AIRCRAFT LEASE AGREEMENT
Dated as of May 25, 2000
BETWEEN
FRONTIER AIRLINES, INC.
as LESSEE
and
INTERNATIONAL LEASE FINANCE CORPORATION
as LESSOR
Aircraft Make and Model: New Airbus A318-100
Aircraft Manufacturer's Serial Number: Per Exhibit E
Aircraft Registration Mark: Per Exhibit E
Make and Model of Engines: PW 6124
Serial Numbers of Engines: Per Exhibit E
NEW AIRCRAFT NO. 1
TABLE OF CONTENTS
ARTICLE 1 SUMMARY OF TRANSACTION.........................................2
1.1 Description of Aircraft........................................2
1.2 Scheduled Delivery Date and Location...........................2
1.3 Initial Lease Term.............................................2
1.4 Lease Extension Options........................................2
1.5 Security Deposit...............................................2
1.6 Transaction Fee................................................3
1.7 Rent During Initial Lease Term.................................3
1.8 Rent During Lease Extension Term...............................3
1.9 Reserves.......................................................4
1.10 Country of Aircraft Registration...............................5
1.11 Maintenance Program............................................5
1.12 Agreed Value of Aircraft.......................................5
1.13 LESSOR's Bank Account..........................................5
ARTICLE 2 DEFINITIONS....................................................7
2.1 General Definitions............................................7
2.2 Specific Definitions..........................................12
ARTICLE 3 PLACE AND DATE OF DELIVERY....................................14
3.1 Place of Delivery.............................................14
3.2 Scheduled Delivery Date.......................................14
3.3 Delivery subject to Manufacturer Delivery.....................14
3.4 No LESSOR Liability...........................................14
3.5 Total Loss of Aircraft prior to Delivery......................14
3.6 Cancellation for Delay........................................14
3.7 Delay.........................................................15
ARTICLE 4 LEASE TERM AND EXTENSION OPTION...............................16
4.1 Initial Lease Term............................................16
4.2 Lease Extension Options.......................................16
4.3 "Lease Term" and "Expiration Date"............................16
4.4 "Termination Date"............................................16
ARTICLE 5 SECURITY DEPOSIT, TRANSACTION FEE, RENT,
RESERVES AND OTHER PAYMENTS...................................18
5.1 Security Deposit..............................................18
5.2 Transaction Fee...............................................19
5.3 Rent..........................................................19
5.4 Reserves......................................................21
5.5 LESSOR's Bank Account.........................................22
5.6 Default Interest..............................................23
5.7 No Deductions or Withholdings.................................23
5.8 Value Added Taxes.............................................23
5.9 Wire Transfer Disbursement Report.............................24
5.10 Net Lease.....................................................24
5.11 LESSOR Performance of LESSEE Obligation.......................25
5.12 Consideration for Rent and other Amounts......................25
ARTICLE 6 INVOLVEMENT WITH AIRCRAFT MANUFACTURER........................26
6.1 LESSEE Selection of Aircraft..................................26
6.2 Participation Agreement.......................................26
6.3 Procurement of BFE............................................26
6.4 LESSEE Inspection of Aircraft.................................26
6.5 Aircraft at Delivery..........................................26
6.6 Delivery of the Aircraft to LESSEE............................27
6.7 LESSEE Acceptance of Aircraft.................................27
ARTICLE 7 PRE-DELIVERY, DELIVERY AND POST-DELIVERY DOCUMENTARY
AND OTHER REQUIREMENTS........................................28
7.1 Pre-Delivery Requirements.....................................28
7.2 LESSOR's Pre-Delivery Requirements............................29
7.3 Delivery Requirements.........................................29
7.4 Post-Delivery Requirements....................................30
ARTICLE 8 DISCLAIMERS...................................................31
8.1 "As Is, Where Is".............................................31
8.2 Waiver of Warranty of Description.............................31
8.3 LESSEE Waiver.................................................32
8.4 Conclusive Proof..............................................32
8.5 No LESSOR Liability for Losses................................32
8.6 No Liability to Repair or Replace.............................33
8.7 No Waiver.....................................................33
ARTICLE 9 MANUFACTURERS' AND VENDORS' WARRANTIES........................34
9.1 Warranties....................................................34
9.2 Non-Assignable Warranties.....................................34
9.3 Reassignment..................................................34
9.4 Warranty Claims...............................................34
ARTICLE 10 OPERATION OF AIRCRAFT.........................................35
10.1 Costs of Operation............................................35
10.2 Compliance with Laws..........................................35
10.3 Training......................................................35
10.4 No Violation of Insurance Policies............................35
10.5 Flight Charges................................................35
ARTICLE 11 SUBLEASES.....................................................37
11.1 No Sublease without LESSOR Consent............................37
11.2 LESSOR Costs..................................................37
11.3 Any Approved Sublease.........................................37
11.4 Assignment of Sublease........................................38
11.5 Continued Responsibility of LESSEE............................38
ARTICLE 12 MAINTENANCE OF AIRCRAFT.......................................39
12.1 General Obligation............................................39
12.2 Specific Obligations..........................................39
12.3 Replacement of Parts..........................................41
12.4 Removal of Engines............................................42
12.5 Pooling of Engines and Parts..................................42
12.6 Installation of Engines on other aircraft.....................42
12.7 Engine Thrust Rating..........................................43
12.8 Modifications.................................................43
12.9 Performance of Work by Third Parties..........................45
12.10 Reporting Requirements........................................45
12.11 Information Regarding Maintenance Program.....................45
12.12 LESSOR Rights to Inspect Aircraft.............................45
ARTICLE 13 USE OF RESERVES...............................................46
13.1 Airframe Reserves.............................................46
13.2 Engine Performance Restoration Reserves.......................46
13.3 Engine LLP Reserves...........................................47
13.4 Landing Gear Reserves.........................................47
13.5 Reimbursement.................................................47
13.6 Reimbursement Adjustment......................................48
13.7 Costs in Excess of Reserves...................................48
13.8 Reimbursement after Termination Date..........................48
ARTICLE 14 TITLE AND REGISTRATION........................................49
14.1 Title to the Aircraft During Lease Term.......................49
14.2 Registration of Aircraft......................................49
14.3 Filing of this Lease..........................................49
14.4 Evidence of Registration and Filings..........................49
ARTICLE 15 IDENTIFICATION PLATES.........................................50
15.1 Airframe Identification Plates................................50
15.2 Engine Identification Plates..................................50
ARTICLE 16 TAXES.........................................................51
16.1 General Obligation of LESSEE..................................51
16.2 Exceptions to Indemnity.......................................51
16.3 After-Tax Basis...............................................52
16.4 Timing of Payment.............................................52
16.5 Contests......................................................53
16.6 Refunds.......................................................53
16.7 Cooperation in Filing Tax Returns.............................53
16.8 Survival of Obligations.......................................53
ARTICLE 17 INDEMNITIES...................................................54
17.1 General Indemnity.............................................54
17.2 Exceptions to General Indemnities.............................55
17.3 After-Tax Basis...............................................56
17.4 Timing of Payment.............................................56
17.5 Subrogation...................................................56
17.6 Notice........................................................56
17.7 Refunds.......................................................56
17.8 Defense of Claims.............................................56
17.9 Survival of Obligation........................................57
ARTICLE 18 INSURANCE.....................................................58
18.1 Categories of Insurance.......................................58
18.2 Write-back of any Date Recognition Exclusion..................58
18.3 Insurance for Indemnities.....................................58
18.4 Insurance required by Manufacturer............................58
18.5 Renewal.......................................................58
18.6 Assignment of Rights by LESSOR................................58
18.7 Other Insurance...............................................59
18.8 Information...................................................59
18.9 Currency......................................................59
18.10 Grounding of Aircraft.........................................59
18.11 Failure to Insure.............................................59
18.12 Reinsurance...................................................59
18.13 Limit on Hull in favor of LESSEE..............................60
ARTICLE 19 LOSS, DAMAGE AND REQUISITION..................................61
19.1 Definitions...................................................61
19.2 Notice of Total Loss..........................................62
19.3 Total Loss of Aircraft or Airframe............................62
19.4 Surviving Engine(s)...........................................63
19.5 Total Loss of Engine and not Airframe.........................63
19.6 Other Loss or Damage..........................................64
19.7 Copy of Insurance Policy......................................65
19.8 Government Requisition........................................65
19.9 LESSOR Retention of Reserves; Return of Security
Deposit and Prepaid Rent................65
ARTICLE 20 REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSEE...........67
20.1 Representations and Warranties................................67
20.2 Covenants.....................................................68
ARTICLE 21 REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSOR...........71
21.1 Representations and Warranties................................71
21.2 Covenant of Quiet Enjoyment...................................72
ARTICLE 22 FINANCIAL AND RELATED INFORMATION.............................73
ARTICLE 23 RETURN OF AIRCRAFT............................................74
23.1 Date of Return................................................74
23.2 Technical Report..............................................74
23.3 Return Location...............................................74
23.4 Full Aircraft Documentation Review............................74
23.5 Aircraft Inspection...........................................74
23.6 Certificate of Airworthiness Matters..........................75
23.7 General Condition of Aircraft at Return.......................76
23.8 Checks Prior to Return........................................79
23.9 Part Lives....................................................81
23.10 Export and Deregistration of Aircraft.........................83
23.11 LESSEE's Continuing Obligations...............................83
23.12 Airport and Navigation Charges................................84
23.13 Return Acceptance Certificate.................................84
23.14 Indemnities and Insurance.....................................85
23.15 Civil Reserve Air Fleet.......................................85
ARTICLE 24 ASSIGNMENT....................................................87
24.1 No Assignment by LESSEE.......................................87
24.2 Sale or Assignment by LESSOR..................................87
24.3 LESSOR's Lender...............................................87
24.4 LESSEE Cooperation............................................87
24.5 Protections...................................................88
ARTICLE 25 DEFAULT OF LESSEE.............................................89
25.1 LESSEE Notice to LESSOR.......................................89
25.2 Events of Default.............................................89
25.3 LESSOR's General Rights.......................................91
25.4 Deregistration and Export of Aircraft.........................91
25.5 LESSEE Liability for Damages..................................91
25.6 Waiver of Default.............................................92
25.7 Present Value of Payments.....................................92
25.8 Use of "Termination Date".....................................93
25.9 LESSEE's Remedies.............................................93
25.10 Waiver of Consequential Damages...............................93
ARTICLE 26 NOTICES.......................................................94
26.1 Manner of Sending Notices.....................................94
26.2 Notice Information............................................94
ARTICLE 27 GOVERNING LAW AND JURISDICTION................................95
27.1 California Law................................................95
27.2 Non-Exclusive Jurisdiction in California......................95
27.3 Service of Process............................................95
27.4 Prevailing Party in Dispute...................................95
27.5 Waiver........................................................95
ARTICLE 28 MISCELLANEOUS.................................................96
28.1 Transportation of Personnel...................................96
28.2 Press Releases................................................96
28.3 Power of Attorney.............................................96
28.4 LESSOR Performance for LESSEE.................................96
28.5 LESSOR's Payment Obligations..................................96
28.6 Application of Payments.......................................96
28.7 Usury Laws....................................................96
28.8 Delegation by LESSOR..........................................97
28.9 Confidentiality...............................................97
28.10 Rights of Parties.............................................97
28.11 Further Assurances............................................97
28.12 Use of Word "including".......................................98
28.13 Headings......................................................98
28.14 Invalidity of any Provision...................................98
28.15 Time is of the Essence........................................98
28.16 Amendments in Writing.........................................98
28.17 Counterparts..................................................98
28.18 Delivery of Documents by Fax..................................98
28.19 Entire Agreement..............................................98
28.20 Expenses......................................................99
EXHIBIT A AIRCRAFT DESCRIPTION.........................................101
EXHIBIT B PARTICIPATION AGREEMENT......................................102
EXHIBIT C CERTIFICATE OF INSURANCE.....................................112
EXHIBIT D BROKERS' LETTER OF UNDERTAKING...............................119
EXHIBIT E ESTOPPEL AND ACCEPTANCE CERTIFICATE..........................121
EXHIBIT F OPINION OF COUNSEL...........................................123
EXHIBIT G FORM OF POWER OF ATTORNEY....................................124
EXHIBIT H ASSIGNMENT OF RIGHTS (AIRFRAME)..............................126
EXHIBIT I ASSIGNMENT OF RIGHTS (ENGINES)...............................133
EXHIBIT J RETURN ACCEPTANCE RECEIPT....................................135
EXHIBIT K MONTHLY REPORT...............................................145
EXHIBIT L AIRCRAFT DOCUMENTATION.......................................148
EXHIBIT M TECHNICAL EVALUATION REPORT..................................150
AIRCRAFT LEASE AGREEMENT
THIS AIRCRAFT LEASE AGREEMENT is made and entered into as of May 25, 2000.
BETWEEN:
FRONTIER AIRLINES, INC., a Colorado corporation whose address and principal
place of business is at 12015 East 46th Avenue, Suite 200, Denver, Colorado
80239 ("LESSEE") and ------
INTERNATIONAL LEASE FINANCE CORPORATION, a California corporation whose
address and principal place of business is at 1999 Avenue of the Stars, 39th
Floor, Los Angeles, California 90067, United States of America ("LESSOR").
The subject matter of this Lease is one (1) new Airbus A318-100 aircraft as
more particularly described on Exhibit A attached hereto. In consideration of
and subject to the mutual covenants, terms and conditions contained in this
Lease, LESSOR hereby agrees to lease to LESSEE and LESSEE hereby agrees to lease
from LESSOR the aircraft and the parties further agree as follows:
ARTICLE 1 SUMMARY OF TRANSACTION
The following is a summary of the lease transaction between LESSEE and
LESSOR. It is set forth for the convenience of the parties only and will not be
deemed in any way to amend, detract from or simplify the other provisions of
this Lease.
1.1 Description of Aircraft
One new Airbus A318-100 aircraft with two (2) installed
PW 6124 engines, all as more particularly described on
Exhibit A hereto
1.2 Scheduled Delivery Date and Location
In the month of February 2003 at Hamburg, Germany
1.3 Initial Lease Term
145 months
1.4 Lease Extension Options
Six (6) Lease extension options of one (1) year each
1.5 Security Deposit
*
1.6 Transaction Fee
*
1.7 Rent During Initial Lease Term
*
1.8 Rent During Lease Extension Term
*
1.9 Reserves
*
1.10 Country of Aircraft Registration
United States
1.11 Maintenance Program
LESSEE's Maintenance Program
1.12 Agreed Value of Aircraft
*
1.13 LESSOR's Bank Account
*
ARTICLE 2 DEFINITIONS
Except where the context otherwise requires, the following words have
the following meanings for all purposes of this Lease. The definitions are
equally applicable to the singular and plural forms of the words. Any agreement
defined below includes each amendment, modification, supplement and waiver
thereto in effect from time to time.
2.1 General Definitions.
"Aircraft" means the Aircraft described on Exhibit A hereto,
including the Airframe, two (2) Engines, Parts and Aircraft Documentation,
collectively. As the context requires, "Aircraft" may also mean the Airframe,
any Engine, any Part, the Aircraft Documentation or any part thereof
individually. For example, in the context of return to LESSOR the term
"Aircraft" means the Airframe, Engines, Parts and Aircraft Documentation
collectively, yet in the context of LESSEE not creating any Security Interests
other than Permitted Liens on the Aircraft, the term "Aircraft" means any of the
Airframe, any Engine, any Part or the Aircraft Documentation individually.
"Aircraft Documentation" means all (a) log books, Aircraft
records, manuals and other documents provided to LESSEE in connection with the
Aircraft, (b) documents listed in Exhibits E and L and (c) any other documents
required to be maintained during the Lease Term by the Aviation Authority,
LESSEE's Maintenance Program and this Lease.
"Airframe" means the airframe listed in the Estoppel and
Acceptance Certificate executed at Delivery together with all Parts relating
thereto (except Engines or engines).
"Airframe Warranty Assignment" means the Assignment of Rights
(Airframe) to be entered into between LESSOR and LESSEE in the form of Exhibit
H.
"Airworthiness Directives" or "ADs" means all airworthiness
directives (or equivalent) of the FAA and the Aviation Authority applicable to
the Aircraft.
"APU" means the auxiliary power unit of the Aircraft.
"Aviation Authority" means the FAA or any Government Entity
which under the Laws of U.S. from time to time has control over civil aviation
or the registration, airworthiness or operation of aircraft in U.S. If the
Aircraft is registered in a country other than the U.S., "Aviation Authority"
means the agency which regulates civil aviation in such other country.
"Aviation Documents" means any or all of the following which at
any time may be obtainable from the Aviation Authority: (a) if required, a
temporary certificate of airworthiness from the Aviation Authority allowing the
Aircraft to be flown after Delivery to the State of Registration, (b) an
application for registration of the Aircraft with the appropriate authority in
the State of Registration, (c) the certificate of registration for the Aircraft
issued by the State of Registration, (d) a full certificate of airworthiness for
the Aircraft specifying transport category (passenger), (e) an air transport
license, (f) an air operator's certificate, (g) such recordation of LESSOR's
title to the Aircraft and interest in this Lease as may be available in the
State of Registration and (h) all such other authorizations, approvals, consents
and certificates in the State of Registration as may be required to enable
LESSEE lawfully to operate the Aircraft.
"AVSA" means AVSA S.A.R.L., a societe a responsabilite limitee
organized and existing under the laws of the Republic of France.
"Basic Engine" means those units and components of the Engine
which are used to induce and convert fuel/air mixture into thrust/power; to
transmit power to the fan and accessory drives; to supplement the function of
other defined systems external to the Engine; and to control and direct the flow
of internal lubrication, plus all essential accessories as supplied by Engine
manufacturer. The nacelle, installed components related to the Aircraft systems,
thrust reversers, QEC and the primary flight nozzle are excluded.
"BFE" means any equipment which is to be provided by the
purchaser of the Aircraft (whether actually provided by LESSOR as
buyer-furnished equipment or Manufacturer as seller-purchased equipment).
"Business Day" means a day other than a Saturday or Sunday on
which the banks in New York City are open for the transaction of business of the
type required by this Lease.
"Certificated Air Carrier" means any Person (except the U.S.
Government) that is a "citizen of the United States of America" (as defined in
Section 40102 of Title 49 of U.S.C.) and holding a Certificate of Public
Convenience and Necessity issued under Section 41102 of Title 49 of U.S.C. by
the Department of Transportation or any predecessor or successor agency thereto,
or, in the event such certificates shall no longer be applicable, any Person
(except the U.S. Government) that is a citizen of the U.S. (as defined in
Section 40102 of Title 49 of the U.S.C.) and legally engaged in the business of
transporting for hire passengers or cargo by air predominantly to, from or
between points within the U.S., and, in either event, operating commercial jet
aircraft capable of carrying ten or more individuals or 6,000 pounds or more of
cargo, which also is certificated.
"Creditor" means any lessor, owner, bank, lender, mortgagee or
other Person which is the owner of or has any interest in an aircraft engine or
aircraft operated by LESSEE.
"Creditor Agreement" means the applicable agreement between a
Creditor and LESSEE or between Creditors pursuant to which such Creditor owns,
leases or has an interest in either an aircraft operated by LESSEE on which an
Engine may be installed or in an aircraft engine which may be installed on the
Airframe.
"Default" means any event which, upon the giving of notice or
the lapse of time would constitute an Event of Default.
"Delivery" means the delivery of the Aircraft from LESSOR to
LESSEE pursuant to Article 6.6.
"Delivery Date" means the date on which Delivery takes place.
"DGAC" means the French Direction Generale a l'Aviation Civile
or any successor thereto.
"Dollars" and "$" means the lawful currency of the U.S.
"Engine" means (a) each of the engines listed on the Estoppel
and Acceptance Certificate; (b) any replacement engine acquired by LESSOR and
leased to LESSEE pursuant to Article 19.5 following a Total Loss of an Engine;
and (c) all Parts installed in or on any of such engines at Delivery (or
substituted, renewed or replacement Parts in accordance with this Lease) so long
as title thereto is or remains vested in LESSOR in accordance with the terms of
Article 12.3.
"Engine Warranty Assignment" means the Assignment of Rights
(Engines) to be entered into between LESSOR and LESSEE in the form of Exhibit I.
"Estoppel and Acceptance Certificate" means that certain
estoppel and acceptance certificate in the form of Exhibit E pursuant to which
LESSEE accepts Delivery of the Aircraft.
"Event of Default" means any of the events referred to in
Article 25.2.
"FAA" means the Federal Aviation Administration of the
Department of Transportation or any successor thereto under the Laws of the U.S.
"FARs" means the U.S. Federal Aviation Regulations embodied in
Title 14 of the U.S. Code of Federal Regulations, as amended from time to time,
or any successor regulations thereto.
"Geneva Convention" means the Convention on the International
Recognition of Rights in Aircraft signed in Geneva, Switzerland on June 19,
1948.
"Government Entity" means any (a) national, state or local
government, (b) board, commission, department, division, instrumentality, court,
agency or political subdivision thereof and (c) association, organization or
institution of which any of the entities listed in (a) or (b) is a member or to
whose jurisdiction any such entity is subject.
"Landing Gear" means the installed main and nose landing gear,
components and their associated actuators, side braces and parts.
"Law" means any (a) statute, decree, constitution, regulation,
order or any directive of any Government Entity, (b) treaty, pact, compact or
other agreement to which any Government Entity is a signatory or party and (c)
judicial or administrative interpretation or application of any of the
foregoing.
"Lease" means this Aircraft Lease Agreement, together with all
Exhibits hereto.
"LESSOR's Lien" means any Security Interest created by LESSOR or
otherwise arising solely as a result of any act or omission of LESSOR or any
Person claiming by or through LESSOR.
"LESSOR's Taxes" means any Taxes referred to in Article 16.2.
"Maintenance Program" means LESSEE's maintenance program as
approved by the Aviation Authority or such other maintenance program as LESSOR
may, in its reasonable discretion, accept in writing.
"Manufacturer" means Airbus Industrie, G.I.E.
"MPD" means the Maintenance Planning Document published by
Manufacturer and applicable to the Aircraft. With respect to the
hour/cycle/calendar time limitation of Parts and inspections, references to the
MPD mean the most restrictive limitation set forth therein.
"Operative Documents" means this Lease, the Participation
Agreement, the Airframe Warranty Assignment, the Engine Warranty Assignment, the
Estoppel and Acceptance Certificate and any Side Letter or other document or
agreement entered into on or after the date hereof between LESSEE and LESSOR
relating to the leasing of the Aircraft hereunder or the transactions
contemplated hereby.
"Overhaul" means the full reconditioning of the Aircraft, an
Engine, APU, Landing Gear, module or Part, as the case may be, in which such
equipment has been fully disassembled; cleaned; thoroughly inspected; and
returned to the highest standard specified by the applicable manufacturer's
manual.
"Part" means any part, component, appliance, system module,
engine module, accessory, material, instrument, communications equipment,
furnishing, LESSEE-furnished or LESSOR-purchased equipment, the APU, or other
item of equipment (other than complete Engines or engines) for the time being
installed in or attached to the Airframe or any Engine, or which, having been
removed from the Airframe or any Engine, remains the property of LESSOR.
"Participation Agreement" means the Participation Agreement to
be entered into by LESSEE, LESSOR and AVSA and the Manufacturer in the form of
Exhibit B.
"Permitted Lien" means (a) LESSOR's Liens; (b) Security
Interests arising in the ordinary course of LESSEE's business for Taxes either
not yet assessed or, if assessed, not yet due or being contested in good faith
in accordance with Article 16.5 or (c) materialmen's, mechanics', workmen's,
repairmen's, employees' liens or similar Security Interests arising by operation
of Law after the Delivery Date in the ordinary course of LESSEE's business for
amounts which are either not yet due or are being contested in good faith by
appropriate proceedings (and for which adequate reserves have been made or, when
required in order to pursue such proceedings, an adequate bond has been
provided) so long as such proceedings do not involve any danger of sale,
forfeiture or loss of the Aircraft.
"Permitted Sublessee" has the meaning ascribed thereto in
Article 11.1.1.
"Permitted Transferee" means any Person who:
(a) is a "citizen of the United States" as defined in Section
40102 of Title 49 of the U.S.C. with the requisite power and
authority to enter into and carry out the transactions
contemplated by this Lease;
(b) is not, and is not affiliated with, a Certificated Air
Carrier;
(c) enters into a binding agreement with LESSEE pursuant to
which it agrees to be bound by the terms of this Lease and
agrees to perform all of the obligations of LESSOR
hereunder; and
(d) is either (i) a U.S. bank, insurance company or other
financial institution with a consolidated net worth of at
least $25,000,000, (ii) a corporation which has (or a
general partnership whose general partners have) a
consolidated net worth of at least $25,000,000 and which is
a sophisticated entity, experienced in participating as an
equity investor in commercial aircraft leases, (iii) the
trustee or agent of an aircraft income or similar fund;
provided that such trustee or agent has a consolidated net
worth of at least $25,000,000, or (iv) such other Person as
LESSEE shall approve in writing, such approval not to be
unreasonably withheld or delayed.
"Person" means any individual, firm, partnership, joint venture,
trust, corporation, Government Entity, committee, department, authority or any
body, incorporated or unincorporated, whether having distinct legal personality
or not.
"Prime Rate" means the rate of interest from time to time
announced by Chase Manhattan Bank in New York as its prime commercial lending
rate.
"Security Interest" means any encumbrance or security interest,
however and wherever created or arising including (without prejudice to the
generality of the foregoing) any right of ownership, security, mortgage, pledge,
charge, encumbrance, lease, lien, statutory or other right in rem,
hypothecation, title retention, attachment, levy, claim or right of possession
or detention.
"State of Registration" means U.S. or such other country or
state of registration of the Aircraft as LESSOR may, in its absolute discretion,
approve in writing.
"U.S." means the United States of America.
2.2 Specific Definitions. The following terms are defined in the Articles
referenced below:
Terms Article
Agreed Value 19.1
Airframe Reserves 5.4.1
CRAF 23.15.1
CRAF Program Requisition Period 23.15.1
Default Interest 5.6
Delivery Location 3.1
Engine LLP Reserves 5.4.1
Engine Performance Restoration Reserves 5.4.1
Expenses 17.1
Expiration Date 4.3
Extension Lease Term 4.2.1
Indemnitees 17.1
Initial Lease Term 4.1
Landing Gear Reserves 5.4.1
Lease Term 4.3
LESSEE Customization Costs 5.3.1
LESSOR's Assignee 24.2.1
LESSOR's Bank 5.5
LESSOR's Lender 24.3
Manufacturer's Escalation Rate 5.3.1
Modification 12.8.1
Net Total Loss Proceeds 19.1
Outside Delivery Date 3.6
Passenger Service Equipment 12.8.1
Rent 5.3.1
Reserves 5.4.1
Scheduled Delivery Date 3.2
Security Deposit 5.1.1
Taxes 16.1
Termination Date 4.4
Total Loss 19.1
Total Loss Date 19.1
Total Loss Proceeds 19.1
Transaction Fee 5.2
ARTICLE 3 PLACE AND DATE OF DELIVERY
3.1 Place of Delivery. LESSOR will deliver the Aircraft to LESSEE at
Manufacturer's facility at Hamburg, Germany or such other place as may be agreed
in writing between the parties (the "Delivery Location").
3.2 Scheduled Delivery Date. As of the date of this Lease, Delivery of the
Aircraft from Manufacturer to LESSOR is scheduled to occur in the month of
February 2003. LESSOR will notify LESSEE from time to time and in a timely
manner but no later than ninety (90) days prior to the scheduled month of
delivery of the scheduled week of delivery and no later than ten (10) Business
Days prior to the exact date on which LESSOR expects Delivery to take place (the
"Scheduled Delivery Date").
3.3 Delivery subject to Manufacturer Delivery. Subject to the provisions of this
Article 3, LESSOR and LESSEE expressly acknowledge that Delivery of the Aircraft
to LESSEE is subject to and conditioned upon delivery of the Aircraft by
Manufacturer to LESSOR.
3.4 No LESSOR Liability. LESSOR will not be liable for any loss or expense, or
any loss of profit, arising from any delay or failure in Delivery to LESSEE
unless such delay or failure arises as a direct consequence of the willful
misconduct of LESSOR or the breach by LESSOR of its obligations under the
purchase agreement with respect to the Aircraft, and in no event will LESSOR be
liable for any delay or failure which is caused by any breach or delay on the
part of Manufacturer or any BFE supplier.
3.5 Total Loss of Aircraft prior to Delivery. If a Total Loss of the Aircraft
occurs prior to Delivery, neither party will have any further liability to the
other except that LESSOR will return to LESSEE the Security Deposit in
accordance with Article 5.1.3 and any prepaid Rent, whereupon this Lease shall
terminate.
3.6 Cancellation for Delay. Promptly after LESSOR becomes aware that in
Manufacturer's opinion a delay will cause Delivery to be delayed beyond February
29, 2004 (the "Outside Delivery Date"), LESSOR will notify LESSEE. By written
notice given within thirty (30) days after the first to occur of (i) LESSEE's
receipt of such LESSOR notice or (ii) the Outside Delivery Date, either party
may by written notice to the other party terminate this Lease and this Lease
will terminate on the date of receipt of such notice. In the event of such
termination, neither party will have any further liability to the other party
except that LESSOR will return to LESSEE the Security Deposit in accordance with
Article 5.1.3 and any prepaid Rent. If neither party gives notice of termination
within such thirty (30) day period, then the period for termination shall be
deemed to be extended for an additional one hundred and eighty (180) days after
the expiration of such thirty (30) day period. In the event that neither party
gives a notice of termination within such one hundred and eighty (180) day
period, the Lease will automatically terminate upon the expiration of such
period, and LESSOR will return to LESSEE the Security Deposit and any prepaid
Rent as provided above.
3.7 Delay. In the event that the Delivery of the Aircraft is delayed beyond the
Scheduled Delivery Date, then LESSEE and LESSOR will meet to discuss the action
that they will take against Manufacturer or any vendor as a result of such delay
and what compensation they desire from the Manufacturer or such vendor. In the
event that LESSOR receives compensation from Manufacturer as a result of any
delay, LESSOR after deducting its costs and expenses resulting from such delay
will provide to LESSEE the balance of such compensation received from
Manufacturer. In the event that LESSOR receives an abatement or other concession
by Manufacturer in respect of Manufacturer's Escalation Rate as a result of any
delay, LESSOR will pass through such abatement or concession to LESSEE.
ARTICLE 4 LEASE TERM AND EXTENSION OPTION
4.1 Initial Lease Term. The term of leasing of the Aircraft will commence on the
Delivery Date and continue for an initial lease term of One Hundred Forty-Five
(145) months (the "Initial Lease Term").
4.2 Lease Extension Options.
4.2.1So long as no payment Default or Event of Default has occurred and is
continuing hereunder on the date of exercise of the option or on the
commencement date of the lease term with respect to such option, LESSEE will
have six (6) options to extend the term of the Lease for a period of one (1)
year each (the "Extension Lease Term").
4.2.2 In order to exercise an option, LESSEE must give written notice to LESSOR
not less than nine (9) months prior to the then-existing Expiration Date of this
Lease. Any notice given by LESSEE in accordance herewith will be irrevocable.
LESSEE may not exercise its option to extend the lease of the Aircraft for any
year unless it has also exercised its option to extend the lease for all prior
lease years.
4.3 "Lease Term" and "Expiration Date". "Lease Term" means the term of leasing
commencing on the Delivery Date and terminating on the Expiration Date.
"Expiration Date" means the date on which LESSEE is required to redeliver the
Aircraft to LESSOR in the condition required by this Lease on the last day of
the Initial Lease Term or Extension Lease Term, if and as applicable.
4.4 "Termination Date". This Lease may in fact terminate on any of the dates
set forth below:
(a) the Expiration Date, provided LESSEE returns the Aircraft to
LESSOR on the Expiration Date in the condition required by
Article 23; or
(b) a date earlier than the Expiration Date, if:
(i) there is a Total Loss of the Aircraft prior to Delivery
pursuant to Article 3.5;
(ii) cancellation of this Lease occurs pursuant to Article
3.6;
(iii)there is a Total Loss of the Aircraft and payment is
made to LESSOR in accordance with Article 19.3; or ----
(iv) an Event of Default occurs and LESSOR repossesses the
Aircraft or otherwise terminates this Lease pursuant to
Article 25.3.
(c) a date later than the Expiration Date, if:
(i) LESSEE fails to return the Aircraft in the condition
required by this Lease on the Expiration Date in
accordance with Article 23; or
(ii) an Event of Default occurs and LESSOR repossesses the
Aircraft or otherwise terminates this Lease pursuant to
Article 25.3.
The "Termination Date" is the date on which this Lease terminates
because one of the above has occurred.
ARTICLE 5 SECURITY DEPOSIT, TRANSACTION FEE, RENT, RESERVES
AND OTHER PAYMENTS
5.1 Security Deposit.
5.1.1 *
5.1.2 The Security Deposit may be commingled with LESSOR's general
funds and any interest earned on such Security Deposit will be
for LESSOR's account. If the Security Deposit is reduced below
the required amount by application to meet LESSEE's unperformed
obligations under this Lease, LESSEE will replenish the Security
Deposit within ten (10) days after LESSOR's demand therefor. The
Security Deposit will serve as security for the performance by
LESSEE of its obligations under this Lease and any other
agreements between LESSEE and LESSOR relating to aircraft,
engines, aircraft equipment or the extension of credit and may
be applied by LESSOR upon the occurrence of an Event of Default
hereunder or of an event of default by LESSEE under any such
other agreements.
5.1.3 Upon termination of this Lease in accordance with Article 4.4
other than if an Event of Default has occurred and is
continuing, LESSOR will return to LESSEE the amount of the
Security Deposit then held by LESSOR (so long as no default by
LESSEE exists under any other agreement between LESSEE and
LESSOR relating to aircraft, engines or aircraft equipment or
the extension of credit by LESSOR to LESSEE in which case LESSOR
will be entitled to set off amounts owing to it), without
interest, less an amount determined to be a reasonable estimate
of the costs, if any, which LESSOR will incur to remedy any
unperformed obligations of LESSEE under this Lease, including
the correction of any discrepancies from the required condition
of the Aircraft on return of the Aircraft.
5.2 Transaction Fee.
*
5.3 Rent.
5.3.1 *
*** All extension term rent amounts are expressed in January
2000 U.S. Dollars and subject to escalation for the period from and including
the 1st of January 2000 through and including the Delivery Date in accordance
with the Manufacturer's Escalation Rate.
5.3.2 The first payment of Rent during the Lease Term will be paid no
later than the Delivery Date. Each subsequent payment of Rent
will be due monthly thereafter no later than the same day of the
month as the Delivery Date of the Aircraft except that, if such
day is not a Business Day, the Rent will be due on the
immediately preceding Business Day. If Delivery occurred on the
29th, 30th or 31st of the month and in any given month during
the Lease Term there is no such corresponding date, Rent will be
payable on the last Business Day of such month.
5.4 Reserves.
5.4.1 *
5.4.2 The amount of the Engine Performance Restoration Reserves set
forth in Article 5.4.1 may be increased by LESSOR in the event
of an increase in the thrust rating of an Engine in accordance
with Article 12.7.
5.4.3 Such Reserves will be paid on or before the 10th day of the
calendar month next following the month in which the Delivery
Date occurs and on or before the 10th day of each succeeding
calendar month for flying performed during the calendar month
prior to payment. All Reserves for flying performed during the
month in which the Termination Date occurs will be paid on the
Termination Date, unless otherwise agreed by the parties.
5.4.4 No interest will accrue or be paid at any time to LESSEE on such
Reserves and, subject to LESSOR's obligations under Article 13,
LESSOR may commingle the Reserves with LESSOR's general funds.
5.5 LESSOR's Bank Account. The Security Deposit, Transaction Fee,
Rent,Reserves and any other payment due under this Lease will be
paid by wire transfer of immediately available U.S. Dollar funds
to LESSOR's bank account at:
*
or to such other bank account as LESSOR may from time to time designate by
written notice ("LESSOR's Bank"). When it is stated in this Lease that an
installment of the Security Deposit, the monthly Rent, Reserves or any other
payment is due or must be paid or made by LESSEE by a specific date, then such
payment actually must be received by LESSOR's Bank on or before such specific
date, even if, in order for such payment to be received by LESSOR's Bank by such
specific date, LESSEE must initiate the wire transfer prior to such specific
date.
5.6 Default Interest.
*
5.7 No Deductions or Withholdings. All payments by LESSEE under this Lease,
including the Security Deposit, Transaction Fee, Rent, Reserves, Default
Interest, fees, indemnities or any other item, will be made in full without any
deduction or withholding whether in respect of set-off, counterclaim, duties, or
Taxes (as defined in Article 16) imposed in the State of Registration or any
jurisdiction from which such payments are made except to the extent otherwise
required by Law, in which event LESSEE will pay any additional amount such that
the net payment received by LESSOR after any required deduction or withholding
equals the amount that LESSOR would have received if such withholding had not
been required; provided, however, that if LESSEE pays any such additional amount
to compensate for the withholding of any LESSOR Taxes, LESSOR shall pay to
LESSEE promptly after receipt of LESSEE's written request therefor (which
request shall include a description in reasonable detail of the LESSOR Taxes
involved and the calculation of the amounts to be paid) such amounts as are
necessary so that the net additional amounts received by LESSOR under this
Article 5.7 do not exceed the amounts that LESSOR would have received if no
amounts in respect of LESSOR Taxes had been required to be withheld or deducted
by LESSEE.
5.8 Value Added Taxes. The Rent and other amounts payable by LESSEE under this
Lease are exclusive of any value added tax, turnover tax or similar tax or duty.
5.9 Wire Transfer Disbursement Report. At the time of each Rent or other
payment, LESSEE will advise LESSOR in writing of the amount of the payment being
made by LESSEE and the allocation of such payment to the Security Deposit, Rent,
Reserves, Default Interest and other charges. Notwithstanding the allocation set
forth in LESSEE's report, in the event an Event of Default has occurred and is
continuing under this Lease, LESSOR will have complete discretion to allocate
LESSEE's payments as LESSOR determines.
5.10 Net Lease.
5.10.1 This Lease is a net lease and LESSEE's obligation to pay Rent and make
other payments in accordance with this Lease will be absolute and unconditional
under any and all circumstances and regardless of other events, including the
following:
(a) any right of set-off, counterclaim, recoupment, defense or
other right (including any right of reimbursement) which
LESSEE may have against LESSOR, Manufacturer, the Engine
manufacturer or any other person for any reason, including
any claim LESSEE may have for the foregoing;
(b) unavailability or interruption in use of the Aircraft for
any reason, including a requisition thereof or any
prohibition or interference with or other restriction
against LESSEE's use, operation or possession of the
Aircraft (whether by Law or otherwise), any defect in title,
airworthiness, merchantability, fitness for any purpose,
condition, design, specification or operation of any kind or
nature of the Aircraft, the ineligibility of the Aircraft
for any particular use or trade or for registration under
the Laws of any jurisdiction or Total Loss of the Aircraft;
(c) insolvency, bankruptcy, reorganization, arrangement,
readjustment of debt, dissolution, liquidation,
receivership, administration or similar proceedings by or
against LESSOR, LESSEE, Manufacturer, the Engine
manufacturer or any other Person;
(d) invalidity or unenforceability or lack of due authorization
of or other defect in this Lease;
(e) failure or delay on the part of any party to perform its
obligations under this Lease; or
(f) any other circumstance which but for this provision would or
might have the effect of terminating or in any other way
affecting any obligation of LESSEE hereunder.
5.10.2 Nothing in Article 5.10 will be construed to limit LESSEE's rights and
remedies in the event of LESSOR's breach of its warranty of quiet enjoyment set
forth in Article 21.2 or to limit LESSEE's rights and remedies to pursue in a
court of law any claim it may have against LESSOR or any other Person; provided,
however, that LESSEE will have no obligation to pay Rent as aforesaid, except in
respect of Rent accrued at the time, for the number of days that LESSEE is
deprived of the possession and use of the Aircraft as the result of the breach
by LESSOR of its warranty of quiet enjoyment obligations set forth Article 21.2.
5.11 LESSOR Performance of LESSEE Obligation. If LESSEE fails to make any
payment due under this Lease to a third party in connection with the Aircraft or
fails to perform any other obligation required under this Lease, LESSOR may (but
is not required to) at its election and without waiver of its rights perform
such obligation and/or pay such amount. Within five (5) Business Days after
written notice to LESSEE of the amount paid by LESSOR on behalf of LESSEE,
LESSEE will repay such amount to LESSOR together with Default Interest. Such
payment to LESSOR will constitute additional Rent payable by LESSEE to LESSOR
hereunder. Any payment, performance or compliance by LESSOR of a LESSEE
obligation hereunder will not affect the occurrence or continuance of a Default
or Event of Default, as the case may be.
5.12 Consideration for Rent and other Amounts. The amount of the Rent and other
payments contained herein are in consideration of LESSEE's waiver of warranties
and indemnities set forth in Articles 8 and 17, respectively, and the other
provisions of this Lease.
ARTICLE 6 INVOLVEMENT WITH AIRCRAFT MANUFACTURER
6.1 LESSEE Selection of Aircraft. LESSEE ACKNOWLEDGES THAT THE DESCRIPTION OF
THE AIRCRAFT SET FORTH IN THIS LEASE IS BASED UPON INFORMATION SUPPLIED BY
MANUFACTURER. LESSEE COVENANTS TO LESSOR THAT LESSEE HAS USED ITS OWN JUDGMENT
IN SELECTING THE AIRCRAFT AND HAS DONE SO BASED ON ITS SIZE, DESIGN AND TYPE.
LESSEE ACKNOWLEDGES THAT LESSOR IS NOT A MANUFACTURER, REPAIRER OR SERVICING
AGENT OF THE AIRCRAFT.
6.2 Participation Agreement. LESSEE shall have the right to inspect the Aircraft
during the manufacture process and to attend and observe the acceptance tests of
the Aircraft pursuant to the terms of a Participation Agreement to be entered
into between LESSEE and LESSOR in the form set forth in Exhibit B.
6.3 Procurement of BFE. LESSEE's and LESSOR's technical representatives will
meet and determine which of LESSEE or LESSOR will provide specific items of BFE.
Such BFE will then be provided to Manufacturer by LESSEE or LESSOR, as
applicable, within the time frames required by Manufacturer.
6.4 LESSEE Inspection of Aircraft. During the course of final assembly of the
Aircraft, and at Delivery, LESSEE may have its own representative present to
inspect the Aircraft and to ensure its conformity with LESSEE's needs and the
terms of this Lease. LESSEE will have ground inspection and acceptance flight
rights with respect to the Aircraft. If LESSEE's inspection reveals that the
Aircraft does not comply in any material respect with the terms of this Lease,
LESSOR will promptly cause the Manufacturer to correct any such defects and make
the Aircraft available for reinspection to LESSEE, and to conduct such further
demonstration flights as may be necessary to verify compliance with the
requirements of this Lease, including but not limited to Exhibit A attached
hereto. LESSEE acknowledges that, as between LESSEE and LESSOR, in accepting the
Aircraft LESSEE is relying on its own inspection and knowledge of the Aircraft
in determining whether the Aircraft meets the requirements of this Lease.
6.5 Aircraft at Delivery. At Delivery, the Aircraft will be as set forth in
Exhibit A, as such description may be modified by any change requests agreed to
among LESSEE, LESSOR and Manufacturer (which will be reflected in amendment(s)
to this Lease). In the event of any discrepancies, LESSEE and LESSOR will
cooperate in good faith with one another and with Manufacturer and Engine
manufacturer, as applicable, in order to arrive at a mutually acceptable
resolution of any such discrepancies.
6.6 Delivery of the Aircraft to LESSEE. Subject to LESSEE having performed all
of the conditions precedent to Delivery set forth herein, immediately following
delivery of the Aircraft from Manufacturer to LESSOR, LESSOR will tender the
Aircraft to LESSEE at the Delivery Location. Provided that the Aircraft is in
the condition required by Article 6.5 and provided that LESSOR shall have
performed all conditions precedent noted in Article 7.2 and 7.3 hereof, upon the
tender of the Aircraft by LESSOR to LESSEE, LESSEE will accept the Aircraft by
executing and delivering to LESSOR the Estoppel and Acceptance Certificate,
whereupon Delivery will be deemed to have occurred for all purposes under this
Lease, including, but not limited to, the commencement of LESSEE's obligation to
pay Rent hereunder.
6.7 LESSEE Acceptance of Aircraft. If LESSEE fails to (a) comply with the
conditions contained in Articles 7.1 and 7.3 so as to allow Delivery to take
place immediately following delivery of the Aircraft by Manufacturer to LESSOR
or (b) take delivery of the Aircraft when properly tendered for delivery by
LESSOR in the condition required hereunder, LESSEE will indemnify LESSOR for all
costs and expenses incurred by LESSOR as a result thereof including (but without
limitation) any payments other than the purchase price which LESSOR becomes
obliged to make to Manufacturer.
ARTICLE 7 PRE-DELIVERY, DELIVERY AND POST-DELIVERY
DOCUMENTARY AND OTHER REQUIREMENTS
7.1 Pre-Delivery Requirements. LESSEE will do each of the following prior to the
Scheduled Delivery Date of the Aircraft within the time frames set forth below:
7.1.1 Within one (1) month after execution of this Lease, LESSEE will deliver to
LESSOR each of the following:
(a) copies of resolutions of the Board of Directors of LESSEE or
other written evidence of appropriate corporate action, duly
certifying and authorizing the lease of the Aircraft
hereunder and the execution, delivery and performance of
this Lease, together with an incumbency certificate as to
the person or persons authorized to execute and deliver
documents on behalf of LESSEE hereunder; and
(b) an opinion of counsel in the form and substance of Exhibit
F.
7.1.2 At least fourteen (14) days prior to the Scheduled Delivery Date, LESSEE
will have delivered to LESSOR a Certificate of Insurance and Brokers' Letter of
Undertaking in the form and substance of Exhibits C and D, respectively, from
LESSEE's insurance brokers evidencing insurance of the Aircraft in accordance
with this Lease from the Delivery Date.
7.1.3 At least three (3) Business Days prior to the Scheduled Delivery Date,
LESSEE will do each of the following:
(a) provide LESSOR with documents evidencing that LESSEE has
obtained any necessary permits or approvals to ferry and
import the Aircraft to the U.S. and that all applicable
customs duties and sales taxes in respect of the Aircraft
have been discharged by LESSEE (or arrangements satisfactory
to LESSOR have been made for obtaining or paying for the
same);
(b) provide LESSOR with a copy of LESSEE's Air Operator's
Certificate;
(c) provide LESSOR with a power of attorney empowering LESSEE's
representative, who may be an officer or employee of LESSEE,
to accept the Aircraft on behalf of LESSEE;
d) provide LESSOR with a power of attorney in the form of
Exhibit G; and -
(e) provide LESSOR with such other documents as LESSOR may
reasonably request.
7.2 LESSOR's Pre-Delivery Requirements. LESSEE's obligation to accept delivery
of and lease the Aircraft hereunder is subject to satisfaction of the following
conditions precedent:
(a) LESSOR shall tender the Aircraft including the Aircraft
Documentation to LESSEE at the Delivery Location in
accordance with Article 6.6;
(b) LESSOR shall be prepared to advise its FAA counsel to
register the Aircraft in the U.S. in the name of LESSOR and
the Aircraft shall have a valid Certificate of Airworthiness
and shall be in the condition required in order to meet the
operating requirements of FAR Part 121;
(c) All Airworthiness Directives which are issued prior to the
Delivery Date and which require compliance (either by means
of repetitive inspections, modifications or terminating
action) prior to Delivery or within one (1) year after
Delivery will be complied with on a terminating action basis
at LESSOR's cost; Airworthiness Directives which do not have
a terminating action will be accomplished at the highest
level of inspection or modification possible; and
(d) LESSOR shall have executed and delivered to LESSEE the
Airframe Warranty Assignment and the Engine Warranty
Assignment, together with the consents of Seller and the
Engine manufacturer, respectively, in the form set forth as
Schedule 1 to each agreement, and a consent of Manufacturer
to the Airframe Warranty Assignment in form and substance
reasonably satisfactory to LESSEE.
7.3 Delivery Requirements. On the Delivery Date of the Aircraft, each of the
following will occur:
7.3.1 If not previously done, LESSEE will pay to LESSOR the first monthly
installment of Rent in accordance with Article 5.3.2;
7.3.2 LESSEE will execute and deliver to LESSOR the Estoppel and Acceptance
Certificate covering the Aircraft and dated the Delivery Date.
7.3.3 If not previously done, LESSEE and LESSOR will sign an amendment or
supplement to Exhibit A evidencing all agreed-to changes to the specification of
the Aircraft.
7.3.4 LESSEE will deliver a certificate signed by an officer of LESSEE stating
all of the following:
(a) the representations and warranties contained in Article 20
are true and accurate on and as of the Delivery Date as
though made on and as of such date (except to the extent
that such representations and warranties relate solely to an
earlier date); and
(b) no Default has occurred and is continuing or will result
from LESSEE's lease of the Aircraft hereunder.
7.3.5 LESSEE's counsel will deliver an opinion confirming the matters set forth
in the opinion of counsel described in Article 7.1 and advising that all filing
and other requirements described in the earlier opinion of counsel have been
met.
7.3.6 If any Creditor Agreement provides or contemplates that such Creditor will
obtain any right, title or interest in an Engine which is installed on such
Creditor's aircraft, prior to placing the Engine on such Creditor's aircraft
LESSEE will deliver to LESSOR an engines cooperation agreement in form and
substance acceptable to LESSOR which is executed by LESSEE and LESSEE's
Creditors (as defined therein).
7.4 Post-Delivery Requirements.
7.4.1 Within seven (7) days after Delivery, if not previously provided, LESSEE
will provide LESSOR with a follow-up opinion of FAA counsel advising that the
Aircraft has been registered in the State of Registration and that all necessary
filings have been made with the FAA.
ARTICLE 8 DISCLAIMERS
LESSOR HAS COMMITTED TO LESSEE THAT ON THE DELIVERY DATE THE
AIRCRAFT WILL BE IN THE CONDITION REQUIRED BY ARTICLE 6. SUCH COMMITMENT OR
COVENANT ON THE PART OF LESSOR EXPIRES AND THE DISCLAIMERS SET FORTH IN THIS
ARTICLE 8 APPLY UPON LESSEE'S ACCEPTANCE OF THE AIRCRAFT AND EXECUTION OF THE
ESTOPPEL AND ACCEPTANCE CERTIFICATE. AFTER SUCH TIME, THEN AS BETWEEN LESSOR AND
LESSEE:
8.1 "As Is, Where Is". LESSEE AGREES THAT IT IS LEASING THE AIRCRAFT "AS IS,
WHERE IS". LESSEE UNCONDITIONALLY ACKNOWLEDGES AND AGREES THAT NEITHER LESSOR
NOR ANY OF ITS OFFICERS, DIRECTORS, EMPLOYEES OR REPRESENTATIVES HAVE MADE OR
WILL BE DEEMED TO HAVE MADE ANY TERM, CONDITION, REPRESENTATION, WARRANTY OR
COVENANT EXPRESS OR IMPLIED (WHETHER STATUTORY OR OTHERWISE) AS TO (a) THE
CAPACITY, AGE, AIRWORTHINESS, VALUE, QUALITY, DURABILITY, CONFORMITY TO THE
PROVISIONS OF THIS LEASE, DESCRIPTION, CONDITION (WHETHER OF THE AIRCRAFT, ANY
ENGINE, ANY PART THEREOF OR THE AIRCRAFT DOCUMENTATION), DESIGN, WORKMANSHIP,
MATERIALS, MANUFACTURE, CONSTRUCTION, OPERATION, DESCRIPTION, STATE,
MERCHANTABILITY, PERFORMANCE, FITNESS FOR ANY PARTICULAR USE OR PURPOSE
(INCLUDING THE ABILITY TO OPERATE OR REGISTER THE AIRCRAFT OR USE THE AIRCRAFT
DOCUMENTATION IN ANY OR ALL JURISDICTIONS) OR SUITABILITY OF THE AIRCRAFT OR ANY
PART THEREOF, OR THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT
DISCOVERABLE, KNOWN OR UNKNOWN, APPARENT OR CONCEALED, EXTERIOR OR INTERIOR, (b)
THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK, COPYRIGHT OR OTHER
INTELLECTUAL PROPERTY RIGHTS, (c) ANY IMPLIED WARRANTY ARISING FROM COURSE OF
PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE OR (d) ANY OTHER REPRESENTATION
OR WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRCRAFT OR ANY PART
THEREOF, ALL OF WHICH ARE HEREBY EXPRESSLY EXCLUDED AND EXTINGUISHED EXCEPT AS
EXPRESSLY PROVIDED IN ARTICLE 21 HEREOF.
8.2 Waiver of Warranty of Description. IN CONSIDERATION OF (a) LESSEE'S RIGHTS
HEREUNDER TO INSPECT THE AIRCRAFT AND (b) LESSOR'S ASSIGNMENT TO LESSEE OF ANY
EXISTING AND ASSIGNABLE WARRANTIES OF MANUFACTURER AND THE ENGINE MANUFACTURER,
LESSEE HEREBY AGREES THAT ITS ACCEPTANCE OF THE AIRCRAFT AT DELIVERY AND ITS
EXECUTION AND DELIVERY OF THE ESTOPPEL AND ACCEPTANCE CERTIFICATE CONSTITUTE
LESSEE'S WAIVER OF THE WARRANTY OF DESCRIPTION, ANY CLAIMS LESSEE MAY HAVE
AGAINST LESSOR BASED UPON THE FAILURE OF THE AIRCRAFT TO CONFORM WITH SUCH
DESCRIPTION AND ANY AND ALL RIGHTS IT MAY HAVE TO THE REMEDIES SET FORTH IN
SECTIONS 10508 THROUGH 10522 OF THE CALIFORNIA COMMERCIAL CODE. EVEN IF AT ANY
TIME THE FAILURE OF THE AIRCRAFT TO CONFORM TO SUCH DESCRIPTION SUBSTANTIALLY
IMPAIRS THE VALUE AND UTILITY OF THE AIRCRAFT AND EITHER (i) LESSEE ACCEPTED THE
AIRCRAFT BASED ON A REASONABLE ASSUMPTION THAT THE NONCONFORMITY WOULD BE CURED
AND IT WAS NOT SEASONABLY CURED OR (ii) LESSEE ACCEPTED THE AIRCRAFT WITHOUT
DISCOVERING THE NONCONFORMITY BUT LESSEE'S ACCEPTANCE OF THE AIRCRAFT WAS
REASONABLY INDUCED EITHER BY LESSOR'S ASSURANCES OR BY THE DIFFICULTY OF
DISCOVERING ANY DEFECT PRIOR TO ACCEPTANCE, LESSEE AGREES NOT TO LOOK TO LESSOR
FOR DAMAGES OR RELIEF ARISING OUT OF THE FAILURE OF THE AIRCRAFT TO CONFORM TO
SUCH DESCRIPTION.
8.3 LESSEE Waiver. LESSEE hereby waives as between itself and LESSOR and agrees
not to seek to establish or enforce any rights and remedies, express or implied
(whether statutory or otherwise) against LESSOR or the Aircraft relating to any
of the matters mentioned in Articles 8.1 or 8.2 and the leasing thereof by
LESSOR to LESSEE.
8.4 Conclusive Proof. DELIVERY BY LESSEE TO LESSOR OF THE ESTOPPEL AND
ACCEPTANCE CERTIFICATE WILL BE CONCLUSIVE PROOF AS BETWEEN LESSOR AND LESSEE
THAT LESSEE'S TECHNICAL EXPERTS HAVE EXAMINED AND INVESTIGATED THE AIRCRAFT,
INCLUDING THE ENGINES AND THE AIRCRAFT DOCUMENTATION AND THAT EACH IS IN THE
CONDITION REQUIRED HEREUNDER AND WITHOUT DEFECT, EXCEPT AS SPECIFICALLY SET
FORTH IN SUCH CERTIFICATE, (WHETHER OR NOT DISCOVERABLE AT DELIVERY) AND
OTHERWISE IN EVERY WAY SATISFACTORY TO LESSEE.
8.5 No LESSOR Liability for Losses. LESSEE agrees that LESSOR will not be liable
to LESSEE, any sublessee or any Person, whether in contract or tort and however
arising, for any cost, loss or damage (consequential or otherwise) arising out
of the condition of the Aircraft, whether or not due in whole or in part to an
act or omission or the active or passive negligence of LESSOR.
8.6 No Liability to Repair or Replace. LESSOR will not be liable for any expense
in repairing or replacing any item of the Aircraft or be liable to supply
another aircraft or any item in lieu of the Aircraft or any Part thereof if the
same is lost, confiscated, damaged, destroyed or otherwise rendered unfit for
use.
8.7 No Waiver. Nothing in this Article 8 or elsewhere in this Lease will be
deemed to be a waiver by LESSEE of any rights it may have against Manufacturer,
the Engine manufacturer or any other Person.
ARTICLE 9 MANUFACTURERS' AND VENDORS' WARRANTIES
9.1 Warranties. Effective upon Delivery LESSOR will assign to LESSEE for the
duration of the Lease Term the benefit of all warranties and indemnities given
to LESSOR by Manufacturer and the Engine manufacturer pursuant to the Airframe
Warranty Assignment and the Engine Warranty Assignment, respectively. Effective
on the Delivery Date, all other assignable vendor warranties with respect to the
Aircraft are hereby assigned by LESSOR to LESSEE.
9.2 Non-Assignable Warranties. To the extent that any warranty or indemnity
given to LESSOR by Manufacturer and others with respect to the Aircraft cannot
be assigned, LESSEE will be entitled to take such action to enforce such
warranty or indemnity in the name of LESSOR against Manufacturer and such other
parties as LESSEE sees fit, but subject to LESSEE first ensuring that LESSOR is
indemnified and secured to LESSOR's satisfaction against all losses, damage,
costs, expenses and liabilities thereby incurred or reasonably likely to be
incurred.
9.3 Reassignment. On the Termination Date, the benefit of any warranty assigned
by LESSOR to LESSEE will be reassigned automatically to LESSOR or its designee.
LESSEE's rights under such warranties (including LESSEE's claims and rights to
payment thereunder) will revert to LESSOR during any period in which an Event of
Default is continuing. LESSEE at its own cost and expense will do all such
things and execute such documents as may be reasonably required for this
purpose.
9.4 Warranty Claims. LESSEE will diligently and promptly pursue any valid claims
it may have against Manufacturer and others under such warranties with respect
to the Aircraft and will provide notice of the same to LESSOR.
ARTICLE 10 OPERATION OF AIRCRAFT
10.1 Costs of Operation. LESSEE will pay all costs incurred in the operation of
the Aircraft during the Lease Term, for profit or otherwise, including the costs
of flight crews, cabin personnel, fuel, oil, lubricants, maintenance, insurance,
storage, landing and navigation fees, airport charges, passenger service and any
and all other expenses of any kind or nature, directly or indirectly, in
connection with or related to the use, movement and operation of the Aircraft.
The obligations, covenants and liabilities of LESSEE under this paragraph
arising prior to return of the Aircraft to LESSOR will continue in full force
and effect, notwithstanding the termination of this Lease or expiration of the
Lease Term.
10.2 Compliance with Laws. Except as expressly provided in this Lease, LESSEE
agrees throughout the Lease Term to maintain operational control of the Aircraft
and use the Aircraft in accordance with applicable Laws of the State of
Registration and of any country, state, territory or municipality into or over
which LESSEE may operate. LESSEE will not employ, suffer or cause the Aircraft
to be used in any business which is forbidden by Law or in any manner which may
render it liable to condemnation, destruction, seizure, or confiscation by any
authority. LESSEE will not permit the Aircraft to fly to any airport or country
if so doing would cause LESSEE to be in violation of any Law applicable to
LESSEE or the Aircraft.
10.3 Training. LESSEE will not use the Aircraft for testing or for training of
flight crew members other than LESSEE crew members and, from and after the date
on which it obtains other A318 aircraft, it will not use the Aircraft for
training any more than it utilizes for training the other A318 aircraft in its
fleet.
10.4 No Violation of Insurance Policies. LESSEE will not use or permit the
Aircraft to be used in any manner or for any purpose which is not covered by the
insurance policies LESSEE is required to carry and maintain as set forth in this
Lease. LESSEE will not carry any goods of any description excepted or exempted
from such policies or do any other act or permit to be done anything which could
reasonably be expected to invalidate or limit any such insurance policy.
10.5 Flight Charges. LESSEE will pay promptly when due all enroute navigation
charges, navigation service charges and all other charges payable by LESSEE for
the use of or for services provided at any airport, whether in respect of the
Aircraft or any other aircraft of LESSEE, and will indemnify and hold LESSOR
harmless in respect of the same. This indemnity will continue in full force and
effect notwithstanding the termination or expiration of the Lease Term for any
reason or the return of the Aircraft.
ARTICLE 11 SUBLEASES
11.1 No Sublease without LESSOR Consent. LESSEE WILL NOT SUBLEASE OR PART WITH
POSSESSION OF THE AIRCRAFT (EXCEPT FOR MAINTENANCE AND REPAIR) AT ANY TIME
WITHOUT THE PRIOR WRITTEN CONSENT OF LESSOR (NOT TO BE UNREASONABLY WITHHELD OR
DELAYED) EXCEPT FOR A SUBLEASE TO A PERMITTED SUBLESSEE PRE-APPROVED IN ARTICLE
11.1.1 BELOW, AND IN ACCORDANCE WITH SUCH REQUIREMENTS AS MAY FROM TIME TO TIME
BE AGREED IN WRITING BETWEEN LESSOR AND LESSEE. The wet leasing of the Aircraft
during the Lease Term (in which LESSEE and its crews retain operational control
of the Aircraft) will not be considered a sublease of the Aircraft.
11.1.1 LESSEE may sublease the Aircraft without LESSOR's prior consent to an
operator based in the U.S. which is then currently a lessee of LESSOR, provided
such operator is not then in default under the aircraft lease agreement between
such operator and LESSOR ("Permitted Sublessee"). Any such sublease will be
subject to the provisions of this Article 11, including the provisions of
Article 11.2 below.
11.2 LESSOR Costs. LESSEE will indemnify LESSOR on demand for all reasonable and
actual out-of-pocket expenses (including legal fees) incurred in connection with
LESSOR's assessment of the subleasing proposal (whether or not LESSOR's consent
to such sublease is ultimately given), review of the sublease documentation and
implementation of the sublease.
11.3 Any Approved Sublease. Any sublease to a Permitted Sublessee, and any other
sublease approved by LESSOR will be for a term no greater than the remaining
Lease Term and contain provisions consistent with this Lease protecting LESSOR's
title to the Aircraft, providing appropriate LESSOR indemnities, regarding the
maintenance and repair standards for the Aircraft, concerning the insurances
which will be carried by the sublessee and the circumstances which constitute a
Total Loss of the Aircraft. Any such sublease will be subject and subordinate to
this Lease. In its sole discretion, LESSOR may require an opinion of counsel in
connection with such sublease, including LESSOR's right to repossess the
Aircraft in the event of an Event of Default hereunder or under the sublease.
LESSEE will not amend the terms of any approved sublease without the prior
written consent of LESSOR, which will not be unreasonably withheld.
Notwithstanding the foregoing, LESSOR agrees that even if an Event of Default
has occurred and is continuing hereunder, so long as the approved sublessee
fully performs all of the obligations of LESSEE hereunder and agrees to do so on
a going forward basis and there is no risk to LESSOR of an impairment to
LESSOR's unencumbered title to the Aircraft, LESSOR will not interfere with such
sublessee's quiet use and enjoyment of the Aircraft.
11.4 Assignment of Sublease. Any approved sublease will be assigned to LESSOR as
security. LESSEE will deliver the original counterpart of the sublease to LESSOR
and make any filings necessary to protect LESSOR's security interest.
11.5 Continued Responsibility of LESSEE. LESSEE will continue to be responsible
for performance of its obligations under this Lease during any period of
sublease.
ARTICLE 12 MAINTENANCE OF AIRCRAFT
12.1 General Obligation.
12.1.1 During the Lease Term and until the Aircraft is returned to LESSOR in the
condition required by this Lease, LESSEE alone has the obligation, at its
expense, to maintain and repair the Aircraft, Engines, and all of the Parts (a)
in accordance with the Maintenance Program, (b) in accordance with the rules and
regulations of the Aviation Authority, (c) in accordance with Manufacturer's
type design, (d) in accordance with any other regulations or requirements
necessary in order to maintain a valid Certificate of Airworthiness for the
Aircraft and meet the requirements at all times during the Lease Term and upon
return of the Aircraft to LESSOR for issuance of a Standard Certificate of
Airworthiness for transport category aircraft issued by the FAA in accordance
with FAR Part 21 (except during those periods when the Aircraft is undergoing
maintenance or repairs as required or permitted by this Lease and to the extent
in conflict with the requirements of the Aviation Authority) and (e) in the same
manner and with the same care as used by LESSEE with respect to similar aircraft
and engines operated by LESSEE and without in any way discriminating against the
Aircraft.
12.1.2 No Engine will remain in an unserviceable condition for more than three
(3) months.
12.1.3 LESSEE will not enter into any Engine maintenance cost per flight hour,
power-by-the-hour or similar agreement with Engine manufacturer or any other
Engine maintenance facility or organization without LESSOR's prior written
consent, which consent shall not be unreasonably withheld or delayed.
12.2 Specific Obligations. Without limiting Article 12.1, LESSEE agrees that
such maintenance and repairs will include but will not be limited to each of the
following specific items:
(a) performance in accordance with the Maintenance Program of
all routine and non-routine maintenance work;
(b) incorporation in the Aircraft of all Airworthiness
Directives, all alert service bulletins of Manufacturer,
Engine manufacturer and other vendors or manufacturers of
Parts incorporated on the Aircraft and any service bulletins
which must be performed in order to maintain the warranties
on the Aircraft, Engines, and Parts;
(c) incorporation in the Aircraft of all other service bulletins
of Manufacturer, the Engine manufacturer and other vendors
which LESSEE schedules to adopt within the Lease Term for
the rest of its A318 aircraft fleet. It is the intent of the
parties that the Aircraft will not be discriminated against
in service bulletin compliance (including method of
compliance) or other maintenance matters compared with the
rest of LESSEE's A318 aircraft fleet. LESSEE will not
discriminate against the Engines with respect to Overhaul
build standards and life-limited part replacements;
(d) incorporation in the Maintenance Program for the Aircraft of
a corrosion prevention and control program as recommended by
Manufacturer, the Aviation Authority and the FAA and the
correction of any discrepancies in accordance with the
recommendations of Manufacturer and the Structural Repair
Manual. In addition, all inspected areas will be properly
treated with corrosion inhibitor as recommended by
Manufacturer;
(e) maintaining in English and keeping in an up-to-date status
the records and historical documents set forth in Exhibit L;
(f) maintaining historical records, in English, for on
condition, condition-monitored, hard time and life-limited
Parts (including tags from the manufacturer of such Part or
a repair facility which evidence that such Part is new or
overhauled and establish authenticity, total time in service
and time since overhaul for such Part), the hours and cycles
the Aircraft and Engines operate and all maintenance and
repairs performed on the Aircraft; and
(g) properly documenting all repairs, Modifications and
alterations and the addition, removal or replacement of
equipment, systems or components in accordance with the
rules and regulations of the Aviation Authority and
reflecting such items in the Aircraft Documentation. In
addition, all repairs to the Aircraft will be accomplished
in accordance with either (i) Manufacturer's Structural
Repair Manual (or DGAC-approved Repair Approval Sheets) or
(ii) FAA-approved data (such as FAA Form 8110 or
equivalent). All Modifications and alterations will be
accomplished in accordance with FAA-approved data (such as
FAA Form 8110 or equivalent).
12.3 Replacement of Parts.
12.3.1 LESSEE, at its own cost and expense, will promptly replace all Parts
which may from time to time become worn out, lost, stolen, destroyed, seized,
confiscated, damaged beyond repair or rendered unfit or beyond economical repair
(BER) for use for any reason. In the ordinary course of maintenance, service,
repair, overhaul or testing, LESSEE may remove any Part provided that LESSEE
replaces such Part as promptly as practicable. All replacement Parts will (a) be
free and clear of all Security Interests (except Permitted Liens) of any kind or
description, (b) be in airworthy condition and of at least equivalent model,
service bulletin and modification status and have a value and utility at least
equal to the Parts replaced, assuming such replaced Parts were in the condition
and repair required to be maintained by the terms hereof and (c) have a current
"serviceable tag" of the manufacturer or maintenance facility providing such
items to LESSEE, indicating that such Parts are new, serviceable or Overhauled.
So long as a substitution meets the requirements of the Maintenance Program and
the Aviation Authority, LESSEE may substitute for any Part a part that does not
meet the requirements of the foregoing sentence if a complying Part cannot be
procured or installed within the available groundtime of the Aircraft and as
soon as practicable the noncomplying part is removed and replaced by a complying
Part. With respect to replacement modules in an Engine, LESSEE will use best
reasonable efforts to ensure that any replacement module will not have been
previously operated at a higher thrust rating than the replaced module provided
that in all circumstances life-limited Parts in such replacement module will
have no less life remaining than the life-limited Parts in the replaced module.
12.3.2 All Parts removed from the Airframe or any Engine will remain the
property of LESSOR and subject to this Lease no matter where located, until such
time as such Parts have been replaced by Parts (which have been incorporated or
installed in or attached to the Airframe or such Engine) which meet the
requirements for replacement Parts specified above and title to such replacement
Parts has passed to LESSOR under the Laws of the State of Registration and lex
situs. To the extent permitted by the Laws of the State of Registration and the
lex situs it is the intent of LESSOR and LESSEE that without further act and
immediately upon any replacement Part becoming incorporated, installed or
attached to the Airframe or an Engine as above provided, (a) title to the
removed Part will thereupon vest in LESSEE, free and clear of all rights of
LESSOR, (b) title to the replacement Part will thereupon vest in LESSOR free and
clear of all rights of LESSEE (other than LESSEE's rights under this Lease) and
(c) such replacement Part will become subject to this Lease and be deemed to be
a Part hereunder to the same extent as the Parts originally incorporated or
installed in or attached to the Airframe or such Engine.
12.4 Removal of Engines.
12.4.1 If an Engine is removed for testing, service, repair, maintenance,
Overhaul work, alterations or modifications, title to such Engine will at all
times remain vested in LESSOR.
12.4.2 LESSEE will be entitled to remove any of the Engines from the Aircraft
and install another engine or engines on the Aircraft, provided that LESSEE
complies with each of the following obligations:
(a) the insurance requirements set forth in Article 18 and
Exhibit C are in place;
(b) LESSEE ensures that the identification plates referred to in
Article 15 are not removed from any Engine upon such Engine
being detached from the Aircraft; and
(c) title to the Engine remains with LESSOR free from all
Security Interests (except Permitted Liens) regardless of
the location of the Engine or its attachment to or
detachment from the Aircraft.
12.5 Pooling of Engines and Parts. LESSEE may subject the Engines and Parts to
normal interchange or pooling agreements with responsible international
scheduled commercial air carriers customary in the airline industry and entered
into by LESSEE in the ordinary course of its business with respect to its entire
A318 fleet so long as (a) in the case of pooling of an Engine, such Engine is
returned to LESSEE within four (4) months, (b) no transfer of title to the
Engine occurs, (c) all other terms of this Lease continue to be observed with
respect to the Engines or Parts, including but not limited to Articles 8, 10,
12, 14, 15, 16, 17, 18 and 19 and (d) LESSEE continues to be fully responsible
to LESSOR for the performance of all of its obligations hereunder.
12.6 Installation of Engines on other aircraft. Any Engine removed from the
Aircraft may be installed on another aircraft in LESSEE's fleet which utilizes
engines of the same type as the Engine only if one of the situations described
in this Article 12.6 exists:
12.6.1 LESSEE or LESSOR has title to such other aircraft free and clear of all
Security Interests (except Permitted Liens).
12.6.2 LESSEE, LESSOR and all of the Creditors of LESSEE of such aircraft enter
into an engines cooperation agreement in form and substance reasonably
acceptable to LESSOR in which each party agrees to recognize one another's
rights in the engines. LESSEE will reimburse LESSOR and LESSOR's Lender for
their reasonable attorneys' fees and costs in negotiating and finalizing engine
cooperation agreement arrangements with LESSEE and its Creditors.
12.6.3 Such other aircraft is subject to a Creditor Agreement (but no other
Security Interests except Permitted Liens) which by its terms expressly or
effectively states that such Creditor and its successors and assigns will not
acquire any right, title or interest in any Engine by reason of such Engine
being installed on such aircraft. LESSEE hereby agrees that if LESSOR's title to
an Engine is in fact impaired under any such Creditor Agreement, such impairment
will be deemed to be a Total Loss of such Engine and the provisions of Article
19.5 will apply. To the extent another Creditor Agreement contains such
provisions, then LESSOR hereby agrees for the benefit of the Creditor of such
Creditor Agreement that neither LESSOR nor its successors or assigns will
acquire or claim any right, title or interest in any engine in which LESSEE or
another Creditor has an interest as a result of such engine being installed on
the Airframe.
12.7 Engine Thrust Rating. If an Engine is utilized by LESSEE on the Aircraft or
on any other airframe (or if the Engine is utilized by any sublessee or user
under a pooling arrangement in accordance with this Lease) at a thrust rating
greater than the thrust rating set forth in Exhibit A, LESSEE will promptly
notify LESSOR and the Engine Performance Restoration Reserves amounts set forth
in Article 5.4.1 will be increased in an amount proportional to the accelerated
rate of deterioration of the Engine resulting from the increased thrust rating.
12.8 Modifications.
12.8.1 *
12.8.2 LESSOR may review LESSEE's proposed designs, plans, engineering drawings
and diagrams, and flight and maintenance manual revisions for any proposed
Modification. If requested by LESSOR, LESSEE will furnish LESSOR (at LESSEE's
expense) with such documents in final form and any other documents required by
Law, as a result of such Modification. All Modifications incorporated on the
Aircraft will be properly documented in the Aircraft Documentation and be fully
approved by the Aviation Authority.
12.8.3 Notwithstanding any other provision of this Lease, no Modification will
be made which has the effect of decreasing the utility or value of the Aircraft
or invalidating any warranty applicable to the Aircraft.
12.8.4 No Modification will be made by LESSEE if an Event of Default exists and
is continuing hereunder.
12.8.5 Unless otherwise agreed by LESSOR in writing, all permanent or structural
Modifications will forthwith become a part of the Aircraft and LESSEE
relinquishes to LESSOR all rights and title thereto. However, all (i) temporary
and non-structural Modifications and (ii) all Passenger Service Equipment so
long as such equipment can be removed without causing material damage to the
Aircraft, will remain the property of LESSEE and, at LESSOR's request and
LESSEE's cost, will be removed from the Aircraft prior to return of the
Aircraft, with LESSEE restoring the Aircraft to the condition it was in prior to
the Modification or installation of Passenger Service Equipment in a manner
cosmetically acceptable to LESSOR. Notwithstanding the foregoing, no such
removal will be permitted without LESSOR's permission during the occurrence of
an Event of Default hereunder and immediately upon the occurrence of an Event of
Default hereunder, without the requirement of any further act or notice, all
right, title and interest in such Modifications and Passenger Service Equipment
will immediately vest in LESSOR; provided however, that in the event of such an
Event of Default, with respect to any Passenger Service Equipment, LESSOR will
use commercially reasonable efforts to reach agreement with any vendors or
suppliers holding title to the Passenger Service Equipment in order to protect
the mutual interests of LESSOR and such parties.
12.8.6 LESSOR will bear no liability for the cost of Modifications of the
Aircraft whether in the event of grounding or suspensions of certification, or
for any other cause.
12.9 Performance of Work by Third Parties. Whenever maintenance and repair work
on the Aircraft or Engines will be regularly performed by a Person other than
LESSEE, such Person will be an FAA-authorized repair station.
12.10 Reporting Requirements.
12.10.1 Commencing with a report furnished ten (10) days after the end of the
calendar month in which Delivery occurs, LESSEE will furnish to LESSOR a Monthly
Report in English in the form attached hereto as Exhibit K. Each Monthly Report
will be furnished within ten (10) days after the end of each calendar month,
except that the Monthly Report pertaining to the last month (or any portion
thereof) of the Lease Term will be furnished to LESSOR on the Termination Date.
12.10.2 Commencing with the second scheduled "C" check for the Aircraft, LESSEE
will provide LESSOR with a Technical Evaluation Report for the Aircraft in the
form and substance of Exhibit M, as revised. Such Technical Evaluation Report
will be furnished within three (3) Business Days after the completion of every
second "C" check performed during the Lease Term and at other times reasonably
requested by LESSOR.
12.11 Information Regarding Maintenance Program. LESSEE will provide LESSOR with
a copy of or information regarding the Maintenance Program for the Aircraft, as
reasonably requested by LESSOR.
12.12 LESSOR Rights to Inspect Aircraft. On reasonable notice, LESSOR and/or its
authorized agents or representatives will have the right to inspect the Aircraft
and Aircraft Documentation. LESSOR agrees that such requests will be coordinated
with LESSEE so as to cause the minimum practical disturbance to LESSEE's
operation or its personnel. LESSEE agrees to cooperate with LESSOR in making the
Aircraft and Aircraft Documentation available to such authorized technical
teams. LESSOR will have no duty to make any such inspection and will not incur
any liability or obligation by reason of (and LESSEE's indemnity obligations
pursuant to Article 17 will apply notwithstanding) not making any such
inspection or by reason of any reports it receives or any reviews it may make of
the Aircraft records.
ARTICLE 13 USE OF RESERVES
13.1 Airframe Reserves. LESSOR will reimburse LESSEE from the Airframe Reserves
for the actual cost of the structural inspection portion of the full and
completed scheduled 4C/5Y and 8C/9Y (or then current equivalent check) as
described in the MPD and the rectification of any structural deficiencies
resulting from such inspection, with work performed for all other causes
excluded, including those causes set forth in Article 13.6. Subject to Article
16.1 and excluding exchange fees and handling, packaging and shipping charges,
reimbursement will be made up to the amount in the Airframe Reserves on the
commencement date of the structural check.
13.2 Engine Performance Restoration Reserves.
13.2.1 LESSOR will reimburse LESSEE from the Engine Performance Restoration
Reserves for the actual cost associated with performance restoration or
permanent repair of on-condition Parts in the Basic Engine during completed
Engine shop visits (i.e. heavy maintenance visits) requiring off-wing teardown
and/or disassembly, with work performed for all other causes excluded, including
those causes set forth in Article 13.6. Subject to Article 16.1 and excluding
exchange fees and handling, packaging and shipping charges, reimbursement for an
Engine will be made up to the amount in the Engine Performance Restoration
Reserves applicable to such Engine at the time of removal of such Engine.
13.2.2 Reimbursement from the Engine Performance Restoration Reserves will be
limited as to each module of such Engine in accordance with the following
percentages of the remaining total amount in the Engine Performance Restoration
Reserves for such Engine:
X*% Fan & Accessory Gearbox
X*% High Pressure Compressor Module
X*% High Pressure Turbine Module
X*% Low Pressure Turbine Module
*Prior to Delivery, LESSOR will obtain the recommended percentage figures
(totaling 100%) from the Engine manufacturer that relate to the Pratt & Whitney
6124 engine when such figures become available. Upon written notice to LESSEE,
such recommended percentage figures provided by Engine manufacturer will be
deemed to be the reimbursement percentages for purposes of this Lease.
13.2.3 LESSEE will not enter into any Engine maintenance cost per flight hour,
power-by-the-hour or similar agreement with Engine manufacturer or any other
Engine maintenance facility or organization without LESSOR's consent which
consent shall not be unreasonably withheld or delayed.
13.3 Engine LLP Reserves. LESSOR will reimburse LESSEE from the Engine LLP
Reserves for an Engine for the actual out-of-pocket materials cost without
overhead, mark-up or profit factor associated with on or off-wing replacement of
life-limited Parts in such Engine, with work performed for all other causes
excluded, including those causes set forth in Article 13.6. Subject to Article
16.1 and excluding exchange fees and handling, packaging and shipping charges,
reimbursement for replacement of life-limited Parts in an Engine will be made up
to the amount in the Engine LLP Reserves applicable to such Engine at the time
of replacement of such life-limited Part.
13.4 Landing Gear Reserves. LESSOR will reimburse LESSEE from the Landing Gear
Reserves for the actual cost of an Overhaul of the Landing Gear, up to the
amount remaining in the Landing Gear Reserves, with work performed for all other
causes excluded, including those causes set forth in Article 13.6.
13.5 Reimbursement. LESSEE will be entitled to reimbursement from the Reserves
after the work is completed and the Airframe, Engine or Landing Gear has left
the repair agency, by submitting invoices and proper documentation within six
(6) months after completion of the work. For the Airframe, proper documentation
includes a list of all routine and non-routine work cards with corresponding
references to the MPD and an itemized labor and materials report. For the
Engine, proper documentation includes a description of the reason for removal
(if removed), a shop teardown report, a shop findings report if an Engine is
removed (or an equivalent report if an Engine is not removed), a full
description of the workscope and complete disk records for the Engine both prior
to and after the repair. Both the invoice supplied by the Engine repair facility
and that submitted by LESSEE to LESSOR with respect to an Engine will state
whether or not credits were provided due to life remaining on any removed Engine
Parts and the amount of any such credits will be itemized. For the Landing Gear,
proper documentation includes the total calendar time, hours and cycles on the
Landing Gear both prior to and after the Overhaul, a copy of the complete
Overhaul report which includes a life limited component list and a description
of all work performed on the Landing Gear assembly.
13.6 Reimbursement Adjustment. By way of example, among the exclusions from
reimbursement are those items resulting from repairs covered by LESSEE's or a
third party's insurance, (deductibles being for the account of LESSEE) or
warranties or required as a result of an Airworthiness Directive, manufacturer's
service bulletin, faulty maintenance or installation, improper operations,
misuse, neglect, accident, incident, ingestion, or other accidental cause.
Reimbursement from the Reserves will not be available for the APU, quick engine
change (QEC) Parts, thrust reversers, or any of their associated components. All
invoices subject to reimbursement from LESSOR will be reduced (by adjustment
between LESSEE and LESSOR retroactively if necessary) by the actual amounts
received by LESSEE on account of such work from responsible third parties or
other sources, such as insurance proceeds, manufacturer's warranties,
guarantees, concessions and credits (including, with respect to Engines, credits
due to life remaining on any removed Engine Parts).
13.7 Costs in Excess of Reserves. LESSEE will be responsible for payment of all
costs in excess of the amounts reimbursed hereunder. If on any occasion the
balance in the Airframe Reserves, Engine Performance Restoration Reserves,
Engine LLP Reserves or Landing Gear Reserves for a particular Engine or Landing
Gear (at the time of the structural check, in the case of the Airframe, or at
the time of removal, in the case of an Engine or the Landing Gear) is
insufficient to satisfy a claim for reimbursement in respect of the Airframe,
such Engine or the Landing Gear, as applicable, the shortfall may not be carried
forward or made the subject of any further claim for reimbursement.
13.8 Reimbursement after Termination Date. LESSEE may not submit any invoice for
reimbursement from the Reserves after the Termination Date unless on or prior to
such date LESSEE has notified LESSOR in writing that such outstanding invoice
will be submitted after the Termination Date and the anticipated amount of such
invoice. So long as LESSEE has provided such notice to LESSOR, LESSEE may then
submit such outstanding invoice at any time within six (6) months after the
Termination Date. In the event of the Total Loss of the Aircraft, fifty percent
(50%) of the unreimbursed Reserves held by LESSOR will be retained by LESSOR and
the remaining portion of the Reserves will be paid to LESSEE in accordance with
Article 19.9.
ARTICLE 14 TITLE AND REGISTRATION
14.1 Title to the Aircraft During Lease Term. Title to the Aircraft will be and
remain vested in LESSOR. LESSOR and LESSEE intend this Lease to be a "true
lease". LESSEE will have no right, title or interest in the Aircraft except as
provided in this Lease.
14.2 Registration of Aircraft. LESSOR at its sole cost and expense will register
and maintain registration of the Aircraft in the name of LESSOR at the register
of aircraft in the State of Registration. LESSEE will cooperate with LESSOR and
will from time to time take all other steps then required by Law (including the
Geneva Convention if applicable) or as LESSOR may reasonably request to protect
and perfect LESSOR's interest in the Aircraft and this Lease in the State of
Registration or in any other jurisdictions in or over which LESSEE may operate
the Aircraft.
14.3 Filing of this Lease. To the extent permitted by Law and in accordance with
the requirements of the Law from time to time, LESSEE at its sole cost and
expense will cause this Lease to be kept, filed, recorded and refiled or
rerecorded in the State of Registration and in any other offices necessary to
protect LESSOR's rights hereunder as reasonably requested by LESSOR.
14.4 Evidence of Registration and Filings. As LESSOR may reasonably request from
time to time, LESSEE will furnish to LESSOR an opinion of counsel or other
evidence reasonably satisfactory to LESSOR of the registrations and filings
required hereunder.
ARTICLE 15 IDENTIFICATION PLATES
LESSOR will affix and LESSEE will at all times maintain on the
Airframe and each Engine the identification plates containing the following
legends or any other legend reasonably requested by LESSOR in writing:
15.1 Airframe Identification Plates.
Location: One to be affixed to the Aircraft structure
above the forward entry door adjacent to
and not less prominent than that of
Manufacturer's data plate and another in a
prominent place on the flight deck.
Size: No smaller than 4" x 6".
Legend: "THIS AIRCRAFT IS OWNED BY INTERNATIONAL
LEASE FINANCE CORPORATION.
MANUFACTURER'S SERIAL NO: [TBD]
OWNER'S ADDRESS:
INTERNATIONAL LEASE FINANCE CORPORATION
1999 Avenue of the Stars, 39th Floor Los
Angeles, California 90067 United States of
America
Fax: (310) 788-1990"
15.2 Engine Identification Plates.
Location: The legend on the plate must be no less
prominent than the Engine data plate
and must be visible.
Size: No smaller than 2" x 6".
"THIS ENGINE IS OWNED BY INTERNATIONAL
LEASE FINANCE CORPORATION, LOS ANGELES,
CALIFORNIA, USA."
ARTICLE 16 TAXES
16.1 General Obligation of LESSEE. Except as set forth in Article 16.2, LESSEE
agrees to pay promptly when due, and to indemnify and hold harmless LESSOR on a
full indemnity basis from, all license and registration fees and all taxes,
fees, levies, imposts, duties, charges, deductions or withholdings of any nature
(including without limitation any value added, franchise, transfer, sales, gross
receipts, use, business, excise, turnover, personal property, stamp or other
tax) together with any assessments, penalties, fines, additions to tax or
interest thereon, however or wherever imposed (whether imposed upon LESSEE,
LESSOR, on all or part of the Aircraft, the Engines or otherwise), by any
Government Entity or taxing authority in the U.S. (including without limitation
the City or County of Los Angeles), or any foreign country or by any
international taxing authority, upon or with respect to, based upon or measured
by any of the following (collectively, "Taxes"):
(a) the Aircraft, Engines or any Parts;
(b) the use, operation or maintenance of the Aircraft or
carriage of passengers or freight during the Lease Term;
(c) this Lease, the payments due hereunder and the terms and
conditions hereof; and
(d) the ownership, financing, delivery, import or export,
return, sale, payment of Total Loss Proceeds or other
disposition of the Aircraft.
16.2 Exceptions to Indemnity. The indemnity provided for in Article 16.1 does
not extend to any of the following Taxes (hereinafter referred to as "LESSOR's
Taxes"):
(a) Taxes imposed by the U.S. or by any state within the U.S. on
the net income, profits or gains, gross receipts, capital or
net worth of LESSOR;
(b) Taxes attributable to the period, or an event occurring,
prior to Delivery or after return of the Aircraft to LESSOR
in accordance with this Lease;
(c) Taxes attributable to LESSOR's gross negligence, willful
misconduct or breach of this Lease;
(d) Taxes which LESSEE is contesting in good faith in accordance
with Article 16.5;
(e) Taxes imposed by any country other than the U.S. on the net
income, gross receipts, capital or net worth of LESSOR but
only to the extent that (i) such Taxes were not in any way
connected with, due to or arising out of this Lease,
LESSEE's business operations or office locations in any such
country or LESSEE's use and operation of the Aircraft and
(ii) such Taxes would be otherwise payable by LESSOR
notwithstanding this Lease, LESSEE's business operations or
office locations in any such country or LESSEE's use and
operation of the Aircraft;
(f) excess Taxes imposed as a result of LESSOR's voluntary or
involuntary transfer or other disposition of the Aircraft,
Engines or any Parts or this Lease (except a transfer or
sale resulting directly from LESSEE's Default) provided that
LESSEE remains responsible for payment of any Taxes and the
specific amount of such Taxes that it would have been
required to indemnify for had such voluntary or involuntary
transfer not occurred;
(g) Taxes consisting of any interest, penalties or additions to
tax imposed on LESSOR as a result, in whole or in part, of a
failure of LESSOR to file any Tax return properly and
timely, unless such failure shall be caused by the failure
of LESSEE to fulfill any obligations of LESSEE under Section
16.7 with respect to such Tax return; or
(h) Taxes resulting from, or that would not have been imposed
but for, any LESSOR's Lien arising as a result of claims
against, or acts or omissions of, or otherwise attributable
to, LESSOR or any related party.
16.3 After-Tax Basis. The amount which LESSEE is required to pay with respect to
any Taxes indemnified against under Article 16.1 is an amount sufficient to
restore LESSOR on an after-tax basis to the same position LESSOR would have been
in had such Taxes not been incurred. If LESSOR determines in good faith that it
has realized a Tax benefit (by way of deduction, credit or otherwise) as a
result of any payment for which LESSEE is liable under Section 5.7 or 16.1 of
this Lease, and such benefit was not previously taken into account in
calculating the amount of such payment on an after-tax basis in accordance with
the immediately preceding sentence of this Article 16.3, LESSOR will pay to
LESSEE an amount that is reasonably sufficient to ensure that LESSOR is in no
better an after-tax position than it would have been in if the event giving rise
to LESSEE's liability for payment had not occurred.
16.4 Timing of Payment. Any amount payable to LESSOR pursuant to this Article 16
will be paid within ten (10) days after receipt of a written demand therefor
from LESSOR accompanied by a written statement describing in reasonable detail
the basis for such indemnity and the computation of the amount so payable
provided, however, that such amount need not be paid by LESSEE prior to the
earlier of (a) the date any Tax is payable to the appropriate Government Entity
or taxing authority or (b) in the case of amounts which are being contested by
LESSEE in good faith or by LESSOR pursuant to Article 16.5, the date such
contest is finally resolved.
16.5 Contests. If claim is made against LESSOR for Taxes with respect to which
LESSEE is liable for a payment or indemnity under this Lease, LESSOR will
promptly give LESSEE notice in writing of such claim provided, however, that
LESSOR's failure to give notice will not relieve LESSEE of its obligations
hereunder unless such failure materially impairs or precludes LESSEE's ability
to contest the claim. So long as (a) a contest of such Taxes does not involve
any material risk of the sale, forfeiture or loss of the Aircraft or any
interest therein, (b) if LESSOR so requests, LESSEE has provided LESSOR with an
opinion of independent tax counsel that a reasonable basis exists for contesting
such claim and (c) adequate reserves have been made for such Taxes or, if
required, an adequate bond has been posted, then LESSOR at LESSEE's written
request will in good faith, with due diligence and at LESSEE's expense, contest
(or permit LESSEE to contest in the name of LESSEE or LESSOR) the validity,
applicability or amount of such Taxes.
16.6 Refunds. Upon receipt by LESSOR of a refund of all or any part of any Taxes
(including any deductions or withholdings referred to in Article 5.7) which
LESSEE has paid, LESSOR will promptly pay to LESSEE the net amount of such Taxes
refunded.
16.7 Cooperation in Filing Tax Returns. LESSEE and LESSOR will cooperate with
one another in providing information which may be reasonably required to fulfill
each party's tax filing requirements and any audit information request arising
from such filing.
16.8 Survival of Obligations. The indemnity obligations and other agreements of
LESSEE as set forth in this Article 16 will survive the Termination Date.
ARTICLE 17 INDEMNITIES
17.1 General Indemnity. Except as set forth in Article 17.2 and Article 28.20,
LESSEE agrees to indemnify and hold harmless LESSOR and its officers, directors,
employees, agents and shareholders (individually an "Indemnitee" and
collectively "Indemnitees") from any and all liabilities, obligations, losses,
damages, penalties, claims, actions, suits, costs, disbursements and expenses
(including legal fees, costs and related expenses) of every kind and nature,
whether or not any of the transactions contemplated by this Lease are
consummated (collectively "Expenses"), which are imposed on, incurred by or
asserted against any Indemnitee and which are in any way relating to, based on
or arising out of any of the following:
(a) this Lease or any transactions contemplated hereby;
(b) the operation, possession, use, non-use, control, leasing,
subleasing, maintenance, storage, overhaul, testing,
inspections or acceptance flights at return of the Aircraft,
any Engine, or any Part during the Lease Term by LESSEE, any
sublessee or any other Person, whether or not the same is in
compliance with the terms of this Lease, including without
limitation claims for death, personal injury, property
damage, other loss or harm to any Person and claims relating
to any Laws, including without limitation environmental
control, noise and pollution laws, rules or regulations;
(c) the manufacture, design, acceptance, rejection, delivery,
return, sale after an Event of Default, import, export,
condition, repair, modification, servicing, rebuilding,
enforcement of warranties whether in LESSOR's or LESSEE's
name, customer and product support provided by Manufacturer
and other vendors, airworthiness, registration,
reregistration, performance, sublease, merchantability,
fitness for use, substitution or replacement of the
Aircraft, Engine, or any Part under this Lease or other
transfer of use or possession of the Aircraft, Engine, or
any Part, including under a pooling or interchange
arrangement, including without limitation latent and other
defects, whether or not discoverable and patent, trademark
or copyright infringement;
(d) any non-compliance by LESSEE with any term of this Lease or
the falsity or inaccuracy of any representation or warranty
of LESSEE set forth herein;
(e) the prevention or attempt to prevent the arrest,
confiscation, seizure, taking in execution, impounding,
forfeiture or detention of the Aircraft, or in securing the
release of the Aircraft; or
(f) as a consequence of any Default in payment by LESSEE of any
sum to be paid by LESSEE when due under this Lease or any
other Default by LESSEE in the due and punctual performance
of its obligations under this Lease.
The foregoing indemnity by LESSEE is intended to include and cover any Expense
to which an Indemnitee may be subject (in contract, tort, strict liability or
under any other theory) regardless of the negligence, active or passive or any
other type, of such Indemnitee, so long as such Expense does not fall within any
of the exceptions listed in Article 17.2.
17.2 Exceptions to General Indemnities. The indemnity provided for in Article
17.1 will not extend to Expenses of any Indemnitee to the extent resulting from
or arising out of any of the following:
(a) Expenses which LESSEE and LESSOR mutually agree or, absent
mutual agreement, are judicially determined to have resulted
from the willful misconduct of such Indemnitee;
(b) Expenses which LESSEE and LESSOR mutually agree or, absent
mutual agreement, are judicially determined to be
attributable to incidents, accidents or occurrences prior to
the Delivery Date, but only where both the act or omission
which gave rise to the incident, accident or occurrence and
the incident, accident or occurrence itself occurred prior
to the Delivery Date;
(c) Expenses which LESSEE and LESSOR mutually agree or, absent
mutual agreement, are judicially determined to be
attributable to acts or events which occur after the
Termination Date and return of the Aircraft to LESSOR in the
condition required hereunder, but in any such case only to
the extent not attributable to acts or omissions of LESSEE;
(d) Expenses representing Taxes, it being acknowledged that the
terms of Article 16 apply exclusively to LESSEE's indemnity
obligations with respect to Taxes;
(e) Expenses due to the breach by LESSOR of its covenant of
quiet enjoyment pursuant to Article 21.2;
(f) Expenses related to LESSOR Taxes or a LESSOR's Lien; or
(g) Expenses that LESSOR has expressly agreed to pay under this
Lease.
17.3 After-Tax Basis. The amount which LESSEE will be required to pay with
respect to any Expense indemnified against under Article 17.1 will be an amount
sufficient to restore the Indemnitee, on an after-tax basis, to the same
position such Indemnitee would have been in had such Expense not been incurred.
17.4 Timing of Payment. It is the intent of the parties that each Indemnitee
will have the right to indemnification for Expenses hereunder as soon as a claim
is made and as soon as an Expense is incurred, whether or not such claim is
meritorious and whether or not liability is established (but subject to Article
17.8). LESSEE will pay an Indemnitee for Expenses pursuant to this Article 17
within ten (10) days after receipt of a written demand therefor from such
Indemnitee accompanied by a written statement describing in reasonable detail
the basis for such indemnity and reasonable proof of such Expenses incurred.
17.5 Subrogation. Upon the payment in full of any indemnity pursuant to this
Article 17 by LESSEE, LESSEE will be subrogated to any right of the Indemnitee
in respect of the matter against which such indemnity has been made.
17.6 Notice. Each Indemnitee and LESSEE will give prompt written notice one to
the other of any liability of which such party has knowledge for which LESSEE
is, or may be, liable under Article 17.1 provided, however, that failure to give
such notice will not terminate any of the rights of Indemnitees under this
Article 17 except to the extent that LESSEE has been materially prejudiced by
the failure to provide such notice.
17.7 Refunds. If any Indemnitee obtains a recovery of all or any part of any
amount which LESSEE has paid to such Indemnitee, such Indemnitee will promptly
pay to LESSEE the net amount recovered by such Indemnitee.
17.8 Defense of Claims. Unless an Event of Default has occurred and is
continuing, LESSEE and its insurers will have the right (in each such case at
LESSEE's sole expense) to investigate or, provided that LESSEE or its insurers
have not reserved the right to dispute liability with respect to any insurance
policies pursuant to which coverage is sought, defend or compromise any claim
covered by insurance for which indemnification is sought pursuant to Article
17.1 and each Indemnitee will cooperate with LESSEE or its insurers with respect
thereto. If LESSEE or its insurers are retaining attorneys to handle such claim,
such counsel must be reasonably satisfactory to the Indemnitees. If not, the
Indemnitees will have the right to retain counsel of their choice at LESSEE's
expense.
17.9 Survival of Obligation. Notwithstanding anything in this Lease to the
contrary, the provisions of this Article 17 will survive the Termination Date
and continue in full force and effect notwithstanding any breach by LESSOR or
LESSEE of the terms of this Lease, the termination of the lease of the Aircraft
to LESSEE under this Lease or the repudiation by LESSOR or LESSEE of this Lease.
ARTICLE 18 INSURANCE
18.1 Categories of Insurance. Throughout the Lease Term and until the
Termination Date LESSEE will, at its own expense, effect and maintain in full
force and effect the types of insurance and amounts of insurance (including
deductibles) described in Exhibit C through such brokers and with such insurers
as may be approved by LESSOR, such approval not to be unreasonably withheld, in
London or New York or such other insurance markets as mutually agreed upon by
the parties.
18.2 Write-back of any Date Recognition Exclusion. In the event any of LESSEE's
insurances (either the primary insurance or the reinsurance) contain any date
recognition exclusion clause or similar clause excluding from such insurance
coverage damage to any property (including the Aircraft) or death or injury to
any person on account of accidents, incidents or occurrences caused by date
recognition or other Year 2000-related problems, LESSEE at its cost will obtain
for the benefit of itself and LESSOR the broadest write-back available in the
U.S. insurance market with respect to such exclusion.
18.3 Insurance for Indemnities. The insurance referred to in Article 18.1 will
in each case include and insure (to the extent of the risks covered by the
policies) the indemnity provisions of Article 17 and LESSEE will maintain such
insurance of the indemnities for a minimum of two (2) years following the
Termination Date.
18.4 Insurance required by Manufacturer. During the Lease Term, LESSEE will
carry the insurance required by Manufacturer in connection with LESSOR's
assignment of Manufacturer's warranties and product support to LESSEE.
18.5 Renewal. Not less than five (5) Business Days before the expiration or
termination date of any insurance required hereunder, LESSEE will provide LESSOR
with fax confirmation from LESSEE's insurance brokers that renewed certificates
of insurance evidencing the renewal or replacement of such insurance and
complying with Exhibit C will be issued on the termination date of the prior
certificate. Within seven (7) days after such renewal, LESSEE will furnish its
brokers' certificates of insurance to LESSOR.
18.6 Assignment of Rights by LESSOR. If LESSOR assigns all or any of its rights
under this Lease as permitted by this Lease or otherwise disposes of any
interest in the Aircraft to any other Person as permitted by this Lease, LESSEE
will, upon request, procure that such Person hereunder be added as loss payee
and/or additional assured in the policies effected hereunder and enjoy the same
rights and insurance enjoyed by LESSOR under such policies. LESSOR will
nevertheless continue to be covered by LESSEE's third party liability insurance
policies.
18.7 Other Insurance. LESSOR may from time to time by notice to LESSEE require
LESSEE at LESSEE's expense to effect such other insurance or such variations to
the terms of the existing insurance as may then be customary in the airline
industry for aircraft of the same type as the Aircraft and at the time commonly
available in the insurance market.
18.8 Information. LESSEE will provide LESSOR with any information reasonably
requested by LESSOR from time to time concerning the insurance maintained with
respect to the Aircraft or in connection with any claim being made or proposed
to be made thereunder.
18.9 Currency. All proceeds of insurance pursuant to this Lease will be payable
in Dollars except as may be otherwise agreed by LESSOR.
18.10 Grounding of Aircraft. If at any time any of the insurance required
pursuant to this Lease will cease to be in full force and effect, LESSEE will
forthwith ground the Aircraft and keep the Aircraft grounded until such time as
such insurance is in full force and effect again.
18.11 Failure to Insure. If at any time LESSEE fails to maintain insurance in
compliance with this Article 18, LESSOR will be entitled but not bound to do any
of the following (without prejudice to any other rights which it may have under
this Lease by reason of such failure):
(a) to pay any premiums due or to effect or maintain insurance
consistent with the terms of this Lease or otherwise remedy
such failure in such manner as LESSOR considers appropriate
(and LESSEE will upon demand reimburse LESSOR in full for
any amount so expended in that connection); or
(b) at any time while such failure is continuing, to require the
Aircraft to remain at any airport or (as the case may be),
if allowed by applicable Law proceed to and remain at any
airport within the continental U.S. designated by LESSOR,
until such failure is remedied to LESSOR's reasonable
satisfaction.
18.12 Reinsurance. Any reinsurance will be maintained with reinsurers and
brokers reasonably acceptable to LESSOR. Such reinsurance will contain each of
the following terms and will in all other respects (including amount) be
reasonably satisfactory to LESSOR:
(a) the same terms as the original insurance;
(b) a cut-through and assignment clause reasonably satisfactory
to LESSOR; and
(c) payment will be made notwithstanding (i) any bankruptcy,
insolvency, liquidation or dissolution of any of the
original insurers and/or (ii) that the original insurers
have made no payment under the original insurance policies.
18.13 Limit on Hull in favor of LESSEE. LESSEE may carry hull all risks or hull
war and allied perils on the Aircraft in excess of the Agreed Value (such Agreed
Value being payable to LESSOR) only to the extent such excess insurance which
would be payable to LESSEE in the event of a Total Loss does not exceed ten
percent (10%) of the Agreed Value and only to the extent that such additional
insurance will not prejudice the insurances required herein or the recovery by
LESSOR thereunder. LESSEE agrees that it will not create or permit to exist any
liens or encumbrances over the insurances, or its interest therein, except as
constituted by this Lease.
ARTICLE 19 LOSS, DAMAGE AND REQUISITION
Throughout the Lease Term and until the Termination Date, LESSEE
will bear all risk of loss, theft, damage and destruction to the Aircraft.
19.1 Definitions. In this Article 19 and throughout this Lease:
"Agreed Value" *
"Net Total Loss Proceeds" means the Total Loss Proceeds actually
received by LESSOR following a Total Loss, less any legal and other
out-of-pocket expenses, taxes or duties incurred by LESSOR in connection with
the collection of such proceeds.
"Total Loss" means any of the following in relation to the
Aircraft, Airframe or any Engine, and "Total Loss Date" means the date set forth
in parenthesis after each Total Loss:
(a) destruction, damage beyond repair or being rendered
permanently unfit for normal use for any reason (the date
such event occurs or, if not known, the date on which the
Aircraft, Airframe or Engine was last heard of);
(b) actual or constructive total loss (including any damage to
the Aircraft which results in an insurance settlement on the
basis of a total loss) (the earlier of the date on which the
loss occurs or thirty (30) days after the date of notice to
LESSEE's brokers or insurers claiming such total loss);
(c) requisition of title, confiscation, forfeiture or any
compulsory acquisition or other similar event (the date on
which the same takes effect);
(d) sequestration, detention, seizure or any similar event for
more than sixty (60) consecutive days or one-hundred eighty
(180) consecutive days if the Aircraft is located in the
U.S. for such entire period (the earlier of the date on
which insurers make payment on the basis of a total loss or
the date of expiration of such period);
(e) requisition for use for more than one hundred eighty (180)
consecutive days, except as set forth in Article 19.8 (the
earlier of the date on which the insurers make payment on
the basis of a total loss or the date of expiration of such
period); or
(f) in the case of an Engine, the event described in Article
12.6.3 (the date on which the same takes effect).
"Total Loss Proceeds" means the proceeds of any insurance or any
compensation or similar payment arising in respect of a Total Loss.
19.2 Notice of Total Loss. LESSEE will notify LESSOR in writing within two (2)
Business Days after a Total Loss Date of the Aircraft, Airframe or any Engine.
19.3 Total Loss of Aircraft or Airframe. If the Total Loss of the Aircraft or
Airframe occurs during the Lease Term, the following will occur:
19.3.1 After the Total Loss Date and until receipt by LESSOR of the Agreed Value
and all other amounts then due under this Lease, LESSEE will continue to pay
Rent and the parties will perform, to the extent possible, all of their other
obligations under this Lease.
19.3.2 On the date which is the earlier of the following dates:
(a) the date on which the Total Loss Proceeds of the Aircraft or
the Airframe are paid by LESSEE's insurance underwriters or
brokers and
(b) the date which falls forty-five (45) days after the Total
Loss Date,
LESSEE will pay to LESSOR an amount equal to the sum of:
(a) the Agreed Value and
(b) all other amounts then due under this Lease,
less an amount equal to the Net Total Loss Proceeds received by LESSOR by such
date.
19.3.3 LESSOR will apply the Net Total Loss Proceeds and any amounts received
from LESSEE pursuant to Article 19.3.2 as follows:
(a) first, in discharge of any unpaid Rent and any other amounts
accrued and unpaid up to the date of LESSOR's receipt of the
Agreed Value;
(b) second, in discharge of the Agreed Value; and
(c) third, payment of the balance, if any, to LESSEE.
19.3.4 Upon receipt by LESSOR of all monies payable by LESSEE in Article 19.3,
this Lease will terminate except for LESSEE's obligations under Articles 10.5,
16 and 17 which survive the Termination Date.
FOR AVOIDANCE OF DOUBT, THE AGREED VALUE OF THE AIRCRAFT WILL BE PAYABLE TO
LESSOR PURSUANT TO THIS ARTICLE 19.3 WHEN A TOTAL LOSS OF THE AIRFRAME OCCURS
EVEN IF THERE HAS NOT BEEN A TOTAL LOSS OF AN ENGINE OR ENGINES.
19.4 Surviving Engine(s). If a Total Loss of the Airframe occurs and there has
not been a Total Loss of an Engine or Engines, then, provided no Default has
occurred and is continuing, at the request of LESSEE (subject to agreement of
relevant insurers) and on receipt of all monies due under Article 19.3 and
payment by LESSEE of all airport, navigation and other charges on the Aircraft,
LESSOR will transfer all its right, title and interest in the surviving
Engine(s) to LESSEE, but without any responsibility, condition or warranty on
the part of LESSOR other than as to freedom from any LESSOR's Lien.
19.5 Total Loss of Engine and not Airframe.
19.5.1 Upon a Total Loss of any Engine not installed on the Airframe or a Total
Loss of an Engine installed on the Airframe not involving a Total Loss of the
Airframe, LESSEE will replace such Engine as soon as reasonably possible by duly
conveying to LESSOR title to another engine (a) free and clear of all Security
Interests (except Permitted Liens) of any kind or description, (b) in airworthy
condition and of the same or improved model, service bulletin and modification
status and having a value and utility at least equal to the Engine which
sustained the Total Loss, (c) not older (by reference to serial number or
manufacture date) than the older of the two Engines (on the date of the
replacement) delivered by LESSOR to LESSEE with the Aircraft on the Delivery
Date, and (d) in the same or better operating condition as the Engine which
sustained a Total Loss, including time in service, hours and cycles since new
and hours and cycles available to the next inspection, Overhaul or scheduled or
anticipated removal; provided that with respect to replacement modules in such
other engine, LESSEE will use best reasonable efforts to ensure that such other
engine will not have been previously operated at a higher thrust rating than the
Engine which sustained the Total Loss and provided further that in all
circumstances life-limited Parts in such replacement engine will have no less
life remaining than the life-limited Parts in the Engine which sustained the
Total Loss. Such replacement engine will be an Engine as defined herein and the
Engine which sustained such Total Loss will cease to be an Engine; whereupon,
subject to agreement of relevant insurers, LESSOR will transfer all of its
right, title and interest in and to the Engine which sustained the Total Loss to
LESSEE, but without any responsibility, condition or warranty on the part of
LESSOR other than as to title and freedom from any LESSOR's Lien.
19.5.2 LESSEE agrees at its own expense to take such action as LESSOR may
reasonably request in order that any such replacement Engine becomes the
property of LESSOR and is leased hereunder on the same terms as the destroyed
Engine. LESSEE's obligation to pay Rent will continue in full force and effect,
but an amount equal to the Net Total Loss Proceeds received by LESSOR with
respect to such destroyed Engine will, subject to LESSOR's right to deduct
therefrom any amounts then due and payable by LESSEE under this Lease, be paid
to LESSEE.
19.6 Other Loss or Damage.
19.6.1 If the Aircraft or any Part thereof suffers loss or damage not
constituting a Total Loss of the Aircraft or the Airframe or any Engine, all the
obligations of LESSEE under this Lease (including payment of Rent) will continue
in full force.
19.6.2 *
19.6.3 To the extent insurance proceeds received by LESSEE directly from its
insurers do not cover the cost of such repair work on the Aircraft or Engine and
LESSOR has received additional insurance proceeds from LESSEE's insurers with
respect to such repair work, LESSOR will (subject to LESSOR's right to deduct
therefrom any amounts then due and payable by LESSEE under this Lease and
submission by LESSEE of reasonable documentation in support of such excess
repair costs) pay to LESSEE insurance proceeds received by LESSOR as and when
such repair work is performed on the Aircraft.
19.7 Copy of Insurance Policy. Promptly after the occurrence of a partial loss
or Total Loss of the Aircraft or an Engine, at the request of LESSOR (and then
only in the event reasonably required by LESSOR in connection with insurance
policies pursuant to which coverage is sought) LESSEE will provide LESSOR with a
copy of the relevant portions of LESSEE's insurance policy. LESSEE's insurance
policy will be confidential between LESSOR and LESSEE and will not be disclosed
by LESSOR to third parties other than LESSOR's professional advisors and except
as necessary in respect of proceedings relating to such insurance claim.
19.8 Government Requisition. If the Aircraft, Airframe or any Engine is
requisitioned for use by any Government Entity, LESSEE will promptly notify
LESSOR of such requisition. All of LESSEE's obligations hereunder will continue
as if such requisition had not occurred. So long as no Event of Default has
occurred and is continuing, all payments received by LESSOR or LESSEE from such
Government Entity will be paid over to or retained by LESSEE. If an Event of
Default has occurred and is continuing, all payments received by LESSEE or
LESSOR from such Government Entity may be used by LESSOR to satisfy any
obligations owing by LESSEE.
19.9 LESSOR Retention of Reserves; Return of Security Deposit and Prepaid Rent .
For avoidance of doubt, the parties agree that (a) notwithstanding the Total
Loss of the Airframe and/or Engines LESSOR will retain an amount equal to fifty
percent (50%) of all Reserves paid by LESSEE and not payable to LESSEE pursuant
to Article 13.5, and (b) in the event of the Total Loss of the Airframe and/or
Engines upon receipt by LESSOR of all monies payable by LESSEE in accordance
with Article 19.1.3, and subject to Article 5.1.3, LESSOR will (i) return the
Security Deposit and any prepaid Rent to LESSEE and (ii) pay to LESSEE an amount
equal to fifty percent (50%) of the Reserves then held by LESSOR.
ARTICLE 20 REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSEE
20.1 Representations and Warranties. LESSEE represents and warrants the
following to LESSOR as of the date of execution of this Lease and as of the
Delivery Date:
20.1.1 Corporate Status. LESSEE is a corporation duly incorporated, validly
existing and in good standing under the Laws of the State of Colorado. It has
the corporate power and authority to carry on its business as presently
conducted and to perform its obligations hereunder.
20.1.2 Governmental Approvals. No authorization, approval, consent, license or
order of, or registration with, or the giving of notice to the Aviation
Authority or any other Government Entity is required for the valid
authorization, execution, delivery and performance by LESSEE of this Lease,
except as will have been duly effected as of the Delivery Date.
20.1.3 Binding. LESSEE's Board of Directors has authorized LESSEE to enter into
this Lease and the other Operative Documents and to perform its obligations
hereunder and thereunder. This Lease and the other Operative Documents that have
been executed and delivered by LESSEE as of the date of this Lease been duly
executed and delivered by LESSEE and represent the valid, binding and
enforceable obligations of LESSEE except as enforceability may be limited by
bankruptcy, insolvency, reorganization or other similar Laws of general
application affecting the enforcement of creditors' rights and by such
principles of equity as a court having jurisdiction may impose. When executed by
LESSEE at Delivery, the same will apply to the Estoppel and Acceptance
Certificate and the other Operative Documents.
20.1.4 No Breach. The execution and delivery of the Operative Documents that
have been executed and delivered by LESSEE as of the date of this Lease, the
consummation by LESSEE of the transactions contemplated under the Operative
Documents and compliance by LESSEE with the terms and provisions thereof do not
and will not contravene any Law applicable to LESSEE, or result in any material
breach of or constitute any material default under or result in the creation of
any Security Interest upon any property of LESSEE, pursuant to any indenture,
mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan
or credit agreement, corporate charter, by-law or other material agreement or
instrument to which LESSEE is a party or by which LESSEE or its properties or
assets may be bound or affected. When executed by LESSEE at Delivery, the same
will apply to the Estoppel and Acceptance Certificate and the other Operative
Documents.
20.1.5 Filings. Except for any filing or recording that may be required under
the U.S. Federal Aviation Administration and except for the filing of UCC-1
financing statements with the Secretary of State of the State of Colorado, no
filing or recording of any instrument or document (including the filing of any
financial statement) is necessary under the Laws of the State of Registration in
order for this Lease to constitute a valid and perfected lease of record
relating to the Aircraft.
20.1.6 Licenses. LESSEE holds all licenses, certificates and permits from
applicable Government Entities in the U.S. necessary for the conduct of its
business as a Certificated Air Carrier and performance of its obligations under
this Lease.
20.1.7 No Suits. There are no suits, arbitrations or other proceedings pending
or threatened before any court or administrative agency against or affecting
LESSEE which, if adversely determined, would have a material adverse effect on
the business, assets or condition (financial or otherwise) of LESSEE or its
ability to perform under this Lease, except as described in the filings provided
to LESSOR pursuant to Article 22.
20.1.8 Tax Returns. All necessary returns have been delivered by LESSEE to all
relevant taxation authorities in the jurisdiction of its incorporation and
LESSEE is not in default in the payment of any taxes due and payable.
20.1.9 No Material Adverse Effect. LESSEE is not in default under any agreement
to which it is a party or by which it may be bound which default if left uncured
would have a material adverse effect on its business, assets or condition.
20.1.10 No Default under this Lease. At the time of execution of this Lease, no
Default has occurred and is continuing and the financial statements provided to
LESSOR pursuant to Article 22 fairly present the financial condition of LESSEE.
20.2 Covenants. LESSEE covenants to LESSOR that it will comply with the
following throughout the entire Lease Term:
20.2.1 Licensing. LESSEE will hold all licenses, certificates and permits from
applicable Government Entities in the U.S. necessary for the conduct of its
business as a Certificated Air Carrier and performance of its obligations under
this Lease. LESSEE will advise LESSOR promptly in the event any such licenses,
certificates or permits are cancelled, terminated, revoked or not renewed.
20.2.2 Information about Suits. LESSEE will promptly give to LESSOR a notice in
writing of any suit, arbitration or proceeding before any court, administrative
agency or Government Entity which, if adversely determined, would materially
adversely affect LESSEE's financial condition, affairs, operations or its
ability to perform under this Lease provided, however, that compliance by LESSEE
with the requirements of Article 22 hereof will be deemed compliance with the
provisions of this Article 20.2.2.
20.2.3 Restrictions on Mergers. LESSEE will not consolidate with or merge into
any other corporation or other Person, and will not convey, transfer, lease or
otherwise dispose of all or substantially all of its assets to any corporation
or other Person, unless:
(i) such transaction shall not have any material adverse effect
on the rights of LESSOR under or in respect of the Lease or
the Aircraft;
(ii) the Person formed by or surviving such consolidation or
merger or the Person which acquires by conveyance, transfer,
lease or other disposition all or substantially all of such
property and other assets: (A) shall be a corporation
organized and existing under the laws of the U. S. or any
State thereof or the District of Columbia; (B) immediately
after giving effect to such transaction, shall have acquired
or succeeded to all or substantially all of the assets of
LESSEE (if such assets are being transferred) as an
entirety, and shall have a tangible net worth (determined in
accordance with GAAP) of not less than LESSEE's tangible net
worth (determined in accordance with GAAP) immediately prior
to such transaction; (C) shall be a "citizen of the United
States" of America as defined in Section 40102(a)(15)(c) of
Title 49 of the U.S.C. and a Certificated Air Carrier; and
(D) shall executed and deliver to LESSOR (1) such
recordations and filings with any Government Entity and such
other documents as shall be reasonably necessary or
advisable in connection with such consolidation, merger,
sale, lease, transfer or other disposition (2) an agreement,
in form and substance reasonably satisfactory to LESSOR,
assuming all of LESSEE's obligations under the Lease and the
other Operative Documents without amendment thereto and (3)
an officer's certificate to the effect that the requirements
of this Section have been satisfied; and
(iii)no Event of Default shall have occurred and be continuing
or shall occur as a result thereof.
20.2.4 Restriction on Relinquishment of Possession. LESSEE will not, without the
prior consent of LESSOR, deliver, transfer or relinquish possession of the
Aircraft except in accordance with Articles 11 and 12.
20.2.5 No Security Interests. LESSEE will not create or agree to or permit to
arise any Security Interest (other than Permitted Liens) on or with respect to
the Aircraft, title thereto or any interest therein. LESSEE will forthwith, at
its own expense, take all action as may be reasonably necessary to discharge or
remove any such Security Interest if it exists at any time.
20.2.6 Representations to Other Parties. LESSEE will not represent or hold out
LESSOR as carrying goods or passengers on the Aircraft or as being in any way
connected or associated with any operation of the Aircraft.
ARTICLE 21 REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSOR
21.1 Representations and Warranties. LESSOR represents and warrants the
following to LESSEE as of the date of execution of the Lease and as of the
Delivery Date and ALL OTHER WARRANTIES, EXPRESS OR IMPLIED HAVE BEEN WAIVED IN
ACCORDANCE WITH ARTICLE 8:
21.1.1 Corporate Status. LESSOR is a corporation duly incorporated, validly
existing and in good standing under the Laws of the State of California. It has
the corporate power and authority to carry on its business as presently
conducted and to perform its obligations hereunder.
21.1.2 Governmental Approvals. No authorization, approval, consent, license or
order of, or registration with, or the giving of notice to any U.S. Government
Entity is required for the valid authorization, execution, delivery and
performance by LESSOR of this Lease.
21.1.3 Binding. This Lease and the other Operative Documents that have been have
been executed and delivered by LESSEE as of the date of this Lease have been
duly authorized, executed and delivered by LESSOR and represent the valid,
enforceable and binding obligations of LESSOR except as enforceability may be
limited by bankruptcy, insolvency, reorganization or other similar Laws of
general application affecting the enforcement of creditors' rights and by such
principles of equity as a court having jurisdiction may impose. When executed by
LESSOR at Delivery, the same will apply to the other Operative Documents.
21.1.4 No Breach. The execution and delivery of the Operative Documents that
have been executed and delivered by LESSOR as of the date of this Lease, the
consummation by LESSOR of the transactions contemplated therein and compliance
by LESSOR with the terms and provisions thereof do not and will not contravene
any Law applicable to LESSOR, or result in any material breach of or constitute
any material default under any indenture, mortgage, chattel mortgage, deed of
trust, conditional sales contract, bank loan or credit agreement, corporate
charter, by-law or other material agreement or instrument to which LESSOR is a
party or by which LESSOR or its properties or assets may be bound or affected.
When executed by LESSOR at Delivery, the same will apply to the other Operative
Documents.
21.1.5 Title to Aircraft. On the Delivery Date LESSOR will have good and valid
title to the Aircraft.
21.1.6 Citizen of the United States. LESSOR is a "citizen of the United States
of America" (as defined in Section 40102 of Title 49 of U.S.C.).
21.2 Covenant of Quiet Enjoyment. So long as no Event of Default has occurred
and is continuing hereunder, LESSOR covenants that neither LESSOR nor any person
lawfully claiming through LESSOR will interfere with LESSEE's quiet, peaceful
use and enjoyment of the Aircraft during the Lease Term.
ARTICLE 22 FINANCIAL AND RELATED INFORMATION
LESSEE agrees to furnish each of the following to LESSOR:
(a) within forty-five (45) days after the end of each fiscal
quarter of LESSEE, three (3) copies of the unaudited
consolidated financial statements (including a balance sheet and
profit and loss statement) prepared for such quarter in
accordance with generally accepted accounting principles in the
U.S.;
(b) within ninety (90) days after the end of each fiscal year of
LESSEE, three (3) copies of the audited consolidated financial
statements (including a balance sheet and profit and loss
statement) prepared as of the close of such fiscal year in
accordance with generally accepted accounting principles in the
U.S.;
(c) promptly after distribution, three (3) copies of all reports
and financial statements which LESSEE sends or makes available
to its stockholders or creditors generally;
(d) Technical Evaluation Reports in conjunction with every
second "C" check for the Aircraft and at other times reasonably
requested by LESSOR in accordance with Article 12.10.2 hereof;
and
(e) from time to time, such other reasonable information as
LESSOR or LESSOR's Lender may reasonably request concerning the
location, condition, use and operation of the Aircraft or the
financial condition of LESSEE.
ARTICLE 23 RETURN OF AIRCRAFT
23.1 Date of Return. LESSEE is obligated to return the Aircraft, Engines, Parts
and Aircraft Documentation to LESSOR on the Expiration Date, unless a Total Loss
of the Aircraft occurred prior to the Expiration Date and this Lease was
terminated early in accordance with Article 19.3. If LESSEE is in Default
hereunder by failing to return the Aircraft on the Expiration Date or if an
Event of Default occurs prior to the Expiration Date and LESSOR repossesses the
Aircraft, the return requirements set forth in this Article 23 nonetheless must
be met on the date the Aircraft is actually returned to LESSOR or repossessed by
LESSOR.
23.2 Technical Report. Six (6) months prior to the Expiration Date (and in an
updated form at return of the Aircraft), LESSEE will provide LESSOR with a
Technical Evaluation Report in the form and substance of Exhibit M, as revised,
and, in addition upon LESSOR's request, will make copies available of (a)
drawings of the interior configuration of the Aircraft both as it then exists
and as it will exist at return, (b) an Airworthiness Directive status list, (c)
a service bulletin incorporation list, (d) rotable tracked, hard-time and
life-limited component listings, (e) a list of LESSEE-initiated modifications
and alterations, (f) interior material burn certificates, (g) the Aircraft
Maintenance Program, (h) the complete workscope for the checks, inspections and
other work to be performed prior to return, (i) a list of all no-charge service
bulletin kits with respect to the Aircraft which were ordered by LESSEE from
Manufacturer or the Engine manufacturer, (j) current Engine disk sheets and a
description of the last shop visit for each Engine and (k) any other data which
is reasonably requested by LESSOR.
23.3 Return Location. LESSEE at its expense will return the Aircraft, Engines,
Parts and Aircraft Documentation to LESSOR at Denver, Colorado, or to such other
airport on LESSEE's route system as may be mutually agreed to by LESSEE and
LESSOR.
23.4 Full Aircraft Documentation Review. For the period commencing at least ten
(10) Business Days prior to the proposed redelivery date and continuing until
the date on which the Aircraft is returned to LESSOR in the condition required
by this Lease, LESSEE will provide for the review of LESSOR and/or its
representative all of the Aircraft records and historical documents described in
Exhibit L in one central room at the Aircraft return location.
23.5 Aircraft Inspection.
23.5.1 During the maintenance checks performed immediately prior to the proposed
redelivery and at the actual return of the Aircraft, LESSOR and/or its
representatives will have an opportunity to conduct a full systems functional
and operational inspection of the Aircraft (and other types of reasonable
inspections based upon the Aircraft type, age, use and other known factors with
respect to the Aircraft) and a full inspection of the Aircraft Documentation
(including records and manuals), all to LESSOR's reasonable satisfaction. Any
deficiencies from the Aircraft return condition requirements set forth in this
Article 23 will be corrected by LESSEE at its cost prior to the acceptance
flight described in Article 23.5.2.
23.5.2 Immediately prior to the proposed redelivery of the Aircraft, LESSEE will
carry out for LESSOR and/or LESSOR's representatives an Aircraft acceptance
flight in accordance with Manufacturer's standard flight operation check flight
procedures or, if agreed to in writing by LESSOR, in accordance with an airline
acceptance flight procedure, either of which will be for two (2) hours, or such
longer duration as is necessary to perform such check flight procedures. Flight
costs and fuel will be furnished by and at the expense of LESSEE. Any
deficiencies from the Aircraft return condition requirements set forth in this
Article 23 will be corrected by LESSEE at its cost prior to return of the
Aircraft.
23.5.3 To the extent that the ground inspection and acceptance flight extend
beyond the Expiration Date, the Lease Term will be deemed to have been
automatically extended and the obligations of LESSEE hereunder (including
Article 23.11.3) will continue on a day-to-day basis until the Aircraft is
accepted by LESSOR as being in the condition required hereunder, which
acceptance shall be evidenced by LESSOR executing and delivering to LESSEE the
Return Acceptance Receipt in the form of Exhibit J.
23.6 Certificate of Airworthiness Matters.
23.6.1 The Aircraft will possess a current Certificate of Airworthiness issued
by the Aviation Authority (although this Certificate of Airworthiness may later
be substituted by the Export Certificate of Airworthiness or equivalent if
requested by LESSOR pursuant to Article 23.10). In addition, even if LESSEE must
perform engineering, maintenance and repair work on the Aircraft beyond the
requirements of Article 12, the Aircraft at return must be in the condition
required in order to meet the requirements for issuance of a U.S. Standard
Certificate of Airworthiness for transport category aircraft issued by the FAA
in accordance with FAR Part 21 and, in addition, to meet the operating
requirements of FAR Part 121.
23.6.2 If the Aircraft is registered in a country other than the U.S. at time of
return, LESSEE at its cost will demonstrate that the Aircraft meets the
requirements for issuance of the U.S. Standard Certificate of Airworthiness for
transport category aircraft specified in Article 23.6.1 by delivering to LESSOR
at its option either an actual U.S. Standard Certificate of Airworthiness (if
the Aircraft is to be registered in the U.S.) or a letter acceptable to LESSOR
signed by an FAA Designated Airworthiness Representative (DAR) or another Person
acceptable to LESSOR stating that the DAR or such Person has inspected the
Aircraft and Aircraft Documentation (including records and manuals) and has
found that the Aircraft meets the requirements for issuance of a U.S. Standard
Certificate of Airworthiness for transport category aircraft in accordance with
FAR Part 21 and, in addition, meets the operating requirements of FAR Part 121.
23.6.3 If the Aircraft is to be registered in a country other than in the U.S.
after return from LESSEE, LESSOR may in its sole discretion waive the
requirements of Article 23.6.1 and instead require that LESSEE at its expense
(to the extent such expense is no greater than that which LESSEE would have
incurred pursuant to Article 23.6.1, with any additional expenses being for
LESSOR's account) put the Aircraft in a condition to meet the requirements for
issuance of a Certificate of Airworthiness of the Aviation Authority of the next
country of register, provided that if solely as a result of such work the
Aircraft is returned after the scheduled redelivery date, LESSEE will not be
liable for payment of Rent in respect of the period following the date the
Aircraft would have been returned following completion of the requirements of
this Article 23, but for the provisions of this Article 23.6.3.
23.7 General Condition of Aircraft at Return.
23.7.1 The Aircraft, Engines, and Parts will have been maintained and repaired
in accordance with the Maintenance Program, the rules and regulations of the
Aviation Authority and this Lease.
23.7.2 Aircraft Documentation (including records and manuals) will have been
maintained in an up-to-date status, in accordance with the rules and regulations
of the Aviation Authority and the FAA and this Lease and in a form necessary in
order to meet the requirements of Article 23.6.1. The records and historical
documents set forth in Exhibit L will be in English.
23.7.3 The Aircraft will be in the same working order and condition as at
Delivery (subject to the other provisions of this Article 23, reasonable wear
and tear from normal flight operations excepted), with all pilot discrepancies
and deferred maintenance items cleared on a terminating action basis.
23.7.4 The Aircraft will be airworthy (conform to type design and be in a
condition for safe operation), with all Aircraft equipment, components and
systems operating in accordance with their intended use and within limits
approved by Manufacturer, Aviation Authority and FAA.
23.7.5 The Aircraft interior (including cabin and windows) and exterior will be
clean in accordance with U.S. commercial airline standards and cosmetically
acceptable to LESSOR in its reasonable discretion, with all compartments free of
foreign objects, dirt, grease, fluids, stains, grime, cracks, tears and rips and
ready to be placed into immediate commercial airline operations.
23.7.6 No special or unique Manufacturer, Engine manufacturer or Aviation
Authority inspection or check requirements which are specific to the Aircraft or
Engines (as opposed to all aircraft or engines of their types) will exist with
respect to the Airframe, Engines and Aircraft equipment, components and systems.
23.7.7 All repairs, modifications and alterations to the Aircraft will have been
accomplished in accordance with either (i) Manufacturer's Structural Repair
Manual (or DGAC-approved Repair Approval Sheets) for the Aircraft or (ii)
FAA-approved data (such as FAA Form 8110 or equivalent).
23.7.8 The Aircraft will be returned with LESSOR's Engines installed and with
the same equipment as at Delivery, subject only to those replacements, additions
and Modifications permitted under this Lease.
23.7.9 All Airworthiness Directives which are issued during the Lease Term and
require compliance (either by means of repetitive inspections, modifications or
terminating action) prior to return of the Aircraft to LESSOR or within one (1)
year after the Termination Date will have been complied with on the Aircraft on
a terminating action basis at LESSEE's cost. Airworthiness Directives which do
not have a terminating action will be accomplished at the highest level of
inspection or modification possible. If, after using commercially reasonable
efforts, LESSEE is unable to acquire the material, parts or components necessary
to accomplish such Airworthiness Directive, LESSEE will pay to LESSOR upon
return of the Aircraft the estimated cost of terminating such Airworthiness
Directive. If the estimated cost cannot be mutually agreed upon by LESSEE and
LESSOR, LESSEE and LESSOR will each obtain an estimate from a reputable
FAA-approved maintenance facility (unaffiliated with LESSEE or LESSOR) and the
estimated cost will be the average of the two estimates.
23.7.10 The Aircraft will be in compliance with Manufacturer's Corrosion
Prevention and Control Program (CPCP) specified for the model type by
Manufacturer.
23.7.11 If any waivers, deviations, dispensations, alternate means of
compliance, extensions or carry-overs with respect to maintenance or operating
requirements, repairs or Airworthiness Directives are granted by the Aviation
Authority or permitted by the Maintenance Program, LESSEE at its sole cost and
expense will nonetheless perform such maintenance or operating requirements,
repairs or Airworthiness Directives as if such waivers, deviations,
dispensations, alternate means of compliance, or extensions or carry-overs did
not exist, unless such waivers, deviations, dispensations, alternate means of
compliance, extensions or carry-overs are applicable to all similar A318
aircraft registered with the FAA.
23.7.12 The Aircraft will be free from any Security Interest except LESSOR's
Liens and no circumstance will have so arisen whereby the Aircraft is or could
become subject to any Security Interest or right of detention or sale in favor
of the Aviation Authority, any airport authority, or any other authority.
23.7.13 All no-charge vendor and Manufacturer's service bulletin kits received
by LESSEE for the Aircraft but not installed thereon will be on board the
Aircraft as cargo. At LESSOR's request, any other service bulletin kit which
LESSEE paid for will also be delivered to LESSOR on board the Aircraft, but
LESSOR will reimburse LESSEE for its actual out-of-pocket costs for such kit,
unless LESSEE purchased such kit as part of its implementation of a service
bulletin on its fleet of aircraft of the same type as the Aircraft but had not
yet installed such kit on the Aircraft, in which case such kit will be furnished
free of charge to LESSOR.
23.7.14 The Aircraft will be free of any leaks and any damage resulting
therefrom. All repairs will have been performed on a permanent basis in
accordance with the applicable manufacturer's instructions.
23.7.15 The Aircraft fluid reservoirs (including oil, oxygen, hydraulic and
water) will be serviced to full and the waste tank serviced in accordance with
Manufacturer's instructions. Fuel tanks will be at least as full as at Delivery.
23.8 Checks Prior to Return. Immediately prior to return of the Aircraft to
LESSOR, LESSEE at its expense will do each of the following:
23.8.1 Have performed, by LESSEE or any other FAA-approved repair station, the
next due full and complete zonal, systems and structural check ("C" or its
equivalent), the corresponding lower checks ("A" and "B" or equivalent) and any
other maintenance and inspections tasks, all in accordance with the then-current
MPD, sufficient to clear the Aircraft for operation until the next-scheduled
full and complete zonal, systems and structural check under the then-current MPD
(which in any event will not be less than fifteen (15) months). LESSEE will also
weigh the Aircraft. Any discrepancies revealed during such inspection will be
corrected in accordance with Manufacturer's maintenance and repair manuals or
FAA-approved data. LESSEE agrees to perform during such check any other work
reasonably required by LESSOR (and not otherwise required under this Lease) and
LESSOR will reimburse LESSEE for such work at LESSEE's preferred customer rates.
23.8.2 Perform an internal and external corrosion inspection where any evidence
of corrosion exists and correct any discrepancies in accordance with the
recommendations of Manufacturer and the Structural Repair Manual. In addition,
all inspected areas will be properly treated with corrosion inhibitor if and as
recommended by Manufacturer.
23.8.3 Remove LESSEE's exterior markings, including all exterior paint, by
stripping (or, at LESSOR's option, pneumatically scuff/sanding) the paint from
the fuselage, empennage, wings and Engine cowlings, and clean, reseal, refinish,
prepare (including application of alodine or another corrosion inhibitor) and
prime the surfaces to be painted, all in accordance with Manufacturer's and
paint manufacturer's recommendations. LESSEE will then repaint the fuselage,
empennage, wings and Engine cowlings in the colors and logo specified by LESSOR
provided, however, that if such colors and logo are substantially more complex
than those of LESSEE, at LESSOR's discretion, LESSOR will either (i) pay to
LESSEE an amount equal to the incremental cost of repainting the Aircraft in
such complex colors and logo over and above the cost of repainting the Aircraft
in LESSEE's colors and logo at such time or (ii) permit LESSEE to return the
Aircraft repainted white and to pay LESSOR an amount equal to the incremental
cost of painting the colors and logo required by LESSOR's next operator, up to
an amount equal to the amount that would have been required to paint the
Aircraft in LESSEE's livery. Such painting will be accomplished in such a manner
as to result in a uniformly smooth and cosmetically acceptable aerodynamic
surface. All external placards, signs and markings will be properly attached,
free from damage, clean and legible.
23.8.4 Clean the exterior and interior of the Aircraft.
23.8.5 If reasonably required by LESSOR, repaint the flight deck and replace
placards of the Aircraft.
23.8.6 In accordance with Article 23.7.7, permanently repair damage to the
Aircraft that exceeds Manufacturer's limits and replace any non-flush structural
patch repairs installed on the Aircraft with flush-type repairs unless
Manufacturer does not recommend a flush-type repair.
23.8.7 With LESSOR or its representatives present, perform a full and complete
hot and cold section videotape borescope on each Engine and its modules in
accordance with the Engine manufacturer's maintenance manual.
23.8.8 If the Engine historical and technical records and/or condition trend
monitoring data of any Engine (including the APU) indicate an acceleration in
the rate of deterioration in the performance of an Engine, LESSEE will correct,
to LESSOR's reasonable satisfaction, such conditions which are determined to be
causing such accelerated rate of deterioration.
23.8.9 With LESSOR or its representatives present, accomplish a maximum power
assurance run and condition, acceleration and bleed valve scheduling checks on
the Engines. LESSEE will evaluate the Engine performance and record the Engine
maximum power assurance test conditions and results on the Return Acceptance
Receipt.
23.8.10 LESSEE will provide evidence to LESSOR's satisfaction that the Engine
historical and technical records, borescope inspection, trend monitoring and
other checks specified in Article 23.8.9 do not reveal any condition which would
cause the Engines or any module to be unserviceable, beyond serviceable limits
or serviceable with an increased frequency of inspection or with calendar time,
flight hour or flight cycle restrictions under the Engine manufacturer's
maintenance manual. LESSEE will correct any discrepancies in accordance with the
guidelines set out by the Engine manufacturer which may be discovered during
such inspection.
23.8.11 In the event the Engine historical and technical records, borescope
inspection, trend monitoring and other checks specified in Article 23.8.9 result
in a dispute regarding the conformity of an Engine with the requirements of this
Article 23, LESSEE and LESSOR will consult with Engine manufacturer and follow
Engine manufacturer's recommendations (including the accomplishment of an Engine
test cell operational check) with regard to determining if such Engine complies
with the requirements of this Article 23 and the manner in which any
discrepancies from the requirements of this Article 23 will be rectified.
23.9 Part Lives. At return, the condition of the Aircraft will be as follows:
23.9.1 The Aircraft will have zero (0) hours consumed since the last full and
complete zonal, systems and structural check ("C" check or equivalent)
(excluding hours consumed on the acceptance flight).
23.9.2 Each Engine will meet all of the following:
(a) Each Engine will have operated no more than 4,000 hours and
4,000 cycles since the last full performance restoration
shop visit in which the core modules (including without
limitation the high pressure compressor rotor and stator,
combustor, stage 1 nozzle and high pressure turbine
assembly) were fully refurbished and will have at least
6,000 hours and 6,000 cycles remaining until its next
anticipated removal (based upon the Engine manufacturer's
estimated mean time between removals for engines of the same
type as the Engines); provided, however, that if at the time
of return Engine manufacturer's mature mean time between
removal rate for engines of the same type as the Engines is
greater than 10,000 hours and 10,000 cycles, then the above
referenced 4,000 hour and 4,000 cycle requirement will be
increased by an amount equal to the difference between (i)
the number of hours and cycles of such mean time removal
rate and (ii) 10,000 hours and 10,000 cycles (for example,
if at return the mature mean time removal rate is 14,000
hours and 14,000 cycles, each Engine will have operated no
more than 8,000 hours and 8,000 cycles since its last full
performance restoration shop visit and will have at least
6,000 hours and 6,000 cycles remaining until its next
anticipated removal).
(b) Each Engine will have a remaining EGT margin sufficient to
permit the operation of such Engine for the hours and cycles
set forth in the preceding subparagraph, based upon the
historical experience of the Engine manufacturer's worldwide
fleet;
(c) No life-limited Part of an Engine will have more hours or
cycles consumed than such Engine's data plate; and
(d) Each Part of an Engine which has a hard time limit will have
at least 50% of such Part's full allotment of hours and
cycles remaining to operate until its next scheduled
Overhaul. Each Part of an Engine which has a life limit will
have at least 50% of such Part's full allotment of hours and
cycles remaining to operate until its removal. However, if
50% of such hard time or life-limited Part's full allotment
of hours and cycles remaining is less than 6,000 hours and
6,000 cycles, then such hard time or life-limited Part will
be returned with at least 6,000 hours and 6,000 cycles
remaining.
23.9.3 The APU will not have operated more than five hundred (500) APU hours
since the last hot section refurbishment.
23.9.4 The Landing Gear will have at least fifty percent (50%) of the full
allotment of hours/cycles/calendar time (whichever is the more limiting factor)
pursuant to the MPD remaining until the next Overhaul or scheduled removal.
23.9.5 Each Part of the Aircraft which has a hard time (hour/cycle) limit to
Overhaul pursuant to the MPD will have at least 50% of such Part's full
allotment of hours and cycles remaining to operate until its next scheduled
Overhaul pursuant to the MPD. However, if 50% of such hard time Part's full
allotment of hours and cycles remaining is less than 4,000 hours and 4,000
cycles, then such hard time Part will be returned with at least 4,000 hours and
4,000 cycles remaining to operate until its next scheduled Overhaul pursuant to
the MPD.
23.9.6 Each life-limited Part of the Aircraft will have at least 50% of such
Part's full allotment of hours and cycles remaining to operate until removal
pursuant to the MPD. However, if 50% of such life-limited Part's full allotment
of hours and cycles remaining is less than 6,000 hours and 6,000 cycles, then
such life-limited Part will be returned with at least 6,000 hours and 6,000
cycles remaining to operate pursuant to the MPD.
23.9.7 Each Part which has a calendar limit will have sufficient calendar time
remaining to operate until the next "C" check pursuant to the then-current MPD
after return of the Aircraft to LESSOR (which in any event will be not less than
fifteen (15) months). If a Part has a total approved life pursuant to the MPD
less than such "C" check interval, then such Part will be returned with 100% of
its total approved life remaining.
23.9.8 No Part of the Aircraft or Engine (excluding life-limited Parts on the
Engine, which are covered by Article 23.9.2(c)) will have total hours and total
cycles time since new greater than one hundred ten percent (110%) of that of the
Airframe and, with respect to all Parts as a group, the Parts will have an
average total time since new no greater than that of the Airframe.
23.9.9 The Aircraft Landing Gear tires and brakes will be new or have zero (0)
hours/cycles out of Overhaul (except for the acceptance flight).
23.10 Export and Deregistration of Aircraft. At LESSOR's request by notice at
least fifteen (15) days prior to the Expiration Date, LESSEE at its cost will
(a) provide an Export Certificate of Airworthiness or its equivalent from the
State of Registration for the country designated by LESSOR, (b) assist with
deregistration of the Aircraft from the register of aircraft in the State of
Registration, (c) assist with arranging for prompt confirmation of such
deregistration to be sent by the registry in the State of Registration to the
next country of registration and (d) perform any other acts reasonably required
by LESSOR in connection with such deregistration. If any Aircraft work which
LESSEE is not otherwise required to perform hereunder, including engineering, is
required in order to obtain such Export Certificate of Airworthiness, LESSEE
will, to the extent reasonably possible, perform such work and LESSOR will
reimburse LESSEE for such work at LESSEE's preferred customer rates.
23.11 LESSEE's Continuing Obligations. In the event that LESSEE does not return
the Aircraft to LESSOR on the Expiration Date and in the condition required by
this Article 23 for any reason (whether or not the reason is within LESSEE's
control):
23.11.1 the obligations of LESSEE under this Lease will continue in full force
and effect on a day-to-day basis until such return. This will not be considered
a waiver of LESSEE's Event of Default or any right of LESSOR hereunder.
23.11.2 Until such return, the Agreed Value will be an amount equal to the
Agreed Value on the day the Aircraft should have been returned to LESSOR
pursuant to this Lease.
23.11.3 LESSEE will fully indemnify LESSOR on demand for all losses (including
damages in accordance with Article 25.5(b)), liabilities, actions, proceedings,
costs and expenses thereby suffered or incurred by LESSOR and, in addition,
until such time as the Aircraft is redelivered to LESSOR and put into the
condition required by this Article 23, instead of paying the Rent specified in
Article 5.3, LESSEE will pay twice the amount of Rent for each day from the
scheduled Expiration Date until the Termination Date (the monthly Rent payable
under Article 5.3.1 will be prorated based on the actual number of days in the
applicable month). Payment will be made upon presentation of LESSOR's invoice.
Notwithstanding the foregoing, in the event that the Aircraft is removed from
service by LESSEE and placed in a maintenance facility for the performance of
work required to put the Aircraft into the condition required by this Article 23
and as a result of delays in the performance of such work the Aircraft is not
returned on the Expiration Date, for a period of up to seven (7) days following
the Expiration Date, LESSEE shall only be responsible for normal Rent. After the
7th day of such period, if LESSEE has not returned the Aircraft to LESSOR in the
condition required by this Lease, LESSEE shall be responsible for twice the Rent
for the period after such 7 day period in accordance with the provisions of this
Article 23.11.3 until the actual Termination Date.
23.11.4 LESSOR may elect, in its sole and absolute discretion, to accept the
return of the Aircraft prior to the Aircraft being put in the condition required
by this Article 23 and thereafter have any such non-conformance corrected at
such time as LESSOR may deem appropriate (but within ninety (90) days following
the return of the Aircraft) and at commercial rates then-charged by the Person
selected by LESSOR to perform such correction. Any direct expenses incurred by
LESSOR for such correction will become additional Rent payable by LESSEE within
fifteen (15) days following the submission of a written statement by LESSOR to
LESSEE, identifying the items corrected and setting forth the expense of such
corrections in reasonable detail. LESSEE's obligation to pay such supplemental
Rent will survive the Termination Date.
23.12 Airport and Navigation Charges. LESSEE will ensure that at return of the
Aircraft any and all airport, navigation and other charges which give rise or
would if unpaid give rise to any lien, right of detention, right of sale or
other Security Interest in relation to the Aircraft, Engine or any Part have
been paid and discharged in full and will at LESSOR's request produce evidence
thereof satisfactory to LESSOR.
23.13 Return Acceptance Certificate. Upon return of the Aircraft in accordance
with the terms of this Lease, LESSEE will promptly prepare and execute two (2)
Return Acceptance Certificates in the form and substance of Exhibit J and LESSOR
will countersign and return one such Return Acceptance Certificate to LESSEE. In
addition, LESSEE and LESSOR will execute a Lease Termination for filing with the
FAA evidencing termination of this Lease.
23.14 Indemnities and Insurance. The indemnities and insurance requirements set
forth in Articles 17 and 18, respectively, will apply to Indemnitees and
LESSOR's representatives during return of the Aircraft, including the ground
inspection and acceptance flight. With respect to the acceptance flight,
LESSOR's representatives will receive the same protections as LESSOR on LESSEE's
Aviation and Airline General Third Party Liability Insurance.
23.15 Civil Reserve Air Fleet.
23.15.1 LESSEE may transfer possession of the Aircraft to the United States of
America or any instrumentality or agency thereof as part of the Civil Reserve
Air Fleet Program authorized under 10 U.S.C.ss.9511 et seq. (or any
substantially similar program) ("CRAF Program") for a period which includes
(collectively, the "CRAF Program Requisition Period") (a) the entire period of
requisition under the CRAF Program and (b) an additional six (6) months after
the expiration of the requisition under the CRAF Program. If the CRAF Program
Requisition Period extends beyond the Expiration Date provided by this Lease,
then the Lease will be deemed to continue until the end of the CRAF Program
Requisition Period at a monthly rental rate equal to the monthly rental rate in
effect at the end of the Lease Term and the Expiration Date will be deemed to be
the end of the CRAF Program Requisition Period. If the Aircraft is requisitioned
under the CRAF Program for a period which extends beyond the Lease Term, then
LESSEE will provide LESSOR with written notice of the proposed redelivery at
least six (6) months prior to such redelivery date and LESSEE must return the
Aircraft in the condition required by Article 23 on the redelivery date set
forth in such written notice.
23.15.2 LESSEE will promptly notify LESSOR in writing in the event of the
requisition for use of the Aircraft under CRAF activation by the U.S.
Government. All of LESSEE's obligations under this Lease will continue to the
same extent as if such requisition had not occurred.
23.15.3 Any provisions of this Lease to the contrary notwithstanding, if there
is a requisition for use of the Aircraft pursuant to the CRAF Program and/or
CRAF activation, LESSOR agrees that LESSEE's insurances described in Exhibit C
may - be supplemented or replaced by insurances provided under Title XIII of the
Act, and/or U.S. Government indemnification (which Title XIII insurances and
indemnification will be, as to the Aircraft, in an amount not less than the
Agreed Value and, as to all other insurances, in amounts not less than those
established in Exhibit C); provided, however, that LESSEE will remain
responsible for full compliance with all the provisions of this Lease, including
Articles 17 -- and 19, to the extent Title XIII and/or the U.S. Government
indemnification do not satisfy LESSEE's obligations under -- this Lease.
23.15.4 If there is a requisition for use of the Aircraft pursuant to the CRAF
Program and/or CRAF activation, there will be no limitation on the geographic
area in which the Aircraft may be operated so long as, taken as a whole,
LESSEE's insurance, the Title XIII insurance and/or the indemnification provided
by the U.S. Government fully cover (without any geographic exclusions) LESSEE's
Exhibit C insurance requirements.
23.15.5 If an Event of Default occurs under this Lease and LESSOR elects to
pursue its remedies under Article 25.3(e) to terminate this Lease and repossess
the Aircraft, LESSOR will so notify the U.S. Government by sending a written
communication with a copy to LESSEE as follows:
Headquarters Air Mobility Command
AMC Contracting Office -- XOKA
Scott Air Force Base, Illinois 62225-5007
23.15.6 So long as no Event of Default has occurred and is continuing, all
payments received by LESSOR or LESSEE from such Government Entity in connection
with the requisition of the Aircraft under the CRAF Program (except payments on
account of a Total Loss of the Aircraft) will be paid over to or retained by
LESSEE. If an Event of Default has occurred and is continuing, all payments
received by LESSEE or LESSOR from such Government Entity in connection with the
requisition of the Aircraft under the CRAF Program may be used by LESSOR to
satisfy any obligations owing by LESSEE.
ARTICLE 24 ASSIGNMENT
24.1 No Assignment by LESSEE. EXCEPT AS EXPRESSLY PERMITTED BY ARTICLE 11 OR
ARTICLE 20.2.3, NO ASSIGNMENT, NOVATION, TRANSFER, MORTGAGE OR OTHER CHARGE MAY
BE MADE BY LESSEE OF ANY OF ITS RIGHTS WITH RESPECT TO THE AIRCRAFT, ENGINE OR
PART OR THIS LEASE.
24.2 Sale or Assignment by LESSOR.
24.2.1 Subject to LESSEE's rights pursuant to this Lease, LESSOR may at any time
and without LESSEE's consent sell, assign or transfer its rights, interest and
obligations hereunder, under any other Operative Document, or with respect to
the Aircraft to a Permitted Transferee; provided, however, that no such transfer
shall materially increase LESSEE's liabilities or obligations hereunder or
materially adversely affect LESSEE's rights under this Lease. For a period of
two (2) years after such sale or assignment and at LESSEE's cost, LESSEE will
continue to name LESSOR as an additional insured under the Aviation and Airline
General Third Party Liability Insurance specified in Exhibit C.
24.2.2 The term "LESSOR" as used in this Lease means the lessor of the Aircraft
at the time in question. In the event of the sale of the Aircraft and transfer
of LESSOR's rights and obligations under this Lease to a Permitted Transferee,
such Permitted Transferee will become "LESSOR" of the Aircraft under this Lease
and the transferring party (the prior "LESSOR") will be relieved of all
liability to LESSEE under this Lease for obligations arising on and after the
date the Aircraft is sold. LESSEE will acknowledge and accept the Permitted
Transferee as the new "LESSOR" under this Lease and will look solely to the
Permitted Transferee for the performance of all LESSOR obligations and covenants
under this Lease arising on and after the Aircraft sale date.
24.3 LESSOR's Lender. Subject to LESSEE's rights pursuant to this Lease, LESSOR
may at any time and without LESSEE's consent grant security interests over the
Aircraft and assign the benefit of this Lease to a lender ("LESSOR's Lender") as
security for LESSOR's obligations to LESSOR's Lender.
24.4 LESSEE Cooperation. On request by LESSOR, LESSEE will execute all such
documents (such as a consent to a lease assignment agreement) as LESSOR may
reasonably require to confirm LESSEE's obligations under this Lease and obtain
LESSEE's acknowledgment that LESSOR is not in breach of the Lease. LESSEE will
provide all other reasonable assistance and cooperation to LESSOR in connection
with any such sale or assignment or the perfection and maintenance of any such
security interest, including, at LESSOR's cost, making all necessary filings and
registrations in the State of Registration and providing all opinions of counsel
with respect to matters reasonably requested by LESSOR. LESSOR will reimburse
LESSEE for its reasonable out-of-pocket costs and expenses (including reasonable
legal fees) in reviewing documents required by LESSOR and cooperating with a
transfer pursuant to this Article 24.
24.5 Protections.
24.5.1 LESSOR will obtain for the benefit of LESSEE a written acknowledgment
from any Permitted Transferee or LESSOR's Lender that, so long as no Event of
Default has occurred and is continuing hereunder, neither such Person nor any
Person claiming by, through or under such Person will not interfere with
LESSEE's quiet, peaceful use and enjoyment of the Aircraft.
24.5.2 Wherever the term "LESSOR" is used in this Lease in relation to any of
the provisions relating to disclaimer, title and registration, indemnity and
insurance contained in Articles 8, 14, 17 and 18, respectively, or with respect
to Article 20.2.6, the term "LESSOR" will be deemed to include any Permitted
Transferee and its lenders, if applicable. For avoidance of doubt, in the event
of LESSOR's sale or financing of the Aircraft, the disclaimer and indemnity
provisions contained in Articles 8 and 17 will continue to be applicable after
the sale or assignment to International Lease Finance Corporation, as well as
being applicable to any Permitted Transferee and its lenders.
ARTICLE 25 DEFAULT OF LESSEE
25.1 LESSEE Notice to LESSOR. LESSEE will promptly notify LESSOR if LESSEE
becomes aware of the occurrence of any Default.
25.2 Events of Default. The occurrence of any of the following will constitute
an Event of Default and material breach of this Lease by LESSEE:
*
25.3 LESSOR's General Rights. Upon the occurrence and continuance of any Event
of Default, LESSOR may do all or any of the following at its option (in addition
to such other rights and remedies which LESSOR may have by statute or otherwise
but subject to any requirements of applicable Law):
(a) terminate this Lease by giving written notice to LESSEE;
(b) require that LESSEE immediately move the Aircraft to an
airport or other location designated by LESSOR;
(c) for LESSEE's account, do anything that may reasonably be
required to cure any default and recover from LESSEE all
reasonable costs, including legal fees and expenses incurred
in doing so and Default Interest;
(d) proceed as appropriate to enforce performance of this Lease
and to recover any damages for the breach hereof, including
the amounts specified in Article 25.5;
(e) terminate this Lease by taking possession of the Aircraft or
by serving notice requiring LESSEE to return the Aircraft to
LESSOR at the location specified by LESSOR. If LESSOR takes
possession of the Aircraft, it may enter upon LESSEE's
premises where the Aircraft is located without liability
except for the willful misconduct of LESSOR. Upon
repossession of the Aircraft, LESSOR will then be entitled
to sell, lease or otherwise deal with the Aircraft as if
this Lease had never been made. LESSOR will be entitled to
the full benefit of its bargain with LESSEE; or
(f) apply all or any portion of the Security Deposit and any
other security deposits held by LESSOR pursuant to any other
agreements between LESSOR and LESSEE to any amounts due.
25.4 Deregistration and Export of Aircraft. If an Event of Default has occurred
and is continuing, LESSOR may take all steps necessary to deregister the
Aircraft in and export the Aircraft from the State of Registration.
25.5 LESSEE Liability for Damages. Upon the occurrence and during the
continuance of an Event of Default, in addition to all other remedies available
at law or in equity, LESSOR has the right to recover from LESSEE and LESSEE will
pay LESSOR within two (2) Business Days after LESSOR's written demand, all of
the following:
(a) all amounts which are then due and unpaid hereunder and
which become due prior to the earlier of LESSOR's recovery
of possession of the Aircraft or LESSEE making an effective
tender thereof;
(b) subject to LESSOR's obligations at Law to mitigate its
damages, any losses suffered by LESSOR because of LESSOR's
inability to place the Aircraft on lease with another lessee
or to otherwise utilize the Aircraft on financial terms as
favorable to LESSOR as the terms hereof or, if LESSOR elects
to dispose of the Aircraft, the funds arising from a sale or
other disposition of the Aircraft are not as profitable to
LESSOR as leasing the Aircraft in accordance with the terms
hereof would have been (and LESSOR will be entitled to
accelerate any and all Rent which would have been due from
the date of LESSOR's recovery or repossession of the
Aircraft through the Expiration Date);
(c) all costs associated with LESSOR's exercise of its remedies
hereunder, including but not limited to repossession costs,
legal fees, Aircraft storage costs and Aircraft re-lease or
sale costs;
(d) any amount of principal, interest, fees or other sums paid
or payable on account of funds borrowed in order to carry
any unpaid amount;
(e) any loss, premium, penalty or expense which may be incurred
in repaying funds raised to finance the Aircraft or in
unwinding any financial instrument relating in whole or in
part to LESSOR's financing of the Aircraft;
(f) direct expenses incurred by LESSOR to correct
non-conformance of the Aircraft with return conditions in
accordance with Article 23.11.3; and
(g) an amount sufficient to fully compensate LESSOR for any loss
of or damage to the Aircraft caused by LESSEE's default.
25.6 Waiver of Default. By written notice to LESSEE, LESSOR may at its election
waive any Default or Event of Default and its consequences and rescind and annul
any prior notice of termination of this Lease. The respective rights of the
parties will then be as they would have been had no Default or Event of Default
occurred and no such notice been given.
25.7 Present Value of Payments. In calculating LESSOR's damages hereunder, upon
an Event of Default all Rent and other amounts which would have been due
hereunder during the Lease Term if an Event of Default had not occurred will be
calculated on a present value basis using a discounting rate of six percent (6%)
per annum discounted to the earlier of the date on which LESSOR obtains
possession of the Aircraft or LESSEE makes an effective tender thereof.
25.8 Use of "Termination Date". For avoidance of doubt, it is agreed that if
this Lease terminates and the Aircraft is repossessed by LESSOR due to an Event
of Default, then, notwithstanding the use of the term "Termination Date" in this
Lease, the period of the Lease Term and the "Expiration Date" will be utilized
in calculating the damages to which LESSOR is entitled pursuant to Article 25.5.
For example, it is agreed and understood that LESSOR is entitled to receive from
LESSEE the Rent and the benefit of LESSEE's insurance and maintenance of the
Aircraft until expiration of the Lease Term.
25.9 LESSEE's Remedies. Except as otherwise set forth in the Operative
Documents, upon a breach by LESSOR of any of the terms and conditions of this
Lease, LESSEE shall have all rights available at law or in equity.
25.10 Waiver of Consequential Damages. LESSEE and LESSOR each agree that it
shall not be entitled to recover, and hereby disclaims and waives any right that
it may otherwise have to recover, any special, indirect or consequential damages
as a result of any breach or alleged breach by the other party of any of the
agreements, representations or warranties contained in this Lease or the other
Operative Documents; provided, however, that nothing herein shall be deemed to
disclaim or waive any of LESSOR's remedies expressly set forth in Article
25.5(a) through 25.5 (g).
ARTICLE 26 NOTICES
26.1 Manner of Sending Notices. Any notice, request or information required or
permissible under this Lease will be in writing and in English. Notices will be
delivered in person or sent by fax, letter (mailed airmail, certified and return
receipt requested), or by expedited delivery addressed to the parties as set
forth in Article 26.2. In the case of a fax, notice will be deemed received upon
actual receipt (and the date of actual receipt will be deemed to be the date set
forth on the confirmation of receipt produced by the sender's fax machine
immediately after the fax is sent). In the case of a mailed letter, notice will
be deemed received on the tenth (10th) day after mailing. In the case of a
notice sent by expedited delivery, notice will be deemed received on the date of
delivery set forth in the records of the Person which accomplished the delivery.
If any notice is sent by more than one of the above listed methods, notice will
be deemed received on the earliest possible date in accordance with the above
provisions.
26.2 Notice Information. Notices will be sent:
If to LESSOR: INTERNATIONAL LEASE FINANCE CORPORATION
1999 Avenue of the Stars, 39th Floor Los Angeles,
California 90067, U.S.A.
Attention: Legal Department
Fax: 310-788-1990
Telephone: 310-788-1999
If to LESSEE: FRONTIER AIRLINES, INC.
12015 East 46th Avenue
Suite 200
Denver, CO 80239
Attention: General Counsel
Fax: 303- 371-7007
Telephone: 303-371-7400
or to such other places and numbers as either party directs in writing to the
other party.
ARTICLE 27 GOVERNING LAW AND JURISDICTION
27.1 California Law. This Lease is being delivered in the State of California
and will in all respects be governed by and construed in accordance with the
Laws of the State of California (notwithstanding the conflict Laws of the State
of California).
27.2 Non-Exclusive Jurisdiction in California. As permitted by Section 410.40 of
the California Code of Civil Procedure, the parties hereby irrevocably submit to
the non-exclusive jurisdiction of the Federal District Court for the Central
District of California and the State of California Superior or Municipal Court
in Los Angeles, California. Nothing herein will prevent either party from
bringing suit in any other appropriate jurisdiction.
27.3 Service of Process. The parties hereby consent to the service of process
(a) out of any of the courts referred to above, (b) in accordance with Section
415.40 of the California Code of Civil Procedure by mailing copies of the
summons and complaint to the person to be served by air mail, certified or
registered mail to the address set forth in Article 26.2, postage prepaid,
return receipt requested or (c) in accordance with the Hague Convention, if
applicable.
27.4 Prevailing Party in Dispute. If any legal action or other proceeding is
brought in connection with or arises out of any provisions in this Lease, the
prevailing party will be entitled to recover reasonable attorneys' fees and
other actual and reasonable costs incurred in such action or proceedings. The
prevailing party will also, to the extent permissible by Law, be entitled to
receive pre- and post-judgment Default Interest.
27.5 Waiver. LESSEE AND LESSOR HEREBY WAIVE THE RIGHT TO A TRIAL BY JURY. LESSEE
AND LESSOR HEREBY IRREVOCABLY WAIVE ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF THE VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF
OR RELATED TO THIS LEASE BROUGHT IN ANY OF THE COURTS REFERRED TO IN ARTICLE
27.2, AND HEREBY FURTHER IRREVOCABLY WAIVE ANY CLAIM THAT ANY SUCH SUIT, ACTION
OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM.
ARTICLE 28 MISCELLANEOUS
28.1 Transportation of Personnel. LESSEE will provide transportation to LESSOR's
personnel on a positive space basis on the Aircraft or any other aircraft
operated by LESSEE for the purposes of conducting business between LESSEE and
LESSOR.
28.2 Press Releases. The parties will give copies to one another, in advance if
possible, of all news, articles and other releases provided to the public media
regarding this Lease or the Aircraft.
28.3 Power of Attorney. LESSEE hereby irrevocably appoints LESSOR as its
attorney for the purpose of putting into effect the intent of this Lease
following and during the continuation of an Event of Default, including without
limitation, the return, repossession, deregistration and exportation of the
Aircraft. To evidence this appointment, LESSEE has executed the Power of
Attorney in the form of Exhibit G. LESSEE will take all steps required under the
Laws of the State of Registration to provide such power of attorney to LESSOR.
28.4 LESSOR Performance for LESSEE. The exercise by LESSOR of its remedy of
performing a LESSEE obligation hereunder is not a waiver of and will not relieve
LESSEE from the performance of such obligation at any subsequent time or from
the performance of any of its other obligations hereunder.
28.5 LESSOR's Payment Obligations. Any obligation of LESSOR under this Lease to
pay or release any amount to LESSEE is conditioned upon and will be delayed
until (a) all amounts then due and payable by LESSEE to LESSOR under this Lease
or under any other agreement between LESSOR and LESSEE having been paid in full
and (b) no payment or other material Default having occurred and continuing
hereunder at the time such payment or release of payment is payable to LESSEE.
28.6 Application of Payments. Any amounts paid or recovered in respect of LESSEE
liabilities hereunder may be applied to Rent, Default Interest, fees or any
other amount due hereunder in such proportions, order and manner as LESSOR
determines.
28.7 Usury Laws. The parties intend to contract in strict compliance with the
usury Laws of the State of California and, to the extent applicable, the U.S.
Notwithstanding anything to the contrary in the Operative Documents, LESSEE will
not be obligated to pay Default Interest or other interest in excess of the
maximum non-usurious interest rate, as in effect from time to time, which may by
applicable Law be charged, contracted for, reserved, received or collected by
LESSOR in connection with the Operative Documents. During any period of time in
which the then-applicable highest lawful rate is lower than the Default Interest
rate, Default Interest will accrue and be payable at such highest lawful rate;
however, if at later times such highest lawful rate is greater than the Default
Interest rate, then LESSEE will pay Default Interest at the highest lawful rate
until the Default Interest which is paid by LESSEE equals the amount of interest
that would have been payable in accordance with the interest rate set forth in
Article 5.6.
28.8 Delegation by LESSOR. LESSOR may delegate to any Person(s) all or any of
the rights, powers or discretion vested in it by this Lease and any such
delegation may be made upon such terms and conditions as LESSOR in its absolute
discretion thinks fit, provided that no such delegation shall relieve LESSOR of
any of its obligations hereunder.
28.9 Confidentiality. The Operative Documents and all non-public information
obtained by either party about the other are confidential and are between LESSOR
and LESSEE only and will not be disclosed by a party to third parties (other
than (i) to such party's auditors or professional advisors, (ii) to potential
equity investors or lenders or (iii) as required in connection with any filings
of this Lease in accordance with Article 14 or as otherwise required by Law)
without the prior written consent of the other party. If disclosure is required
as a result of applicable Law, LESSEE and LESSOR will cooperate with one another
to obtain confidential treatment as to the commercial terms and other material
provisions of this Lease.
28.10 Rights of Parties. The rights of the parties hereunder are cumulative, not
exclusive, may be exercised as often as each party considers appropriate and are
in addition to its rights under general Law. The rights of one party against the
other party are not capable of being waived or amended except by an express
waiver or amendment in writing. Any failure to exercise or any delay in
exercising any of such rights will not operate as a waiver or amendment of that
or any other such right any defective or partial exercise of any such rights
will not preclude any other or further exercise of that or any other such right
and no act or course of conduct or negotiation on a party's part or on its
behalf will in any way preclude such party from exercising any such right or
constitute a suspension or any amendment of any such right.
28.11 Further Assurances. Each party agrees from time to time to do and perform
such other and further acts and execute and deliver any and all such other
instruments as may be required by Law or reasonably requested by the other party
to establish, maintain or protect the rights and remedies of the requesting
party or to carry out and effect the intent and purpose of this Lease.
28.12 Use of Word "including". The term "including" is used herein without
limitation.
28.13 Headings. All article and paragraph headings and captions are purely for
convenience and will not affect the interpretation of this Lease. Any reference
to a specific article, paragraph or section will be interpreted as a reference
to such article, paragraph or section of this Lease.
28.14 Invalidity of any Provision. If any of the provisions of this Lease become
invalid, illegal or unenforceable in any respect under any Law, the validity,
legality and enforceability of the remaining provisions will not in any way be
affected or impaired.
28.15 Time is of the Essence. Time is of the essence in the performance of all
obligations of the parties under this Lease and, consequently, all time
limitations set forth in the provisions of this Lease will be strictly observed.
28.16 Amendments in Writing. The provisions of this Lease may only be amended or
modified by a writing executed by LESSOR and LESSEE.
28.17 Counterparts. This Lease may be executed in any number of identical
counterparts, each of which will be deemed to be an original, and all of which
together will be deemed to be one and the same instrument when each party has
signed and delivered one such counterpart to the other party.
28.18 Delivery of Documents by Fax. Delivery of an executed counterpart of this
Lease or of any other documents in connection with this Lease by fax will be
deemed as effective as delivery of an originally executed counterpart. Any party
delivering an executed counterpart of this Lease or other document by fax will
also deliver an originally executed counterpart, but the failure of any party to
deliver an originally executed counterpart of this Lease or such other document
will not affect the validity or effectiveness of this Lease or such other
document.
28.19 Entire Agreement. The Operative Documents constitute the entire agreement
between the parties in relation to the leasing of the Aircraft by LESSOR to
LESSEE and supersede all previous proposals, agreements and other written and
oral communications in relation hereto. The parties acknowledge that there have
been no representations, warranties, promises, guarantees or agreements, express
or implied, except as set forth herein.
28.20 Expenses. Each party shall be responsible for its own expenses in
connection with the drafting, negotiation, execution and delivery of this Lease
and the other Operative Documents.
SIGNATURE PAGE
IN WITNESS WHEREOF, LESSEE and LESSOR have caused this Lease to be executed by
their respective officers as of May 25, 2000.
INTERNATIONAL LEASE FINANCE CORPORATION FRONTIER AIRLINES, INC.
By: By:
Its: Its:
EXHIBIT A AIRCRAFT DESCRIPTION
Aircraft Manufacturer and Model: Airbus A318-100
Specification (included within Rent payable under Airbus A318 Standard Specification Issue A plus the
Article 5.3.1(a)): following:
1. Interior Seating Configuration: 114Y-120Y
2. Maximum Gross Takeoff Weight: 65 tons (145,505
lbs.)
3. Engine Manufacturer and Model: Pratt & Whitney
PW 6124
- -Manufacturer's Serial Number: To be identified in the Estoppel and Acceptance
Certificate
Registration Mark: N-_____
Engine Serial Numbers: To be identified in the Estoppel and Acceptance
Certificate
Engine Thrust Rating: 23,800 pounds
EXHIBIT B PARTICIPATION AGREEMENT
This Participation Agreement is made this ______ day of _______________, ______
(the "Participation Agreement")
BETWEEN
(1) INTERNATIONAL LEASE FINANCE CORPORATION, a corporation organized and
existing under the laws of the State of California, United States of
America, having its principal corporate offices located at 1999 Avenue of
the Stars, 39th Floor, Los Angeles, California 90067, U.S.A. ("ILFC"); and
(2) FRONTIER AIRLINES, INC., a Colorado corporation whose address and principal
place of business is at 12015 East 46th Avenue, Suite 200, Denver, Colorado
80239, U.S.A. ("LESSEE")
RECITALS
(A) Pursuant to the Airbus A318-100 Purchase Agreement between ILFC and AVSA,
S.A.R.L. ("AVSA") dated as of January 11, 1999, as further amended (the
"Purchase Agreement") and the General Terms Agreement between ILFC and AVSA
dated as of November 10, 1988 (the "G.T.A."), ILFC has agreed to purchase
from AVSA certain Airbus A318-100 model aircraft, including the aircraft
bearing as of today manufacturer's serial number [TBD] and scheduled for
delivery in the month of February 2003 (the "Aircraft");
(B) Pursuant to the Product Support Agreement (Exhibit E) applicable to the
Purchase Agreement (the "Support Agreement"), AVSA has agreed to provide
certain product support to ILFC;
(C) Pursuant to the Aircraft Lease Agreement between ILFC and LESSEE dated as
of May 25, 2000 (the "Lease Agreement"), ILFC has agreed to lease the
Aircraft to LESSEE;
(D) ILFC and LESSEE have agreed to enter into this Participation Agreement:
IT IS NOW HEREBY AGREED AS FOLLOWS:
1. Authorization for LESSEE to Participate. ILFC hereby authorizes LESSEE to
participate in the following activities in connection with the delivery of
the Aircraft:
(a) to inspect, pursuant to Clause 7.1 of the G.T.A., the manufacture of
the Aircraft and the materials and parts thereto; and
(b) to attend and observe the acceptance tests of the Aircraft referred to
in Clause 8.1 of the G.T.A.; and
(c) to receive, pursuant to Clause 15 of the Support Agreement, the
technical publications set forth in Appendix 3 hereto.
2. Effectivity of Participation Agreement. This Participation Agreement shall
be effective from the date hereof until the earlier of:
(a) the occurrence of an Event of Default as defined in the Lease
Agreement; or
(b) the "Termination Date" as defined in the Lease Agreement.
3. Conditions of Participation. This Participation Agreement is made subject
to the following conditions:
(a) LESSEE hereby agrees to be bound by and to comply with the following
provisions of the G.T.A. and Support Agreement (copies of which are
attached hereto) as if LESSEE had been named "Buyer" of the Aircraft
under such agreements:
(i) Clauses 7.2 and 8.5 of the G.T.A. to the extent of (aa) injury to
or death of any LESSEE representative, (bb) loss or damage to
property of any LESSEE representatives and (cc) liabilities,
damages, losses, costs and expenses of AVSA, Manufacturer and
their associated subcontractors, officers, agents and employees
arising out of or caused by the willful misconduct or gross
negligence of LESSEE's representatives, and
(ii) Clauses 16.9 and 18.5 of the Support Agreement.
(b) So long as this Participation Agreement is in full force and effect,
LESSEE and not ILFC will be responsible for the liabilities and
obligations set forth in section 3(a) above.
(c) For avoidance of doubt, even while this Participation Agreement is in
full force and effect, ILFC will remain responsible for compliance
with Clauses 7.2 and 8.5 of the G.T.A. to the extent of (aa) injury to
or death of any ILFC representative, (bb) loss or damage to property
of any ILFC representative and (cc) liabilities, damages, losses,
costs and expenses of AVSA, Manufacturer and their associated
subcontractors, officers, agents and employees arising out of or
caused by the willful misconduct or gross negligence of ILFC's
representatives.
(d) Except with respect to events occurring prior to termination of the
Participation Agreement, upon termination of this Participation
Agreement, ILFC shall once again be bound by Clauses 7.2 and 8.5 of
the G.T.A. and Clauses 16.9 and 18.5 of the Support Agreement with
respect to the Aircraft.
(e) Other than with respect to the obligations assumed by LESSEE under
this Participation Agreement as set forth in section 3(a) above, ILFC
shall remain fully bound by all provisions of the Purchase Agreement,
G.T.A. and Support Agreement.
(f) Nothing contained herein shall subject AVSA to any liability or
additional obligations whatsoever to which it would not otherwise be
subject under the Purchase Agreement, the G.T.A. and the Support
Agreement or, except to the extent set forth in sections 3(a) and (b)
above, modify in any respect whatsoever its contractual rights under
the said agreements.
(g) LESSEE shall not be appointed as ILFC's agent and shall not be
permitted to act on behalf or in place of ILFC without the express
written authorization of ILFC and nothing contained herein shall be
construed as to give such authorization.
4. Notification
(a) This Participation Agreement shall be notified to AVSA by courier
service immediately after the execution hereof. AVSA shall not be
deemed to have received notice of any of the provisions hereof prior
to receipt of notice as provided in this section 4(a) in the form of
Appendix 1 hereto.
(b) On termination of this Participation Agreement as provided in section
2 hereof, ILFC shall immediately notify AVSA by courier service of
such termination. AVSA shall not be deemed to have received notice of
such termination prior to receipt of notice as provided in this
section 4(b) in the form of Appendix 2 hereto.
(c) All notices and requests required or authorized under this
Participation Agreement shall be given in writing either by personal
delivery to a responsible officer of the party to whom the same is
given or by internationally recognized courier service or by telefax
directed as set forth below:
ILFC shall be addressed at:
1999 Avenue of the Stars, 39th Floor
Los Angeles, California 90067, U.S.A.
Attn: Senior Vice President-Technical
Fax: 310-788-1990
Telephone: 310-788-1999
LESSEE shall be addressed at:
12015 East 46th Avenue Suite 200
Denver, Colorado 80239, U.S.A.
Attention: General Counsel
Fax: 303-371-7007
Telephone: 303-371-7400
AVSA shall be addressed at:
2 Rond-Point Maurice Bellonte
31 700 Blagnac, France
Attention: Director Contracts
Fax: (33) 5.61.30.40.11
Telephone: (33) 5.61.30.40.12
or at such other address or to such other person as the party receiving the
notice or request may designate from time to time.
Such notice or request shall be deemed to be effective in the case of (aa)
personal delivery, on the date upon which personally delivered, (bb) delivery by
courier, on the date of receipt or (cc) telefax transmission, on the date of
confirmation of successful transmission.
5. Assignment. Except as permitted under Article 24 of the Lease Agreement,
the rights and obligations under this Participation Agreement are personal
to the parties and shall not be assigned, transferred, sold or otherwise
disposed of by either of the parties hereto.
6. Applicable Law and Jurisdiction. THIS PARTICIPATION AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW, AND THE PARTIES
AGREE THAT ANY COMPETENT FEDERAL COURT LOCATED IN NEW YORK, NEW YORK SHALL
HAVE JURISDICTION OVER ANY DISPUTE ARISING IN CONNECTION HEREWITH. Nothing
in this section will prevent either party from making a claim in a court of
competent jurisdiction in California or, if AVSA is involved, France.
7. Confidentiality. Subject to any legal or governmental requirements of
disclosure, ILFC and LESSEE shall keep confidential the terms and
conditions of this Participation Agreement and the clauses from the G.T.A.
and Support Agreement provided to LESSEE provided that such materials may
be disclosed by ILFC and LESSEE to their professional advisors.
IN WITNESS WHEREOF, the parties have caused this Participation
Agreement to be executed on their behalf by their duly authorized officers.
INTERNATIONAL LEASE FRONTIER AIRLINES, INC.
FINANCE CORPORATION
By: _______________________ By: _______________________
Its: Its:
APPENDIX 1
[DATE]
BY COURIER
AVSA, S.A.R.L.
2, rond-point Maurice Bellonte
31700 BLAGNAC
Attention: Director-Contracts
Re: ILFC/FRONTIER AIRLINES: PARTICIPATION AGREEMENT
Dear Sirs,
Pursuant to Section 4(a) of the Participation Agreement between ILFC
and FRONTIER AIRLINES dated _______________ ___, ______, we advise you that
pursuant to the Participation Agreement (a copy of which is attached hereto),
FRONTIER AIRLINES has been authorized by ILFC to participate with respect to the
Aircraft. This authorization shall be effective on acknowledgement of this
letter by you.
We confirm for your benefit the provisions of Sections 3(c), 3(d), 3(e) and 3(f)
contained therein.
Yours faithfully,
for and on behalf of
INTERNATIONAL LEASE FINANCE CORPORATION
CC: FRONTIER AIRLINES
AVSA, S.A.R.L. confirms receipt of this notice and agrees to the terms of
Section 3 of the Participation Agreement.
By: ________________
Its:
Date:
APPENDIX 2
[DATE]
BY COURIER
AVSA, S.A.R.L.
2, rond-point Maurice Bellonte
31700 BLAGNAC
Attention: Director-Contracts
Re: ILFC/FRONTIER AIRLINES: PARTICIPATION AGREEMENT
Dear Sirs,
Pursuant to Section 4(b) of the Participation Agreement between ILFC
and FRONTIER AIRLINES dated _______________ ___, ______, we advise you that the
authorization provided therein for FRONTIER AIRLINES is terminated with
immediate effect.
Yours faithfully,
for and on behalf of
INTERNATIONAL LEASE FINANCE CORPORATION
CC: FRONTIER AIRLINES
APPENDIX 3
1. TECHNICAL PUBLICATIONS
(See attached sheets)
APPENDIX 4
[Copies of Clauses 7.2 and 8.5 of the General Terms Agreement and Clauses 16.9
and 18.5 of the Support Agreement]
EXHIBIT C CERTIFICATE OF INSURANCE
[Refer to Aircraft Lease Agreement dated as of May 25, 2000 between LESSEE and
LESSOR (the "Lease"). If applicable, insurance certificates from both the
insurers and reinsurers will be provided. If there is a LESSOR's Lender, include
references to it where appropriate after references to LESSOR.]
To: INTERNATIONAL LEASE FINANCE CORPORATION ("LESSOR")
1999 Avenue of the Stars, 39th Floor
Los Angeles, California 90067
United States
Re: FRONTIER AIRLINES, INC.
("LESSEE")
Airbus A318-100
Manufacturer's Serial No.: [TBD]
Registration Mark: N-_____ (the "Aircraft")
--------
The following security has subscribed to the insurance and/or
reinsurance policies:
[LIST COMPANIES & PERCENTAGES]
THIS IS TO CERTIFY THAT, as Insurance Brokers, we have effected Fleet
Insurance in respect of aircraft owned or operated by LESSEE (including the
Aircraft) as specified below.
AIRCRAFT HULL ALL RISKS
COVERING:
*
DEDUCTIBLES:
*
GEOGRAPHICAL COVERAGE:
Worldwide.
AVIATION AND AIRLINE GENERAL THIRD PARTY LIABILITY
COVERING:
*
GEOGRAPHICAL LIMITS:
Worldwide.
HULL WAR AND ALLIED PERILS
COVERING:
*
DEDUCTIBLE:
*
GEOGRAPHICAL LIMITS:
Worldwide.
AIRCRAFT SPARES ALL RISKS INSURANCE
COVERING:
*
and covering:
With respect to an Engine, an agreed value of US$___________ or,
with LESSOR's written concurrence, replacement cost;
With respect to Parts, replacement cost.
DEDUCTIBLE:
*
GEOGRAPHICAL COVERAGE:
Worldwide.
INSURANCE REQUIRED BY MANUFACTURER
LESSEE will carry the insurance required by Manufacturer in connection
with LESSOR's assignment of Manufacturer's warranties and product support to
LESSEE.
CONTRACTUAL INDEMNITY
LESSEE has insurance coverage for the indemnities agreed to by LESSEE
pursuant to Article 17 of the Lease to the extent provided in the relevant
policies.
PERIOD OF COVERAGE (ALL POLICIES)
From Delivery Date of Aircraft to [EXPIRATION DATE]
It is further certified that LESSOR has an interest in respect of the
Aircraft under the Lease. Accordingly, with respect to losses occurring during
the period from the Effective Date until the expiry of the Insurance or until
the expiry or agreed termination of the Lease or until the obligations under the
Lease are terminated by any action of the Insured or LESSOR and in consideration
of the Additional Premium it is confirmed that the Insurance afforded by the
Policy is in full force and effect and it is further agreed that the following
provisions are specifically endorsed to the Policy.
1. UNDER THE HULL (ALL RISKS AND HULL WAR AND ALLIED RISKS) AND AIRCRAFT
SPARES INSURANCES
*
(d) Insurers have no right to replace the Aircraft on a Total
Loss (arranged, constructive or otherwise).
(e) Insurers recognize that LESSEE and LESSOR have agreed that a
Total Loss of the Airframe will constitute a Total Loss of the
Aircraft.
(f) In the event of Total Loss of the Aircraft, Insurers agree
to pay LESSOR all amounts up to the Agreed Value based solely upon
LESSOR's (not LESSEE's) execution of the appropriate form of
release/discharge document. LESSOR may sign any required release in
lieu of the Insured in the event of a Total Loss, Constructive Total
Loss or Arranged Total Loss.
(g) "Cut-through clause": Insurers confirm that in the event of
any claim arising under the hull insurances, the Reinsurers will in
lieu of payment of the Insurers, its successors in interest and
assigns, pay to the person named as sole loss payee under the original
insurances that portion of any loss due for which the Reinsurers would
otherwise be liable to pay the Insurers (subject to proof of loss), it
being understood and agreed that any such payment by any Reinsurers
will fully discharge and release such Reinsurer from any and all
further liability in connection therewith and provide for payment to be
made notwithstanding (i) any bankruptcy, insolvency, liquidation or
dissolution of the Insurers and (ii) that the Insurers have made no
payment under the original insurance policies.
(h) Insurers confirm that under the insurance policies, if the
Insured installs an engine owned by a third party on the Aircraft,
either (i) the hull insurance will automatically increase to such
higher amount as is necessary in order to satisfy both LESSOR's
requirement to receive the Agreed Value in the event of a Total Loss,
Constructive Total Loss or Arranged Total Loss and the amount required
by the third party engine owner, or (ii) separate additional insurance
on such engine will attach in order to satisfy separately the
requirements of the Insured to such third party engine owner.
2. UNDER THE LEGAL LIABILITY INSURANCE
(a) Subject to the provisions of this Endorsement, the Insurance
will operate in all respects as if a separate Policy had been issued
covering each party insured hereunder, but this provision will not
operate to include any claim arising howsoever in respect of loss or
damage to the Aircraft insured under the Hull or Spares Insurance of
the Insured. Notwithstanding the foregoing the total liability of
Insurers in respect of any and all Insureds will not exceed the limits
of liability stated in the Policy.
(b) The Insurance provided hereunder will be primary and without
right of contribution from any other insurance which may be available
to LESSOR.
3. UNDER ALL INSURANCES
(a) LESSOR, its successors and assigns, and (with respect to
Aviation and Airline General Third Party Liability only) its directors,
officers and employees for their respective rights and interests, are
included as Additional Insureds.
(b) The cover afforded to LESSOR by the Policy in accordance
with this Endorsement will not be invalidated by any act or omission
(including misrepresentation and non-disclosure) of any other person or
party which results in a breach of any term, condition or warranty of
the Policy provided that LESSOR has not caused, contributed to or
knowingly condoned the said act or omission.
(c) LESSOR will have no responsibility for premium and insurers
will waive any right of set-off or counterclaim against LESSOR except
in respect of outstanding premium in respect of the Aircraft, provided
that Insurer may only set-off for premiums against the proceeds of the
hull insurance for outstanding premiums in connection with hull all
risks and hull war and allied perils insurance.
(d) Upon payment of any loss or claim to or on behalf of LESSOR,
Insurers will to the extent and in respect of such payment be thereupon
subrogated to all legal and equitable rights of LESSOR indemnified
hereby (but not against LESSOR). Insurers will not exercise such rights
without the consent of those indemnified, such consent not to be
unreasonably withheld. At the expense of Insurers LESSOR will do all
things reasonably necessary to assist the Insurers to exercise said
rights.
(e) Except in respect of any provision for Cancellation or
Automatic Termination specified in the Policy or any endorsement
thereof, cover provided by this Endorsement may only be cancelled or
materially altered in a manner adverse to LESSOR by the giving of not
less than thirty (30) days notice in writing to LESSOR. Notice will be
deemed to commence from the date such notice is given by the Insurers.
Such notice will NOT, however, be given at normal expiry date of the
Policy or any endorsement.
4. EXCEPT AS SPECIFICALLY VARIED OR PROVIDED BY THE TERMS OF THIS
CERTIFICATE
(a) LESSOR IS COVERED BY THE POLICY SUBJECT TO ALL TERMS,
CONDITIONS, LIMITATIONS, WARRANTIES, EXCLUSIONS AND CANCELLATION
PROVISIONS THEREOF.
(b) THE POLICY WILL NOT BE VARIED BY ANY PROVISIONS CONTAINED IN
THE LEASE WHICH PURPORT TO SERVE AS AN ENDORSEMENT OR AMENDMENT TO THE
POLICY.
SUBJECT (save as specifically stated in this Certificate) to policy
terms, conditions, limitations and exclusions.
Yours faithfully,
[BROKERS]
EXHIBIT D BROKERS' LETTER OF UNDERTAKING
To: INTERNATIONAL LEASE FINANCE CORPORATION
1999 Avenue of the Stars, 39th Floor
Los Angeles, California 90067
United States
Date: Our Ref:
Re: FRONTIER AIRLINES, INC.
("LESSEE")
Airbus A318-100
Manufacturer's Serial No.: [TBD]
Registration Mark: N-_____ (the "Aircraft")
--------
Dear Sirs:
We confirm that insurance has been effected for the account of [LESSEE]
(the "Operator") covering all aircraft owned or operated by them, including the
above-referenced aircraft (the "Aircraft"). [Also confirm, if applicable, the
amount of any hull all risks or hull war and allied perils on the Aircraft which
LESSEE is carrying in excess of the Agreed Value (which excess insurance would
be payable to LESSEE). Such excess insurance may not exceed ten percent (10%) of
the Agreed Value.]
Pursuant to instructions received from the Operator and in
consideration of your approving the arrangement of the Operator's "Fleet Policy"
(under which the above-referenced Aircraft is insured) through the intermediary
of ourselves as Brokers in connection with the insurance (the "Insurance")
mentioned in our Certificate of Insurance (Reference No. [ ] dated [ ] and
attached hereto), we undertake as follows:
1. In relation to the Hull and War Risks Insurance to hold to your
order the insurance Slips or Contracts and any Policies which may be issued or
any policies substituted (with your consent) therefor (but only insofar as the
same relate to the Aircraft only) and the benefit of the Hull and War Risks
Insurance thereunder, but subject to our requirements to operate the Fleet
Policy insofar as it relates to any other aircraft insured thereunder.
2. To advise you of any of the following:
(a) If any insurer cancels or gives notice of cancellation of
any of the Insurance at least thirty (30) days (or such lesser period
as may be available in the case of War and Allied Perils) before such
cancellation is to take effect in respect of the Aircraft.
(b) Of any act or omission or of any event (including
non-payment of premium) of which we have knowledge or are notified and
which might invalidate or render unenforceable in whole or in part any
of the Insurance, insofar as the same relate to the Aircraft.
(c) If we do not receive instructions to renew all or any of the
Insurance at least thirty (30) days prior to their expiration.
(d) If any of the Insurance are not renewed on the same terms
(save as to premium and period of cover and as you might otherwise have
notified us to be acceptable to you) seven (7) days prior to expiry
thereof.
The above undertakings are given subject to our continuing appointment
for the time being as Insurance Brokers to the Operator.
We also undertake to advise you if we cease to be Insurance Brokers to
the Operator.
Yours faithfully,
EXHIBIT E ESTOPPEL AND ACCEPTANCE CERTIFICATE
FRONTIER AIRLINES, INC. ("LESSEE"), a corporation organized under the laws of
Colorado does hereby agree as follows:
1. LESSEE and INTERNATIONAL LEASE FINANCE CORPORATION, as LESSOR, have
entered into an Aircraft Lease Agreement dated as of May 25, 2000 (hereinafter
referred to as the "Lease"). Words used herein with capital letters and not
otherwise defined will have the meanings set forth in the Lease.
2. LESSEE has this ____ day of __________, ____ (Time: __________ )
at ____________________ received from LESSOR possession of:
(a) One (1) Airbus A318-100 aircraft bearing Manufacturer's
serial number [TBD] and United States registration mark N-_____,
together with two (2) PW 6124 engines bearing manufacturer's serial
numbers ______ and ______ (each of which has 750 or more rated take-off
horsepower), all in airworthy condition.
(b) All Aircraft Documentation, including the usual and
customary manuals, logbooks, flight records and historical information
regarding the Aircraft, Engines, and Parts.
3. All of the foregoing has been delivered on the date set forth
above pursuant to the terms and provisions of the Lease.
4. The amount of fuel on board at Delivery is ________ (circle one)
pounds/kilos (________ gallons).
5. The Aircraft, Engines, Parts and Aircraft Documentation as described
in the Lease have been fully examined by LESSEE and, except as set forth in the
attached Discrepancies List, have been received and accepted by LESSEE in a
condition fully satisfactory to LESSEE and in full conformity with the Lease in
every respect.
6. The Lease is in full force and effect, LESSOR has fully, duly and
timely performed all of its obligations of every kind or nature thereunder and
LESSEE has no claims, offsets, deductions, set-off or defenses of any kind or
nature in connection with the Lease.
7. LESSEE has obtained all required permits, authorizations, licenses
and fees of the State of Registration or any Government Entity thereof necessary
in order for LESSEE to operate the Aircraft as permitted by the terms of the
Lease.
Dated on the date set forth above
FRONTIER AIRLINES, INC.
By:
Title:
EXHIBIT F OPINION OF COUNSEL
[SEE ATTACHED]
EXHIBIT G FORM OF POWER OF ATTORNEY
FRONTIER AIRLINES, INC. ("Frontier") hereby irrevocably appoints INTERNATIONAL
LEASE FINANCE CORPORATION ("ILFC") of 1999 Avenue of the Stars, 39th Floor, Los
Angeles, California 90067, U.S.A. as Frontier's true and lawful attorney so that
ILFC may take any of the following actions in the name of and for Frontier with
respect to the Airbus A318-100 aircraft bearing manufacturer's serial number
[TBD] (the "Aircraft") leased by ILFC to Frontier pursuant to an Aircraft Lease
Agreement dated as of May 25, 2000 (the "Lease"):
1. Pursuant to the Lease, Frontier has procured and is maintaining
insurances for the Aircraft. ILFC has been named sole loss payee on the all risk
hull and war risk insurances for the Aircraft. In the event of a total loss or
constructive total loss of the Aircraft, ILFC is entitled to receive insurance
proceeds in an amount equal to: 28,000,000. ILFC may take all action and sign
all documents otherwise required to be performed by Frontier, including
execution on behalf of Frontier of an appropriate form of discharge/release
document, in order for ILFC to collect such insurance proceeds.
2. In the exercise of the rights of ILFC under the Lease to recover the
Aircraft from Frontier and United States after termination of the Lease due to
an Event of Default under the Lease or for termination of the Lease due to any
other reason, ILFC may take all action otherwise required to be performed by
Frontier before the authorities and courts in United States in order to cause
the Aircraft to be repossessed by ILFC, deregistered from the U.S. Federal
Aviation Administration and exported from the United States.
3. In the exercise of the rights mentioned in paragraphs 1 and 2, ILFC
may make any declarations or statements and sign any public or private documents
which may be considered necessary or appropriate.
4. ILFC may delegate the powers conferred hereby, in whole or in part,
to any individual(s), including but not limited to employees of ILFC or legal
counsel in United States.
ILFC is empowered to determine in its sole discretion when to exercise
the powers conferred upon ILFC pursuant to this Power of Attorney. Any person,
agency or company relying upon this Power of Attorney need not and will not make
any determination or require any court judgment as to whether an Event of
Default has occurred under the Lease or whether the Lease has been terminated.
Frontier hereby waives any claims against (a) any person acting on the
instructions given by ILFC or its designee pursuant to this Power of Attorney
and (b) any person designated by ILFC or an officer of ILFC to give instructions
pursuant to this Power of Attorney. Frontier also agrees to indemnify and hold
harmless any person, agency or company which may act in reliance upon this Power
of Attorney and pursuant to instructions given by ILFC or its designee.
This Power of Attorney is irrevocable until the Aircraft has been
returned to the possession of ILFC, deregistered and exported from United
States.
FRONTIER AIRLINES has made and delivered this Power of Attorney on
_________ in ____________.
FRONTIER AIRLINES
By:
Title:
EXHIBIT H ASSIGNMENT OF RIGHTS (AIRFRAME)
This Assignment of Warranty and Support Rights is made this ______ day of
_______________, ______ (the "Assignment Agreement")
BETWEEN
(1) INTERNATIONAL LEASE FINANCE CORPORATION, a corporation organized and
existing under the laws of the State of California, United States of
America, having its principal corporate offices located at 1999 Avenue of
the Stars, 39th Floor, Los Angeles, California 90067, U.S.A. ("ILFC"); and
(2) FRONTIER AIRLINES, INC. a Colorado corporation whose address and principal
place of business is at 12015 East 46th Avenue, Suite 200, Denver, Colorado
80239, U.S.A. ("LESSEE")
1. Preamble. In connection with the lease by ILFC to LESSEE of one Airbus
A318-100 aircraft bearing manufacturer's serial number [TBD] (the
"Aircraft"), reference is made to the following documents:
(a) the Airbus A318-100 Purchase Agreement between ILFC and AVSA,
S.A.R.L. ("AVSA") dated as of January 11, 1999, as further
amended (the "Purchase Agreement"), under which ILFC agreed to
purchase the Aircraft;
(b) the General Terms Agreement between ILFC and AVSA dated as of
November 10, 1988 (the "G.T.A.");
(c) the Product Support Agreement ("Exhibit E") applicable to the
Purchase Agreement (the "Support Agreement");
(d) the Aircraft Lease Agreement between ILFC and LESSEE dated as of
May __, 2000 (the "Lease Agreement");
(e) the Participation Agreement between ILFC and LESSEE dated as of
____________ ___, ______ (the "Participation Agreement").
2. Assignment. Pursuant to the Lease Agreement, ILFC will lease the Aircraft
to LESSEE, including in such Lease Agreement a commitment to assign to
LESSEE certain warranty and other rights related to the Aircraft under the
Purchase Agreement, the G.T.A. and the Support Agreement. With effect from
the actual delivery date of the Aircraft by AVSA to ILFC in respect of (a),
(b) and (d) below, and with effect from the date hereof in respect of (c)
below, ILFC therefore hereby assigns to LESSEE and LESSEE accepts the
assignment on the terms and conditions specified herein of the following
rights (the "Rights") under the provisions indicated (the "Assigned
Provisions") with respect to the Aircraft:
(a) the benefit of the rights with respect to the Aircraft under
Clause 12 (Warranties and Service Life Policy) of the G.T.A.;
(b) the rights with respect to the Aircraft under Clause 13 (Patent
Indemnity) of the G.T.A.;
(c) the rights with respect to the Aircraft under the Support
Agreement;
(d) the benefit of the remaining part of support allowances set forth
in paragraph 1(d) of the Participation Agreement.
3. Conditions of Assignment. This Assignment Agreement is made subject to the
following conditions:
(a) LESSEE hereby agrees to be bound by and to comply with all
applicable terms, conditions and limitations of Clause 12.5 of
the G.T.A. and Clauses 16.9 and 18.5 of the Support Agreement
(copies of which are attached hereto) with respect to the
exercise of any of the Rights and to be bound by the covenants of
the Buyer in the Assigned Provisions to the same extent as if
LESSEE had been named "Buyer" of the Aircraft under the Purchase
Agreement.
(b) Nothing contained herein shall subject AVSA to any liability or
additional obligations whatsoever to which it would not otherwise
be subject under the Purchase Agreement, the G.T.A. and the
Support Agreement or, except to the extent set forth in section
3(c) below, modify in any respect whatsoever its contractual
rights under the said agreements.
(c) So long as this Assignment Agreement is in full force and effect,
LESSEE and not ILFC will be responsible for compliance with
Clause 12.5 of the G.T.A. and Clauses 16.9 and 18.5 of the
Support Agreement, in each case with respect to the Aircraft.
Upon termination of this Assignment Agreement, ILFC shall once
again be bound by such clauses with respect to the rights and
benefits described in section 2 above received by ILFC in
connection with the Aircraft.
(d) Other than with respect to the obligations assumed by LESSEE
under this Assignment Agreement as set forth in section 3(a)
above, ILFC shall remain fully bound by all provisions of the
Purchase Agreement, G.T.A. and Support Agreement.
4. Reassignment. Upon termination of the Lease Agreement between ILFC and
LESSEE, and provided that LESSEE and ILFC shall have furnished AVSA with
written notice thereof, upon receipt of such notice by AVSA, the rights
contained herein shall automatically be reassigned to ILFC.
5. Assignment by LESSEE. Except as permitted under Article 24 of the Lease
Agreement, the rights of ILFC and LESSEE under this Assignment Agreement in
respect of the Purchase Agreement, the G.T.A. and the Support Agreement
shall not be further assigned by the parties hereto.
6. Notification
(a) It shall be a condition precedent to this Assignment Agreement
that this Assignment Agreement shall, at the expense of LESSEE,
be notified to AVSA within 2 weeks of the date hereof pursuant to
Article 1690 of the French Civil Code.
(b) All notices and requests required or authorized under this
Assignment Agreement shall be given in writing either by personal
delivery to a responsible officer of the party to whom the same
is given or by internationally recognized courier service or by
telefax directed as set forth below:
ILFC shall be addressed at:
1999 Avenue of the Stars, 39th Floor
Los Angeles, California 90067, U.S.A.
Attention: Senior Vice President-Technical
Fax: 310-788-1990
Telephone: 310-788-1999
LESSEE shall be addressed at:
12015 East 46th Avenue Suite 200 Denver, Colorado 80239,
U.S.A.
Attention: General Counsel
Fax: 303-371-7007
Telephone: 303-371-7400
AVSA shall be addressed at:
2 Rond-Point Maurice Bellonte
31 700 Blagnac, France
Attention: Director Contracts
Fax: (33) 5.61.30.40.11
Telephone: (33) 5.61.30.40.12
or at such other address or to such other person as the party receiving the
notice or request may designate from time to time.
Such notice or request shall be deemed to be effective in the
case of (aa) personal delivery, on the date upon which personally
delivered, (bb) delivery by courier, on the date of receipt or (cc)
telefax transmission, on the date of confirmation of successful
transmission.
7. Consent of AVSA. It shall be a condition precedent to this Assignment
Agreement that AVSA execute the Consent contained in Schedule 1 hereto.
8. Applicable Law and Jurisdiction. THIS ASSIGNMENT AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW, AND THE PARTIES
AGREE THAT ANY COMPETENT FEDERAL COURT LOCATED IN NEW YORK, NEW YORK SHALL
HAVE JURISDICTION OVER ANY DISPUTE ARISING IN CONNECTION HEREWITH. Nothing
in this section will prevent either party from making a claim in a court of
competent jurisdiction in California or, if AVSA is involved, France.
9. Confidentiality. Subject to any legal or governmental requirements of
disclosure, ILFC and LESSEE shall keep confidential the terms and
conditions of this Assignment Agreement and the clauses from the G.T.A. and
Support Agreement provided to
LESSEE provided that ILFC and LESSEE may disclose such materials to their
professional advisors.
IN WITNESS WHEREOF, the parties have caused this Assignment Agreement
to be executed on their behalf by their duly authorized officers.
INTERNATIONAL LEASE FINANCE CORPORATION FRONTIER AIRLINES, INC.
By: By:
Its: Its:
SCHEDULE 1
[DATE]
Re: ILFC/FRONTIER AIRLINES ("LESSEE"): ASSIGNMENT OF WARRANTY AND SUPPORT RIGHTS
Dear Sirs,
1. Reference is made to the Assignment of Warranty and Support Rights dated
____________ ___, ______ between ILFC and LESSEE (the "Assignment
Agreement") concerning the assignment of certain warranty rights under the
Purchase Agreement and the G.T.A. and certain customer support rights under
the Support Agreement with respect to the Aircraft.
2. All terms defined herein bear the meaning ascribed hereto in the Assignment
Agreement.
3. AVSA hereby consents to the assignment and reassignment contained in
Clauses 2 and 4 respectively of the Assignment Agreement on the terms and
conditions therein, subject to the following conditions:
(a) AVSA shall have received formal notification of the Assignment
Agreement;
(b) AVSA shall not be subject by reason of the Assignment Agreement to any
liability or additional obligations whatsoever to which it would not
otherwise be subject under the Purchase Agreement, the G.T.A. and the
Support Agreement or modify in any respect whatsoever its contractual
rights under the said agreements;
(c) So long as the Assignment Agreement is in full force and effect,
LESSEE and not ILFC will be responsible for compliance with Clause
12.5 of the G.T.A. and Clauses 16.9 and 18.5 of the Support Agreement,
in each case with respect to the Aircraft. Upon termination of the
Assignment Agreement, ILFC shall once again be bound by such clauses
with respect to the rights and benefits described in section 2 of the
Assignment Agreement received by ILFC in connection with the Aircraft.
(d) LESSEE hereby agrees to be bound by and to comply with all applicable
terms, conditions and limitations of Clause 12.5 of the G.T.A. and
Clauses 16.9 and 18.5 of the Support Agreement with respect to the
exercise of any of the Rights and to be bound by the covenants of the
Buyer in the Assigned Provisions to the same extent as if LESSEE had
been named "Buyer" of the Aircraft under the Purchase Agreement.
(e) Other than with respect to the obligations assumed by LESSEE under the
Assignment Agreement as set forth in section 3(a) above, ILFC shall
remain fully bound by all provisions of the Purchase Agreement, G.T.A.
and Support Agreement.
4. This Consent shall be governed by and construed in accordance with the laws
of the State of New York and any dispute arising hereunder shall be
referred to the federal court located in New York, New York. Nothing in
this clause will prevent any party from making a claim in a court of
competent jurisdiction in California or France.
For and on behalf of AVSA, S.A.R.L.
By:
Title:
Date:
Signed in acknowledgement for Signed in acknowledgement for
and on behalf of and on behalf of
INTERNATIONAL LEASE FINANCE CORPORATION FRONTIER AIRLINES, INC.
By: By:
Its: Its:
EXHIBIT I ASSIGNMENT OF RIGHTS (ENGINES)
ASSIGNMENT OF WARRANTIES
[DATE]
In consideration of FRONTIER AIRLINES, INC. ("LESSEE") leasing from
INTERNATIONAL LEASE FINANCE CORPORATION ("ILFC") one (1) A318-100 aircraft with
two Pratt & Whitney 6124 engines installed thereon, it is hereby agreed as
follows:
1. ILFC hereby assigns and transfers to LESSEE all of ILFC's respective
rights and interest in and to and in and under the Engine Sales Warranty and
Service Policy benefits (the "Engine Warranties") of the Consolidated JT8D-200
Series/PW2000 Series/PW4000 Series Propulsion System/Engine Support Proposal for
International Lease Finance Corporation Dated May 11, 1988 (the "Support
Agreement") between United Technologies Corporation, Pratt & Whitney Group
("P&W") and International Lease Finance Corporation ("ILFC") during the term of
the lease to LESSEE so long as LESSEE is not in default thereunder.
2. P&W hereby consents to the assignment and transfer to LESSEE of all
of the rights and interest of ILFC in, to and under the Engine Warranties and
P&W agrees that until it shall have received written notice that LESSEE is in
default under such lease from ILFC, it will allow LESSEE on an exclusive basis,
to exercise in its own name all rights and interest that ILFC would have been
entitled to pursuant to the Engine Warranties, it being further agreed that
LESSEE accepts all of the limitations and liabilities pertaining to said
Warranties as stated in the Support Agreement.
3. Each party agrees that at any time from time-to-time, on written
request of any other party hereto and at the expense of the party so requesting,
that it will promptly and duly execute and deliver any and all reasonable
documentation required to accomplish the assignment and transfer of the rights
and interest referred to above.
4. This Agreement shall be binding upon and inure to the benefit of
each of the parties hereto and their respective successors and assigns to the
extent permitted by the Support Agreement and hereunder.
5. This Agreement shall be governed by and construed in accordance with
the laws of the State of California.
6. This Agreement may be executed in any number of counterparts, each
of which when executed and delivered is an original but all of which taken
together constitute on and the same instrument and any party may execute this
Agreement by signing any counterpart.
IN WITNESS WHEREOF, the authorized representative of the parties hereto have
executed this Agreement as of the day and year first above written.
For and on behalf of
INTERNATIONAL LEASE FINANCE CORPORATION
For and on behalf of FRONTIER AIRLINES, INC.
Its:
For and on behalf of
UNITED TECHNOLOGIES CORPORATION, PRATT & WHITNEY GROUP
L.E. Pawlich
Manager, Business Support
EXHIBIT J RETURN ACCEPTANCE RECEIPT
Date: _________________ ___, ____
1. FRONTIER AIRLINES, INC. as LESSEE, and INTERNATIONAL LEASE FINANCE
CORPORATION, as LESSOR, have entered into an Aircraft Lease Agreement
dated as of May 25, 2000 (the "Lease"). Words used herein with capital
letters and not otherwise defined will have the meanings set forth in
the Lease.
2. LESSOR has this ____ day of __________, ____ (Time: __________) at
____________________ received from LESSEE possession of:
(a) One (1) Airbus A318-100 Aircraft bearing Manufacturer's
serial number [TBD], together with two (2) PW 6124 Engines bearing
manufacturer's serial numbers ______ and ______, and all Parts attached
thereto and thereon in an airworthy condition and
(b) All Aircraft Documentation, including the usual and
customary manuals, logbooks, flight records and historical information
regarding the Aircraft, Engines, and Parts, as listed in the Document
Receipt attached hereto.
3. The Airframe, Engines, and Parts had the following hours/cycles at
return:
(a) Airframe:
Total hours: ________ Total Landings: ___________
Date last "C" check performed: _________________
______ hours/ ______ cycles since last "C" check
Date last "D" check performed: _________________
______ hours/ ______ cycles since last "D" check
(b) Engines:
Position Serial No. Total Hours Total Cycles Hrs/Cycles since
last shop visit
Time Remaining to Next
Life Limited Part Removal
Part Name Hours Cycle
MSN
MSN
(c) APU: MSN __________
Total hours: __________
______ hours/ ______ cycles since last Overhaul
______ hours/ ______ cycles remaining on APU life-limited Parts
(d) Landing Gears:
Position Serial No. Total Hrs/Cycles Hrs/Cycles since Date of last
last Overhaul Overhaul
Nose
Right Main
Left Main
(e) Fuel on board at return: ______ (circle one) pounds/kilos
(______ gallons)
4. Other technical information regarding the Aircraft and its components
are correctly set forth on the Technical Evaluation Report (in the
form of Exhibit M) attached hereto. -
5. With reference to Article 13.8 of the Lease regarding reimbursement
from the Reserves after return of the Aircraft:
_____ There are no claims for reimbursement from the
Reserves which will be submitted after the date
hereof.
or
_____ Claims for reimbursement from the Reserves will be
submitted after the date hereof for the following:
Type of Work Estimated Invoice Amount
6. The above specified aircraft, engines and documentation are hereby
accepted by LESSOR subject to correction by LESSEE (or procurement by
LESSEE at LESSEE's cost) as soon as reasonably possible of the
discrepancies specified in Attachment 2 hereto.
7. Subject to the following paragraph, the leasing of the Aircraft by
LESSOR to LESSEE pursuant to the Lease is hereby terminated without
prejudice to LESSEE's continuing obligations under the Lease
including, without limitation, paragraph 6 above, paragraph 8 below,
and Articles 10.5, 16 and 17.
8. LESSEE represents and warrants that during the term of the Lease all
maintenance and repairs to the Airframe and Engines were performed in
accordance with the requirements contained in the Lease. LESSEE
further confirms that all of its obligations under the Lease whether
accruing prior to the date hereof.