
to furnish a Vendor
Warranty Manual incorporating all such Warranties. The
Buyer's sole rights and
remedies in respect of the failure of any such equipment
shall be as stated in such
Warranties, and any other warranties conditions or
representations rights or
remedies expressed or implied by stature or common law
regarding such equipment
are to the extent permitted by applicable law hereby
excluded. Unless otherwise
stated therein such warranties shall be governed and
constructed under the laws of
England.
Section 2. Notwithstanding the provision of paragraph 1.
above the Seller undertakes to take
prompt and diligent action to mediate between the Buyer and
the appropriate
Supplier in the event that the Buyer notifies the Seller
that its claim under the terms
of the said Supplier's Warranty has been unfairly rejected
by, or has received an
inadequate or dilatory response from, the said Supplier
.
Section 3. Notwithstanding the provision of paragraph 1.
above, the Seller undertakes to offer
warranty protection in respect of Vendor or Supplier
equipment installed in the
Aircraft in the event such Vendor or Supplier ceases doing
business as a going
concern. Such warranty protection shall be in accordance
with the terms and
conditions of the applicable Vendor or Supplier warranty.
EXHIBIT B-
1
Addendum to Exhibit B, Part A - Aircraft Warranty
In addition to the provisions of Part A - Aircraft Warranty,
the following claim and other
procedures shall apply:
1. In the event Buyer believes any Part of an Aircraft is
defective and within the terms of
this warranty, the Buyer shall return the Part to Seller's
designee AIRAMS for a
warranty adjudication.
2. The AIRAMS adjudication shall state the reason for the
adjudication and shall include a
copy of the repairer's investigation report (if applicable).
3. All adjudications will be provided to Buyer in writing
within * days from the
date of receipt by AIRAMS of the Part (unless otherwise
required by AIRAMS) and
Warranty Claim Form, which ever is later.
4. Failure to supply Buyer with a written adjudication as
provided for and within the time
frame stated in Section 3 above shall result in the claim
being deemed automatically
accepted by AIRAMS and the transaction including, but not
limited to the cost of repairs
and freight charges, as applicable, will be processed free
of charge.
5. In the event Buyer requests a unit exchange
transaction, such transaction shall be
processed in accordance with the terms detailed in the then
current AI(R) Spares Price
Book. Buyer shall return the unserviceable part within
thirty (30) days from the date of
Buyer's receipt of an exchanged unit. In the event Buyer
fails to return the unserviceable
part within thirty (30) days from the date of Buyer's
receipt of an exchange unit (unless
prevented by Force Majeure at that term is defined in the
Jetstream 41 Free of Charge
Exchange Program Agreement between the parties dated
February 23, 1997), AIRAMS
will invoice Buyer for the price of a new unit as listed in
the then current AI(R) Spares
Price Book (less any discounts as applicable). In the event
Buyer believes it had
previously returned the unserviceable part to AIRAMS,
provided Buyer notified
AIRAMS within thirty (30) days of Buyer's receipt of the
corresponding exchanged unit
that it had returned the unserviceable part to AIRAMS or
that the unserviceable part had
been separated from the aircraft during operations, AIRAMS
will not invoice Buyer for
such corresponding exchanged unit.
Addendum to Exhibit B, Part B - Supplier Warranties
In addition to the provisions of Part B - Supplier
Warranties, the following claim and other
procedures shall apply:
1. In the event Buyer believes any vendor or supplier part
of an Aircraft is defective and
within the terms of the applicable vendor or supplier
warranty, the Buyer may return the
Part to its designee AIRAMS pursuant to the Customer
Property Warranty Repair
provisions of the then current AI(R) Spares Price Book for
process and adjudication.
2. The AIRAMS adjudication shall state the reason for the
adjudication and shall include a
copy of the repairer's investigation report (if applicable).
3. All adjudications will be provided to Buyer in writing
within * days from the date of
receipt by AIRAMS of the part and Warranty Claim Form, which
ever is later.
4. Failure to supply Buyer with a written adjudication as
provided for and within the time
frame stated in Section 3 above shall result in the claim
being deemed automatically
accepted by AIRAMS and the transaction including, but not
limited to the cost of repairs
and freight charges, as applicable, will be processed free
of charge.
5. In the event Buyer requests a unit exchange
transaction, such transaction shall be
processed in accordance with the terms detailed in the then
current AI(R) Spares Price
Book. Buyer shall return the unserviceable part within
thirty (30) days from the date of
Buyer's receipt of an exchanged unit. In the event Buyer
fails to return the unserviceable
part within thirty (30) days from the date of Buyer's
receipt of an exchange unit(unless
prevented by Force Majeure at that term is defined in the
Jetstream 41 Free of Charge
Exchange Program Agreement between the parties dated
February 23, 1997), AIRAMS
will invoice Buyer for the price of a new unit as listed in
the then current AI(R) Spares
Price Book. In the event Buyer believes it had previously
returned the unserviceable part
to AIRAMS, provided Buyer notified AIRAMS within thirty (30)
days of Buyer's receipt
of the corresponding exchanged unit that it had returned the
unserviceable part to
AIRAMS or that the unserviceable part had been separated
from the aircraft during
operations, AIRAMS will not invoice Buyer for such
corresponding exchanged unit.
EXHIBIT C
CHANGE ORDERS
[OMITTED]
EXHIBIT D
FORM OF OPERATING LEASE AGREEMENT
LEASE AGREEMENT
dated as of , 199
between
FIRST SECURITY BANK ,
NATIONAL ASSOCIATION
Not in its individual capacity but
solely as owner trustee
Lessor,
and
ATLANTIC COAST AIRLINES
Lessee,
Covering One British Aerospace (Operations) Limited
Jetstream Series 4100 Model Turboprop Aircraft
Serial Number U.S. Registration
Number
TABLE OF CONTENTS
Heading Page
SECTION 1. DEFINITIONS. 1
SECTION 2. ACCEPTANCE UNDER LEASE AND CONDITIONS
PRECEDENT 7
SECTION 3. TERM AND RENT 9
SECTION 4. NET LEASE, ETC. 9
SECTION 5. DISCLAIMER OF REPRESENTATIONS AND WARRANTIES
AND
QUIET ENJOYMENT 10
SECTION 6. POSSESSION, OPERATION AND USE, MAINTENANCE,
INSIGNIA
AND RESERVES 12
SECTION 7. CERTAIN NOTICES 17
SECTION 8. REPLACEMENT AND POOLING OF PARTS;
ALTERATIONS,
MODIFICATIONS AND ADDITIONS 17
SECTION 9. RISK, LOSS, DESTRUCTION OR REQUISITION 19
SECTION 10. INSURANCE. 22
SECTION 11. LIENS 25
SECTION 12. TITLE, RECORDATION, FURTHER ASSURANCE, AND
COOPERATION WITH FINANCIERS. 26
SECTION 13. RETURN OF AIRCRAFT AND RECORDS 29
SECTION 14. TAX INDEMNITY, GENERAL INDEMNITY. 34
SECTION 15. EVENTS OF DEFAULT. 40
SECTION 16. REMEDIES 42
SECTION 17. LESSOR'S RIGHT TO PERFORM FOR LESSEE. 43
SECTION 18. COUNTERPARTS 44
SECTION 19. ASSIGNMENT 44
SECTION 20. MISCELLANEOUS 44
SECTION 21. REPRESENTATIONS, WARRANTIES
AND ASSURANCES OF LESSEE 47
SECTION 22. GENERAL UNDERTAKINGS OF LESSEE 49
Exhibit A - Lease Acceptance Supplement
Schedule 1 to Exhibit A - Description of Aircraft
Schedule 2 to Exhibit A - Schedule of Rental Payments
Schedule 3 to Exhibit A - Schedule of Stipulated Loss
Values
Exhibit B - Schedule of Life-Limited Components
Exhibit C - Schedule of Present Insured Parties
Exhibit D -Voluntary Termination Option
Exhibit E - Side Letter Re: Termination / Event of Loss
Payments
Lease Agreement, dated as of ______, 19__, between
FIRST SECURITY BANK,
NATIONAL ASSOCIATION, a national banking association, having
its principal place of business
at 79 South Main Street, Salt Lake City, Utah, 84130, not in
its individual capacity but solely as
Owner Trustee under the Trust Agreement (as hereinafter
defined) ("Lessor"), and ATLANTIC
COAST AIRLINES, a California corporation, having its
principal place of business at 515A Shaw
Road, Sterling, Virginia, 20166 ("Lessee").
WHEREAS, the purpose of this Lease is to lease to
Lessee one British Aerospace
(Operations) Limited Jetstream Series 4100 Model ____
aircraft.
WHEREAS, First Security Bank, National Association, is
the Owner Trustee under the
Trust Agreement, dated as of ______, 19__, with Owner
Participant British Aerospace Asset
Management, Inc. (the "Trust Agreement").
NOW, THEREFORE, in consideration of the mutual
covenants and agreements contained
herein, Lessor and Lessee agree as follows:
SECTION 1. DEFINITIONS.
The following terms shall have the following meanings
for all purposes of this Lease.
Unless otherwise defined in this Lease: (i) references to
agreements shall be deemed to mean and
include such agreements as the same may be amended and
supplemented from time to time, and
(ii) references to parties to agreements shall be deemed to
include the successors and permitted
assigns of such parties.
"Agent" shall mean any Person party to a Financier
Document designated as Agent under
such Financier Document;
"Aircraft" shall mean the Airframe leased and delivered
under this Lease and the Engines
initially installed on such Airframe and the Propellers
initially installed on such Engines, or any
engine or propeller substituted for any of said Engines or
Propellers under this Lease, as permitted
by this Lease whether or not any of said initial or
substitute Engines or Propellers may from time to
time be installed on such Airframe.
"Airframe" shall mean and include: (i) the Aircraft
(except Engines and Propellers) leased
by the Lessor to the Lessee, which Aircraft has the Federal
Aviation Administration Registration
Number and manufacturer's serial number specified in the
Lease Acceptance Supplement executed
and delivered on the Delivery Date and (ii) any and all
Parts so long as the same shall be
incorporated or installed in or attached to such Airframe,
or, so long as the same shall be leased
hereunder, in accordance with the terms of Section 8 of this
Lease, after removal from such
Airframe.
"Applicable Law" shall mean all applicable laws,
treaties, judgments, decrees, injunctions,
writs and orders of any court, governmental agency or
authority and rules, regulations, orders,
directives, licenses and permits of any governmental body,
instrumentality, agency or authority.
"Banks" shall mean the Persons party to any Financier
Document and notified to Lessee in
writing as a Bank;
"Basic Rent" shall mean all rent payable pursuant to
Section 3(b) for the Term.
"Business Day" shall mean any day other than a
Saturday, Sunday or a day on which banks
in the State of New York are authorized or permitted to be
closed.
"Certificated Air Carrier" shall mean any corporation
(except the United States
Government) domiciled in the United States of America and
holding a certificate under 49 U.S.C.
Section 41102 by the Department of Transportation or any
predecessor or successor agency thereof,
or in the event such certificates shall no longer be issued,
any corporation (except the United States
Government) domiciled in the United States of America and
legally engaged in the business of
transporting for hire passengers or cargo by air
predominantly to, from or between points within the
United States of America, and, in either event, operating
commercial aircraft capable of carrying 10
or more individuals or 6,000 pounds or more of cargo.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Default" shall mean any event which constitutes an
Event of Default under this Lease, but
for any requirement in connection therewith for the giving
of notice or the lapse of time, or the
happening of any further condition, event or act.
"Delivery Date" shall mean the date on which the
Aircraft is delivered to the Lessee under
this Lease, which date shall be set forth in the Lease
Acceptance Supplement.
"Engine" shall mean and include: (i) each of the two
Allied Signal Propulsion model TPE-
331-14 engines (except propellers) initially installed on
the Airframe and listed by manufacturer's
model and serial number in the Lease Acceptance Supplement,
whether or not from time to time
thereafter installed on the Airframe (ii) any engine which
may at any time be conveyed to the
Lessor or its nominee pursuant to Section 9(b) or 13(b); and
(iii) any and all Parts, so long as the
same shall be incorporated or installed in or attached to
any Engine subject to this Lease, or, so long
as the same shall be leased hereunder, in accordance with
the terms of Section 8 of this Lease, after
removal from such Engine.
"Event of Default" shall have the meaning assigned
thereto in Section 15 hereof.
"Event of Loss" with respect to the Airframe or any
Engine or Propeller shall mean any of
the following events: (i) the actual or constructive total
loss thereof; (ii) such Airframe, Engine or
Propeller shall become lost or stolen for a period greater
than 45 days, destroyed, damaged beyond
repair or permanently rendered unfit for use for any reason
whatsoever; (iii) the condemnation,
confiscation, requisition or taking of title thereof; or
(iv) the condemnation, confiscation, requisition
or taking of use for a period in excess of six consecutive
months by any government or
instrumentality or agency thereof, or for a period that
extends beyond the end of the Term;
provided however that if the definition of Event of Loss in
the Loan Agreement (or any alternative
expression thereunder corresponding to the definition of
Event of Loss hereunder) differs from the
foregoing definition, but does not differ to the point that
the definition varies from reasonable
aircraft insurance practices, the foregoing shall be deemed
to be substituted by the terms of the
relevant definition in the Loan Agreement. An Event of Loss
with respect to the Airframe shall
constitute an Event of Loss with respect to the Aircraft.
"Federal Aviation Administration" or "FAA" shall mean
the Federal Aviation
Administration and any successor agency.
"Federal Aviation Act" shall mean 49 U.S.C., Subtitle
VII - Aviation Programs, as may be
amended from time to time.
"Financier(s)" means each financial institution(s),
including each Bank, which from time to
time provides financing in respect of all or part of the
Aircraft to Lessor or Owner Participant,
together with any Agent, trustee (including, without
limitation, Security Trustee) or guarantor
thereof, or any other party having or which it is proposed
shall have any interest in the Aircraft,
whether directly or indirectly, by way of ownership or
security.
"Financier Document" shall mean the Mortgage, the Loan
Agreement, any Lessor
Assignment of Insurances and any other document entered into
in connection with any financing
referred to in section 12(f) and designated as a Financier
Document by notice from Lessor or
Owner Participant to Lessee;
"Financier's Liens" shall mean the Mortgage, any other
liens arising as a result of (i) claims
against or affecting any of Agent, Banks or Security Trustee
in each case not related to the
transactions contemplated by the Lease and the Financier
Documents or (ii) acts or omissions of
any of Agent, Banks or Security Trustee relating to the
Lease and the Financier Documents.
"Hourly Reserve Rate" means Garrett Engine Division of
Allied Signal's then-current
recommended hourly set-aside rate for the cost of major and
intermediate periodic inspections on
the engines model TPE-331-14GR/HR engine, adjustable as set
forth below. If no recommended
set-aside is available, Hourly Reserve Rate shall be
calculated by the sum of the estimated costs for
a major and an intermediate periodic inspection divided by
the then approved TBO. In the event
that the engine is operated on an approved "on condition"
program, the Hourly Reserve Rate shall
be calculated by dividing the Lessee's fleet average cost of
each comparable type of shop visit over
the previous twelve months by the Lessee's fleet average
time between the shop visits. If no such
history is available, the amount shall be based on a rate to
be mutually agreed between Lessee and
Lessor.
"Indemnified Parties" shall mean Lessor (both in its
individual capacity and as Owner
Trustee), Owner Participant, and each Financier and the
Security Trustee , (including, each previous
Lessor (both in its individual capacity and as Owner
Trustee), Owner Participant (including,
Financier and Security Trustee which has transferred its
relevant interest as permitted hereunder),
and affiliates, successors, assigns, agents, servants,
officers and employees of each of the foregoing.
"Insured Parties" shall mean Lessor (both in its
individual capacity and as Owner Trustee),
Owner Participant, Banks, Agent, Security Trustee, each
Financier, the Security Trustee (including,
each previous Lessor (both in its individual capacity and as
owner Trustee), Owner Participant,
Financier and Security Trustee which has transferred its
relevant interest as permitted hereunder for
a period of two (2) years from the date of such transfer),
and any other Person who Lessor notifies
Lessee in writing is to be an Insured Party. The present
Insured Parties are identified in Exhibit C
hereto, which Exhibit shall be deemed amended by any proper
notice from any Insured Party.
"Lease" or "Lease Agreement" shall mean this Lease
Agreement dated as of the date first
stated above, between the Lessor, as lessor, and the Lessee,
as lessee.
"Lease Acceptance Supplement" shall mean a Lease
Acceptance Supplement, substantially
in the form of Exhibit A hereto, entered into on the
Delivery Date covering the Aircraft leased
hereunder.
"Leased Aircraft" shall mean any British Aerospace
(Operations) Limited Jetstream Series
4100 Model 4101 Turboprop aircraft (other than the Aircraft)
leased or subleased, bailed or
consigned to Lessee by Lessor, Owner Participant, Seller,
Manufacturer, Trident, any of their
affiliates, or any trustee acting on behalf of any of them.
"Lessee Assignment of Insurances" shall mean a security
assignment by Lessee in favor of
Lessor of all its rights, title and interest to and in all
policies and contracts of insurance from time to
time in existence in respect of or relating to the Aircraft
as required by this Lease Agreement (and
other than third party liability insurances, insurances or
coverage not required by this Lease
Agreement, or other policies or contracts of insurance taken
out in accordance with Section 10(f))
and all the benefit of all such policies and contracts of
insurances in form and substance satisfactory
to each Insured Party.
"Lessor Assignment of Insurances" shall mean a security
assignment by Lessor in favor of
any Financier of all its right, title and interest to and in
all policies and contracts of insurance from
time to time in existence in respect of or relating to the
Aircraft as required by this Lease
Agreement (and other than third party liability insurances,
insurances or coverage not required by
this Lease Agreement, or other policies or contracts of
insurance taken out in accordance with
Section 10(f)) and all the benefit of all such policies and
contracts of insurances in form and
substance satisfactory to any such Financier.
"Lessor's Liens" means any Liens arising as a result of
(i) claims against or affecting either
the Lessor or Owner Participant, in each case not related to
the transactions contemplated by the
Operative Agreements, or (ii) acts or omissions of either
the Owner Participant or Lessor in each
case not related to or contemplated by the Operative
Agreements.
"Lien" shall mean any mortgage, pledge, security
interest, lien, encumbrance, title retention
arrangement or other charge of any kind on property (real,
personal or mixed, tangible or
intangible).
"Loan Agreement" shall mean the loan agreement which
may be entered into in connection
with any financing referred to in Section 12(f) and
designated as a "Loan Agreement" by notice
from Lessor to Lessee.
"Manufacturer" shall mean British Aerospace
(Operations) Limited, a company organized
under the laws of England and Wales, and any corporation
which succeeds thereto by merger or
consolidation or which acquires all or substantially all of
the assets thereof.
"Mortgage" shall mean any aircraft mortgage which may
be entered into in connection with
any financing referred to in Section 12(f) and designated as
a "Mortgage" by notice from Lessor or
Owner Participant to Lessee.
"Operative Agreements" shall mean and include this
Lease, each Financier Document, the
Trust Agreement, the Lessee Assignment of Insurances, and
any other document, instrument or
agreement required under any thereof or which is entered
into in connection with any thereof or is
supplemental thereto.
"Overdue Rate" means the lesser of the lawful maximum
rate or the prime lending rate plus
four percent (4%). Prime lending rate shall mean the rate
appearing in the Wall Street Journal on
the fifteenth day (or the next succeeding publication day)
of the month preceding the date on which
any payment is due to Lessor, which prime lending rate shall
be adjusted on the fifteenth day of
each succeeding month.
"Owner Participant" shall mean British Aerospace Asset
Management, Inc. and its
successors and assigns.
"Parts" shall mean any and all appliances, parts,
instruments, appurtenances, accessories,
furnishings, seats, and other equipment of whatever nature
(other than Engines or engines or
Propellers or propellers and temporary replacement parts as
provided in Section 8 of this Lease),
which may from time to time be incorporated or installed in
or attached to any Airframe, Engine or
Propeller.
"Permitted Liens" shall have the meaning assigned
thereto in Section 11 hereof.
"Person" shall mean an individual, partnership,
corporation, trust, unincorporated
organization, or government or any agency or political
subdivision thereof.
"Propeller" shall mean and include: (i) each of the
two propellers for the Aircraft listed by
manufacturer's serial number in the Lease Acceptance
Supplement, whether or not from time to
time thereafter installed on an Engine or installed on any
other engine; and (ii) any propeller which
may at any time be conveyed to the Lessor or its nominee
pursuant to Section 9(c) or 13(b) of this
Lease in replacement for a Propeller leased hereunder, and
(iii) any and all Parts, so long as the
same shall be incorporated or installed in or attached to
any Propeller subject to this Lease, or, so
long as the same shall be leased hereunder in accordance
with the terms of Section 8 of this Lease,
after removal from such Propeller.
"Rent" shall mean all Basic Rent and Supplemental Rent
hereunder.
"Rent Payment Dates" shall mean each day on which an
installment of Basic Rent is
payable during the Term.
"Replacement Engine" shall mean any engine conveyed to
the Lessor or its nominee
pursuant to Section 9(c) or 13(b) in replacement of an
Engine Leased hereunder.
"Replacement Propeller" shall mean any propeller
conveyed to the Lessor or its nominee
pursuant to Section 9(c) or 13(b) in replacement of a
Propeller the leased hereunder.
"Responsible Officer" shall mean (a) when used with
respect to any Person any of the
Chairman of the Board, the President, the Secretary, the
Treasurer, Company Secretary, or any Vice
President, Assistant Secretary or Assistant Treasurer of
such Person and (b) when used with respect
to the subject matter of any covenant, agreement or
obligation referred to in this Lease, any officer
or any managerial employee of such Person who in the
performance of his operational
responsibilities would reasonably be expected to have
knowledge of such matters. In the case of
Owner Participant, a Director shall also be considered a
responsible officer at such time that a non-
U.S. company becomes Owner Participant.
"Security Trustee" means such financial institutions as
Lessor may from time to time advise
Lessee which act as Trustee under the Mortgage.
"Seller" shall mean Aero International (Regional), a
Societe par Actions Simplifee, acting
as agent for and on behalf of the Manufacturer.
"Stipulated Loss Value" shall mean the amount
determined in accordance with Schedule 3
to the Lease Acceptance Supplement.
"Supplemental Rent" shall mean all amounts, liabilities
and obligations (other than Basic
Rent) which the Lessee is obligated to pay hereunder,
including, without limitation, Stipulated Loss
Value payments.
"Tax" means all license and registration fees and all
taxes, levies, imposts, duties, charges,
assessments or withholdings of any nature whatsoever
together with any penalties, additions to tax,
fines or interest thereon.
"Term" shall mean the period from and including the
Delivery Date and ending on the day
immediately preceding the twelfth (12th) anniversary of the
Delivery Date except as otherwise
provided in Exhibit D hereto.
"Trident" shall mean Trident Turboprop (Dublin)
Limited, a company organized under the
laws of Ireland.
"Trust" shall mean the trust created by the Trust
Agreement.
"Trust Agreement" shall mean the Trust Agreement dated
as of , 19 between the
Owner Participant and Lessor as amended, supplemented or
otherwise modified from time to time.
SECTION 2. ACCEPTANCE UNDER LEASE AND CONDITIONS
PRECEDENT.
(a) Acceptance Under Lease. Lessor shall lease to
Lessee, and Lessee shall accept
and lease from Lessor, the Aircraft on the terms and
conditions set forth herein, such leasing to
be evidenced by the execution and delivery of a Lease
Acceptance Supplement.
(b) Conditions Precedent. Lessor's obligation to
lease the Aircraft to Lessee is subject
to the fulfillment of the following conditions to the
satisfaction of Lessor on or before the date of
acceptance of the Aircraft:
(i) Representations and Warranties. The
representations, warranties and
assurances set forth in Section 21 shall be true on the
Delivery Date and no Event of Default
specified in Section 15 shall have occurred or be
continuing, no event which shall have occurred
and be continuing, with the giving of notice or lapse of
time or both would constitute such an
Event of Default, and Lessee shall have furnished to Lessor
a certificate of an officer of Lessee to
such effect dated the Delivery Date confirming such facts.
(ii) Corporate Action. Lessee shall have
furnished to Lessor satisfactory proof
that Lessee has taken all corporate action necessary to
authorize this Lease and the transactions
contemplated hereby.
(iii) No Change in Applicable Law. No change
shall have occurred after the
date of execution and delivery of this Agreement in
Applicable Law or interpretation thereof by
appropriate regulatory authorities which, in the reasonable
opinion of Lessor or its counsel,
would make it illegal or potentially illegal for Lessor to
enter into, or to perform any of its
obligations under, this Lease.
(iv) No Litigation. No action or proceeding shall
have been instituted nor shall
any action or proceeding be threatened before any court or
governmental agency, nor shall any
order, judgment or decree have been issued or proposed to be
issued by any court or
governmental agency, at the time of delivery, to set aside,
restrain, enjoin or prevent the
completion and consummation of this Lease, or which might
have a material adverse effect on
the financial condition or business prospects of Lessee or
the ability of Lessee to carry on its
business as presently proposed to be conducted.
(v) No Material Adverse Change. There shall not
have been any material
adverse change in the business, assets, liabilities,
financial condition, results of operations or
business prospects of Lessee.
(vi) Opinions of Counsel.
(A) Lessor shall receive from counsel for
Lessee an opinion dated the
date of acceptance of the Aircraft reasonably satisfactory
to Lessor and Owner Participant as to
certain of the matters set forth in Section 21 of this Lease
prior to the Delivery Date.
(B) Lessor shall receive from Daugherty,
Fowler & Peregrin special
FAA counsel, an opinion reasonably satisfactory to Lessor
and Owner Participant, and dated the
date of acceptance of the Aircraft as to the registration of
the Aircraft and the eligibility of this
Lease for recordation at the FAA and the due filing thereof
for recordation at the FAA.
(vii) Approval of Lessor's Counsel. All
matters incident to this transaction
shall be reasonably satisfactory to counsel for Lessor.
(viii) Insurance. Lessee shall have furnished
to Lessor certificates of insurance
satisfactory to Lessor evidencing the insurance required by
Article 10 of this Lease.
(ix) Lessee Assignment of Insurances. Lessee
shall have executed in favor of
Lessor the Lessee Assignment of Insurances, if requested.
(x) Additional Information. Lessee shall have
furnished Lessor with such
other opinions, documents, evidence, materials and
information as Lessor may reasonably
request.
(xi) Guaranty. Receipt of guaranty from Atlantic
Coast Airlines, Inc. a
Delaware Corporation, in the form previously provided by
Lessee for other aircraft leased from
Lessor, guaranteeing the obligations of the Lessee
hereunder.
(xii) Letter Re Termination/Event of Loss
Payments. Lessor and Lessee shall
have executed and delivered a sideletter regarding
Termination/Event of Loss Payments in the
form attached hereto as Exhibit E.
SECTION 3. TERM AND RENT.
(a) Term. The Term for the Aircraft shall commence on
the Delivery Date and shall
continue until the last day of the Term.
(b) Basic Rent. Lessee agrees to pay Basic Rent for
the Aircraft monthly in the
applicable amount set forth in Schedule 2 to Exhibit A
hereto.
(c) Supplemental Rent. Lessee also agrees to pay to
Lessor, or to whomsoever shall
be entitled thereto, any and all Supplemental Rent when the
same shall become due and owing,
and in the event of any failure on the part of the Lessee to
pay any Supplemental Rent, Lessor
shall have all rights, powers and remedies provided for
herein or by law or equity in the case of
nonpayment of Basic Rent. Lessee will also pay, on demand,
as Supplemental Rent, interest at
the Overdue Rate on any part of any installment of Basic
Rent not paid within five (5) Business
Days after it is due for any period for which the same shall
be overdue, provided, however, that
such five business day grace period shall not be available
to Lessee more than once in each fiscal
quarter in each of its fiscal years during the Term and, to
the extent permitted by Applicable
Law, on any payment of Supplemental Rent not paid when due
for the period until the same shall
be paid.
(d) Manner of Payment. All Rent shall be paid by
Lessee to Lessor at its address
referred to in Section 20 hereof, or as Lessor may otherwise
direct, in immediately available
funds consisting of lawful currency of the United States of
America, so that Lessor receives the
full amount of such payment on the due dates thereof. If
any Rent is due on a day which is not a
Business Day, such Rent shall be paid on the next succeeding
Business Day.
SECTION 4. NET LEASE, ETC.
This Lease is a net lease. Lessee acknowledges and
agrees that its obligations to pay all
Rent due and owing under the terms hereof shall be absolute
and unconditional and shall not be
affected by any circumstance whatsoever, including, without
limitation (a) any set off,
counterclaim, recoupment, defense or other right which
Lessee may have against the
Manufacturer, the Seller, Lessor, Owner Participant, any
Financier any affiliate of any of them,
or anyone else for any reason whatsoever, (b) any defect in
the title, airworthiness, eligibility for
registration under the Federal Aviation Act, condition,
design, operation or fitness for use of, or
any damage to or loss or destruction of, the Aircraft, or
any interference, interruption or cessation
in or prohibition of the use or possession thereof by Lessee
for any reason whatsoever, including,
without limitation, any such interference, interruption,
cessation or prohibition resulting from the
act of any governmental authority, or any violation by
Lessor of Section 5(b) hereof, (c) any
Liens, encumbrances or rights of others with respect to the
Aircraft, (d) the invalidity or
unenforceability or lack of due authorization or other
infirmity of this Lease or any lack of right,
power or authority of Lessor or Lessee to enter into this
Lease, (e) any insolvency, bankruptcy,
reorganization or similar proceedings by or against Lessee,
or any other person, or (f) any other
cause whether similar or dissimilar to the foregoing, any
present or future Applicable law
notwithstanding, it being the intention of the parties
hereto that all Rent being payable by Lessee
hereunder shall continue to be payable in all events in the
manner and at the times provided
herein. Such Rent shall not be subject to any abatement and
the payments thereof shall not be
subject to any set off or reduction for any reason
whatsoever, including any present or future
claims of Lessee against the Lessor under this Lease or
otherwise. Each Rent payment made
pursuant to this Lease by Lessee shall be final and Lessee
will not seek to recover all or any part
of such payment from Lessor, Owner Participant, Agent, Bank,
any Financier or the Security
Trustee, for any reason whatsoever. To the extent permitted
by Applicable Law, Lessee hereby
waives any rights which it may now have or which may be
conferred upon it, by statute or
otherwise, to terminate, cancel, quit or surrender this
Lease except in accordance with the terms
hereof. Nothing contained in this Section 4 shall be
construed to limit the right of Lessee to
make any claim it might have against Lessor or any other
Person (including, without limitation,
that Rent payments demanded from or paid by the Lessee are
or were erroneous) or to pursue
such claim in such manner as Lessee shall deem appropriate.
SECTION 5. DISCLAIMER OF REPRESENTATIONS AND WARRANTIES
AND QUIET
ENJOYMENT.
(a) Disclaimer of Warranties. LESSOR LEASES AND
LESSEE TAKES THE
AIRCRAFT "AS-IS, WHERE-IS". LESSEE ACKNOWLEDGES AND AGREES
THAT AS
BETWEEN LESSEE AND EACH OF LESSOR (FOR THE PURPOSES OF THIS
SECTION
5(A), IN ITS INDIVIDUAL CAPACITY OR OTHERWISE), OWNER
PARTICIPANT AND
ANY FINANCIER: (i) THE AIRFRAME AND EACH ENGINE ARE OF A
SIZE, DESIGN,
CAPACITY AND MANUFACTURE SELECTED BY AND ACCEPTABLE TO
LESSEE, (ii)
LESSEE IS SATISFIED THAT THE AIRFRAME AND EACH ENGINE ARE
SUITABLE
FOR THEIR RESPECTIVE PURPOSES, AND (iii) NONE OF LESSOR,
OWNER
PARTICIPANT OR ANY FINANCIER MAKE, HAS MADE OR SHALL BE
DEEMED TO
HAVE MADE, AND EACH WILL BE DEEMED TO HAVE EXPRESSLY
DISCLAIMED,
AND LESSEE HEREBY WAIVES, RELEASES AND RENOUNCES, ANY
WARRANTY,
REPRESENTATION, GUARANTY, LIABILITY AND OBLIGATION OF
LESSOR, OWNER
PARTICIPANT OR ANY FINANCIER, AND ANY RIGHT, CLAIM AND
REMEDY OF
LESSEE AGAINST SUCH PARTIES, EXPRESS OR IMPLIED, ARISING BY
OPERATION
OF LAW, COURSE OF PERFORMANCE, COURSE OF DEALING, USAGE OF
TRADE OR
OTHERWISE, AS TO:
(i) THE TITLE, AIRWORTHINESS, VALUE, CONDITION,
DESIGN,
OPERATION, ANY IMPLIED WARRANTY OF MERCHANTABILITY OR
FITNESS FOR
USE OR FOR ANY PARTICULAR PURPOSE OF THE AIRFRAME, ANY
ENGINE, ANY
PROPELLER, ANY PART, ANY DATA OR ANY OTHER THING DELIVERED,
SOLD OR
TRANSFERRED HEREUNDER,
(ii) THE QUALITY OF THE MATERIAL OR WORKMANSHIP
WITH
RESPECT TO THE AIRFRAME, ANY ENGINE, ANY PROPELLER ANY PART,
ANY
DATA OR ANY OTHER THING DELIVERED, SOLD OR TRANSFERRED
HEREUNDER,
(iii) THE ABSENCE OF LATENT OR ANY OTHER
DEFECT OR
NONCONFORMANCE IN THE AIRFRAME, ANY ENGINE, ANY PROPELLER
ANY
PART, ANY DATA OR ANY OTHER THING DELIVERED, SOLD OR
TRANSFERRED
HEREUNDER, WHETHER OR NOT DISCOVERABLE, OR
(iv) THE ABSENCE OF ANY ACTUAL OR ALLEGED
INFRINGEMENT
OF ANY PATENT, TRADEMARK OR COPYRIGHT OR THE LIKE.
LESSEE FURTHER WAIVES, DISCLAIMS, RELEASES AND
RENOUNCES ANY
LIABILITY, RIGHT, CLAIM, REMEDY OR OBLIGATION BASED ON TORT,
INCLUDING STRICT LIABILITY, WHETHER OR NOT ARISING FROM THE
NEGLIGENCE (WHETHER ACTIVE, PASSIVE OR IMPUTED) EXCEPT FOR
WILLFUL
MISCONDUCT OR GROSS NEGLIGENCE, OF LESSOR, OWNER
PARTICIPANT OR
ANY FINANCIER, ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR
REMEDY FOR
LOSS OF OR DAMAGE TO THE AIRFRAME, ANY ENGINE, ANY PROPELLER
ANY
PART, ANY DATA OR ANY OTHER THING DELIVERED, SOLD OR
TRANSFERRED
HEREUNDER, OR ANY OTHER REPRESENTATION OR WARRANTY
WHATSOEVER,
EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRFRAME, ANY
ENGINE, ANY
PROPELLER ANY PART, ANY DATA OR ANY OTHER PHYSICAL THING
DELIVERED,
SOLD OR TRANSFERRED HEREUNDER.
Nothing contained in this Section 5(a) shall be deemed
to modify or otherwise affect any
warranties or other obligation of any manufacturer,
subcontractor, or supplier to Lessee with
respect to the Airframe or any Propeller, Engine or Part or
any other rights Lessee has under
Section 4 of this Lease.
(b) Quiet Enjoyment. Lessor covenants with Lessee
that, subject to no Default or
Event of Default having occurred and continuing, subject to
the provisions of the Operative
Agreements, unless compelled to do so by any person claiming
a right in or title to the Aircraft or
any part thereof superior to Lessor or unless compelled to
do so by any Applicable Law, Lessor
will not knowingly disturb the quiet use, possession and
enjoyment of the Aircraft by Lessee.
(c) Subordination. Lessee acknowledges and agrees
that this Lease and the
subleasing of the Aircraft hereunder are subject and
subordinate to the provisions of the
Mortgage and the respective rights of Security Trustee and
each other Financier thereunder and
that the interest of Lessee is subject to and subordinate to
the respective interests of Security
Trustee, and each other Financier. Lessor and Lessee
accordingly acknowledge and agree that
Lessor's obligation to lease the Aircraft to Lessee
hereunder and the Lessee's obligation
hereunder to pay Basic Rent for future periods shall
automatically terminate upon any
enforcement of the Mortgage unless the Security Trustee,
Agent, Bank, or the other Financiers
require otherwise.
(d) Compliance with Operative Agreements. Lessor
hereby covenants and agrees that
it shall perform its obligations under the Operative
Agreements including the Lease provided that
Lessor shall have no liability whatsoever to Lessee for any
failure to perform such obligations in
circumstances where (i) Lessee shall have failed to perform
any corresponding obligations under
the Lease or (ii) such failure shall result, whether
directly or indirectly, from a failure by Lessee
to perform any express and specific obligations under the
Lease or from the occurrence of a
Default or an Event of Default.
SECTION 6. POSSESSION, OPERATION AND USE, MAINTENANCE,
INSIGNIA AND
RESERVES.
(a) Possession. Lessee shall not sublease, or
otherwise in any manner deliver,
relinquish or transfer possession of the Airframe, or any
Engine or Propeller leased hereunder to
any Person or install any Engine, or permit any Engine to be
installed on any airframe other than
the Airframe or install any Propeller, or permit any
Propeller to be installed, on any engine other
than an Engine during the Term, without, in each case, the
prior written consent of Lessor,
provided that so long as no Event of Default has occurred
which is continuing Lessee, may,
without the prior written consent of Lessor:
(i) deliver possession of the Airframe or any
Engine or Propeller to any
organization for testing or other similar purposes or for
service, repair, maintenance or overhaul
work on such Airframe, Engine or Propeller or for
alterations or modifications in or additions to
such Airframe, Engine or Propeller, to the extent required
or permitted by the terms of this
Lease;
(ii) install any of the Engines or Propellers on
an aircraft owned by Lessee or
leased by or hired to Lessee on terms whereby (i) Lessee has
full operational control of such
aircraft (ii) title to the relevant Engine or Propeller
remains vested in the Lessor and (iii) such
Engine or Propeller does not thereby become subject to any
Lien (other than a Permitted Lien);
(iii) install on the Aircraft any engines or
propellers owned by Lessee, or leased
by or hired to Lessee on terms whereby (i) title to each
Engine or Propeller (whether or not installed
on the Aircraft) remains vested in Lessor; and (ii) neither
the Aircraft nor any Engine or Propeller
(whether or not installed on the Aircraft) thereby becomes
subject to any Lien (other than a
Permitted Lien).
(b) Operation and Use. Lessee agrees not to (i)
operate the Airframe or any Engine or
Propeller or permit the Airframe or any Engine or Propeller
to be operated except in a passenger
configuration, in commercial or other operations for which
Lessee is duly authorized by the FAA or
other governmental authority having jurisdiction over Lessee
or such Airframe, Engine or
Propeller; (ii) use or permit the Aircraft to be used for a
purpose for which the Aircraft is not
designed or reasonably suitable; (iii) base the Aircraft
outside the United States or operate, use or
locate any Airframe, Engine or Propeller, or suffer such
Airframe, Engine or Propeller to be
operated, used or located (A) in any area excluded from
coverage by any insurance required by the
terms of Section 10 hereof or (B) outside the contiguous 48
United States or Canada, or the
Bahamas, or (C) in any recognized, or in Lessor's reasonable
judgment, threatened area of
hostilities unless fully covered by war risk insurance.
Lessee will not permit the Aircraft or any
Engine or Propeller to be maintained, used or operated
during the Term in violation of any
Applicable Law, or for matters not covered by Applicable
Law, contrary to any manufacturer's
operating manuals or instructions. Lessee agrees not to
operate the Aircraft, or suffer the Aircraft to
be operated or kept in any place (i) unless the Aircraft is
covered by insurance as required by the
provisions of Section 10 hereof, or (ii) contrary to or
inconsistent with the terms of such insurance
and will not do or permit to be done or left undone anything
whereby any policy required hereunder
would or might reasonably be expected to be rendered in
whole or in part invalid or unenforceable.
Lessor will favorably respond to requests as may be made by
Lessee from time to time for
permission to utilize the Aircraft in countries located in
the Caribbean region in addition to the
Bahamas, provided that the Aircraft will remain registered
and based in the United States, that the
proposed countries of use are identified reasonably in
advance to Lessor based on a specific
proposal for utilization of the Aircraft, that Lessee
obtains additional insurance coverage as may be
appropriate in light of the proposed foreign use which is
consistent with the obligations of Lessor
under the Financier Documents, and that Lessor can
reasonably satisfy itself that said use will not
result in any breach of the Financier Documents or undue
physical, political, or legal risk to the
Aircraft, to title thereto, or to any interest therein.
Lessor reserves the right to withdraw its consent
to foreign use as a result of material changes in
circumstances involving any country for which
permission was previously granted, provided that Lessor will
use its best efforts to provide thirty
(30) days prior written notice to Lessee prior to its
withdrawal of such consent.
(c) Maintenance. Lessee, at its own cost and expense,
shall service, repair, maintain
and overhaul, test or cause the same to be done to the
Airframe and each Engine and Propeller
during the Term (i) so as to keep such Airframe, Engine and
Propeller in as good operating
condition and appearance as when delivered to Lessee by the
Lessor hereunder, ordinary wear and
tear excepted, (ii) so as to keep such Airframe, Engine or
Propeller in such operating condition as
may be necessary to enable a standard airworthiness
certificate for the Aircraft to be maintained in
good standing at all times under the applicable rules and
regulations of the FAA and (iii) in
accordance with a maintenance program approved by the FAA
and which Lessee would generally
apply to aircraft of the same type as the Aircraft. Lessee
shall maintain all records, logs technical
data materials and other materials required in the format
required by the Department of
Transportation or the FAA to be maintained in respect of the
Aircraft in an accurate, current and
complete condition in accordance with good commercial
aviation practice and shall promptly
furnish to Lessor upon written request, or if verbally,
confirmed in writing within 24 hours, such
information as may be necessary to file any required reports
with any governmental authority
because of Lessee's use or operation of the Aircraft.
(d) Insignia. On or prior to the Delivery Date or as
soon as is practicable thereafter,
Lessee shall place and maintain in the cockpit of the
Airframe in a location reasonably adjacent to
the airworthiness certificate of the Aircraft, in the
cockpit or on the flight deck of the Aircraft and
on each Engine, a fireproof metal nameplate having
dimensions of not less than six (6) inches by
four (4) inches identifying the leasehold interest of the
Lessor and the ownership interest of the
Lessor in the Aircraft, as follows:
"This Aircraft/Engine together with its accessories
installed thereon is owned by First
Security Bank, National Association in its capacity as Owner
Trustee, and is leased to Atlantic
Coast Airlines [and is mortgaged to .]"
and in addition, Lessee shall attach to and keep upon the
Propellers such labels, plates or markings
as are necessary or advisable to evidence Lessor's ownership
thereof. Lessee will not allow the
name of any Person other than those listed in this Section
6(d) or their respective successors or
assigns, to be placed on the Aircraft or any Engine or
Propeller as a designation that might be
interpreted as a claim of ownership, Lien, or of any
interest therein, provided, however, that Lessee
may operate the Aircraft in its livery, including its name
and logo so long as the above mentioned
fireproof nameplates are not covered or painted over.
The size of the name plates to be affixed to the
Aircraft and to each Engine may be reduced
to reasonably accommodate space limitations, provided that
the size of the name plate not be
reduced to the extent that the effect would be to diminish
the prominence of the statement contained
therein.
(e) Engine Maintenance Reserves/GED Agreement.
(i) Lessee shall enter into an agreement with
Garrett Engine Division of Allied
Signal ("GED") or such comparable engine repair facility as
is acceptable to the parties
(collectively, the "GED Agreement") for scheduled and
unscheduled maintenance and support of
the Engines. Lessee shall be permitted to provide for the
maintenance and repair of Engines under
the GED Agreement under terms and conditions acceptable to
Lessor in lieu of Lessee's payment of
Engine Maintenance Reserves to Lessor as provided below.
Lessee shall provide Lessor with: a
copy of the GED Agreement; copies of any amendments (to be
provided prior to their effective
date); and copies of any renewals or extensions thereof (to
be provided, to the extent possible at
least twelve months prior to the scheduled termination).
Terms and prices contained in the GED
Agreement may be withheld from Lessor if required by GED,
provided that the Lessee does not
impose such a restriction.
(ii) At any time during the term of this Lease
that the Engines are no longer
eligible for maintenance and repair by GED under the GED
Agreement, or that Lessee is in default
under the GED Agreement for nonpayment, or that either
Lessee or GED are in default under the
GED Agreement for any other reason which such default has
been declared, Lessee shall
commence payments to Lessor. Such payments ("Engine
Maintenance Reserves") will be applied
to scheduled and unscheduled maintenance and support of the
Engine as described in this Section
6(e). Engine Maintenance Reserves shall be paid monthly in
arrears on the fifteenth day of each
succeeding month. The amount of Engine Maintenance Reserves
in respect of each Engine shall be
in an amount equal to the Hourly Reserve Rate times the
aggregate number of Engine flight hours
occurring on the Engines since the prior intermediate and
major shop inspections on the Engines.
(iii) In the event that the GED Agreement is
terminated for any reason, Lessee
shall pay an initial deposit to Lessor for Engine
Maintenance Reserves to cover time accrued to
date. This initial deposit shall be paid to Lessor (or to a
party designated by Lessor to hold Engine
Maintenance Reserves) in addition to the ongoing payments
provided in subparagraph (ii) above,
and shall be expended and applied, to the extent paid in, as
Engine Maintenance Reserves as
provided in this Section 6(e). Such initial deposit shall
in all circumstances be due in full no later
than twelve months following the date of termination of the
GED Agreement, and shall be paid in
twelve monthly installments, due at the time of payment of
Engine Maintenance Reserves as
described in subparagraph (ii) above. The amount of the
initial deposit due at the end of twelve
months will be the Hourly Reserve Rate multiplied by the
total number of hours accrued on all of
the J41 Engines since the last major periodic inspection on
each of the J41 Engines as of the date of
termination of the GED Agreement, adjusted for any
intermediate inspection that may have
occurred. To the extent there are any amounts owed to
Lessee by GED with respect of the Engines
upon termination of the GED Agreement, such amount shall be
assigned to Lessor and Lessee's
payment required in accordance with this Section shall be
reduced by an equivalent amount upon
payment to Lessor of the assigned amounts.
(iv) In the event of a Default or Event of Default
under this Lease Agreement or
any other agreement between Lessor or Owner Participant (or
any agreement whereby Owner
Participant is the beneficiary pursuant to a trust) and
Lessee or any affiliate of Lessee (a "Lessee
Agreement"). Lessor shall have the right at any time
following such Default or Event of Default to
apply funds held as Engine Maintenance Reserves to cure any
such Default or Event of Default.
(v) Provided Lessee is not in default under this
Lease Agreement,
disbursements from funds paid as Engine Maintenance Reserves
by Lessee for the Engines shall be
made to Lessee by the party holding the Engine Maintenance
Reserves for costs actually incurred
by Lessee in connection with intermediate and major shop
periodic inspections on the Engines.
Such disbursements will be made upon the written request of
Lessee to Lessor, accompanied by
evidence satisfactory to Lessor (including invoices,
purchase orders, etc.) that such engine
inspection has been performed by Lessee and expenses
incurred and paid. Advance disbursements
to third parties will be made if necessary to proceed with
the work provided adequate protection is
made to ensure proper completion of the work and to ensure
release of the Engine by said third
party.
(vi) The amount required to be paid by Lessee as
Engine Maintenance Reserves
shall be subject to adjustment annually to reflect both
Lessee's operational results and changes in
the GED's recommendations as may be mutually agreed. Such
amount may also be adjusted in the
event of a significant change in maintenance intervals on
Lessee's TPE-331-14GR/HR engine fleet
as mutually agreed by both Lessor and Lessee.
(vii) In the event that Engine Maintenance
Reserves have been paid under this
Section 6(e), and upon the occurrence of an Event of Loss
involving the Aircraft on which the
Engine is installed, Lessee shall be entitled to the prompt
return of Engine Maintenance Reserves
payments. This reimbursement shall take place at the time
of settlement of any insurance claim
provided no Default or Event of Default has occurred which
is continuing at the time of insurance
settlement. If there is an Event of Default at the time of
settlement, reimbursement will be made
upon satisfactory cure of all such Defaults or Events of
Default. Reimbursement shall not be made
in the event of an Event of Loss involving an Engine that is
to be replaced, but a positive or
negative adjustment will be made to the reserve account to
reflect changes in the hours and cycles
between the original Engine and the Replacement Engine.
(f) Removal of Engines and Propellers. Lessee
will ensure than no Engine or
Propeller installed on the Aircraft is at any time removed
from the Aircraft other than:
(i) if replaced as permitted by this
Agreement; or
(ii) if the removal is of an obsolete item
and is in accordance with the
Lessee's maintenance program;
(iii) (A) during the course of
maintaining, servicing, repairing, restoring
or testing that Engine, Propeller or the Aircraft, as the
case may be; or (B) as part of a normal
engine or propeller rotation program; or (C) for the purpose
of making such modifications to the
Engine, Propeller or the Aircraft, as the case may be, as
are required under this Agreement, or by
the manufacturer of the Engines or Propellers; or
(iv) as provided for in Section 6(a)(i), (ii)
or (iii);
and then in each case only if it is reinstalled or replaced
by an engine or propeller complying with
the requirements in Section 6(g), or in the case of a
removal for the reasons set out in Section
6(f)(iii) the requirements of paragraphs (i), and (iii) of
Section 6(g) and not paragraph (ii) until the
expiration of the term of this Agreement or early
termination of this Agreement, as soon as
practicable and in any event no later than the expiration of
the term of this Agreement or early
termination of this Agreement.
(g) Installation of Engines and Propellers.
Lessee will ensure that, except as permitted by
this Agreement, no engine or
propeller is installed on the Aircraft unless:
(i) it is an engine of the same model as, or an
improved or advanced version of
the Engine or Propeller it replaces, which has the same
value and utility and which is in the
same or better operating condition (without regard to hours
or cycles) assuming that such
Engine or Propeller was in the condition and repair as
required to be maintained by the
terms of this Agreement;
(ii) in each case, it has become and remains the
property of Lessor free from any
Liens except Lessor's Liens and the Lien of the Mortgage
and upon installation on the
Aircraft will without further act be subject to this
Agreement; and
(iii) in each case, Lessee has all necessary
information as to its source and
maintenance records.
SECTION 7. CERTAIN NOTICES.
As soon as possible and in any event within 30 days after
the occurrence of any Default or Event
of Default which is continuing, Lessee shall notify Lessor
of such Default or Event of Default,
setting forth in detail the nature of such Default or Event
of Default and the action which Lessee
proposes to take with respect thereto. Lessee shall
immediately notify Lessor of any "aircraft
accident" as defined in 49 CFR Part 830 with respect to the
Airframe or any Engine or Propeller,
which notice shall indicate the time, place and nature of
the accident, the damage caused to
property and the names and addresses of any persons injured.
SECTION 8. REPLACEMENT AND POOLING OF PARTS;
ALTERATIONS,
MODIFICATIONS AND ADDITIONS
(a) Replacement of Parts. Lessee, at its own cost and
expense, shall promptly replace
all Parts that may from time to time during the Term become
worn out, lost, stolen, destroyed,
seized, confiscated, damaged beyond repair or permanently
rendered unfit for use for any reason
whatsoever. In addition, in the ordinary course of
maintenance, service, repair, overhaul or
testing, Lessee may remove any Parts, provided that Lessee
shall replace such Parts as promptly
as practicable with replacement Parts or temporary
replacement parts as provided in Section 8(c)
hereof. All replacement Parts shall be free and clear of
all Liens (except Permitted Liens) and
shall be in as good operating condition as, and shall 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.
(b) Title to Parts. All Parts at any time removed
from the Airframe or any Engine or
Propeller, shall remain subject to this Lease and the
Mortgage, no matter where located, until
such time as such Parts shall be replaced by Parts that have
been incorporated or installed in or
attached to such Airframe, Engine or Propeller and that meet
the requirements for replacement
Parts specified above. Immediately upon any replacement
Part (other than a temporary
replacement Part) becoming incorporated or installed in or
attached to any Airframe, Engine or
Propeller as above provided, without further act, (i) title
to such replacement Part shall thereupon
immediately vest in the Lessor; (ii) title to the replaced
Part shall thereupon vest in Lessee, free
and clear of all rights of Lessor, Financier(s) and Owner
Participant, and shall no longer be
deemed a Part hereunder; and (iii) such replacement Part
shall become subject to this Lease and
the Lien of the Financiers and be deemed part of such
Airframe, Engine or Propeller, as the case
may be, for all purposes hereof to the same extent as the
Parts originally incorporated or installed
in or attached to such Airframe, Engine or Propeller.
(c) Pooling of Parts. Any Part removed from the
Airframe or any Engine or Propeller
as provided in Section 8(a) hereof may be subjected by
Lessee to a normal pooling arrangement
customary in the airline industry entered into in the
ordinary course of Lessee's business with any
air carrier, provided the part replacing such removed Part
shall be incorporated or installed in or
attached to such Airframe, Engine or Propeller in accordance
with Sections 8(a) and 8(b) as
promptly as possible after the removal of such removed Part.
In addition, any temporary
replacement part when incorporated or installed in or
attached to any Airframe, Engine or
Propeller in accordance with Section 8(a) hereof may be
owned by another airline or vendor as
customary in the airline industry, subject to such a normal
pooling or leasing arrangement,
provided Lessee shall, at its own expense, as promptly
thereafter as reasonably possible, either
(i) cause title to such temporary replacement part to vest
in Lessor in accordance with
Section 8(b)(iii) hereof by Lessee acquiring title thereto
for the benefit of Lessor free and clear of
all Liens except Permitted Liens, at which time such
temporary replacement part shall become a
Part and become subject to this Lease; or (ii) replace such
temporary replacement part by
incorporating or installing in or attaching to such
Airframe, Engine or Propeller a further
replacement Part owned by Lessee free and clear of all Liens
except Permitted Liens, and by
causing title to such further replacement Part to vest in
Lessor in accordance with Section 8(b)
hereof.
(d) Alterations, Modifications and Additions. Lessee,
at its own expense, shall make
such alterations and modifications in and additions to the
Airframe or any Engine or Propeller as
may be required to be made from time to time during the Term
by Applicable Law regardless
upon whom such requirements are, by their terms, nominally
imposed. Title to all Parts
incorporated on, installed in or attached or added to the
Airframe or any Engine or Propeller as
the result of any alteration, modification or addition
required by the preceding sentence shall vest
without further act in Lessor and become subject to the
Mortgage and this Lease and the Lien of
the Financiers. In addition, Lessee, at its own expense,
may from time to time make or cause to
be made such alterations and modifications in and additions
to the Airframe, any Engine or any
Propeller as Lessee may deem desirable in the proper conduct
of its business, (any such additions
for purposes of this Section 8(d) called "Additional Parts")
including, without limitation,
removal of Parts (for purposes of this Section 8(d) called
"Obsolete Parts"); provided that no
such alteration, modification, addition or removal shall
materially diminish the value or utility of
the Airframe, such Engine or such Propeller, or impair the
condition or airworthiness thereof
immediately prior to such alteration, modification, addition
or removal assuming the Airframe,
such Engine or such Propeller was then of the value and
utility and in the condition and
airworthiness required to be maintained by the terms of this
Lease. Notwithstanding anything to
the contrary, Lessee may, at any time during the Term,
remove any Additional Part; provided
that (i) such Additional Part is in addition to, and not in
replacement of or substitution for, any
Part originally incorporated or installed in or attached to
the Airframe, such Engine or such
Propeller at the time of delivery thereof hereunder or any
part in replacement of, or substitution
for, any such Part, (ii) such Additional Part is not
required to be incorporated or installed in or
attached or added to such Airframe, Engine or Propeller
pursuant to the first sentence of this
Section 8(d) and (iii) such Additional Part can be removed
from the Airframe, such Engine or
such Propeller without materially diminishing or impairing
the value, utility, condition or
airworthiness required to be maintained by the terms of this
Lease which the Airframe, such
Engine or such Propeller would have had at such time had
such addition not occurred. Upon the
removal by Lessee of any Additional Part as provided in the
immediately preceding sentence or
the removal of any Obsolete Part permitted by this Section
8(d), title thereto shall, without
further act, vest in Lessee, free and clear of all rights of
Owner Participant any Financier, the
Security Trustee, or Lessor as appropriate or any Lessor
Liens and such Additional Part or
Obsolete Part shall no longer be deemed part of the
Airframe, the Engine or Propeller from
which it was removed. Title to any Additional Part not
removed by Lessee prior to the return of
the Airframe, such Engine or such Propeller to Lessor
hereunder shall vest in the Lessor without
further act.
SECTION 9. RISK, LOSS, DESTRUCTION OR REQUISITION.
(a) Risk. Throughout the Term and until redelivery
of the Aircraft in accordance
with Section 13, Lessee shall bear all risks of loss, theft,
damage and destruction of or to the
Aircraft and every part thereof, and no such loss, theft,
damage or destruction, nor any other
event or circumstance of any nature whatsoever, shall impair
or frustrate any obligation of Lessee
under this Lease (including without limitation as to the
payment of Rent or other payments) so
that all such obligations shall continue in force and
effect.
(b) Event of Loss with Respect to the Aircraft. Upon
the occurrence of an Event of
Loss with respect to the Aircraft during the Term, Lessee
shall forthwith (and in any event within
seven (7) days after such occurrence) give Lessor written
notice of such Event of Loss. On the
"Casualty Termination Date" (which is defined as the earlier
of: (x) the date on which insurance
proceeds are paid, or (y) the date which is the first Rent
Payment Date occurring not less than 60
days after such Event of Loss), Lessee shall pay Lessor an
amount equal to the sum of (i) the
Stipulated Loss Value of such Aircraft as of the Casualty
Termination Date, plus (ii) if not
previously paid by Lessee, all other Rent due and payable on
or prior to such Casualty
Termination Date. Notwithstanding such Event of Loss,
Lessee's obligation to pay Basic Rent
hereunder up to such Casualty Termination Date shall
continue, such Basic Rate to be payable on
the due date therefor.
Upon payment in full of the Stipulated Loss Value for
the Aircraft and other Rent payable
as provided in the immediately preceding paragraph, (xx)
this Lease (except for Supplemental
Rent obligations surviving pursuant to Section 14 hereof or
which have otherwise accrued but
not been paid as of the date of such payment) shall
terminate; (yy) any remaining insurance
proceeds (other than proceeds of policies maintained by
Lessor for its own account) shall be
promptly paid over to Lessee; subject to the rights of any
Insured Party under the Operative
Agreements and (zz) Lessor shall subject to the rights of
insurers and other Insured Parties seek
to cause title to such Airframe, Engines and Propellers to
be conveyed to Lessee or its designee,
as-is, where-is, without recourse or warranty, express or
implied, except for a warranty from
Lessor against Lessor's Liens, and shall exercise such
rights as it has to cause the release of the
Lien of the Mortgage.
(c) With Respect to an Engine or Propeller. Upon the
occurrence during the Term of
an Event of Loss with respect to an Engine or Propeller not
involving an Event of Loss with
respect to the Aircraft, Lessee shall give Lessor prompt
written notice thereof and Lessee shall
replace, at its sole cost, such Engine or propeller as soon
as reasonably practicable after the
occurrence of such Event of Loss by duly conveying to Lessor
as a replacement for said Engine
or Propeller, title to another engine or propeller of the
type specified in the applicable Lease
Acceptance Supplement which engine or propeller shall be
free and clear of all Liens except
Permitted Liens and shall have a value and utility at least
equal to, and be in as good operating
condition as, the Engine or Propeller with respect to which
such Event of Loss occurred,
assuming such Engine or Propeller was of the value and
utility and in the condition and repair
required by the terms hereof immediately prior to the
occurrence of such Event of Loss. Lessee
agrees that on the date that the Replacement Engine or
Replacement Propeller, as the case may
be, is delivered (hereinafter referred to in this Section
9(c) as the "Replacement Closing Date")
the following documents at the Lessee's sole cost and
expense shall have been duly authorized,
executed and delivered by the respective party or parties
thereto and shall be in full force and
effect, and the Lessee shall deliver or cause to be
delivered an executed counterpart of each
thereof (or, in the case of the Bill of Sale referred to
below, a photocopy thereof) to Lessor, each
Financier:
(i) a Lease Supplement covering the Replacement
Engine or Replacement
Propeller, as the case may be; and
(ii) a full warranty bill of sale (as to title),
in form and substance reasonably
satisfactory to the Lessor and each Financier, covering the
Replacement Engine or Replacement
Propeller, as the case may be, and to deliver a certificate
from a Responsible Officer of Lessee
certifying that such Replacement Engine or Replacement
Propeller complies with this
Section 9(c). Lessee agrees to take such further action as
Lessor may reasonably request with
respect to such Replacement Engine or Replacement Propeller
including, without limitation, the
actions required to be taken by it under this Section 9(c)
but excluding, without limitation, an
opinion of counsel for Lessee relating to such Replacement
Engine or Replacement Propeller.
Such Replacement Engine or Replacement Propeller, upon being
titled in the name of Lessor free
of all Liens, shall be deemed an "Engine" or "Propeller", as
the case may be, as defined herein
for all purposes hereof. Upon full compliance with this
Section 9(c), Lessor shall subject to the
rights of the insurers and other Insured Parties, seek to
cause title in and to the Engine or
Propeller which suffered such Event of Loss to be conveyed
to Lessee, as-is, where-is, without
recourse or warranty, express or implied, except for a
warranty from Lessor against Lessor's
Liens, and shall exercise such rights as it has to cause the
release of the Lien of the Mortgage
with respect to the Engine or Propeller. No Event of Loss
with respect to an Engine or Propeller
on any Aircraft under the circumstances contemplated by the
terms of this Section 9(c) shall
result in any reduction in Rent or Lessee obligation to pay
Basic Rent hereunder. Lessee agrees
that it shall at all times during the term of this Lease
maintain on each Airframe two Engines or
other engines suitable for use on such Airframe and a
Propeller or other propeller on each Engine
suitable for use on such Engine.
(d) Payments from Governmental Authorities for
Requisition of Title or Use.
(i) Any payments on account of an Event of Loss
(other than insurance
proceeds or other payments the application of which is
provided for in this Lease) received at any
time by Owner Participant, Lessor, any Financier, or by
Lessee from any governmental authority
or other Person will be applied as follows:
(A) if such payments are received with
respect to an Airframe, so much
of such payments as shall not exceed the Stipulated Loss
Value required to be paid by Lessee
pursuant to Section 9(b) hereof, shall be applied in
reduction of Lessee's obligation to pay such
Stipulated Loss Value, to the extent not already paid by
Lessee, and, to the extent already paid by
Lessee, shall be applied to reimburse Lessee for its payment
of such Stipulated Loss Value, and
the balance, if any, of such payment remaining thereafter
shall be paid to or retained by Lessor;
and
(B) if such payments are received with
respect to an Engine or
Propeller under the circumstances contemplated by Section
9(c) or 9(d)(iii) hereof, such
payments shall subject to the terms of the Operative
Agreement be paid over to, or retained by,
Lessee, provided that Lessee shall have fully performed the
terms of Section 9(c) hereof with
respect to the Event of Loss for which such payments are
made.
(ii) In the event of a requisition for use by any
government, so long as it does
not constitute an Event of Loss, of the Aircraft during the
Term, Lessee shall promptly notify
Lessor of such requisition and all the Lessee's obligations
under this Lease shall continue to the
same extent as if such requisition had not occurred except
to the extent that any failure or delay
in the performance or observance of each obligation by
Lessee shall have been prevented or
delayed by such requisition, provided that Lessee's
obligations for the payment of money and
under Section 10 hereof shall in no way be affected, reduced
or delayed by such requisition. Any
payments received by Lessor or Lessee from such government
with respect to such requisition
shall be paid over to or retained by, Lessee. If the Lessor
shall receive any such payments,
Lessor shall use its best commercially reasonable efforts to
secure such payments on the behalf
of Lessee.
(iii) In the event of the requisition for use
by a government of any Engine or
Propeller (but not an Airframe) for a period exceeding 45
days, Lessee shall replace such Engine
or Propeller hereunder by complying with the terms of
Section 9(c) hereof to the same extent as
if an Event of Loss had occurred with respect to such Engine
or Propeller, and any payments
received by Lessor, or Lessee from such government with
respect to such requisition shall be
paid over to, or retained by, Lessee provided that, if the
Airframe and Engines or engines are not
returned prior to the end of the Term then, notwithstanding
that the Term shall have ended,
Lessee shall be obliged to return the Airframe and such
Engines or engines to Lessor pursuant to,
and in all other respects to comply with the provisions of,
Section 13 promptly upon their return
and any payments received by Lessee in respect of any such
period after the end of the Term
shall be paid over and belong solely to Lessor.
(e) Application of Payments During Existence of Event
of Default. Any amount
referred to in this Section 9 or Section 10 hereof which is
payable to Lessee shall not be paid to
Lessee, or, if it has been previously paid directly to
Lessee, shall not be retained by Lessee and
shall be promptly paid over to Lessor, if at the time of
such payment an Event of Default shall
have occurred and be continuing, but shall be paid to and
held by Lessor (or so long as the Lien
of the Security Trustee shall not have been discharged and
the Security Trustee so requires, the
Security Trustee) as security for the obligations of Lessee
under this Lease, and at such time as
there shall not be continuing any such Event of Default such
amount shall, subject to the terms of
the Operative Agreements be paid over to Lessee.
SECTION 10. INSURANCE.
(a) Third Party Liability Insurance. Lessee shall,
without expense to any Insured
Party, maintain or cause to be maintained in effect, at all
times during the Term, with insurers of
recognized reputation and responsibility, comprehensive
aircraft and general liability insurance
against third party bodily injury or property damage
(including without limitation contractual
liability, cargo liability, passenger legal
liability/property damage including war risk and allied
perils as clause AV52 (all paragraphs deleted except B) or
equivalent coverage) with respect to
the Aircraft in an amount not less than a $150,000,000
combined single limit, or such greater
amounts as Lessee may carry from time to time on other
similar aircraft in its fleet. Such
insurance shall be of the type usually carried by
corporations engaged in the same or a similar
business, similarly situated to Lessee and owing and
operating similar aircraft and engines, and
covering such other risks as are customarily insured against
by such corporations.
(b) Insurance Against Loss or Damage to the Aircraft
and Engines. Lessee shall,
without expense to any Insured Party, maintain or cause to
be maintained in effect, at all times
during the Term, with insurers of recognized reputation and
responsibility, all-risk, agreed value
ground and flight hull insurance, excluding war risks and
allied perils (but including extended
coverage against the type of risks excluded by clauses (c),
(e) and (g) of the War, Hijacking and
Other Perils Exclusion Clause (AVN 48B)), covering the
Aircraft for an amount in respect of
such Aircraft not less than the Stipulated Loss Value from
time to time. Such hull insurance
shall cover Engines and Propellers or engines and propellers
and Parts temporarily removed from
the Airframe pending replacement by installation of the same
or similar engines, propellers or
Parts on such Airframe. Such insurance shall be of the type
usually carried by corporations
engaged in the same or a similar business, similarly
situated with and owning and operating
similar aircraft, engines and propellers and covering such
other risks as are customarily insured
against by such corporations. If and to the extent that
Lessee maintains war risk and allied perils
insurance (including governmental confiscation insurance) in
effect with respect to other similar
owned or Lease aircraft in its fleet, Lessee shall maintain
such insurance in effect with respect to
the Aircraft in an amount in respect of such Aircraft not
less than the Stipulated Loss Value of
such Aircraft from time to time.
(c) Additional Insureds; Loss Payee. Lessee shall
cause all policies of insurance
carried in accordance with this Section 10 to name the
Insured Parties as additional insureds as
their respective interests may appear (it being understood
that the Insured Parties have no
operational interest). Such policies shall provide with
respect to such additional insureds that (i)
none of their respective interests in such policies shall be
invalidated by any act or omission or
breach of warranty of Lessee or of any other named insured;
(ii) no cancellation or lapse of
coverage for nonpayment of premium or otherwise, and no
material change of coverage which
adversely affects the interests of such additional insured,
shall be effective as to such additional
insured until 30 days (or, with respect to war risk
insurance such lesser period as may be
customary in the London market for such insurance in such
area of the world) after receipt by
such additional insured of written notice from the insurers
of such cancellation, lapse, or change;
(iii) the Insured Parties shall have no liability for
premiums, commissions, calls, assessments or
advances with respect to such policies; (iv) the insurers
waive any rights of set-off, counterclaim,
deduction or subrogation against such additional insureds
and their respective directors, officers,
employees and agents. Each liability policy shall provide
that (i) all the provisions thereof,
except the limits of liability, shall operate in the same
manner as if there were a separate policy
covering each insured, (ii) such policies will be primary
without any right of contribution from
any other insurance carried by such additional insureds and
(iii) to the extent of the coverage
provided, coverage shall include and insure the indemnity
provisions of Section 14 of this Lease
and the indemnity provisions contained in the Financier
Documents. Each hull policy shall,
where appropriate, include a 50/50 claim funding arrangement
in the form of AVS 103 (this
being an agreement between insurers and not forming part of
the policies of insurance) and
provide that, so long as the insurers shall not have
received written notice from the Lessor that an
Event of Default has occurred and is continuing, or the
Security Trustee or the Lessor requires
payment of the relevant amounts to it pursuant to the
Operative Agreements, any proceeds of less
than $500,000 shall be payable to Lessee to be applied to
repair of the Aircraft; any proceeds of
over $500,000 but less than an Event of Loss shall be
payable to Lessor or if applicable under the
Operative Agreements the Security Trustee (with prior
written notice of payment of any proceeds
of over $1,000,000 given to the Insured Parties) and any
proceeds in respect of an Event of Loss,
or if the insurers shall have received written notice that
an Event of Default under the Financier
Documents has occurred and is continuing, any single loss,
regardless of the amount, shall be
payable to the Security Trustee as long as the Mortgage is
in effect and to Lessor after the Lien
of the Mortgage shall have been discharged. Furthermore the
insurances required to be
maintained by this Section 10 shall not be affected by any
other insurance which may be
available to any of Lessor and the Financiers so as to
reduce the amount payable to any
Financier, it being warranted by the relevant additional
named insured that they will not
knowingly effect or authorize the placement of other
insurances covering the same subject matter
except on a contingency or secondary basis.
(d) Deductibles and Self-Insurance. Lessee may from
time to time self-insure, by way
of deductible provisions in insurance policies, the risks
required to be insured against pursuant to
this Section 10 in such reasonable amounts as are then
applicable to similar owned or Leased
aircraft in Lessee's fleet but in no case shall such self-
insurance exceed an aggregate hull and
liability self-insurance retention of $280,000 per Aircraft
per occurrence, and with deductibles
under any liability policy not to exceed $1,250 for each and
every loss with respect to passenger
baggage, and $5,000 for each and every loss with respect to
cargo.
(e) Application of Hull Insurance Proceeds. Any
payments received by Owner
Participant or Lessor under policies of hull insurance
required to be maintained by Lessee pursuant
to this Section 10, shall subject to the terms of the
Operative Agreements be applied as follows:
(i) If such payments are received with respect to
loss or damage (including an
Event of Loss with respect to an Engine or Propeller) not
constituting an Event of Loss with respect
to an Airframe, such payments shall be paid over to or
retained by Lessee or the repairer of the
Aircraft upon, or at Lessor's option in conjunction with,
Lessee performance of its repair or
replacement obligations under this Lease; and
(ii) If such payments are received with respect to
an Event of Loss with respect
to an Airframe, so much of such payments as shall not exceed
the amount required to be paid by
Lessee pursuant to Section 9 hereof shall be applied in
reduction of Lessee's obligations to pay such
amount if not already paid by Lessee, and to reimburse
Lessee if it shall have paid all or part of
such amount, and the balance, if any, of such payments,
subject to the rights of any Insured Party
under the Operative Agreements shall be promptly paid over
to, or retained by, Lessee.
(f) Insurance for Own Account. Nothing in this
Section 10 shall prohibit any of the
Lessee or the Insured Parties from obtaining insurance for
their own account and any proceeds
payable thereunder shall be payable as provided in the
insurance policy relating thereto, provided
that no such insurance may be obtained which would limit or
otherwise adversely affect the
coverage or payment of any insurance required to be obtained
or maintained pursuant to this
Section 10.
(g) Reports, Etc. Lessee shall begin negotiations or
cause negotiations to begin for the
renewal of each required policy at least 30 days before its
expiration. Lessee shall, both on the
Delivery Date and during the Term, furnish to the Insured
Parties in satisfactory from evidence of
insurance or renewal of the insurance policies required
pursuant to this Section 10 and the Lessee
Assignment of Insurances (in a form acceptable to the
Insured Parties) prior to the cancellation,
lapse or expiration of such insurance policies and, on the
renewal dates of the insurance policies
carried by Lessee pursuant to this Section 10, a report
signed by a firm of independent aircraft
insurance brokers, appointed by Lessee and reasonably
satisfactory to Lessor, stating the opinion of
such firm that the insurance then carried and maintained on
the Aircraft complies with the terms
hereof (including, without limitation, with respect to war
risk insurance, if required). Lessee will
cause such firm to advise each Insured Party in writing
promptly of any default in the payment of
any premium and of any other act or omission on the part of
the Lessee of which they have
knowledge and which would in such firm's opinion invalidate
or render unenforceable, in whole or
in any material part, any insurance on the Aircraft. Lessee
will also cause such firm to advise each
Insured Party in writing at least 30 days prior to the
termination or cancellation of, or material
adverse change in, such insurance carried and maintained on
the Aircraft pursuant to this
Section 10. Lessee will also procure that the firm shall
confirm to Lessor and the Security Trustee
that the terms and conditions of any provision for
cancellation and automatic termination contained
in such policy are in accordance with normal market
practice.
(h) Amendments to Insurances. Without prejudice to
the foregoing provisions, if due to
changes in aviation insurance market practice and custom
Lessee is unable at any time to comply
with its obligations under this Section 10, any Insured
Party is reasonably of the view that the
insurances required to be maintained pursuant to this
Section 10 afford less protection to the
Insured Parties, than would reasonably be required, Lessor
shall forthwith notify Lessee and as
soon as practicable thereafter the insurance broker for
Lessee and the insurance broker(s) for such
Insured Party shall meet in good faith to consider what (if
any) changes might be made to the terms
and conditions of the insurances required hereunder in order
to take account of the changes in
aviation insurance market practice and custom. On the basis
of the recommendations of such
insurance brokers such Insured Party and Lessee will meet as
soon as practicable in order to
negotiate in good faith with a view to reaching agreement on
what (if any) amendments should be
made to such provisions and upon such agreement being
reached, the parties will take appropriate
steps to amend the insurances accordingly.
(i) Ground Insurance. When the insurances required
hereunder are not maintained in
full force and effect, the Aircraft shall be grounded and
Lessee shall, if required by Lessor, maintain
at its sole cost, such ground insurance as is of the type
customarily carried by operators of aircraft
similar to the Aircraft being adequately insured, and
subject to the Aircraft being adequately
insured, Lessor may require the Aircraft to proceed to or
remain at an airport designated by Lessor
acting reasonably (at Lessor's sole cost and expense) until
the provisions of this Section 10 shall be
fully complied with.
SECTION 11. LIENS.
Lessee shall not during the Term, directly or
indirectly create, incur, assume or suffer to
exist any Lien on or with respect to any Airframe, Engine or
Propeller or title thereto or the
respective rights, title and interests therein of Owner
Participant, any Financier, or Lessor, or in this
Lease except (a) the respective rights of Lessor and Lessee
as provided herein; the Lien of the
Mortgage and the rights of the parties to the other
Operative Agreements; (b) the rights of others
under agreements or arrangements to the extent expressly
permitted in Section 6(a) and 8(c)
thereof; (c) Liens for Taxes either not yet due or being
contested in good faith by appropriate
proceedings so long as such proceedings do not involve any
material danger of the sale, forfeiture
or loss of the Airframe, Engines, Propellers or Parts; (d)
material suppliers', mechanics', airports',
workers', repairers', employees' or other like liens arising
in the ordinary course of business and for
amounts the payment of which either is not yet delinquent or
is being contested in good faith by
appropriate proceedings, and so long as such proceedings do
not involve a material danger of the
sale, forfeiture or loss of any Airframe, Engine or
Propeller or Parts; (e) Liens arising out of
judgments or awards against Lessee (and for payment of which
adequate reserves have been
provided with respect to which at the time an appeal or
proceedings for review is being prosecuted
in good faith and there shall have been secured a stay of
execution pending such appeal or
proceedings for review so long as such proceedings do not
involve a material danger of the sale,
forfeiture or loss of any Airframe, Engine, Propeller or
Parts; and (f) Lessor's Liens; provided that
the aggregate amount of Liens permitted by clause (c), (d)
and (e) shall not exceed $150,000
without the prior written consent of the Lessor (Liens
described in clauses (a) through (f) above
(and to the extent approved to be outstanding in the case of
clauses (c), (d) and (e)) are referred to
herein as "Permitted Liens"). Lessee shall promptly, at its
own expense, take such action as may be
necessary to duly discharge any such Lien not excepted above
if the same shall arise at any time.
Lessee shall indemnify and hold Lessor harmless from and
against any and all losses which Lessor
may sustain arising therefrom (including any claim by Owner
Participant or any Financier).
SECTION 12. TITLE, RECORDATION, FURTHER ASSURANCE, AND
COOPERATION WITH FINANCIERS.
(a) Title. Legal title to the Aircraft shall at all
times be vested in Lessor exclusively.
The acceptance of the Aircraft by Lessee and Lessee's
possession thereof shall constitute merely a
Lease. It is intended that this Lease constitute a true
lease for tax and all other purposes and Lessee
has no right, title or interest in the Aircraft other than
as a Lessee hereunder and shall not claim any
interest other than as Lessee hereunder. Without limiting
the foregoing, Lessee shall not file any
federal, state or local tax return claiming ownership of the
Aircraft.
(b) Registration. Prior to or concurrently with
acceptance of the Aircraft by Lessee, the
Aircraft shall be registered by Lessor in the United States
and Lessee shall not take any action or
allow any event to occur that might jeopardize such
registration and Lessor, except as permitted
under this Lease Agreement shall not take any action or
allow any event to occur that might
jeopardize such registration.
(c) FAA Regulations. Lessee shall at all times comply
with all FAA regulations and
other requirements of the FAA during the Term that are
required to maintain the Aircraft in a
condition to satisfy the FAA Type Certificate and a valid
current U.S. Standard Airworthiness
Certificate on the Aircraft, including but not limited to
all service, inspection, maintenance,
modification, repair and overhaul of the Aircraft; and in
relation to the flight crew standards and the
operations of the Aircraft, whether performed by Lessee or
by others for Lessee. Lessee shall
consult with Lessor and, if necessary or appropriate, the
FAA, with respect to the action required to
meet such requirements, including the execution of
maintenance, flight operations and other
contracts with persons or firms duly authorized by the FAA.
Lessee and Lessor will execute all
required documents and otherwise cooperate with all
reasonable requests of each other to complete
the activities contemplated in this Section 12(c).
(d) Recordation of Lease. Lessor shall cause this
Lease, all exhibits hereto, any Lease
Supplements, and any and all additional instruments which
shall be executed pursuant to the terms
hereof so far as permitted by Applicable Law, to be kept,
filed and recorded and to be re-executed,
re-filed and re-recorded at all times during the Term in the
office of the FAA, pursuant to the
Federal Aviation Act and in such other places or with such
other governmental authority as Lessor
may reasonably request to perfect and preserve Lessor's
rights hereunder. The schedule of rental
payments shall not be filed unless required by law or
regulation.
(e) Further Assurances. Lessee shall promptly and
duly execute and deliver to Lessor
such further documents (prepared at Lessor's sole expense)
and assurances and take such further
action as Lessor may from time to time during the Term
reasonably request in order to establish and
protect the rights and remedies created in favor of the
Indemnified Parties hereunder or under the
Operative Agreements or the title of Lessor to the Aircraft,
including, without limitation, if
requested by Lessor, at the reasonable expense of Lessee,
the execution and delivery of
supplements or amendments hereto, in recordable form,
subjecting any replacement or substituted
engine or propeller to this Lease and the recording of
filing of counterparts hereof, or of financing
statements with respect hereto, in accordance with the laws
of such jurisdiction as Lessor may
reasonably deem advisable.
(f) Cooperation with Financiers. Lessee acknowledges
that Owner Participant and
Lessor will finance the acquisition of the Aircraft
subsequent to the date of this Lease and may
refinance the outstanding obligations at any time and from
time to time (the initial and each
subsequent financing are referred to herein as a
"Financing"). Lessee further acknowledges that
Lessor or Owner Participant may, at any time and from time
to time prior to or during the Term sell
their respective interests in the Aircraft and this Lease to
a new owner, and that owner may at any
time and from time to time prior to or during the Term,
grant Liens over the Aircraft or any part
thereof (including, without limitation, the Mortgage) and
Lessor may, at any time and from time to
time prior to or during the Term, grant Liens over its
rights under this Agreement to a Financier as
security for Owner Participant's or, as the case may be,
Lessor's obligations to such Financier.
Lessee further acknowledges that it will cooperate with
Lessor with respect to a restructuring of the
terms hereof at the time of the first Financing, including
the execution of a new lease or sublease in
replacement of this Lease on terms to be mutually agreed,
subject to the terms of Subsection (i)
below.
(g) Notification of Status of Financing. Lessor
undertakes to keep Lessee informed as
to the selection of the Financiers and the structure
arranging the implementation of any Financing.
(h) Assurances to Financiers. Lessee undertakes to
provide all reasonable assistance to
every owner, Owner Participant, Lessor, and any Financier
and their respective representatives and
advisers including relocating the Aircraft to a selected
jurisdiction at the time of any Financing
provided such relocation does not deprive Lessee of the
Aircraft for a period of more than 24 hours,
and including entering into all additional documents,
including operative agreements and any
assignment of insurances (including amendments thereto) and
amendments to or replacements of
this Lease which may be necessary to permit the Financing to
be completed and in connection with
the perfection and maintenance of any Lien in relation to
the Aircraft or any operative agreements
required by any Financier, including but without limitation
the making of all necessary filings and
registrations. Lessee's operations as an operator of
commercial aircraft shall not be restricted or
otherwise impaired in any material way as a result of the
implementation of any such Financing. If
any Financier shall impose upon Owner Participant or Lessor
any requirements as to insurance,
reinsurance, maintenance, operation or otherwise in respect
of the Aircraft which are additional to
or inconsistent with the requirements of this Lease, Lessee
shall, upon receipt of notice from Lessor
specifying such additional or inconsistent requirements and
at all times thereafter during the Term
unless and until Lessor shall otherwise specify by notice in
writing, comply with such additional or
inconsistent requirements in addition to, or, as the case
may be, instead of the requirements of this
Lease.
(i) Effects of Financing and Assignments. Further to
Subsections 12(f) and 12(h) with
respect to any Financing, and to Section 19 with respect to
an assignment by Lessor, Lessor hereby
confirms the following:
(i) Lessee's operations as an operator of
commercial aircraft, as a provider of air
transportation, and of the Aircraft shall not be restricted
or otherwise impaired in any material way
as a result of the implementation of any such Financing or
assignment.
(ii) Except as provided in Section 5(c), such
Financing or assignment will not
result in any limitation or diminution of Lessee's rights or
Lessor's obligations under the Lease.
(iii) In the event of Financing, Lessee will
not be held responsible under this
Section 12 for the incremental cost of any ongoing material
obligations including but not limited to
those referenced in the last sentence of Section 12(h)
required as a result of said Financing beyond:
(A) those existing as of the date immediately preceding
such Financing, and (B) those obligations
identified in this Lease (except as specified in the last
sentence of Section 12(h)) but which do not
apply until such time as a Financing takes place.
(iv) In the event of a Financing, Lessee will not
be held responsible under
Section 14 for the incremental cost of any obligations which
result in the Lessee being in a
materially worse position than: (A) its position at the
date immediately preceding such Financing,
and (B) the position it will be in under the terms of this
Lease at such time as a Financing takes
place. For the purpose of this clause, it is expressly
understood that Lessee would not be
considered to be in a materially worse position under a
Financing involving tax depreciation
benefits in the United States provided that such Financing
allows limited foreign use consistent
with that permitted in this Lease.
(v) Lessor will use its best efforts to minimize
the imposition on Lessee of
administrative requirements or costs incurred at the time of
Financing as a result of said Financing
or assignment. In the event of untoward administrative
requirements, Lessor will on a case by case
basis consider the reimbursement of Lessee's attorneys' fees
for purposes of closing, dependent on
the extent of those requirements and on Lessee's use of its
best efforts to minimize those expenses.
Lessor will also in any case reimburse Lessee for any direct
costs incurred in connection with an
aircraft relocation required to accommodate a Financing.
SECTION 13. RETURN OF AIRCRAFT AND RECORDS.
(a) Return of Aircraft. With respect to the Aircraft,
at the expiration of the Term, or
upon the termination of this Lease pursuant to Section 16,
Lessee, at its own expense, shall, except
as otherwise provided in Section 16 hereof, return such
Aircraft by delivering the same to Lessor at
such location within the continental United States as
selected by Lessor, with such Aircraft fully
equipped with the Engines and the Propellers.
(b) Return of other Engines and Propellers. Lessee
may return the Airframe with an
engine or propeller other than an Engine or Propeller (the
Engine or Propeller that is not being
returned is referred to in this paragraph as "Replaced
Equipment" and that provided in its place is
referred to as "Substitute Equipment"), and the Substitute
Equipment shall be deemed to be an
Engine or Propeller for all purposes hereof, provided that
the following conditions have been met:
(i) Lessee shall have provided Lessor with at
least 30 days' advance notice prior
to the Return Date identifying the Substitute Equipment
including maintenance status and
ownership interests.
(ii) Substitute Equipment shall have a value and
utility at least equal to, and shall
be in as good operating condition as, Replaced Equipment
(other than as to accumulated hours,
changes in which shall affect return conditions
calculations), shall be in the condition and repair
required by the terms hereof for an Engine or Propeller upon
return, shall be of the same or another
manufacturer of the same or a comparable or improved model
and suitable for installation and use
on the Aircraft with the other Engine and Propellers duly
installed on the Airframe.
(iii) Lessor, and all parties with ownership,
leasehold or security interests in
Replaced Equipment shall be granted identical interests in
Substitute Equipment, free and clear of
any other liens or interests. There shall be delivered to
and accepted by the appropriate party full
warranty (as to title) bills of sale, amendments to leases
and security agreements, opinions, and all
other documents as deemed necessary or appropriate to create
identical interests in the Substitute
Equipment.
(iv) Lessor, and all parties with ownership,
leasehold or security interests in the
Replaced Equipment shall have conveyed title thereof to the
proper party and shall have released all
liens and interests therein. Conveyance of title to
Replaced Equipment by Lessor as applicable
shall be as-is, where-is, without recourse or warranty,
express or implied except a warranty from
Lessor against Lessor's Liens, and a warranty of all
Lessor's right, title and interest in and to the
Replaced Equipment.
(v) Lessor or its agent shall be exclusively
responsible for all communications
with all parties with ownership, leasehold or security
interests in Replaced Equipment and in any
Substitute Equipment in which Lessor also has an interest.
Lessor makes no representation or
warranty that the necessary actions or approvals will be
obtained or of the costs thereof. Lessee
shall be responsible for all communications with any other
parties.
(vi) Lessee shall be responsible for all fees or
expenses charged in connection
with this substitution by Lessor and by all parties with
ownership, leasehold or security interests in
Replaced Equipment or Substitute Equipment. Lessee shall
also be responsible for recording fees
and for Lessor's attorneys' reasonable fees and reasonable
expenses. Lessor shall not charge a fee to
Lessee for Lessor's services and will use reasonable efforts
to mitigate third party attorneys' fees.
(c) Maintenance Status. The maintenance status of
individual components on the
Aircraft may vary from delivery condition but the overall
maintenance status of the Aircraft at the
time of the Aircraft's return to Lessor shall be subject to
the following minimum standards:
(i) All parts, systems and components (other than
Engines and their associated
line replaceable units) that are considered under the
Lessee's FAA maintenance program and the
Manufacturer recommended maintenance program to be "on-
condition" shall be functioning and
serviceable.
(ii) All Components (as hereinafter defined) that
are listed in Exhibit B as having
a defined life between service, inspections, overhaul or
replacement by way of hours, cycles or
calendar time shall have one-half time remaining of the then
defined life in hours, cycles or
calendar time between service, inspections, overhaul or
replacement; provided that if subsequent to
the date hereof any Component is considered under the
Lessee's FAA maintenance program and the
Manufacturer's recommended maintenance program to be "on-
condition", such Component shall be
deleted from the list of Components in Exhibit B and shall
be returned to Lessor in the condition
required by Subsection (c)(i) hereof and; provided Aircraft
shall be deemed to have satisfied return
conditions for Components if all Components on average meet
the half-life standard set forth in
subsection (c)(ii).
Average half-life shall be measured by application of the
formula set forth below. In the event the
Half-Life Variance is greater than zero, there shall be
deemed to be a deficiency in the overall
maintenance status of the Aircraft, and Lessee shall make a
payment to Lessor in the amount of the
Half-Life Variance. In the event the Half-Life Variance is
less than zero, there shall be deemed to
be a betterment in the overall maintenance status of the
Aircraft, and Lessor shall make a payment
to Lessee in the amount of the Half-Life Variance. The
formula to calculate the Half-Life Variance
is as follows:
Half-Life Variance = S (TBO/2 - TRr) x (Vo/TBO)
Where:
"Half-Life Variance" - is the sum of the
difference in value for all individual
Components fitted on the Aircraft between the maintenance
standard as defined in
subparagraph (c)(ii) above and the value at the date of
return of the Aircraft.
"Components" - as used in this Section, is defined
in Section 13.(c)(ii). Engines
(both HSI/GBI and hard-time overhaul) shall not be included
in the calculation.
"TBO" - is the limit between major maintenance
events (overhauls, inspections, or
replacements) for each Component as specified in Seller's
Jetstream 41 Maintenance
Manual as approved by the FAA, and as generally accepted in
the United States for
operation of such Aircraft, which limit shall be specified
in Exhibit B hereto but
which is subject to adjustment from time to time to conform
to changes in the
Jetstream 41 Maintenance Manual, provided, however, that
such change is generally
accepted in the United States for operation of Jetstream 41
Aircraft.
"Vo" - is the projected cost of each major
maintenance event for each Component
based on the direct cost of overhaul, inspection or
replacement for said Components
as required by the Lessee's FAA approved maintenance
program. Vo shall be
agreed between Lessor and Lessee from time to time during
the term of this Lease
based upon Lessee's experienced cost of overhaul and that
generally available in the
marketplace.
"TRr" - is the time remaining on each Component at
the time of return of the
Aircraft until the next major maintenance event as
identified at the time of return of
the Aircraft.
(iii) All exterior painted surfaces shall
be in good condition, ordinary wear and
tear only excepted. The interior shall be in good, clean,
undamaged and untorn appearance and
condition, ordinary wear and tear only excepted.
(d) Records. Upon the return of the Aircraft, Lessee
shall deliver to Lessor all logs,
manuals, certificates, data and inspection, modification,
repair, and overhaul records which are
required to be maintained with respect thereto under
applicable rules and regulations of the FAA,
Department of Transportation or other government agency
having jurisdiction over the Aircraft.
All records shall be in full compliance with Part 135 or
Part 121 as amended or superseded,
whichever is applicable to Lessee. If Lessor so requests,
Lessee shall also provide a copy of the
portions of the Lessee's general maintenance manual which
relate to the maintenance and records
practices for the Aircraft. Obligations with respect to the
return of manuals shall not be imposed on
Lessee to the extent Lessee would be required to acquire
more individual copies of manuals than it
has previously been required to maintain as part of the
operation of its fleet of Jetstream 41 aircraft.
Lessee shall be required to return such manuals that Lessee
has been required to maintain, to the
extent that they become surplus to Lessee as a result of the
return of aircraft.
(e) General Condition of Aircraft. Upon return of the
Aircraft, the Aircraft's fuel tanks
shall be full (provided that if the fuel tanks are not full
at delivery, Lessee will be obligated upon
return to provide the same level of fuel as at delivery) and
the Aircraft shall (1) be in the same good
operating order, repair, condition and appearance as when
received, ordinary wear and tear
excepted; (2) be free and clear of all Liens (other than
Lessor's Liens); (3) be clean by airline
standard; (4) have installed the full complement of parts,
accessories and loose equipment
delivered by Lessor in respect of the Aircraft and any such
parts, accessories and loose equipment
as is required for an Aircraft operating under FAR Part 135;
(5) have a valid, standard FAA
Certificate of Airworthiness under FAR Part 135 or FAR Part
121 as applicable of the Federal
Aviation Regulations; (6) be in compliance with the
Manufacturer's original equipment
specifications; (7) have undergone, immediately prior to
redelivery, a next scheduled check in
accordance with the Lessee's FAA approved equalised
maintenance program; (8) be in compliance
with Lessee's FAA approved maintenance and corrosion control
programs, (9) be in compliance
with all applicable airworthiness directives and
Manufacturer's mandatory service bulletins,
applicable in reference to effective date, which by the term
thereof must be complied with on the
Lease termination date, however compliance may not be by way
of recurring inspection unless the
Manufacturer has failed to provide a final corrective
modification, to include applicable part(s) for
replacement, prior to the Lease termination date in which
case compliance may be by way of
recurring inspection; (10) have installed all applicable
vendor's and Manufacturer's service bulletin
kits received free of charge by Lessee that are appropriate
for the Aircraft or to the extent not
installed, those kits shall be furnished free of charge to
Lessor; (11) have any and all damage (or
repairs of damage) to the Aircraft, be demonstrated by
Lessee to be within structural repair manual
limits, or else be covered by concessionary paperwork
acceptable to the FAA; (12) have wings free
of fuel leaks noted as excessive or out of specified limits
as defined in the applicable Aircraft
Maintenance Manual or Fuel Tank Component Maintenance
Manual; (13) have landing gear and
wheel wells clean and free of excessive or out of specified
limit leaks as defined in the applicable
Aircraft Maintenance Manual or Landing Gear Component
Maintenance Manual; (14) have the
fuselage, wings and empennage in compliance with the latest
applicable structural inspection or
within 12 months of the last structural inspection, as
designated in the approved maintenance
program ; (15) a fuel tank treatment program shall be in
operation as required; (16) have
emergency equipment that has a calendar life a minimum of
one (1) year or one hundred percent
(100%) of its total approved life, whichever is less,
remaining; and (17) have all Lessee
identification (i.e., name and logo) removed from the
Aircraft, if requested by Lessor, at Lessee's
cost and expense.
(f) Engines. Lessee agrees to maintain each Engine on
a program as contained in the
Lessee's approved maintenance manual or included in the
Jetstream 41 Maintenance Review Board
(MRB) Report. In the event Engines are maintained on a hard
time program, Lessee shall return
Engines with an average of half time remaining of the then
approved Engine manufacturer's
program (provided that no individual Engine shall have less
than one quarter time remaining to the
next /CAM inspection) or pay the financial equivalent as
determined by the formula below.. In the
event Engines are maintained in accordance with an on
condition maintenance program, Lessee
shall provide data trend information substantiating that
there are no less than 3000 hours remaining
before / a CAM inspection, and similar time remaining with
respect to line replaceable units or
shall pay the financial equivalent as determined by the
formula below .
Variance = (Vo/TBO) x (T - [TBO - TSO])
Where:
Vo = Projected cost of shop visit if Engines are on hard
time or average price of
shop visits over the fleet if Engines are on condition.
TBO = Hard time between CAM inspection if Engines are
operated on a hard time
program or the average time achieved by the fleet between
CAM inspection if
applied to Engines on condition.
T = TBO/2 if an Engine is operated on hard time or 3,000
hours if an Engine is
operated on condition.
TSO = Time since last CAM.
(g) Half-Time Equivalency. To the extent that the
Engines are returned in a condition
better than the standard required in paragraph (h) above,
Lessee may apply the
betterment ( as determined by the formula in paragraph (h)
above) solely against
amounts owning Lessor under paragraph (c)(ii).
(h) Final Inspection. Immediately prior to return of
the Aircraft, Lessee, at its own
expense, shall make the Aircraft available to Lessor for
inspection ("Final Inspection") at Lessee's
primary maintenance location in order to verify that the
condition thereof complies with the
provisions of this Section 13. In the event that, due to
delays caused by Lessee, any required work,
repairs or services delays the return of the Aircraft to
Lessor beyond the expiration or earlier
termination of the Term of this Lease, Lessee shall continue
to pay Rent in the same manner as if
there had been no expiration or termination of this Lease
for the number of days until such required
work, repair or servicing has been completed and the
Aircraft is returned to Lessor as provided
hereinabove pending which Lessee shall have no right to use
the Aircraft. The period allowed for
the Final Inspection shall have such duration as to permit
Lessor to conduct the following:
(i) inspection of all records, logs and other
materials referred to herein;
(ii) inspection of the Airframe, Engines, and
Parts including without limitation,
data trend reports for Engines; and
(iii) an operational test flight or flights of
a total duration not exceeding three
hours with Lessor's representatives as observers. Lessee
shall maintain adequate insurance
coverage for such flight or flights in accordance with the
terms of this Agreement and such
additional insurance coverage, if any, as Lessor may
reasonably require.
(i) Storage. Upon any expiration or termination of
this Lease with respect to the
Aircraft, at the written request of Lessor received by
Lessee ten (10) days in advance of the date
provided for redelivery to Lessor hereunder, subject to
availability of space at Lessee's facilities,
Lessee shall arrange, or shall cause to be arranged, storage
of such Aircraft beyond the Term for a
period not exceeding ninety (90) days at Lessor's risk and
expense.
(j) Alterations. At the time of return of the
Aircraft, if not otherwise specified in
Lessee's records returned to Lessor, Lessee shall notify
Lessor of any alterations made to the
Aircraft as a result of any Applicable Law, rule, regulation
or order of any government or
governmental authority.
SECTION 14. TAX INDEMNITY, GENERAL INDEMNITY.
(a) General Tax Indemnity. Subject to exclusions
stated in Section 14(b) below,
Lessee agrees to indemnify, defend and hold harmless each
Indemnified Party, against all Taxes,
howsoever imposed (whether imposed upon any Indemnified
Party, all or any part of the Aircraft
or otherwise), by any Federal, state or local government,
political subdivision, or taxing authority
in the United States, by any government or taxing authority
of or in a foreign country or of or in
a territory or possession of the United States, or by any
international authority, upon or with
respect to or in connection with, based upon or measured by,
in whole or in part:
(i) the Aircraft, the Airframe, the Engines, the
Propellers, the Parts, or any part of
any of the foregoing or interest therein;
(ii) the manufacture, modification, purchase,
financing, ownership, delivery, non-
delivery, leasing, possession, use, operation, return,
storage, transfer of title, sale, acceptance,
rejection or other disposition of or action or event with
respect to the Aircraft, the Airframe, the
Engines, the Propellers, the Parts, or any part of any of
the foregoing or interest therein;
(iii) the rentals, receipts, income or earnings,
gains or revenue arising from the
purchase, financing, ownership, delivery, leasing,
possession, use, operation, return, storage,
transfer of title, sale, substitution, or other disposition
of the Aircraft, the Airframe, the Engines,
the Propellers, the Parts, or any part of any of the
foregoing or interest therein;
(iv) the Lease or the Rent or other sums payable by
Lessor;
(v) the property, or the income or other proceeds
received with respect to the
property, held by the Security Trustee under the Mortgage;
or
(vi) the Operative Agreements or amendments or
supplements thereto, their execution
or the transactions contemplated thereby.
(b) Taxes Excluded. The indemnity provided for in
Section 14(a) above shall not
extend to any Taxes not due in whole or part to: (1) the
acts or omissions of Lessee; (2) the
delivery or acceptance of the Aircraft by or to Lessee; (3)
the use, possession, maintenance or
operation of the Aircraft by Lessee; (4) the
misrepresentations of Lessee; or (v) the breach of any
covenant or warranty by Lessee. The indemnity provided for
in Section 14(a) above shall not
extend to any of the following:
(i) in the case of the Lessor and its respective
successors, transferees or
assigns permitted under the terms of the Operative
Agreements, taxes on, based on, or measured
by, the income, capital, franchises, excess profits or
conduct of business (other than taxes which
are in the nature of sales, use, value added, excise,
license or property taxes) of such Indemnified
Party imposed by the United States of America or any state
or local or foreign government or
other taxing authority (collectively, "Income Taxes") other
than "Covered Income Taxes" (as
such term is defined below);
(ii) in the case of each Financier and the
Security Trustee and their respective
successors, transferees or assigns permitted under the terms
of the Operative Agreements, taxes
on, based on, or measured by income, receipts, capital,
franchises or conduct of business of such
Indemnified Party, other than such Taxes imposed by any
taxing authority of any jurisdiction to
the extent such Taxes exceed the amount that would have been
imposed had the Aircraft never
been operated to or used in such jurisdiction;
(iii) Taxes relating to the Aircraft for any
period after the expiration or early
termination of the Term and return of the Aircraft by
Lessee, except that Taxes incurred in
connection with the exercise of any remedies pursuant to
Section 16 hereof following the
occurrence of an Event of Default or pursuant to Exhibit D
shall not be excluded from the
indemnity provided for in Section 14(a) hereof;
(iv) Taxes imposed against the Owner Trustee or
Security Trustee with respect
to any fees received by it for services rendered in its
capacity as Security Trustee under the
Mortgage and Taxes imposed on the Lessor with respect to
fees or compensation for services
rendered in its capacity as Trustee under the Trust
Agreement;
(v) as to any Indemnified Party, Taxes in respect
of the Aircraft or the
Operative Agreements which arise out of or are caused by the
willful misconduct or gross
negligence of such Indemnified Party, or the breach by such
Indemnified Party of any express
covenant, agreement or representation in the Operative
Agreements;
(vi) Taxes which become payable by reason of any
transfer by an Indemnified
Party of all or any portion of its interest in the Aircraft,
the Mortgage, the Trust Estate, any
interest in any Operative Agreement or shares of stock in an
Indemnified Party (other than
transfers which occur as a result of the exercise of any
rights under Section 16 or Exhibit D
hereof, or any remedies under the Mortgage);
(vii) Income Taxes imposed on the Trust or the
Owner Participant other than
Covered Income Taxes; and
(viii) Taxes imposed by way of deduction or
withholding by the U.S. Federal
Government on payments to a Person who is not a United
States Person or, except for
Covered Income Taxes, by any foreign government on payments
to any Person (provided,
that if in any case any such Taxes are imposed as a result
of a change in a tax treaty after
the date hereof that is not already published as a proposed
change on the date hereof or on
the date an Indemnified Party becomes an Indemnified Party,
Lessee and the applicable
Indemnified Parties agree to negotiate in good faith a
restructuring of the transaction
contemplated hereby to eliminate such Taxes without changing
the economic terms of
this transaction, but if such Taxes are not so eliminated
within 90 days from the date of
the imposition of such Taxes, Lessor may (unless Lessee
agrees to extend the indemnity
provided for in Section 14(a) above to cover such Taxes)
elect to terminate this Lease on
not less than an additional 90 days prior notice to Lessee,
whereupon the Term of this
Lease shall terminate and Lessee shall return the Aircraft
to Lessor in the condition
required under Section 13 hereof on the date so selected by
Lessor in its notice of
termination).
For purposes of this Section 14(b), a "Covered Income
Tax" shall mean an Income Tax
(including, without limitation, a tax imposed upon gross
income or receipts) imposed on an
Indemnified Party by any taxing authority (excluding the
U.S. Federal Government) (A) in
whose jurisdiction the Indemnified Party (including for this
purpose all entities with which it is
combined, integrated or consolidated in such taxing
authority's jurisdiction) did not engage in
business, did not maintain an office or other place of
business, and was not otherwise located, but
the term "Covered Income Tax" shall include any Income Tax
imposed by a jurisdiction in
which the Indemnified Party is deemed to engage in business,
or be otherwise located, to the
extent it results from the operation of the Aircraft in
such jurisdiction or the transactions
contemplated by the Operative Agreements, or (B) in whose
jurisdiction the Indemnified Party in
fact is doing business, maintaining an office or other place
of business, or is otherwise located, if
such circumstance was no factor in the imposition of such
Tax.
(c) Amount of Payment. The amount Lessee shall be
required to pay with respect to
any Tax indemnified against under Section 14(a) hereof shall
be an amount which (after taking
into account all United States Federal, state or local, and
any foreign income tax effects on the
Indemnified Party and the anticipated realization by such
Indemnified Party of tax benefits
resulting from the transaction to which such indemnity is
related, the present value of any
anticipated future tax benefits to be realized by such party
as a result of deducting or crediting
such Tax or as a result of the matters immediately giving
rise thereto, and the loss of use of
money between the time indemnity payments are included in
income and tax benefits are
realized) will be sufficient to restore the Indemnified
Party to the same position such party would
have been in had such Tax not been incurred or paid. For
purposes of this Section 14(c), it shall
be assumed that any payment made to any Person shall be
taxable to the Indemnified Party at the
highest applicable United States Federal, state, and local
and foreign rates in effect for the
taxable year for which the computation is made.
Computations involving the loss of use of
money and present values shall be based on the corporate
base rate on the date payment is made
under Section 14, as adjusted for applicable income tax
effects and compounded quarterly on the
Rent Payment Dates.
(d) Procedures. Any amount payable to an Indemnified
Party pursuant to
Section 14(a) above shall be paid within 30 days after
receipt of a written demand therefor from
such Indemnified Party accompanied by a written statement
describing in reasonable detail the
basis for such indemnity and the computation of the amount
so payable, provided that such
amount need not be paid prior to the time such Taxes are due
to be paid.
(e) Refund. If a payment with respect to Tax under
this Section 14 as calculated
pursuant to Section 14(c) above turns out to have been
incorrectly made because the Tax was not
payable by the Indemnified Party or should not have been
indemnified against then, upon receipt
by an Indemnified Party of a refund or credit of all or part
of any Taxes which Lessee shall have
paid for such Indemnified Party or for which Lessee shall
have reimbursed or indemnified such
Indemnified Party, and provided there shall not have
occurred any Event of Default, such
Indemnified Party shall pay to Lessee (or if such
Indemnified Party is not Lessor, Lessor shall
pay to Lessee) an amount which, after subtraction of the
amount of any further net tax savings
(or addition of the amount of any net tax detriment), if
any, realized by such Indemnified Party as
a result of the receipt thereof and payment under this
paragraph, is equal to the amount of such
refund and any interest received by such Indemnified Party
on such refund (or if such
Indemnified Party is not Lessor an amount equal to the
amount received by Lessor pursuant to
the Financier Documents which is referable on any such Tax
which Lessee has so paid or for
which Lessee has so reimbursed or indemnified); provided,
however, that such amount shall not
be payable (i) before such time as Lessee shall have made
all payments or indemnities then due
and payable to such Indemnified Party under Section 14(a)
and under any other provision of the
Operative Agreements or (ii) to the extent that the amount
of such payment would exceed (A) the
amount of all prior payments (other than amounts
attributable to interest) by Lessee to such
Indemnified Party with respect to such Taxes less (B) the
amounts of all prior payments (other
than amounts attributable to interest) by Lessor to Lessee
with respect to such Taxes.
(f) Reports and Returns. In case any report or return
is required to be made with
respect to any Tax which is subject to indemnification under
Section 14(a) hereof, Lessee will
either make such report or return in such manner as will
show the ownership of the Aircraft in
the Lessor and shall send a copy of the applicable portion
of such report or return to the
Indemnified Party or, where Lessee is not permitted to file
such report or return, will notify the
Indemnified Party of such requirement and prepare and
deliver such report or return to the
Indemnified Party in such manner as shall be satisfactory to
such Indemnified Party within a
reasonable time prior to the time such report or return is
to be filed.
(g) Withholding Taxes. All payments of Rent hereunder
will be free and clear of all
withholding taxes, and if any withholding taxes are required
with respect to any such payments,
Lessee shall pay an additional amount such that the net
amount actually received will be equal to
the amount that would be due absent such withholding. Each
Indemnified Party shall promptly
pay to Lessee the amount of any withholding taxes for which
Lessee has no obligation to
indemnify such Indemnified Party under this Section 14.
(h) General Indemnity. The Lessee hereby agrees to
assume liability for, and does
hereby agree to indemnify, protect, save and keep harmless
(provided such indemnity shall not
extend to the Manufacturer of the Aircraft or any of its
component parts and their affiliates for
any claims arising out of Manufacturer's legal liability as
a manufacturer, repairer or supplier of
the Aircraft or any of its component parts) each
Indemnified Party from and against any and all
liabilities, obligations, losses, damages, penalties, claims
(including claims by an employee of
the Lessee or any of its agents or contractors), actions,
suits and related costs, judgments,
expenses and disbursements, including reasonable legal fees
and expenses, of whatsoever kind
and nature excluding Taxes (for purposes of this Section
14(h) collectively called "Expenses"),
imposed on, asserted against or incurred by any Indemnified
Party, in any way resulting from or
arising out of (i) this Lease and the other Operative
Agreements, (ii) the construction,
installation, ownership, design, maintenance, storage,
delivery, lease, sublease, possession, use,
operations or condition of any Airframe, Engine or Propeller
or engine or propeller used in
connection with the Aircraft (including, without limitation,
latent and other defects, whether or
not discoverable by the Indemnified Party or the Lessee, and
any claim for patent, trademark or
copyright infringement and any claim arising under the
strict liability doctrine in tort), or (iii) the
sale or other disposition of any Airframe, Engine or
Propeller or any portion thereof pursuant to
Section 8, 9 or 16 or Exhibit D hereof. . Except to the
extent fairly attributable to the failure of
Lessee fully to discharge its obligations under this Lease
the indemnities contained in this
Section 14(h) shall not apply, as to any Indemnified Party,
to any Expense to the extent resulting
from or arising out of one or more of the following: (A)
any breach of a representation or
warranty in this Lease of such Indemnified Party; or (B) a
breach by such Indemnified Party of
any express covenant or other agreement in this Lease to be
performed or observed by such
Indemnified Party; or (C) the gross negligence or willful
misconduct of such Indemnified Party;
or (D) a disposition (voluntary or involuntary) by such
Indemnified Party of all or any part of
such Indemnified Party's interest in the Airframe, or any
Engine or Propeller or the Operative
Agreements (other than as contemplated by Sections 8, 9 and
16 and Exhibit D or following the
occurrence of a Default or Event of Default); or (E) any
Taxes whether or not Lessee is required
to indemnify for such Taxes pursuant to the other Sections
of this Section 14 hereof (it being
agreed that the other Sections of this Section 14 provide
for Lessee's sole liability to indemnify
with respect to Taxes); or (F) acts or events with respect
to the Airframe or any Engine or
Propeller after the later of (i) return of possession of the
Airframe or such Engine or such
Propeller to the Lessor or its designee pursuant to the
terms of the Lease, or (ii) the termination
of the Term with respect to the Airframe or such Engine or
Propeller in accordance with the
Lease; or (G) the authorization or giving of any future
amendments, supplements, waivers or
consents with respect any of the Operative Agreements other
than such as have been requested
by or consented to by Lessee or as contemplated hereunder or
resulting from or arising out of a
Default or Event of Default. If Lessor shall have knowledge
of any claim or liability hereby
indemnified against it shall give prompt written notice
thereof to the Lessee; provided, however,
that the failure of Lessor to give such notice shall not
relieve the Lessee of any of its obligations
hereunder.
If Lessor shall obtain a recovery of all or any part of
any Expense or other amount which
the Lessee shall have paid to Lessor or for which the Lessee
shall have reimbursed Lessor,
pursuant to this Section 14(h), Lessor shall pay to the
Lessee an amount equal to the amount of
such recovery, adjusted as provided in Section 14(c).
(i) Payments. All amounts payable by the Lessee
pursuant to Section 14(h) shall
(i) be payable on demand to Lessor, or at Lessor's written
request, payable directly to the parties
entitled to indemnification and (ii) be adjusted as provided
for Taxes as provided for in
Section 14(c) hereof.
(j) Survival. All the indemnities contained in
Section 14(h) shall continue in full
force and effect notwithstanding the expiration or other
termination of this Lease and shall, in
that event, be enforceable by the Lessor and each
Indemnified Party. The Lessee's obligations
under Section 14 shall be that of primary obligor
irrespective of whether the Indemnified Party
shall also be indemnified with respect to the same matter
under any other agreement by any other
Person.
(k) Contest Rights. If any claim is made against
Lessor or Lessor is otherwise liable,
for any Taxes which Lessee is required to pay or indemnify
against pursuant to this Agreement,
Lessor shall, promptly upon becoming aware of the same,
notify Lessee in writing. If reasonably
requested by Lessee in a written notice to Lessor, Lessor
and Lessee shall (at the cost of Lessee)
seek the opinion of a reputable independent tax accountant
or counsel in the relevant jurisdiction
or jurisdictions acceptable to Lessor. If in the opinion of
such accountant or counsel, a contest of
the claim has merit and a substantial chance of success,
then to the extent that there are means
available by which to do so, Lessor shall in good faith take
such action as Lessee may reasonably
request to contest (including pursuing all administrative
and one level of judicial appeals) the
validity, applicability or amount of such claim for taxes
and shall:
(a) resist or seek postponement of payment thereof if
available and practicable;
(b) pay the same only under protest, if protest is
necessary and proper; or
(c) if payment shall be made, seek refund thereof in
appropriate administrative or
judicial (including one level of judicial appeal)
proceedings;
Provided Always that:
(i) Lessee shall indemnify Lessor (and prior to
Lessor taking such action shall
provide to Lessor security satisfactory to Lessor in respect
of any amounts so payable) against all
losses, costs and expenses Lessor may incur in connection
with or as a result of contesting such
claim or taking such action, including, without limitation,
all reasonable legal and accountants'
fees and disbursements, and the amount of any interest or
penalties which may be payable and
any other loss or damage whatsoever which may be incurred as
a result of contesting such claim
or taking such action;
(ii) if such contest is to be initiated by the
payment of, and the claiming of a
refund for, such Taxes, Lessee shall have advanced to Lessor
sufficient funds (on an interest-free
basis and, if such advance results in taxable income to
Lessor on an after-tax basis) to make such
payment;
(iii) nothing herein shall require Lessor
(acting reasonably and in good faith) to
disclose any information or provide any document Lessor
considers confidential to it or to any
customer of it, or to take or refrain from taking any action
or doing anything which would (or
might), in the opinion of Lessor adversely affect either
immediately or at any time in the future in
any respect of any of the business or commercial interest of
Lessor or any of its affiliates; and
(iv) Lessee shall give Lessor sufficient
information concerning such contest as
they may request from time to time.
(l) Additional Contest Rights. Subject to (i) no
Event of Default having occurred and
continuing, (ii) to the prior written approval of Lessor
(such approval not to be unreasonably
withheld), and (iii) Lessee first ensuring that Lessor is
indemnified and secured to its satisfaction
against all costs, expenses and liabilities thereby incurred
or to be incurred, Lessee shall be
entitled to take, in the name of Lessor, such action as
Lessee shall see fit to defend or avoid any
such Expenses as are referred to in Section 14(h) or to
recover the same from any third party; and
so long as the conditions described in clauses (i), (ii) and
(iii) of this paragraph (l) are continuing
to be complied with, Lessor shall not without Lessee's prior
consent, which consent shall not be
unreasonably withheld or delayed, settle, compromise or pay
any Expenses in respect of which
Lessee is required to indemnify Lessor pursuant to Section
14(h).
SECTION 15. EVENT OF DEFAULT.
The following events shall constitute Events of
Default:
(a) The Lessee shall fail to make any payment of Rent,
when due, subject to a five
business day grace period available once in each fiscal
quarter in each of Lessee's fiscal years
during the Term; or
(b) There shall occur any failure of Lessee to procure
any of the insurance coverage
required by Section 10 hereof or such insurance shall cease
to be in full force and effect; or
(c) Lessee shall fail to observe or perform any other
of the covenants, conditions,
agreements or warranties to be performed or observed by
Lessee hereunder and such failure shall
continue unremedied for the earlier to occur of (i) a period
of ten Business Days after written
notice thereof by Lessor, or (ii) a period of ten Business
Days after any corporate officer of
Lessee who, in the normal course of his operational
responsibilities, would have knowledge of
the matter and the requirements of this Lease with respect
thereto shall have obtained actual
knowledge of such failure; provided, however, removal of the
Aircraft at any time from the
continental limits of the United States or Canada in a
manner not permitted hereunder shall result
in an immediate Event of Default; or
(d) Any representation or warranty made by Lessee
herein or any document or
certificate furnished Lessor pursuant hereto shall prove to
have been incorrect in any material
respect when made and shall remain incorrect and material;
or
(e) Lessee shall consent to the appointment of or
taking possession by a receiver,
assignee, custodian, sequestrator, trustee or liquidator (or
other similar official) of itself or of a
substantial part of its property, or Lessee shall fail to
pay its debts generally as they come due (as
provided in 11 U.S.C. 303(h)(l)), or shall make a general
assignment for the benefit of its
creditors, or Lessee shall commence a voluntary case or
other proceeding seeking liquidation,
reorganization or other relief with respect to itself or its
debts under the Federal bankruptcy laws,
as now or hereafter constituted or any other applicable
Federal or State bankruptcy, insolvency or
other similar law or shall consent to the entry of an order
for relief in an involuntary case under
any such law or Lessee shall file an answer admitting the
material allegations of a petition filed
against Lessee in any such proceeding, or otherwise seek
relief under the provisions of any now
existing or future Federal or State bankruptcy, insolvency
or other similar law providing for the
reorganization or winding-up of corporations, or providing
for an agreement, composition,
extension or adjustment with its creditors; or
(f) An order, judgment or decree shall be entered in
any proceedings by any court of
competent jurisdiction appointing, without the consent of
Lessee, a receiver, trustee or liquidator
of Lessee or of any substantial part of its property, or any
substantial part of the property of
Lessee shall be sequestered, and any such order, judgment or
decree or appointment or
sequestration shall remain in force undismissed, unstayed or
unvacated for a period of 60 days
after the date of entry thereof: or
(g) A petition against Lessee in a proceeding or case
under the bankruptcy laws or
other insolvency laws (as now or hereafter in effect) shall
be filed and shall not be withdrawn or
dismissed within 90 days thereafter, or, in case the
approval of such petition by a court of
competent jurisdiction is required, the petition as filed or
amended shall be approved by such a
court as properly filed and such approval shall not be
withdrawn or the proceeding dismissed
within 90 days thereafter, or a decree or order for relief
in respect of the Lessee shall be entered
by a court of competent jurisdiction in an involuntary case
under the Federal bankruptcy laws, as
now or hereafter constituted, or any other applicable
Federal or State bankruptcy, insolvency or
other similar law, as now or hereafter constituted, and such
decree or order shall remain unstayed
in effect for a period of 90 days, or if, under the
provisions of any law providing for
reorganization or winding-up of corporations which may apply
to Lessee, any court of competent
jurisdiction shall assume jurisdiction, custody or control
of Lessee of any substantial part of its
property and such jurisdiction, custody or control shall
remain in force unrelinquished, unstayed
or unterminated for a period of 90 days; or
(h) A final judgment or judgments by a court or courts
or competent jurisdiction for
the payment of money in excess of $150,000, shall be
rendered against Lessee and the same shall
remain undischarged for a period of 60 days during which
execution of such judgment shall not
be effectively stayed, provided, however, that Lessee has
not provided for Lessor's benefit a bond
or has not placed cash or a cash equivalent in escrow, in
each case sufficient to pay the full
amount of such judgment or judgments on terms reasonably
satisfactory to Lessor; or
(i) There occur, be continuing, and having been
declared in writing by the party in
interest, an event of default under any other agreement
between Lessee or an affiliate thereof and
Lessor, Owner Participant, Seller, Manufacturer, Trident or
any affiliate thereof, or any trustee
acting on behalf of any of them, or any lease or sublease
with respect to a Leased Aircraft or any
sublease or lease of a Jetstream Model 3101, 3201, or 4101
Turboprop aircraft by Lessee or an
affiliate of Lessee ("Other Agreements"), such that pursuant
to the terms of the Other
Agreements the event of default as defined therein shall
permit the party in interest to terminate
said Other Agreement; or
(j) The code sharing agreement between Lessee or its
affiliates, and United Airlines,
shall cease to be in full force and effect prior to its
expiration in accordance with its term or shall
have been amended, modified or supplemented and such
amendment modification or supplement
would materially adversely affect the ability of Lessee or
any affiliate or subsidiary of Lessee to
perform its obligations hereunder, provided, however, that
nothing contained herein shall
preclude Lessee from entering into any code sharing
agreement with any other carrier, or
(k) If the Aircraft is flown without a valid
certificate of airworthiness or any other
valid permit to fly issued by the FAA or the registration of
the Aircraft or recordation of this
Lease is canceled except where such cancellation is caused
by the default or negligence of
Lessor.
SECTION 16. REMEDIES.
Upon the occurrence of any Event of Default and at any time
thereafter so long as the same shall
be continuing, Lessor may, at its option, declare by notice
to Lessee this Lease to be in default;
and at any time thereafter so long as Lessee shall not have
remedied all outstanding Events of
Default, Lessor may do, and Lessee shall comply with, one or
more of the following with respect
to the Airframe or any Engine or Propeller, as Lessor in its
sole discretion shall elect, to the
extent permitted by, and subject to compliance with any
mandatory requirements of, Applicable
Law then in effect:
(a) Repossession. Cause Lessee, upon the written
demand of Lessor and at Lessee's
expense, to, and Lessee shall, promptly return the Airframe
or any Engine or Propeller as Lessor
may demand to Lessor at such location in the continental
United States of America as selected by
Lessor in the manner and condition required by, and
otherwise in accordance with all of the
provisions of, Section 13 hereof as if such Airframe, Engine
or Propeller were being returned at
the end of the Term; or Lessor, at its option, may enter
upon the premises where the Airframe,
Engine or Propeller is located or believed to be located and
take immediate possession of and
peaceably remove such Airframe, Engine or Propeller without
the necessity for first instituting
proceedings, or by summary proceedings or otherwise, and
Lessee shall comply therewith, all
without liability to Lessor for or by reason of such entry
or taking possession, whether for the
restoration of damage to property caused by such taking or
otherwise;
(b) Keep Idle. Hold, use, operate, sublease to others
or keep idle all or any part of the
Airframe, Engine or Propeller as Lessor, in its sole
discretion, may determine, in any such case
free and clear of any rights of Lessee except as hereinafter
set forth in this Section 16 and
without any duty to account to Lessee with respect to such
action or inaction or for any proceeds
with respect thereto;
(c) Rescission. Rescind this Lease as to the Airframe
or any Engine or Propeller; or
(d) Other Remedies. Exercise any other right or
remedy which may be available
under applicable Law or proceed by appropriate court action
to enforce the terms hereof or to
recover damages for the breach hereof.
In addition, Lessee shall be liable for any and all
Supplemental Rent due hereunder before or
after any termination hereof, including all costs and
expenses (including reasonable attorney's
fees and disbursements) incurred by reason of the occurrence
of any Event of Default or the
exercise of Lessor's remedies with respect thereto including
all costs and expenses incurred in
connection with the return of any Airframe, Engine or
Propeller in accordance with the terms of
Section 13 hereof or any appraisal of the Aircraft. No
remedy referred to in this Section 16 is
intended to be exclusive, but each shall be cumulative and
in addition to any other remedy
referred to above or otherwise available to Lessor at law or
in equity; and the exercise or
beginning of exercise by Lessor of any one or more of such
remedies shall not preclude the
simultaneous or later exercise by Lessor of any or all such
other remedies. No express or implied
waiver by Lessor of any Event of Default hereunder shall in
any way be or be construed to be, a
waiver of any future or subsequent Event of Default.
SECTION 17. LESSOR'S RIGHT TO PERFORM FOR LESSEE.
If Lessee fails to make any payment of Rent required to be
made by it hereunder or fails to
perform or comply with any of its agreements contained
herein, Lessor may itself make such
payment or perform or comply with such agreement, and the
amount of such payment and the
amount of the reasonable expenses of Lessor incurred in
connection with such payment or the
performance of or compliance with such agreement, as the
case may be, together with interest
thereon at the Overdue Rate, shall be deemed Supplemental
Rent, payable by Lessee upon
demand. No such action shall be deemed a repossession of any
Airframe, Engine or Propeller,
and no such payment or performance or other act shall be
deemed to relieve the Lessee from any
default hereunder.
SECTION 18. COUNTERPARTS.
This Lease may be executed by the parties hereto in separate
counterparts, each of which when
so executed and delivered shall, subject to the next
sentence and the legends appearing on the
cover and signature page hereof, be an original, but all
such counterparts shall together constitute
but one and the same instrument. To the extent, if any,
that this Lease constitutes chattel paper
(as the term is defined in the Uniform Commercial Code as in
effect in any applicable
jurisdiction), no security interest in this Lease may be
created through the transfer or possession
of any counterpart other than the "original" counterpart
which shall be identified as the
counterpart containing the receipt therefor executed by the
Security Trustee on the signature page
thereof.
SECTION 19. ASSIGNMENT.
(a) Assignment by Lessor or Owner Participant. Lessor
or Owner Participant may,
without the consent of Lessee sell, assign or otherwise
transfer any or all of its rights in the
Aircraft or any or all of its rights or obligations
hereunder or under the Trust Agreement. In the
event of such an assignment by Lessor, Lessee agrees to
execute all amendments to this Lease
necessary to reflect the interests of such assignee.
(b) Assignment by Lessee. Lessee may not assign any
of its rights hereunder. The
prohibition against assignment by the Lessee can by waived
with the prior written approval by
Lessor. If an approval is granted to an assignment for the
remainder of the Term, the Lessee will
be relieved of its obligation under Section 22(a) to
continue to operate as an operator of
commercial aircraft and of the Aircraft.
SECTION 20. MISCELLANEOUS.
(a) Applicable Law. This Lease shall in all respects
be governed by, and construed in
accordance with, the laws of the Commonwealth of Virginia.
This Lease shall be effective for all
purposes as of the date first above written.
(b) Notices. Unless otherwise specifically provided
herein, all notices required or
permitted by the terms hereof shall be in writing and shall
be deemed to have been duly given
when delivered personally or otherwise actually received or
five days after being deposited in the
United States mail, registered, postage prepaid, addressed
as follows:
If to the Lessee:
Atlantic Coast Airlines
515A Shaw Road
Sterling, Virginia 20166
Attn: Chief Financial Officer
Fax: 703-406-6294
If to the Lessor:
First Security Bank , National
Association
79 South Main Street
Salt Lake City, Utah 84111
Attn: Corporate Trust Department
Fax: 801-246-5053
Phone: 801-350-5630
If to the Owner Participant:
British Aerospace Asset Management,
Inc.
15000 Conference Center Drive,
Suite 200
Chantilly, Virginia 20151
Attn: Vice President and
General Counsel
Fax: 703-227-1766
or at such other place as any such party may designate
by notice given in accordance with
this Section to the other parties.
(c) Judicial Proceedings. Lessee and Lessor hereby
each waive personal service of
process and consent that service of process upon each of
them may be made by certified or
registered mail, return receipt requested, at its address
specified or determined in accordance with
the provisions of Section 20(b), and service so made shall
be deemed completed on the third
Business Day after such service is deposited in the mail.
Nothing herein shall affect the right to
serve process in any other manner permitted by law or shall
limit the right of the Lessor to bring
proceedings against the Lessee in the courts of any
jurisdiction.
(d) Unenforceability. Any provision of this Lease
which is prohibited or
unenforceable in any jurisdiction shall, as to such
jurisdiction be ineffective to the extent of such
prohibition or unenforceability without invalidating the
remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction
shall not invalidate or render
unenforceable such provision in any other jurisdiction.
(e) Residual Value. Nothing in this Lease shall be
construed to be a guarantee by
Lessee of any particular residual value of the Aircraft,
provided, however, that this Section 20(e)
shall not reduce Lessee's obligations otherwise set forth in
this Lease.
(f) Time of Essence. Time is of the essence of this
Lease and of every provision
herein contained.
(g) Set-Off. Lessor shall be entitled to set-off or
withhold from any amount due and
payable to Lessee by Lessor under this Lease, or any amount
standing to the credit of Lessee on
any account between Owner Participant, Lessee and Lessor,
any amounts from time to time due
and payable by Lessee to Lessor or Owner Participant under
any agreement in relation to the
Leased Aircraft or any spare parts for the Leased Aircraft
or otherwise, and shall be entitled to do
so notwithstanding that any such amount or amounts may not
be expressed in the same currency.
Lessee agrees that, with respect to any claim which it may
now or hereafter have against Owner
Participant, Lessor, Seller, Manufacturer, British Aerospace
Public Limited Company or any of
their respective affiliates or subsidiaries in connection
with any other transaction whatsoever,
Lessee shall pursue any such claim independently of Lessee's
obligations under this Lease and
Lessee agrees not to use any such claim as a defense
against, set-off from or counterclaim to
Lessee's obligations hereunder.
(h) Integrated Agreement. This Lease means this Lease
Agreement, the Schedules
and the Exhibits hereto, and embodies together with any
letter agreements dated of even date
herewith the entire agreement and understanding between
Lessor and Lessee relating to the Lease
of the Aircraft and other items to be delivered hereunder.
Any other previous oral or written
communications, representations, agreements or
understandings between Lessor and Lessee with
respect to the leasing of the Aircraft are superseded and
canceled by this Lease.
(i) No Individual Liability. First Security Bank ,
National Association is entering
into this Lease solely as trustee under the Trust Agreement
and not in its individual capacity and
in no case whatsoever shall First Security Bank , National
Association (or any entity acting as
successor trustee under the Trust Agreement) be personally
liable on, or for any loss in respect
of, any of the statements, representations, warranties,
agreements or obligations of Lessor
hereunder as to all of which Lessee, its successors and
assigns, agree with respect to First
Security Bank , National Association (or any entity acting
as successor trustee under the Trust
Agreement), to look solely to the trust estate pursuant to
the Trust Agreement referred to in this
Section 20(i), except for any loss caused by [First Security
Bank , National Association] in its
individual capacity, and any of its past, present or future
stockholders, subscribers of capital
stock, officers, directors or any incorporators.
(j) Waivers, Headings. No term or provision of this
Lease may be changed, waived,
discharged or terminated orally, but only by an instrument
in writing signed by the party against
which the enforcement of the change, waiver, discharge or
termination is sought. This Lease
shall constitute an agreement of Lease, and nothing
contained herein shall be construed as
conveying to Lessee any right, title or interest in the
Aircraft except as a Lessee only. The
section and paragraph headings in this Lease and the table
of contents are for convenience or
reference only and shall not modify, define, expand or limit
any of the terms or provisions hereof
and all references herein to numbered sections, unless
otherwise indicated, are to sections of this
Lease.
SECTION 21. REPRESENTATIONS, WARRANTIES AND ASSURANCES OF
LESSEE.
Lessee hereby makes the following representations and
warranties on the Delivery Date:
(a) Corporate Existence. Lessee is a corporation duly
organized under the laws of the
State of California, validly existing and in good standing
under the laws of said state and is duly
qualified and authorized, or is in the process of obtaining
such qualification and authorization, to do
business as a foreign corporation wherever the nature of its
activities requires such qualification and
authorization.
(b) Corporate Authority. Lessee has full power and
authority to execute, deliver and
perform its obligations under this Lease, the Acceptance
Supplement and all supporting documents,
the same having been duly authorized by all necessary
corporate action of Lessee and duly executed
and delivered by the authorized officers of Lessee and
constitute legal, valid and binding
obligations of Lessee and are enforceable in accordance with
such terms, except as enforceability
thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar
laws affecting the enforcement of creditors' rights
generally as well as by general principles of
equity regardless of whether enforcement is sought in a
proceeding in equity or at law.
(c) Consistency with Governing Documents and Law. The
execution and delivery of
this Lease, the Lease Acceptance Supplement, and all
supporting documents and the performance
by Lessee of its obligations under this Lease, the Lease
Acceptance Supplement, and all supporting
documents will not be inconsistent with its charter or by-
laws, do not contravene any presently
existing law, governmental rule or regulation, judgment or
order applicable or binding on Lessee,
and do not contravene any provision of, or constitute a
material default or result in the creation of
any material lien or encumbrance with respect to this Lease
or the Aircraft under any presently
existing indenture, mortgage, contract or other instrument
to which Lessee is a party or by which it
or any of its properties is bound.
(d) Consents. No consent of shareholders of Lessee or
of any trustee or holders of any
presently existing indebtedness or obligations of Lessee or
of any other person and no consent or
approval of, giving notice to, or any filing or registration
with any governmental authority, body,
commission or agency is or will be required as a condition
to the validity of this Lease or as a
condition to or in connection with the authorization,
execution, delivery or performance hereof by
Lessee except those which have been duly made or obtained,
certified copies of which have been or
will be delivered to Lessor prior to delivery of the
Aircraft to Lessee. To Lessee's knowledge, this
Lease and its performance do not and will not violate or
contravene any law, regulation, order,
judgment or other similar obligation imposed by any
government or regulatory agency, court,
administrative or legislative body.
(e) Pending Legal Actions. There is no action, suit
or proceeding pending or, to
Lessee's knowledge, threatened, against or affecting Lessee
or any of its subsidiaries or associated
companies before any court or before any governmental
commission, arbitrator, board, authority or
administrative agency which might result in any material
adverse effect on the ability of Lessee or
any of its subsidiaries or associated companies to perform
its obligations under this Lease, the
Lease Acceptance Supplement or any related documents, or
upon on assets, liabilities, business,
prospects, profit, condition or operations, financial or
otherwise, of Lessee or any of its subsidiaries
or associated companies.
(f) Covenants, Terms and Conditions. Lessee is fully
familiar with all the covenants,
terms and conditions of this Lease and is not in default
with respect thereto.
(g) Financial Statements. All financial statements
and tax returns that have heretofore
been provided to Lessor in conjunction with this transaction
fairly and accurately represent the
financial condition and income of Lessee as of the dates
given and as of the date hereof and as of
such date such financial statements or tax returns do not
contain any untrue statements of a material
fact, nor do they omit to state a material fact required to
be stated therein or necessary in order to
prevent such financial statements or tax returns from being
misleading; and there is no fact,
situation or event which, so far as can be foreseen by
Lessee, will materially adversely affect the
properties, business assets, income, prospects or
conditions, financial or otherwise, of Lessee.
(h) Taxes. All Federal, state and local tax returns
required to be filed by Lessee have, in
fact, been filed, and all taxes which are shown to be due
and payable in such returns have been paid.
No material controversy in respect of additional income
taxes due for which adequate reserves
have not been provided is, to Lessee's knowledge, pending or
threatened, which controversy if
determined adversely would materially and adversely affect
Lessee's ability to perform its
obligations hereunder. The provision for taxes on the books
of Lessee is adequate for all open
years, and for its current fiscal period.
(i) ERISA. Lessee is not engaged in any transaction
in connection with which it could
be subjected to either a civil penalty assessed pursuant to
Section 502(c) of ERISA or any tax
imposed by Section 4975 of the Code; no material liability
of the Pension Benefit Guaranty
Corporation has been or is expected by Lessee to be incurred
with respect to any employee pension
benefit plan (as defined in Section 3 of ERISA) with respect
to any such employee pension benefit
plan. There is no event of termination of any such employee
pension benefit plan by the Pension
Benefit Guaranty Corporation; and no accumulated funding
deficiency (as defined in Section 302
of ERISA or Section 412 of the Internal Revenue Code),
whether or not waived, exists with respect
to any such employee pension benefit plan.
(j) No Defaults Under Other Agreements. Lessee is not
in default under any indenture,
mortgage, loan agreement or other agreement or instrument,
in each case of a material nature to
which Lessee is now a party or by which it or any of its
properties is bound, unless such default has
been waived; nor is Lessee in violation of any law, order,
injunction, decree, rule or regulation
applicable to Lessee of any court or administrative body,
which violation could materially and
adversely affect the business, property or assets,
operations or condition, financial or otherwise of
Lessee; and no event has occurred and is continuing which,
under the provisions of any such
indenture, mortgage, loan agreement or other agreement or
instrument, with the lapse of time or the
giving of notice or both, would constitute a material
default thereunder.
(k) No Defaults Under this Lease. No Default or Event
of Default has occurred and is
continuing.
(l) Chief Executive Offices. Lessee's chief executive
office (as that term is defined in
Article 9 of the Uniform Commercial Code as in effect in the
Commonwealth of Virginia) is
located at the address set forth in the heading of this
Lease.
(m) Certificated Air Carrier. Lessee is a
Certificated Air Carrier and Lessor, as lessor of
the Aircraft to Lessee, is entitled to the benefits of
Section 1110 of Title 11 of the United States
Code with respect to the Aircraft.
(n) Citizen of the United States. Lessee is a
"citizen of the United States" as defined in
49 U.S.C. Section 40102(a)(15)(c).
SECTION 22. GENERAL UNDERTAKINGS OF LESSEE.
Lessee covenants with Lessor that from the date of this
Agreement and until all its liabilities under
the Lease have been fully discharged it will do the
following:
(a) Operation of Business. Lessee will remain in and
continue to operate the business
of providing commercial air transportation services
possessing all necessary consents, licenses and
authorizations required under Applicable Law, preserve its
corporate existence, conduct its business
in an orderly and efficient manner, satisfy its debts and
obligations as they generally fall due and
keep and maintain all of its assets in good working order
and condition (Lessee's obligations under
this Section 22(a) with respect to its operation of the
business of providing commercial air
transportation services will apply only until the
termination of the Lease Agreements or until an
assignment of the Lease Agreements which has been approved
by Lessor, although a subsequent
Lessee will be responsible for similar obligations for the
remainder of the Term. Lessee will not
change its chief executive office (as that term is defined
in Article 9 of the Uniform Commercial
Code as in effect for the Commonwealth of Virginia) from
that described in the heading of this
Lease, unless it gives Lessor notice thereof;
(b) No Defaults. Lessee will not willfully cause any
Event of Default to occur or
knowingly permit any Event of Default to occur and shall
notify Lessor immediately of the
occurrence of any Default or Event of Default or of any
occurrence which might have an adverse
effect upon Lessee's ability to perform any of its
obligations under the Lease and provide Lessor
with full details of any steps which Lessee is taking, or is
considering taking, in order to remedy or
mitigate the effect of any such Default or Event of Default;
(c) Notification of Potential Insurance Claims. In
addition to any formal notices
required under this Lease, Lessee will notify Lessor as soon
as practicable after becoming aware of:
(i) any Event of Loss with respect to the
Aircraft or any part thereof or any
damage to the Aircraft or any part thereof the cost of
repair of which is expected to be in excess of
US$100,000 or equivalent;
(ii) any loss, arrest, hi-jacking, confiscation,
seizure, requisitioning, impounding
taking in execution, detention or forfeiture of the Aircraft
any part thereof;
(iii) any death, sickness or injury of, or any
loss or damage to any property of,
any third party caused by or in connection with, the
Aircraft which might reasonably be expected to
give rise to a loss or liability in excess of US$100,000 or
equivalent in any other currency; and
(iv) any event in respect of the Aircraft which
might reasonably be expected to
involve the Insured Parties loss or liability in excess of
US$100,000 or equivalent in any other
currency;
(d) Protection of Aircraft. Lessee will not do or
knowingly permit to be done or omit or
knowingly permit to be omitted anything which might expose
the Aircraft to penalty, forfeiture,
impounding, detention or destruction or abandon any part of
the Aircraft in any location;
(e) Operational Interests. Lessee will not represent
or hold out Lessor the Insured
Parties as carrying goods or passengers on the Aircraft or
as being in any way connected or
associated with any operation or carriage (whether for hire
or reward or gratuitously) which Lessee
may undertake nor represent or hold out the Insured Parties
as having any operational interest in the
Aircraft or any part thereof;
(f) Pledge of Credit. Lessee will not pledge the
credit of the Insured Parties for any
maintenance, overhauls, replacement, repairs or
modifications to the Aircraft any part thereof or
otherwise in connection with the use or operation of the
Aircraft or any part thereof;
(g) Release of Aircraft. In the event of any arrest,
confiscation, seizure, requisitioning,
impounding, taking in execution, detention or forfeiture of
the Aircraft or any part thereof not
constituting a casualty occurrence, Lessee will take all
steps necessary to procure the release thereof
at the earliest time possible;
(h) Attachments/Discharge of Liens. Lessee will
discharge any and all fees, charges to
any third party in relation to the use or operation of the
Aircraft or any part thereof during the Term
or any premises where the Aircraft or any part thereof is
situated during the Term and will keep the
Aircraft or any part thereof from being detained for rent,
taxes or other outgoings or in any way
attached;
(i) Power to Sell. Lessee will not attempt to hold
itself out as having any power to
sublease (without the prior written consent of Lessor),
sell, or otherwise dispose of or create any
security interest over the Aircraft or any part thereof.
Lessee shall not claim depreciation
allowances, deductions or other tax benefits associated with
ownership or deemed ownership of the
Aircraft;
(j) Landing and Navigation Fees. Lessee will pay and
discharge whether during or
after the Term within the normal period of payment from time
to time permitted by the authority to
which such charges are owed:
(i) all landing fees and other similar airport
charges imposed by the authorities
or any airport from or to which the Aircraft may fly; and
(ii) all charges, if any, in respect of air
navigation incurred by Lessee in respect
of the Aircraft.
(k) Financial Statements and Operational Reports.
Lessee will submit to Lessor, at the
times indicated, the following:
(i) Within 90 days after the end of each fiscal
year, a consolidated balance sheet
and consolidated statements of income and cash flow for said
fiscal year, audited by BDO Seidman
or other independent accounting firm acceptable generally
to Lessor and without qualification as
to the scope of the audit or as to generally accepted
accounting principles;
(ii) Within 45 days after the end of each quarter,
through the Term, the previous
quarter's actual results as reported on the Lessee's
profit/loss statement, balance sheet, and cash
flow statement;
(iii) At the time of filing or delivery to
third parties, copies of all financial
statements, proxy statements, notices and reports as it
shall send to its security holders and all
registration statements (without exhibits) which it files
with the Securities and Exchange
Commission or any securities exchange, copies of all press
releases and other statements made
generally available by Lessee to the public concerning
material developments in the Lessee's
business; and
(iv) Such other cost, revenue, and operational and
financial performance
information as the Lessor may reasonably request, provided
Lessee shall not be required to provide
information that would directly or indirectly disclose
confidential financial or operational
information with respect to aircraft other than British
Aerospace products. On a quarterly basis, the
Lessee's Chief Financial Officer shall provide a written
attestation of the authenticity and
completeness of all of the information supplied by Lessee.
(l) Inspection. Lessee will permit Lessor, any
Financier, the FAA and any
person designated by Lessor to visit and inspect the
Aircraft and the records maintained in
connection therewith at Lessee's facilities or at a third
party's facilities all at reasonable times and
as often as Lessor may reasonably request, and to obtain
copies of such records at such person's
expense, provided that Lessor shall not interfere with
Lessee's or such third party's operations.
Each such visit to such third party's facilities shall be
arranged through Lessee. During the Term,
Lessee shall furnish to Lessor such additional information
concerning the location, condition, use
and operation of the Aircraft, engines, and parts as Lessor
may reasonably request, and Lessee
shall permit (but only in connection with the monitoring of
Lessee's performance of its
obligations under this Lease) any qualified person
designated by Lessor to fly on board the
Aircraft on any flight on which space is available (the
Lessee being under no obligation to
displace a revenue passenger to accommodate the Lessor's
representative) and where permitted
by regulations, in the Lessee's reasonable judgment, to sit
in the cockpit of the Aircraft in order
to observe the condition and performance of the Aircraft in
flight.
[THE NEXT PAGE IS THE SIGNATURE PAGE]
IN WITNESS WHEREOF, Lessor and Lessee have each caused
this Lease to be duly
executed by their authorized officers as of the day and year
first above written.
LESSOR:
FIRST SECURITY BANK ,
NATIONAL ASSOCIATION, not in
its
individual capacity but solely
as trustee
under a trust created under a
Trust
Agreement dated as of
__________, 199__
By:
Its: Vice President
LESSEE:
ATLANTIC COAST AIRLINES
By:
Its:
By:
_______________________________
Its:
_______________________________
EXHIBIT A TO LEASE AGREEMENT
Atlantic Coast Airlines
Jetstream Series 4100 Model _____
Aircraft S/N ______, U.S. Reg. _______
Lease Agreement Dated as of __________, 199__
LEASE ACCEPTANCE SUPPLEMENT
THIS LEASE ACCEPTANCE SUPPLEMENT, dated ____________, 199__
is executed and
agreed by and between First Security Bank , National
Association, a national banking
association, not in its individual capacity but solely as
Owner Trustee under Trust Agreement
dated as of __________, 199__ (hereinafter referred to as
"Lessor"), and Atlantic Coast Airlines,
a California corporation (hereinafter referred to as
"Lessee").
W I T N E S S E T H:
1. Lessor and Lessee have heretofore entered into a Lease
Agreement dated as of
__________, 199__, (the "Lease") providing for the execution
and delivery of this Lease
Acceptance Supplement. The terms defined in the Lease shall
have the same meanings when
used herein.
2. Lessor hereby leases to Lessee, and Lessee hereby
leases from Lessor, the Aircraft
described in Schedule 1 hereto and made a part hereof (the
"Aircraft"). Lessee hereby
acknowledges and agrees, respecting the Aircraft:
(A) That Lessee has inspected the Aircraft fully and
completely as to size, model,
function and conformity to the specification,
(B) That the Aircraft is of a size, design, function
and manufacture selected by Lessee,
(C) That Lessee is satisfied that the same is suitable
for its intended purposes and any
special purposes of Lessee,
(D) LESSOR LEASES AND LESSEE TAKES THE AIRCRAFT "AS-
IS, WHERE-
IS". LESSEE ACKNOWLEDGES AND AGREES THAT AS BETWEEN LESSEE
AND
EACH OF LESSOR (FOR THE PURPOSES OF THIS SECTION 2(d), IN
ITS INDIVIDUAL
CAPACITY OR OTHERWISE), OWNER PARTICIPANT AND ANY FINANCIER:
(i) THE
AIRFRAME AND EACH ENGINE ARE OF A SIZE, DESIGN, CAPACITY AND
MANUFACTURE SELECTED BY AND ACCEPTABLE TO LESSEE, (ii)
LESSEE IS
SATISFIED THAT THE AIRFRAME AND EACH ENGINE ARE SUITABLE FOR
THEIR
RESPECTIVE PURPOSES, AND (iii) NONE OF LESSOR, OWNER
PARTICIPANT OR
ANY FINANCIER MAKE, HAS MADE OR SHALL BE DEEMED TO HAVE
MADE, AND
EACH WILL BE DEEMED TO HAVE EXPRESSLY DISCLAIMED, AND LESSEE
HEREBY
WAIVES, RELEASES AND RENOUNCES, ANY WARRANTY,
REPRESENTATION,
GUARANTY, LIABILITY AND OBLIGATION OF LESSOR, OWNER
PARTICIPANT OR
ANY FINANCIER, AND ANY RIGHT, CLAIM AND REMEDY OF LESSEE
AGAINST
SUCH PARTIES, EXPRESS OR IMPLIED, ARISING BY OPERATION OF
LAW, COURSE
OF PERFORMANCE, COURSE OF DEALING, USAGE OF TRADE OR
OTHERWISE, AS
TO:
THE TITLE, AIRWORTHINESS, VALUE, CONDITION,
DESIGN,
OPERATION, ANY IMPLIED WARRANTY OF MERCHANTABILITY OR
FITNESS FOR
USE OR FOR ANY PARTICULAR PURPOSE OF THE AIRFRAME, ANY
ENGINE, ANY
PROPELLER, ANY PART, ANY DATA OR ANY OTHER THING DELIVERED,
SOLD OR
TRANSFERRED HEREUNDER,
THE QUALITY OF THE MATERIAL OR WORKMANSHIP
WITH
RESPECT TO THE AIRFRAME, ANY ENGINE, ANY PROPELLER, ANY
PART, ANY
DATA OR ANY OTHER THING DELIVERED, SOLD OR TRANSFERRED
HEREUNDER,
THE ABSENCE OF LATENT OR ANY OTHER DEFECT OR
NONCONFORMANCE IN THE AIRFRAME, ANY ENGINE, ANY PROPELLER,
ANY
PART, ANY DATA OR ANY OTHER THING DELIVERED, SOLD OR
TRANSFERRED
HEREUNDER, WHETHER OR NOT DISCOVERABLE, OR
THE ABSENCE OF ANY ACTUAL OR ALLEGED INFRINGEMENT
OF
ANY PATENT, TRADEMARK OR COPYRIGHT OR THE LIKE.
LESSEE FURTHER WAIVES, DISCLAIMS, RELEASES AND
RENOUNCES ANY
LIABILITY, RIGHT, CLAIM, REMEDY OR OBLIGATION BASED ON TORT,
INCLUDING STRICT LIABILITY, WHETHER OR NOT ARISING FROM THE
NEGLIGENCE (WHETHER ACTIVE, PASSIVE OR IMPUTED) EXCEPT FOR
WILLFUL
MISCONDUCT OR GROSS NEGLIGENCE, OF LESSOR, OWNER
PARTICIPANT OR
ANY FINANCIER, ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR
REMEDY FOR
LOSS OF OR DAMAGE TO THE AIRFRAME, ANY ENGINE, ANY
PROPELLER, ANY
PART, ANY DATA OR ANY OTHER THING DELIVERED, SOLD OR
TRANSFERRED
HEREUNDER, OR ANY OTHER REPRESENTATION OR WARRANTY
WHATSOEVER,
EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRFRAME, ANY
ENGINE, ANY
PROPELLER, ANY PART, ANY DATA OR ANY OTHER PHYSICAL THING
DELIVERED,
SOLD OR TRANSFERRED HEREUNDER.
(E) That the Aircraft has been delivered to, is now in
the possession of, and is
acceptable to Lessee.
(ii) Lessee hereby agrees to pay to Lessor as Basic Rent for
the Aircraft the amounts set forth
in the Schedule of Rental Payments attached hereto as
Schedule 2.
(ii) In addition Lessee agrees to pay to Lessor when
required by the Lease the Stipulated Loss
Value payments in the amounts set forth in Schedule 3
attached hereto and made a part hereof.
(ii) The date of delivery and acceptance of the Aircraft is
the date of this Lease Acceptance
Supplement set forth in the opening paragraph hereof.
(ii) All of the rights and obligations hereunder, including
matters of construction, validity and
performance shall be governed in the same manner and under
the same circumstances as the
Lease.
(ii) Lessee hereby states that the Representatives,
Warranties and Assurances of Lessee in
Section 21 of the Lease are valid and correct on the date
hereof and that no Default has occurred
which is continuing.
[THE NEXT PAGE IS THE SIGNATURE PAGE]
IN WITNESS WHEREOF, the parties have set their hands
and seals on the first day
written above.
LESSOR:
FIRST SECURITY BANK ,
NATIONAL ASSOCIATION, not
in its
individual capacity but
solely as trustee
under a trust created
under a Trust
Agreement dated as of
__________, 199__
By:
_________________________
Its: Vice President
LESSEE:
ATLANTIC COAST AIRLINES
By:
__________________________
Its:
__________________________
By:
__________________________
Its:
__________________________
EXHIBIT B TO LEASE AGREEMENT
Atlantic Coast Airlines
British Aerospace (Operations) Limited
Jetstream Series 4100 Model 4101 Aircraft
S/N ______, U.S. Reg. _______
Lease Agreement Dated as of __________, 199__
SCHEDULE OF LIFE-LIMITED COMPONENTS
MRB REF J41 COMPONENT INTERVAL
21-30-05 ELECTRIC-PNEUMATIC VALVE F/C3,900 HRS
21-30-06 ELECTRO-PNEUMATIC VALVE F/C6,000 HRS
21-30-08 CABIN AIR FILTER REPLACE 1,800 HRS
21-30-10 ALTITUDE SWITCH F/C1,500 HRS
23-71-02 COCKPIT VOICE RECORDER O/H6,000 HRS
23071-03/09 INERTIA SWITCH TEST 3 YRS
23-71-07 CVR LOCATOR BEACON BATTERY REPLACE 6 YRS
24-30-05 STANDBY POWER SUPPLY CAP CK 300 HR/12 MO
24-30-09 STARTER GENERATOR CMR O/H 600 HRS
24-002 GENERATOR CONTROL UNIT L/L 16,000 HRS
24-32-01 BATTERY DEEP CYC 3 MO
25-60-04 LIFEJACKETS INSP 30 DAYS
25-60-05 ELT BATTERY REPLACE 12 MO
26-21-01 FIRE BOTTLE CARTRIDGE REPLACE 10 YRS
26-21-07 FIRE BOTTLES (ENGINE) HYDRO 14 YRS
27-50-01 FLAP HYDRAULIC CONTROL UNIT F/C 3,000 HRS
29-10-04 MAIN/RETURN FILTER VALVE REPLACE 1,800 HRS
29-10-07 PRESSURE RELIEF VALVE B/C 6,000 HRS
29-20-04 EMERGENCY SELECTOR VALVE B/C 1,200 HRS
31-21-01/02 CLOCK BATTERY REPLACE 3 YRS
31-31-02 FLIGHT DATA RECORDER O/H 8,000 HRS
31-31-08 FDR LOCATOR BEACON BATTERY REPLACE 6 YRS
32-10-03 MAIN SHUT STRUT L/L 60,000 HRS
32-20-03 MAIN SHOCK STRUT L/L 60,000 HRS
MRB REF J41 COMPONENT INTERVAL
33-52-02 EMERGENCY LIGHT BATTERIES DEEP CYC 6 MO
35-10-05 CREW OXYGEN BOTTLE GAUGE CAL 3 YRS
35-10-06 CREW OXYGEN BOTTLE TEST 3 YRS
35-10-07 CREW OXYGEN MASKS F/C 3 YRS
35-20-05 ALTITUDE SWITCH F/C 1,800 HRS
35-20-06 ALT COMPENSATING REGULATOR CAL 1,800 HRS
35-20-08 PAX OXYGEN BOTTLE TEST 3 YRS
61-00-09 PROPELLER INSP 3,000 HRS
71-00-04 ISOLATOR ELASTOMERIC L/L 6,000 HRS
72-00-07 OIL FILTER REPLACE 300 HRS
72-00-11 GEARBOX INSP 3,000 HRS
72-00 12 COMPRESSOR INSP 3,000 HRS
72-00-13 HOT SECTION INSP 1,500 HRS
72-00-12 SHOULDERED TIE SHAFT L/L 20,000 CYC
72-00-12 COMPRESSOR STUB SHAFT L/L 20,000 CYC
72-00-14 1st COMPRESSOR IMPELLER L/L 10,000 CYC
P/N 3105129-1
72-00-14 1st COMPRESSOR IMPELLER L/L 30,000 CYC
P/N 3105129, 3104276-4
72-00-14 2nd COMPRESSOR IMPELLER L/L 30,000 CYC
P/N 3104204-6/-7
72-00-16 CENTER ROTATING SEAL PLATE L/L 20,000 CYC
P/N 3104189
72-00-15 1st STAGE TURBINE DISK L/L 20,000 CYC
P/N 3104026-7
72-00-15 2nd STAGE TURBINE DISK L/L 20,000 CYC
P/N 3104142-5
72-00-15 3rd STAGE TURBINE DISK L/L 20,000 CYC
P/N 3104108-6
76-00-06 FLEXIBLE CONTROL ASSYs REPLACE 6,000 HRS
76-00-07 CONTROL CABLES REPLACE 20,000 FLT
79-00-06 OIL TEMP SWITCH INSP 15,000 HRS
If a life-limited component is subsequently fitted to or on
the Aircraft, such life limited component
shall be incorporated by reference into this Exhibit B.
EXHIBIT C TO THE LEASE AGREEMENT
Atlantic Coast Airlines
British Aerospace (Operations) Limited
Jetstream Series 4100 Model 4101 Aircraft
S/N ______, U.S. Reg. _______
Lease Agreement Dated as of __________, 199__
SCHEDULE OF PRESENT INSURED PARTIES
Lessor/Owner-Trustee:
Owner Participant:
Seller:
Security Trustee, Facility
Agent and Banker:
Lenders:
Manufacturer
EXHIBIT D TO LEASE AGREEMENT
Atlantic Coast Airlines
British Aerospace (Operations) Limited
Jetstream Series 4100 Model 4101 Aircraft
S/N ______, U.S. Reg. _______
Lease Agreement Dated as of __________, 199__
Voluntary Termination Option
So long as no Default or Event of Default has occurred
and is continuing on the applicable notice date or the
Termination Date (as defined below) and provided that this
Lease shall not have been previously terminated, Lessee
shall have the right, at its option, and subject to the
provisions of this Exhibit, to terminate this Lease on any
date (such date, as it may be changed by Lessee from time to
time pursuant to notice as described below, the "Termination
Date") during the period beginning with and from the
Delivery Date and ending on the later of the date which is
* after the Delivery Date or * but not at any time
thereafter, exercisable by the Lessee giving prior notice
thereof to Lessor and Owner Participant received by each of
them not less than * prior to the proposed Termination
Date. If Lessee elects to terminate this Lease, Lessee must
purchase or cause a Person designated by Lessee to purchase
the Aircraft on such Termination Date for an amount (the
"Purchase Price") equal to * Lessee shall have the right
upon notice to Lessor and Owner Participant to delay the
Termination Date to a later date within the period described
above or to rescind its notice to terminate the Lease, based
on the final availability of its financing of the purchase
of the Aircraft, without further compromise to its right to
subsequently elect to terminate the Lease within the period
described above and otherwise in accordance with this
Exhibit D. If no sale occurs on the Termination Date, this
Lease shall continue in full force and effect (subject to
Lessor's rights and remedies hereunder if such sale did not
occur due to the existence of a Default or Event of
Default). In connection with any such sale Lessor shall
execute and deliver to such purchaser or Lessee, as
relevant, a bill of sale, without recourse, representation
or warranty (except a warranty that good, legal and
marketable title to the Aircraft is being transferred free
and clear of all liens other than liens created by or
through Lessee or which arise as a result of Lessee's
operation of the Aircraft or for which Lessee is otherwise
responsible under this Lease, which title Lessor will
warrant and defend forever against all claims and demands
whatsoever) for the Aircraft, together with an aircraft
purchase and sale agreement and such other documents as may
be required to release the Aircraft from the terms and scope
of this Lease or to transfer Lessor's interest therein to
Lessee or such purchaser, as applicable, each of such
documents to be in form and substance reasonably
satisfactory to Lessor and Lessee or such purchaser, as
applicable.
Notwithstanding the provisions of Section 12(f) and Section
19(a) of this Lease, during the period described above in
which Lessee has the right to terminate this Lease, neither
of Lessor or Owner Participant is permitted to sell, assign
or otherwise transfer their interests in the Aircraft, the
Lease or the Trust Agreement or Financing as defined in
Section 12(f) of the Lease with a Person who is not an
affiliate of either of them or Trident or any of its
affiliates or a trustee acting for any of them; and, for
purposes of clarification, upon the termination or transfer
of this Lease in accordance with the foregoing provisions of
this Exhibit D, Lessee shall not be required to return the
Aircraft or comply with the provisions of Section 13 of this
Lease. Notwithstanding any provision in Section 20(h), in
the event of any termination or transfer of this Lease as
provided above; (i) Lessee shall continue to be entitled to
such rights as are provided in the Purchase Agreement (as
defined in Schedule 2 to Exhibit A); (ii) the Insured
Parties shall continue to be entitled to such rights as are
provided in Section 10 of this Lease (for a period of two
years after the Termination Date); and (iii) Section 14 of
this Lease shall survive as provided therein.
EXHIBIT E TO LEASE AGREEMENT
Atlantic Coast Airlines
British Aerospace (Operations) Limited
Jetstream Series 4100 Model 4101 Aircraft
S/N ______, U.S. Reg. _______
Lease Agreement Dated as of __________, 199__
BAAM, INC. Letterhead
SIDE LETTER RE: TERMINATION / EVENT OF LOSS PAYMENTS
Atlantic Coast Airlines
515A Shaw Road
Sterling, Virginia 20166
Re: Lease Agreement dated as of ____________,
1997
between First Security Bank, National
Association, not in its individual capacity
but solely as trustee, or Lessor, and
Atlantic
Coast Airlines, as Lessee (the "Lease")
Dear Sirs,
Reference is hereby made to the above Lease. Terms
used herein and not otherwise defined herein shall have the
meaning given to them in the Lease.
Pursuant to this letter agreement, we, as Owner
Participant under the Lease, hereby agree to *
1. In the event you, as Lessee, terminate or transfer
the Lease in accordance with Exhibit D to the Lease and
pay Lessor the Stipulated Loss Value and other amounts
provided in Exhibit D of the Lease, * .
2. *
3. In the event that subsequent to the period
provided in Exhibit D of the Lease for termination of
the Lease, * .
The provisions of Sections 18, 19 and 20 of the Lease
are hereby incorporated herein by this reference and made
applicable hereto with the necessary changes being deemed
made.
If the foregoing accurately reflects our agreement,
please execute a counterpart hereof in the space indicated
below and return it to the undersigned.
Very truly yours,
BRITISH AEROSPACE ASSET MANAGEMENT,
INC.
By:______________________________________
Title:_____________________________________
Agreed and accepted:
ATLANTIC COAST AIRLINES
By:
Title:
EXHIBIT D-
1
BACKSTOP FINANCING TERMS
D.1 Subject to the conditions precedent provided in Section
17, the absence of a matured or unmatured Event of
Termination, or an event described in Section 19.2, and
to satisfaction of the conditions precedent to the
lessor's obligations in the form of Lease Agreement for
such Aircraft, including the absence of a Default or
Event of Default thereunder, Backstop Financing shall
be available to Buyer subject and pursuant to the
following limits:
D.1.1 *
D.1.2 *
D.1.3 *
D.1.4 *
D.1.5 Seller shall be under no obligation to
provide Backstop Financing for any Aircraft in
excess of the limits set forth herein. Buyer shall
be under no obligation to accept Backstop
Financing in excess of the limits set forth
herein.
D.2 With respect to each Aircraft for which Buyer has not
secured a financing commitment as of the Delivery Date,
and provided that Backstop Financing is available in
accordance with the limitations set forth in Section
D.1, Seller shall provide and Buyer shall accept such
Backstop Financing, subject to the terms and conditions
of this Agreement (including this Exhibit).
D.3 The detailed terms and conditions of the Backstop
Financing shall be in accordance with a Lease Agreement
substantially in the form of Exhibit D, and the
commercial terms as provided in this Exhibit D-1.
D.4 The lessor, and any beneficiary of a trust which acts
as a lessor, shall have the right, commencing with the
first Business Day after the last day of the Window (as
defined below) for a Lease Agreement, to assign,
novate, or alternatively dispose of its interests in
such Lease Agreement or applicable trust and Buyer
shall provide all reasonable assistance and required
consents necessary to effect such assignment, novation
or disposal, as more specifically provided in the Lease
Agreement.
D.5 Buyer shall have the right to terminate the Lease
Agreement for an Aircraft subject to Backstop Financing
during a period of * (the "Window") by paying * any
other amounts provided for in the Lease Agreement,
subject to compliance with the other terms and
conditions and as provided for in the Lease Agreement.
D.6 Lease Term: The term of such Lease Agreement shall be
twelve (12) years, subject to the termination rights
described above.
D.7 The monthly lease rentals with respect to each Aircraft
for the Backstop Financing shall be structured as
follows:
D.7.1 *
D.7.2 *
D.7.3 *
D.8 *
D.9 The Base Monthly Lease Rental quoted herein shall be
adjusted for any changes to the Customer Specification
as set forth in Change Orders executed subsequent to
the date hereof, including those issued pursuant to
Section 2.3 other than those issued pursuant to Section
2.3.1 hereof (except those paid directly by Buyer).
D.10 The Base Monthly Rental quoted herein shall be adjusted
to reflect changes in economic conditions * and
(ii) the monthly lease rentals for each Aircraft shall
not be increased for any period of delay in delivery of
an Aircraft which is due to *
D.11 Adjustments to Base Monthly Lease Rental amounts as
provided for in Section D.7, D.8, D.9 and D.10 shall be
made *
D.12 The Buyer acknowledges and agrees that Seller's
agreement to provide Backstop Financing as set forth
herein is a contract to extend a "financial
accommodation" within the meaning of Section
365(e)(2)(B) of the United States Bankruptcy Code,
which agreement will terminate automatically upon the
occurrence of any event described in Sections 19.1.2
through and including 19.1.7 of this Agreement.
If for any reason such terminate is not given effect,
the Buyer acknowledges and agrees that the agreement
for Backstop Financing for any Aircraft which is
undelivered and as to which Backstop Financing is
available at the time of any event described in
Sections 19.1.2 through and including 19.1.7 of this
Agreement shall be deemed a lease of such Aircraft for
the purposes of Section 1110 of the United States
Bankruptcy Code commencing on the date on which Seller
is able to tender such Aircraft for delivery to the
Buyer hereunder and the sixty (60) day period described
in such Section 1110 shall begin on such date.
D.13 With respect to each Aircraft delivered to Buyer under
Backstop Financing, the parties hereby agree that
Seller shall have the right, for the purpose of
providing the Lease Agreement, to transfer title to
each such Aircraft to a U.S. subsidiary of the
manufacturer, or to its trustee.
EXHIBIT E
PAYMENT INSTRUCTIONS
All payments due to Seller under this Agreement shall be
made to:
Banque Generale du Commerce
36, Rue Marbeuf
75008 PARIS
Bank Code: *
Branch Code: *
Account Number: *
Swift Code: CGENFRPP
All payments due to Buyer under this Agreement shall be made
to:
Account Name: *
Account No: *
ABA No: *
Bank: Crestar Bank
Alexandria, VA
EXHIBIT F-3
Agreed Residual Value Table - New Aircraft
*
EXHIBIT G
AMENDMENTS TO THE PRODUCT SUPPORT AGREEMENT; *
1. SUMMARY
1.1 British Aerospace, Inc. and Buyer have entered into an
aircraft acquisition agreement dated December 23, 1992
in respect of seventeen (17) Jetstream 4100 aircraft
(the "Agreement to Lease").
1.2 British Aerospace, Inc. and Buyer have entered into a
product support agreement dated December 23, 1992 (the
"Product Support Agreement") in respect of the
Jetstream 4100 aircraft provided under the Agreement to
Lease which included, among other things, *
1.3 Jetstream Aircraft, Inc., JSX Capital Corporation, and
Buyer have entered into an aircraft acquisition
agreement dated December 30, 1994 in respect of twenty
(20) Jetstream 4100 aircraft (the "Acquisition
Agreement") under which the Buyer acquired eleven (11)
Jetstream 4100 aircraft (the "Additional Aircraft") and
which provided *
1.4 Seller and Buyer have entered into this Agreement dated
February 23, 1997 in respect of twelve (12) Jetstream
4100 aircraft (the "Purchase Agreement").
1.5 Seller and Buyer confirm and ratify the agreements and
exhibits referenced herein as amended by this Exhibit
G.
2. INTERPRETATION
2.1 Definitions
All capitalized terms used herein and not otherwise defined
shall have the meanings ascribed thereto in the referenced
agreement or exhibit.
3. AMENDMENTS TO THE PRODUCT SUPPORT AGREEMENT
The Product Support Agreement is amended with effect of the
date hereof in the manner set out in Clause 3 and Clause 4.
3.1 Amendments to *
3.1.1 *
3.1.2 In Section 2.1, insert at the beginning of
the section *
3.1.3 Sections 2.2, 2.3, 2.4, 2.5, and 2.6 are
renumbered 2.4, 2.5, 2.6, 2.7, and 2.8
respectively.
3.1.4 A new section 2.2 is added as follows: In
the case of the Aircraft delivered pursuant to the
Acquisition Agreement, *
3.1.5 A new Section 2.3 is added as follows: In
the case of the Aircraft delivered pursuant to the
Purchase Agreement, *
3.2 Amendments to *
3.2.1 In Section 4.3 insert at the end of the
section, *
3.2.2 In Section 5.1, insert at the beginning of
the section *
3.2.3 Sections 5.2, 5.3, 5.4, 5.5, and 5.6 are
renumbered 5.4, 5.5, 5.6, 5.7, and 5.8
respectively.
3.2.4 A new Section 5.2 is added as follows: *
3.2.5 A new Section 5.3 is added as follows: *
3.3 Amendments to *
3.3.1 In Section 7.3 insert at the end of the
section, *
3.3.2 In Section 8.1, insert at the beginning of
the section *
3.3.3 Sections 8.2, 8.3, and 8.4 are renumbered
8.4, 8.5, and 8.6 respectively.
3.3.4 A new Section 8.2 is added as follows: *
3.3.5 A new Section 8.3 is added as follows: *
3.4 *
4. AMENDMENTS TO *
4.1 In Section 2 the definition of * is deleted and
replaced with the following new definition: *
4.2 In Section 2 the definition of * is deleted and
replaced with the following new definition: *
4.3 In Section 5.3(a) the reference to the *
4.4 Section 5.4 is deleted in its entirety and is replaced
with: "The maximum aggregate amount of compensation
which shall be paid by Seller in settlement of all
claims made under this Guarantee shall be *
4.5 Section 6.1.6 is deleted in its entirety and is
replaced with: "tires, wear-out of brake heat packs,
or tire-related cancellations;"
4.6 Section 6.1.15 is renumbered to Section 6.1.16.
4.7 Section 7.9 is deleted in its entirety and replaced
with the following: "Buyer shall submit any claims
arising under this Guarantee in writing within * after
the end of the Quarter concerned and provide to the
Seller sufficient supporting information to enable the
claim to be fully assessed. Failure by buyer to submit
a claim in accordance with the time period provided in
this Section 7.9 shall result in any claims for the
relevant period being invalid and Seller shall have no
liability for any claims for such Quarter."
4.7 A new Section 8.4 is inserted as follows: "Buyer and
Seller shall use reasonable efforts to convene the
review meeting as provided in Section 8.2 herein.
Failure of either party to convene such meeting,
however, shall not result in any damages to either
party nor shall such failure indicate validity of any
claim."
4.8 A new Section 8.5 is inserted as follows: "Upon
receipt of any claim from Buyer under this Guarantee,
Seller shall: (i) respond in writing within * of the
receipt of any claim for compensation from Buyer under
the Guarantee requesting, if necessary and in good
faith but not for the purpose of delaying the
processing of a claim, additional information as
required to complete the review and processing of the
claim and (ii) respond to Buyer in writing with the
result of the adjudication of the claim within * of
receipt of all the requested additional information
from Buyer, if any. If Buyer shall fail or refuse to
provide such additional information, Seller's duty to
adjudicate the claim shall be extended for the period
of time during which Buyer fails or refuses to respond
to Seller's good faith request for additional
information. Failure by Seller to send such request
for additional information, or to adjudicate the claim
within the time periods provided for herein, shall
result in prompt payment of the claim by Seller,
subject to the limitations and caps on compensation
contained herein."
4.9 A new Section 9.3 is inserted as follows: *
4.10 A new Section 9.4 is inserted as follows: "For the
purpose of Buyer filing claims pursuant to Section 7.9
herein, and Seller responding to claims pursuant to
Section 8.5, all such claims and responses shall be
served in writing by certified mail, return receipt
requested, personal delivery, overnight delivery, or
facsimile. Notices sent by certified letter shall be
deemed to have been received as evidenced by receipt.
Notices sent by certified letter shall be deemed to
have been received as evidenced by receipt. Notices
sent overnight shall be deemed to have been received as
evidenced by the proof of delivery. Notices sent by
facsimile or personal delivery shall be deemed to have
been received on the date of transmission where receipt
is confirmed by any addressee. Notices sent by
facsimile shall be deemed to have been received on the
date of transmission as evidenced by the facsimile
machine answerback notification." Notices to Seller
shall be addressed to: AIRAMS, 13850 McLearen Road,
Herndon, VA 20171, Attention: President, Fax Number
(703) 736-4255. Notices to Buyer shall be addressed
to: Atlantic Coast Airlines, 515A Shaw Road, Dulles,
VA 20166, Attention: Senior Vice President Operations,
Fax Number (703) 925-6294.
5. AMENDMENTS TO *
5.1 In Section 1.2, the * is amended as follows:
5.1.1 The amount * is deleted and replaced with the
word *
5.1.2 The amount * is deleted and replaced with the
amount *
5.1.3 The amount * is deleted and replaced with the
amount *
5.2 *
5.3 Seller and Buyer shall convene a meeting within sixty
(60) days of the date of this Agreement to mutually
establish regular procedures for reporting by Buyer of
maintenance cost information and filing of any claims.
5.4 Seller hereby confirms that as of the date hereof
Buyer's practices meet the standards and requirements
of Section 10 of the agreement.
6. AMENDMENTS TO THE *
6.1 In Section 1.2, the * is amended as follows:
6.1.1 The amount * is deleted and replaced with the
word *
6.1.2 The amount * is deleted and replaced with the
number *
6.1.3 The amount * is deleted and replaced with the
amount *
6.2 *
6.3 Seller and Buyer shall convene a meeting within sixty
(60) days of the date of this Agreement to establish
regular procedures for reporting by Buyer of
maintenance cost information and filing of any claims.
6.4 Seller hereby confirms that as of the date hereof
Buyer's practices meet the standards and requirements
of Section 9 of the agreement.
EXHIBIT H
CERTIFICATE OF ACCEPTANCE
IN ACCORDANCE WITH that certain Purchase Agreement dated
("Agreement"), by and between AERO INTERNATIONAL (REGIONAL),
acting as agent for
and on behalf of British Aerospace (Operations) Limited,
("Seller)", and the undersigned
ATLANTIC COAST AIRLINES ("Buyer"), Buyer hereby accepts the
below-described airframe,
engines and propellers ("Aircraft") and agrees that (a) the
Aircraft has been delivered to and
accepted by Buyer in accordance with the conditions set
forth in the Agreement (b) any
discrepancies listed below shall be rectified by Seller
subsequent to delivery and (c) there has
been accepted with the Aircraft the logs and other records
required to be delivered pursuant to
the Agreement:
Airframe
One (1) Jetstream Aircraft Ltd. Model Jetstream, Series
4100 aircraft, with the following
manufacturer's serial number and registration number:
Manufacturer's Serial Number FAA Registration
Number
Engines
Two (2) Garrett AiResearch Model GPE331-14GR/HR engines
with the following
manufacturer's serial numbers:
Propellers
Two (2) McCauley propellers with the following
manufacturer's serial numbers:
EXECUTED by a duly authorized representative of Buyer
at this
day of , 19 .
("Buyer")
By:
Name:
List of any Discrepancies to be Rectified by Seller
subsequent to the Delivery Date:
EXHIBIT I-1
AMENDMENT TO SUBLEASE AGREEMENT
Atlantic Coast Airlines
Jetstream 32 Aircraft
S/N ___, Reg. ______
THIS __________ AMENDMENT TO SUBLEASE AGREEMENT, dated
as of
___________ __, ____, is entered into by and between Jet
Acceptance Corporation,
("Sublessor"), and Atlantic Coast Airlines, a California
corporation ("Sublessee").
WHEREAS, Sublessor and Sublessee are parties to a
Sublease Agreement dated as of
__________ __, 19__ and to a Sublease Acceptance Supplement
dated __________ __, 19__,
(such Sublease Agreement and Sublease Acceptance Supplement,
the "Sublease") providing
for the sublease by Sublessor to Sublessee of the aircraft
(the "Aircraft") as identified above
and as further described in Schedule 1 to the Sublease
Acceptance Supplement; and
WHEREAS, the Sublease was recorded by the Federal
Aviation Administration (the
"FAA") as one instrument on ___________ __, ____ and was
assigned Conveyance No.
____________; and
WHEREAS, Sublessor and Sublessee have agreed to amend
the Sublease as hereinafter
provided.
NOW THEREFORE, the parties hereto agree and do hereby
amend the Sublease as
follows:
A. AMENDMENTS
1. Section 1 shall be amended to add the following
definitions:
""Florida Engine" shall mean any engine delivered to
Sublessee by Sublessor or its
affiliate pursuant to the Used J32 Agreement under any lease
or sublease, including each
engine which at the time of such delivery was mounted on any
aircraft delivered to Sublessee
pursuant to the Used J32 Agreement, each engine that was
provided as a spare, and each
Replacement Engine."
""JACO Propeller" shall mean any propeller delivered to
Sublessee by Sublessor or its
affiliate under any lease or sublease, including each
propeller that was provided as a spare,
and each Replacement Propeller."
""Used J32 Agreement" shall mean the Used J32 Aircraft
Agreement to Lease dated as
of October 30, 1992 by and between British Aerospace, Inc.
and Atlantic Coast Airlines."
2. Section 13 (a) shall be deleted in its entirety and
replaced with the following:
"Return of Aircraft. With respect to the Aircraft, at
the expiration of the Term, or
upon the termination of this Sublease pursuant to Section
16, Sublessee, at its own expense,
shall, except as otherwise provided in Section 16, return
such Aircraft by delivering the same
to Sublessor at such place as Sublessor may specify on
Sublessee's route structure, or, at
Sublessor's expense, at any other location in the
continental United States of America."
3. Section 13 (b) shall be deleted in its entirety and
replaced with the following:
"Return of Engines and Propellers. Upon return the
Aircraft shall be fully equipped
with two Engines (or Florida Engines) duly installed on the
Airframe and two Propellers (or
JACO Propellers) duly installed on such Engines or Florida
Engines. So long as Sublessee
returns Engines or Florida Engines and Propellers or JACO
Propellers with each Airframe,
free of liens including Permitted Liens but excluding
Lessor's Liens, Sublessee shall have no
obligation whether under this Section 13 (b) or otherwise,
to take any action or to incur or
reimburse any expense with regard to title of Engines or
Florida Engines or Propellers or
JACO Propellers. Sublessee shall, however, cooperate with
reasonable requests of the
Sublessor with respect to the documentation required to
title such engines and propellers in the
name of Lessor or Sublessor as the case may be."
4. Section 13 (c) shall be amended to add the following
ultimate sentence:
"Obligations with respect to the return of manuals
shall not be imposed on Sublessee to
the extent the Sublessee would be required to acquire more
individual copies of manuals than it
has previously been required to maintain as part of the
operation of its fleet of Jetstream 32
aircraft. Sublessee shall be required to return to
Sublessor such manuals as Sublessee has been
required to maintain to the extent that they become surplus
to Sublessee as a result of the
return of aircraft."
5. Section 13 (d), shall be amended to add the following
sentences to paragraph one
immediately after the first sentence:
"Prior to the return of the Aircraft, Sublessee shall
be permitted to remove any
ACARS/FM equipment it has installed on the Aircraft, and
will not be required to provide
substitute equipment to perform the tasks provided by said
equipment. It is expressly
acknowledged that airframe checks are not required under
this Section 13."
6. Section 13 (d)(2), shall be amended to add the
following proviso to the first sentence:
", provided, however, that Sublessee shall not be
required to repaint the Aircraft or to
replace any other customized equipment."
B. MISCELLANEOUS
1. Except as provided herein, nothing contained in this
______ Amendment to Sublease
Agreement shall be deemed to waive or release Sublessee from
any of its obligations or duties
under the Sublease, including without limitation its
obligation to pay rent, all of which
obligations and duties are hereby expressly ratified and
confirmed by Sublessee.
2. All capitalized terms used herein without definition
shall have the respective meaning
assigned thereto in the Sublease. All references in the
Sublease to "this Agreement",
"herein", "hereof" and the like shall be deemed to refer to
the Sublease as amended hereby.
3. Sublessee represents and warrants to Sublessor that (i)
it has full power and authority to
execute, deliver and perform its obligations under this
______ Amendment to Sublease
Agreement, (ii) the obligations herein constitute the legal,
valid and binding obligations of
Sublessee and are enforceable in accordance with their
terms, (iii) the execution, delivery and
performance of this ______ Amendment to Sublease Agreement
does not contravene any
material provision of or constitute a material default under
any agreement or other instrument
to which Sublease is a party or by which it or its property
is bound, and (iv) Sublessee is not
in default under the Sublease or any material agreement or
other instrument to which it is a
party.
4. This ______ Amendment to Sublease Agreement shall in
all respects be governed by,
and construed under the laws (without reference to the
conflicts laws) of the Commonwealth of
Virginia, including all matters of construction, validity
and performance.
5. This ______ Amendment to Sublease Agreement may be
executed by the parties hereto
in separate counterparts, each of which when so executed and
delivered shall be an original,
but all such counterparts shall together constitute but one
and the same instrument.
[THE NEXT PAGE IS THE SIGNATURE PAGE]
IN WITNESS WHEREOF, the parties hereto have caused this
______ Amendment to Sublease
Agreement to be executed as of the date first above written
by their officers or agents
thereunto duly authorized.
SUBLESSOR: SUBLESSEE:
JET ACCEPTANCE CORPORATION ATLANTIC COAST
AIRLINES
By:__________________________
By:___________________________
Its:__________________________
Its:___________________________
By:___________________________
Its:___________________________
ACKNOWLEDGED AND CONSENTED TO:
ATLANTIC COAST AIRLINES, INC.
as Guarantor
By:__________________________
Its:__________________________
EXHIBIT I-2
AMENDMENT TO SUBLEASE AGREEMENT
Atlantic Coast Airlines
Jetstream 32 Aircraft
S/N ___, Reg. ______
THIS __________ AMENDMENT TO SUBLEASE AGREEMENT, dated
as of
___________ __, ____, is entered into by and between Jet
Acceptance Corporation,
("Sublessor"), and Atlantic Coast Airlines, a California
corporation ("Sublessee").
WHEREAS, Sublessor and Sublessee are parties to a
Sublease Agreement dated as of
__________ __, 19__ and to a Sublease Acceptance Supplement
dated __________ __, 19__,
(such Sublease Agreement and Sublease Acceptance Supplement,
the "Sublease") providing for
the sublease by Sublessor to Sublessee of the aircraft (the
"Aircraft") as identified above and as
further described in Schedule 1 to the Sublease Acceptance
Supplement; and
WHEREAS, the Sublease was recorded by the Federal
Aviation Administration (the
"FAA") as one instrument on ___________ __, ____ and was
assigned Conveyance No.
____________; and
WHEREAS, Sublessor and Sublessee have agreed to amend
the Sublease as hereinafter
provided.
NOW THEREFORE, the parties hereto agree and do hereby
amend the Sublease as
follows:
A. AMENDMENTS
1. Section 1 shall be amended to add the following
definitions:
""JACO Propeller" shall mean any propeller delivered to
Sublessee by Sublessor or its
affiliate under any lease or sublease, including each
propeller that was provided as a spare, and
each Replacement Propeller."
""Purchase Agreement" shall mean the Amended and
Restated Stock Purchase
Agreement dated as of September 30, 1991 among WestAir
Holding, Inc., WestAir Commuter
Airlines, Inc. and Atlantic Coast Airlines, Inc."
""WestAir Engine" shall mean any engine delivered to
Sublessee by Sublessor or its
affiliate pursuant to the Purchase Agreement under any
lease or sublease, including each engine
which at the time of such delivery was mounted on any
aircraft delivered to Sublessee pursuant
to the Purchase Agreement, each engine that was provided as
a spare, and each Replacement
Engine."
2. Section 13 (a) shall be deleted in its entirety and
replaced with the following:
"Return of Aircraft. With respect to the Aircraft, at
the expiration of the Term, or upon
the termination of this Sublease pursuant to Section 16,
Sublessee, at its own expense, shall,
except as otherwise provided in Section 16, return such
Aircraft by delivering the same to
Sublessor at such place as Sublessor may specify on
Sublessee's route structure, or, at
Sublessor's expense, at any other location in the
continental United States of America."
3. Section 13 (b) shall be deleted in its entirety and
replaced with the following:
"Return of Engines and Propellers. Upon return the
Aircraft shall be fully equipped with
two Engines (or WestAir Engines) duly installed on the
Airframe and two Propellers (or JACO
Propellers) duly installed on such Engines or WestAir
Engines. So long as Sublessee returns
Engines or WestAir Engines and Propellers or JACO Propellers
with each Airframe, free of liens
including Permitted Liens but excluding Lessor's Liens,
Sublessee shall have no obligation
whether under this Section 13 (b) or otherwise, to take any
action or to incur or reimburse any
expense with regard to title of Engines or WestAir Engines
or Propellers or JACO Propellers.
Sublessee shall, however, cooperate with reasonable requests
of the Sublessor with respect to the
documentation required to title such engines and propellers
in the name of Lessor or Sublessor as
the case may be."
4. Section 13 (c) shall be amended to add the following
ultimate sentence:
"Obligations with respect to the return of manuals
shall not be imposed on Sublessee to
the extent the Sublessee would be required to acquire more
individual copies of manuals than it
has previously been required to maintain as part of the
operation of its fleet of Jetstream 32
aircraft. Sublessee shall be required to return to
Sublessor such manuals as Sublessee has been
required to maintain to the extent that they become surplus
to Sublessee as a result of the return
of aircraft."
5. Section 13 (d), paragraph two shall be amended to add
the following proviso to the first
sentence:
", provided, however, that Sublessee shall not be
required to repaint the Aircraft or to
replace any other customized equipment."
6. Section 13 (d) shall be further amended to add the
following penultimate and ultimate
sentences:
"Prior to the return of the Aircraft, Sublessee shall
be permitted to remove any
ACARS/FM equipment it has installed on the Aircraft, and
will not be required to provide
substitute equipment to perform the tasks provided by said
equipment. It is expressly
acknowledged that airframe checks are not required under
this Section 13."
7. The third paragraph in Section 13 (e) shall be deleted
in its entirety and replaced with the
following:
"For the purpose hereof the term "cycle life limited
component" shall mean the time
controlled components fitted on the Aircraft as listed in
Schedule 4 to Exhibit A attached hereto."
B. MISCELLANEOUS
1. Except as provided herein, nothing contained in this
______ Amendment to Sublease
Agreement shall be deemed to waive or release Sublessee from
any of its obligations or duties
under the Sublease, including without limitation its
obligation to pay rent, all of which
obligations and duties are hereby expressly ratified and
confirmed by Sublessee.
2. All capitalized terms used herein without definition
shall have the respective meaning
assigned thereto in the Sublease. All references in the
Sublease to "this Agreement", "herein",
"hereof" and the like shall be deemed to refer to the
Sublease as amended hereby.
3. Sublessee represents and warrants to Sublessor that (i)
it has full power and authority to
execute, deliver and perform its obligations under this
______ Amendment to Sublease
Agreement, (ii) the obligations herein constitute the legal,
valid and binding obligations of
Sublessee and are enforceable in accordance with their
terms, (iii) the execution, delivery and
performance of this ______ Amendment to Sublease Agreement
does not contravene any
material provision of or constitute a material default under
any agreement or other instrument to
which Sublease is a party or by which it or its property is
bound, and (iv) Sublessee is not in
default under the Sublease or any material agreement or
other instrument to which it is a party.
4. This ______ Amendment to Sublease Agreement shall in
all respects be governed by, and
construed under the laws (without reference to the conflicts
laws) of the Commonwealth of
Virginia, including all matters of construction, validity
and performance.
5. This ______ Amendment to Sublease Agreement may be
executed by the parties hereto
in separate counterparts, each of which when so executed and
delivered shall be an original, but
all such counterparts shall together constitute but one and
the same instrument.
[THE NEXT PAGE IS THE SIGNATURE PAGE]
IN WITNESS WHEREOF, the parties hereto have caused this
______ Amendment to Sublease
Agreement to be executed as of the date first above written
by their officers or agents thereunto
duly authorized.
SUBLESSOR: SUBLESSEE:
JET ACCEPTANCE CORPORATION ATLANTIC COAST
AIRLINES
By:__________________________
By:___________________________
Its:__________________________
Its:___________________________
By:___________________________
Its:___________________________
ACKNOWLEDGED AND CONSENTED TO:
ATLANTIC COAST AIRLINES, INC.
as Guarantor
By:__________________________
Its:__________________________
EXHIBIT I-3
AMENDMENT TO SUBLEASE AGREEMENT
Atlantic Coast Airlines
Spare Garrett AiResearch Engines
Serial Nos. P66010, P66034, P66082, P66096, P66183, P66216
THIS __________ AMENDMENT TO SUBLEASE AGREEMENT, dated
as of
___________ __, ____, is entered into by and between Jet
Acceptance Corporation,
("Sublessor"), and Atlantic Coast Airlines, a California
corporation ("Sublessee").
WHEREAS, Sublessor and Sublessee are parties to a
Sublease Agreement dated as of
September 30, 1991 and to a Sublease Acceptance Supplement
dated January 1, 1992, (such
Sublease Agreement and Sublease Acceptance Supplement, the
"Sublease") providing for the
sublease by Sublessor to Sublessee of six engines (the
"Engines") as identified above and as
further described in Schedule 1 to the Sublease Acceptance
Supplement; and
WHEREAS, the Sublease was recorded by the Federal
Aviation Administration (the
"FAA") as one instrument on ___________ __, ____ and was
assigned Conveyance No.
____________; and
WHEREAS, Sublessor and Sublessee have agreed to amend
the Sublease as hereinafter
provided.
NOW THEREFORE, the parties hereto agree and do hereby
amend the Sublease as
follows:
A. AMENDMENTS
1. Section 1 shall be amended to add the following
definitions:
""Purchase Agreement" shall mean the Amended and
Restated Stock Purchase
Agreement dated as of September 30, 1991 among WestAir
Holding, Inc., WestAir Commuter
Airlines, Inc. and Atlantic Coast Airlines, Inc."
""WestAir Engine" shall mean any engine delivered to
Sublessee by Sublessor or its
affiliate pursuant to the Purchase Agreement under any
lease or sublease, including each
engine which at the time of such delivery was mounted on any
aircraft delivered to Sublessee
pursuant to the Purchase Agreement, each engine that was
provided as a spare, and any
replacement for any such engine."
2. Section 13 (a) shall be deleted in its entirety and
replaced with the following:
"Return of Engines. With respect to each Engine, at
the expiration of the Term, or
upon the termination of this Sublease pursuant to Section
16, Sublessee, at its own expense,
shall, except as otherwise provided in Section 16, return
each Engine by delivering the same to
Sublessor at such place as Sublessor may specify on
Sublessee's route structure, or, at
Sublessor's expense, at any other location in the
continental United States of America. So
long as Sublessee returns each Engine, or a WestAir Engine
in lieu thereof, free of liens
including Permitted Liens but excluding Lessor's Liens,
Sublessee shall have no obligation
whether under this Section 13 (a) or otherwise, to take any
action or to incur or reimburse any
expense with regard to title of Engines or WestAir Engines.
Sublessee shall, however,
cooperate with reasonable requests of the Sublessor with
respect to the documentation required
to title such engines in the name of Lessor or Sublessor as
the case may be."
3. Section 13 (c) shall be amended to add the following
ultimate sentence:
"The obligations in this Section 13 (c)
notwithstanding, Sublessee shall not be required
to acquire more individual copies of manuals than it has
previously been required to maintain
as part of the operation of its fleet of Jetstream 32
aircraft. Sublessee shall be required to
return to Sublessor such manuals as Sublessee has been
required to maintain to the extent that
they become surplus to Sublessee as a result of the return
of aircraft."
4. The first paragraph in Section 13 (e) shall be deleted
in its entirety and replaced with
the following:
"Overhaul Payment. At the time of return of each
Engine or WestAir Engine the then
current cost of overhaul or hot section inspection shall be
determined (Vo). An aggregate
"half-life value", Vh, of the overhaul and hot section
inspection shall be determined by taking
one-half (1/2) of the sum of the current cost of overhaul
and hot section inspection. Thereafter
an amount, Vi, shall be calculated with respect to each
overhaul and hot section inspection as
follows:
Vi = t * Vo
tTOT
Where
Vi = the portion of the current cost of
overhaul or hot section inspection
consumed to date;
t = hours, calendar time or number of
landings, as the case may be, since
the last overhaul or hot section
inspection of each Engine or WestAir
Engine;
tTOT= the FAA mandated time between
overhaul or hot section inspection, as
the case may be, under Sublessee's then
FAA approved maintenance
program;
Vo = the then current cost of overhaul or hot
section inspection of that
component.
If the aggregate total of Vi with respect to the
overhaul and hot section inspection is
greater than the half-life value of the overhaul and hot
section inspection, Sublessee shall pay
Sublessor they difference. If the aggregate total of Vi
with respect to the overhaul and hot
section inspection is equal or less than the half-life
value, Vh, then Sublessee shall have no
obligation to make any payment to Sublessor with respect
thereto."
B. MISCELLANEOUS
1. Except as provided herein, nothing contained in this
______ Amendment to Sublease
Agreement shall be deemed to waive or release Sublessee from
any of its obligations or duties
under the Sublease, including without limitation its
obligation to pay rent, all of which
obligations and duties are hereby expressly ratified and
confirmed by Sublessee.
2. All capitalized terms used herein without definition
shall have the respective meaning
assigned thereto in the Sublease. All references in the
Sublease to "this Agreement",
"herein", "hereof" and the like shall be deemed to refer to
the Sublease as amended hereby.
3. Sublessee represents and warrants to Sublessor that (i)
it has full power and authority to
execute, deliver and perform its obligations under this
______ Amendment to Sublease
Agreement, (ii) the obligations herein constitute the legal,
valid and binding obligations of
Sublessee and are enforceable in accordance with their
terms, (iii) the execution, delivery and
performance of this ______ Amendment to Sublease Agreement
does not contravene any
material provision of or constitute a material default under
any agreement or other instrument
to which Sublease is a party or by which it or its property
is bound, and (iv) Sublessee is not
in default under the Sublease or any material agreement or
other instrument to which it is a
party.
4. This ______ Amendment to Sublease Agreement shall in
all respects be governed by,
and construed under the laws (without reference to the
conflicts laws) of the Commonwealth of
Virginia, including all matters of construction, validity
and performance.
5. This ______ Amendment to Sublease Agreement may be
executed by the parties hereto
in separate counterparts, each of which when so executed and
delivered shall be an original,
but all such counterparts shall together constitute but one
and the same instrument.
[THE NEXT PAGE IS THE SIGNATURE PAGE]
IN WITNESS WHEREOF, the parties hereto have caused this
______ Amendment to Sublease
Agreement to be executed as of the date first above written
by their officers or agents
thereunto duly authorized.
SUBLESSOR: SUBLESSEE:
JET ACCEPTANCE CORPORATION ATLANTIC COAST
AIRLINES
By:__________________________
By:___________________________
Its:__________________________
Its:___________________________
By:___________________________
Its:___________________________
ACKNOWLEDGED AND CONSENTED TO:
ATLANTIC COAST AIRLINES, INC.
as Guarantor
By:__________________________
Its:__________________________
EXHIBIT J
ADDITIONAL PRODUCT SUPPORT
Seller shall procure on behalf of Buyer the following
services and parts in connection with this Agreement.
J.1 *
J.2 *
J.3 *
J.4 *
J.5 *
J.6 The kits provided pursuant to Sections J.3, J.4, and
J.5 herein shall be delivered in accordance with a
delivery schedule mutually agreed between Seller and
Buyer. Buyer shall be responsible for all installation
of such kits on the applicable aircraft in Buyer's
fleet.
J.7 *
J.8 *
J.9 *
J.10 *
EXHIBIT K
PURCHASE PRICE REVISION
Buyer may elect, upon the purchase of each Aircraft, *
EXHIBIT L
FORM OF CONFIRMATION OF SALE/LEGAL OPINION/EVIDENCE OF
OWNERSHIP OF
AIRCRAFT
1. CONFIRMATION OF SALE
By this Confirmation of Sale, by delivery, AERO
INTERNATIONAL (REGIONAL) (the
"Seller") acting for and on behalf of British Aerospace
(Operations) Limited (the Manufacturer)
acknowledges that on [ ] 199[ ] the Seller did deliver, and
Atlantic Coast Airlines, a California
Corporation, (the "Buyer") did accept delivery of physical
possession of, one (1) British
Aerospace aircraft bearing Manufacturer's serial number [
] with two AlliedSignal aircraft
engines bearing manufacturer's serial numbers [ ], and [ ]
delivered therewith (the Aircraft)
pursuant to the Purchase Agreement dated February
1997 between the Seller the Buyer
(the Contract) and the Buyer did pay to the Seller, in
accordance with Clause 3.4 of the Contract,
the Purchase Price (as defined in the Contract) and that
accordingly title to the Aircraft had
passed from the Manufacturer by delivery of the Aircraft
from the Seller to the Buyer in
accordance with Clause 8.2 of the Contract.
The Manufacturer hereby warrants to Buyer, its successors
and assigns, that Manufacturer has
conveyed to Buyer good title to the Aircraft, free and clear
of all liens and that the Manufacturer
shall warrant and defend such title forever against all
claims and demands whatsoever; and that
this Confirmation of Sale is made and delivered pursuant to
the provisions of the Contract, dated
as of [ ], between the Seller and Buyer.
Dated: , 199[ ]
For and on behalf of
BRITISH AEROSPACE (OPERATIONS) LIMITED
By
Title
2. LEGAL OPINION
, 199[ ]
Our Ref. /NWA
By Courier
Mr. Bob Peregrin, Esq.
Dougherty, Fowler and Peregrin
204 North Robinson
900 City Place
Oklahoma City, OK 73102
Dear Bob:
ATLANTIC COAST AIRLINES
Please find enclosed originals of the following documents:
1) British Aerospace (Operations) Limited Legal Opinion
2) Evidence of Ownership of Aircraft (executed in
counterpart)
Yours sincerely,
Name:
Title:
Enclosur
, 199[ ]
Our Ref. /Buyer
FOR THE ATTENTION OF MR. J. STANDELL
Mike Monroney Aeronautical Center
Oklahoma City, Oklahoma, U.S.A.
Dear Sirs:
LEGAL CERTIFICATION
I am a Solicitor of [ } and Legal Advisor toBritish
Aerospace (Operations) Limited
("Manufacturer"), and I have reviewed the Purchase Agreement
("Contract") between Atlantic
Coast Airlines ("Buyer") and Aero International (Regioinaal)
dated .
Make
Model
Serial Number
FAA Registration Number
British Aerospace
Jetstream 4100
[ ]
[ ]
In this regard I have examined the instrument entitled
Evidence of Ownership of Aircraft
executed by Seller on
, a copy of which is attached.
Based upon my examination of the above-mentioned instrument,
and assuming execution by the
Buyer, it is my opinion that, following the signing of the
Certificate of Acceptance by the Buyer,
the receipt by the Seller of the payment due under the
Contract, and the delivery of physical
possession of the Aircraft at Prestwick, Scotland on
, transfer of the title to
the Aircraft from Manufacturer to Buyer was effected and
that as of the date of the said payment,
title to the Aircraft was vested in Buyer.
Yours faithfully,
Name:
Title:
3. EVIDENCE OF OWNERSHIP OF AIRCRAFT
Atlantic Coast Airlines, Inc. (Buyer), and Aero
International (Regional) (Seller) represent and
certify that the following is an extract from that Purchase
Agreement between Buyer and Seller
dated .
[Clause of Contract]
Buyer and Seller by these presents hereby represent and
certify that the Buyer signed the
Certificate of Acceptance required by the above quoted
paragraph, on , and
made the payment due and delivery of physical possession
took place on that date at Prestwick,
Scotland, and that all other conditions were met for the
passage of title and risk from the
Manufacturer to the Buyer in the Aircraft, described as
follows:
Make
Model
Serial Number
FAA Registration Number
British Aerospace
Jetstream 4100
[ ]
[ ]
The Buyer and Seller further represent and certify that as
of the above date hereof there are no
other instruments of any nature affecting or conveying title
of the Aircraft and thus the
provisions of the above quoted paragraph constitute the only
provisions in any instrument
describing conveyance of title to the Aircraft and that
title to the Aircraft is in the Buyer.
This Certificate may be executed in counterparts, which
taken together shall constitute one and
the same instrument, and the parties hereto may execute this
Certificate by signing any such
counterpart.
Date:
Signed by
on behalf of the Seller
Title: Vice President - Legal
Signed by
on behalf of Buyer
Title:
EXHIBIT M
Dispute Resolution
Section 1. General
1.1 The Dispute Resolution Procedure as provided for herein
shall apply in respect to the following (solely for the
purpose of this Exhibit M each referred to as an
"Agreement" or collectively "Agreements"):
*
1.2 In addition to the Agreements covered in Section 1.1
and subject to ACA and AI(R) using all reasonable
efforts to resolve matters, issues, and disputes which
arise in the normal course of business between the
parties including but not limited to corresponding with
all appropriate ACA, vendor and AI(R) departments and
personnel, the procedures set forth below shall apply
to any Disputes (as hereinafter defined) of a technical
nature meaning issues involving the operation or
maintenance of the Aircraft (but expressly excluding
any non-technical issues arising or pertaining to any
other agreement, lease or contract between Buyer and
Seller or British Aerospace (Operations) Limited or any
of their affiliates) provided such Dispute involves an
amount in excess of * which such amount is
calculated or estimated by the disputing party in good
faith.
1.3 Nothing herein shall be construed to cause any
Agreement to extend beyond the termination or
expiration date of any such Agreement provided that all
Disputes (as hereinafter defined) arising prior to
termination or expiration of such Agreement will be
settled under these provisions irrespective of the date
of termination or expiration of such Agreement.
Section 2. Dispute Resolution Procedure
2.1 In the event Buyer reasonably disagrees with a Seller's
final adjudication made pursuant to the terms of an
Agreement ("Dispute") and Buyer has complied with the
terms and conditions outlined in such Agreement or if
otherwise as provided in Section 1.2 herein, the
parties agree to submit to the following procedure:
2.1.1 Buyer shall submit to Seller a list of all
outstanding Disputes for the previous quarter at
least two weeks prior to the next Quarterly Review
Meeting. For the purposes of clarification,
Quarterly Review Meetings are currently held every
quarter and the parties hereby agree to continue
holding Quarterly Review Meetings. The attendees
of the Quarterly Review Meetings will address,
among other things, any technical related issues,
any commercial related issues, and any spare parts
related issues. Each party will endeavor to have
an attendee available who has decision making
authority. For the avoidance of doubt, failure by
Buyer to submit a Dispute for resolution at the
appropriate Quarterly Review Meeting shall not
prejudice Buyers' right to subsequently have the
Dispute considered under Section 2.1.3.
2.1.2 At the Quarterly Review Meeting Buyer and
Seller shall review the outstanding Disputes with
the view of resolving all items on such list.
2.1.3 In the event Buyer and Seller fail to resolve
all Disputes on such list at the Quarterly Review
Meeting, the parties agree to the following
procedure:
2.1.3.1 The Senior Vice President - Operations
ACA shall supply the Senior Vice President
Customer Support AI(R) with a written
summary of all outstanding Disputes
("Notice"). Such Notice shall state that
such Notice is being submitted in
accordance to the terms and conditions of
this Exhibit M - Dispute Resolution.
2.1.3.2 Within sixty (60) days of receipt of
the Notice, or such later period as agreed
between the parties, the Senior Vice
President Customer Support AI(R) shall
arrange for a dispute resolution meeting,
either by teleconference, video conference,
or in person, to be attended by the
following four (4) individuals: the Senior
Vice President Customer Support - AI(R),
the President of AIRAMS, the Senior Vice
President - Operations ACA, and a fourth
individual designated by the Senior Vice
President - Operations ACA
("Representatives").
2.1.3.3 The Representatives shall use all
reasonable efforts to resolve such Disputes
listed in the Notice and Seller shall
compile a list of the resolutions as to
each Dispute ("Dispute Resolutions").
2.1.3.4 Seller shall within ninety (90) days
after receipt of the Notice provide to
Buyer in writing a summary of Dispute
Resolutions ("Summary of Dispute
Resolutions"). Failure to supply Buyer
with a Summary of Dispute Resolutions
within ninety (90) days after receipt of a
Notice shall result in such Dispute being
automatically deemed accepted by Seller.
EXHIBIT N
JETSTREAM 32 AIRCRAFT
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