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: Used Boeing B737-300
Aircraft Manufacturer's Serial Number: 26293
Aircraft Registration Mark: Per Exhibit E
Make and Model of Engines: CFM56-3C1
Serial Numbers of Engines: 724885 and 724886
USED 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 Option............................................2
1.5 Security Deposit..................................................2
1.6 Transaction Fee...................................................2
1.7 Rent During Initial Lease Term....................................2
1.8 Rent During Lease Extension Term..................................3
1.9 Reserves..........................................................3
1.10 Country of Aircraft Registration..................................3
1.11 Maintenance Program...............................................3
1.12 Agreed Value of Aircraft..........................................3
1.13 LESSOR's Bank Account.............................................3
ARTICLE 2 DEFINITIONS.......................................................4
2.1 General Definitions...............................................4
2.2 Specific Definitions..............................................9
ARTICLE 3 PLACE AND DATE OF DELIVERY.......................................11
3.1 Place of Delivery................................................11
3.2 Scheduled Delivery Date..........................................11
3.3 No LESSOR Liability..............................................11
3.4 Total Loss of Aircraft prior to Delivery.........................11
3.5 Cancellation for Delay...........................................11
ARTICLE 4 LEASE TERM AND EXTENSION OPTION..................................12
4.1 Initial Lease Term...............................................12
4.2 Lease Extension Option...........................................12
4.3 "Lease Term" and "Expiration Date"...............................12
4.4 "Termination Date"...............................................12
ARTICLE 5 SECURITY DEPOSIT, TRANSACTION FEE, RENT, RESERVES AND
OTHER PAYMENTS...................................................14
5.1 Security Deposit.................................................14
5.2 Transaction Fee..................................................14
5.3 Rent.............................................................14
5.4 Reserves.........................................................15
5.5 LESSOR's Bank Account............................................16
5.6 Default Interest.................................................16
5.7 No Deductions or Withholdings....................................17
5.8 Value Added Taxes................................................17
5.9 Wire Transfer Disbursement Report................................17
5.10 Net Lease........................................................17
5.11 LESSOR Performance of LESSEE Obligation..........................18
5.12 Consideration for Rent and other Amounts.........................19
ARTICLE 6 DELIVERY CONDITION AND INSPECTION OF AIRCRAFT....................20
6.1 LESSEE Selection of Aircraft.....................................20
6.2 Condition at Delivery............................................20
6.3 LESSEE Inspection of Aircraft at Delivery........................20
6.4 Delivery of Aircraft to LESSEE...................................20
6.5 LESSEE Acceptance of Aircraft....................................20
ARTICLE 7 PRE-DELIVERY, DELIVERY AND POST-DELIVERY DOCUMENTARY
AND OTHER REQUIREMENTS...........................................21
7.1 Pre-Delivery Requirements........................................21
7.2 LESSOR's Pre-Delivery Requirements...............................21
7.3 Delivery Requirements............................................22
7.4 Post-Delivery Requirements.......................................23
ARTICLE 8 DISCLAIMERS......................................................24
8.1 "As Is, Where Is"................................................24
8.2 Waiver of Warranty of Description................................24
8.3 LESSEE Waiver....................................................25
8.4 Conclusive Proof.................................................25
8.5 No LESSOR Liability for Losses...................................25
8.6 No Liability to Repair or Replace................................26
8.7 No Waiver........................................................26
ARTICLE 9 MANUFACTURERS' AND VENDORS' WARRANTIES...........................27
9.1 Warranties.......................................................27
9.2 Non-Assignable Warranties........................................27
9.3 Reassignment.....................................................27
9.4 Warranty Claims..................................................27
ARTICLE 10 OPERATION OF AIRCRAFT............................................28
10.1 Costs of Operation...............................................28
10.2 Compliance with Laws.............................................28
10.3 Training.........................................................28
10.4 No Violation of Insurance Policies...............................28
10.5 Flight Charges...................................................28
ARTICLE 11 SUBLEASES........................................................29
11.1 No Sublease without LESSOR Consent...............................29
11.2 LESSOR Costs.....................................................29
11.3 Any Approved Sublease............................................29
11.4 Assignment of Sublease...........................................30
11.5 Continued Responsibility of LESSEE...............................30
ARTICLE 12 MAINTENANCE OF AIRCRAFT..........................................31
12.1 General Obligation...............................................31
12.2 Specific Obligations.............................................31
12.3 Replacement of Parts.............................................33
12.4 Removal of Engines...............................................34
12.5 Pooling of Engines and Parts.....................................34
12.6 Installation of Engines on other aircraft........................34
12.7 Engine Thrust Rating.............................................35
12.8 Modifications....................................................35
12.9 Performance of Work by Third Parties.............................37
12.10 Reporting Requirements...........................................37
12.11 Information Regarding Maintenance Program........................37
12.12 LESSOR Rights to Inspect Aircraft................................37
ARTICLE 13 USE OF RESERVES..................................................38
13.1 Airframe Reserves................................................38
13.2 Engine Reserves..................................................38
13.3 Landing Gear Reserves............................................39
13.4 Reimbursement....................................................39
13.5 Reimbursement Adjustment.........................................39
13.6 Costs in Excess of Reserves......................................40
13.7 Reimbursement after Termination Date.............................40
ARTICLE 14 TITLE AND REGISTRATION...........................................41
14.1 Title to the Aircraft During Lease Term..........................41
14.2 Registration of Aircraft.........................................41
14.3 Filing of this Lease.............................................41
14.4 Evidence of Registration and Filings.............................41
ARTICLE 15 IDENTIFICATION PLATES............................................42
15.1 Airframe Identification Plates...................................42
15.2 Engine Identification Plates.....................................42
ARTICLE 16 TAXES............................................................43
16.1 General Obligation of LESSEE.....................................43
16.2 Exceptions to Indemnity..........................................43
16.3 After-Tax Basis..................................................44
16.4 Timing of Payment................................................45
16.5 Contests.........................................................45
16.6 Refunds..........................................................45
16.7 Cooperation in Filing Tax Returns................................45
16.8 Survival of Obligations..........................................45
ARTICLE 17 INDEMNITIES......................................................46
17.1 General Indemnity................................................46
17.2 Exceptions to General Indemnities................................47
17.3 After-Tax Basis..................................................48
17.4 Timing of Payment................................................48
17.5 Subrogation......................................................48
17.6 Notice...........................................................48
17.7 Refunds..........................................................48
17.8 Defense of Claims................................................48
17.9 Survival of Obligation...........................................49
ARTICLE 18 INSURANCE........................................................50
18.1 Categories of Insurance..........................................50
18.2 Write-back of any Date Recognition Exclusion.....................50
18.3 Insurance for Indemnities........................................50
18.4 Insurance required by Manufacturer...............................50
18.5 Renewal..........................................................50
18.6 Assignment of Rights by LESSOR...................................50
18.7 Other Insurance..................................................51
18.8 Information......................................................51
18.9 Currency.........................................................51
18.10 Grounding of Aircraft............................................51
18.11 Failure to Insure................................................51
18.12 Reinsurance......................................................51
18.13 Limit on Hull in favor of LESSEE.................................52
ARTICLE 19 LOSS, DAMAGE AND REQUISITION.....................................53
19.1 Definitions......................................................53
19.2 Notice of Total Loss.............................................54
19.3 Total Loss of Aircraft or Airframe...............................54
19.4 Surviving Engine(s)..............................................55
19.5 Total Loss of Engine and not Airframe............................55
19.6 Other Loss or Damage.............................................56
19.7 Copy of Insurance Policy.........................................57
19.8 Government Requisition...........................................57
19.9 LESSOR Retention of Reserves; Return of Security Deposit
and Prepaid Rent.................................................57
ARTICLE 20 REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSEE..............59
20.1 Representations and Warranties...................................59
20.2 Covenants........................................................60
ARTICLE 21 REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSOR..............63
21.1 Representations and Warranties...................................63
21.2 Covenant of Quiet Enjoyment......................................64
ARTICLE 22 FINANCIAL AND RELATED INFORMATION................................65
ARTICLE 23 RETURN OF AIRCRAFT...............................................66
23.1 Date of Return...................................................66
23.2 Technical Report.................................................66
23.3 Return Location..................................................66
23.4 Full Aircraft Documentation Review...............................66
23.5 Aircraft Inspection..............................................66
23.6 Certificate of Airworthiness Matters.............................67
23.7 General Condition of Aircraft at Return..........................68
23.8 Checks Prior to Return...........................................70
23.9 Engine Return Requirements.......................................71
23.10 Hour/Cycle/Calendar Time Requirements............................73
23.11 Like for Like....................................................74
23.12 Export and Deregistration of Aircraft............................74
23.13 LESSEE's Continuing Obligations..................................74
23.14 Airport and Navigation Charges...................................75
23.15 Return Acceptance Certificate....................................75
23.16 Indemnities and Insurance........................................76
23.17 Civil Reserve Air Fleet..........................................76
ARTICLE 24 ASSIGNMENT.......................................................78
24.1 No Assignment by LESSEE..........................................78
24.2 Sale or Assignment by LESSOR.....................................78
24.3 LESSOR's Lender..................................................78
24.4 LESSEE Cooperation...............................................78
24.5 Protections......................................................79
ARTICLE 25 DEFAULT OF LESSEE................................................80
25.1 LESSEE Notice to LESSOR..........................................80
25.2 Events of Default................................................80
25.3 LESSOR's General Rights..........................................82
25.4 Deregistration and Export of Aircraft............................82
25.5 LESSEE Liability for Damages.....................................82
25.6 Waiver of Default................................................83
25.7 Present Value of Payments........................................83
25.8 Use of "Termination Date"........................................84
25.9 LESSEE's Remedies................................................84
25.10 Waiver of Consequential Damages..................................84
ARTICLE 26 NOTICES..........................................................85
26.1 Manner of Sending Notices........................................85
26.2 Notice Information...............................................85
ARTICLE 27 GOVERNING LAW AND JURISDICTION...................................86
27.1 California Law...................................................86
27.2 Non-Exclusive Jurisdiction in California.........................86
27.3 Service of Process...............................................86
27.4 Prevailing Party in Dispute......................................86
27.5 Waiver...........................................................86
ARTICLE 28 MISCELLANEOUS....................................................87
28.1 Transportation of Personnel......................................87
28.2 Press Releases...................................................87
28.3 Power of Attorney................................................87
28.4 LESSOR Performance for LESSEE....................................87
28.5 LESSOR's Payment Obligations.....................................87
28.6 Application of Payments..........................................87
28.7 Usury Laws.......................................................87
28.8 Delegation by LESSOR.............................................88
28.9 Confidentiality..................................................88
28.10 Rights of Parties................................................88
28.11 Further Assurances...............................................88
28.12 Use of Word "including"..........................................89
28.13 Headings.........................................................89
28.14 Invalidity of any Provision......................................89
28.15 Time is of the Essence...........................................89
28.16 Amendments in Writing............................................89
28.17 Counterparts.....................................................89
28.18 Delivery of Documents by Fax.....................................89
28.19 Entire Agreement.................................................89
28.20 Expenses.........................................................90
EXHIBIT A AIRCRAFT DESCRIPTION.............................................92
EXHIBIT B CONDITION AT DELIVERY............................................93
EXHIBIT C CERTIFICATE OF INSURANCE.........................................99
EXHIBIT D BROKERS' LETTER OF UNDERTAKING..................................106
EXHIBIT E ESTOPPEL AND ACCEPTANCE CERTIFICATE.............................108
EXHIBIT F OPINION OF COUNSEL..............................................110
EXHIBIT G FORM OF POWER OF ATTORNEY.......................................111
EXHIBIT H ASSIGNMENT OF RIGHTS (AIRFRAME).................................113
EXHIBIT I ASSIGNMENT OF RIGHTS (ENGINES)..................................118
EXHIBIT J RETURN ACCEPTANCE RECEIPT.......................................122
EXHIBIT K MONTHLY REPORT..................................................132
EXHIBIT L AIRCRAFT DOCUMENTATION..........................................135
EXHIBIT M TECHNICAL EVALUATION REPORT.....................................137
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) used B737-300 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 used Boeing B737-300 aircraft with two (2) installed
CFM56-3C1 engines, all as more particularly described on Exhibit
A hereto 1.2 Scheduled Delivery Date and Location
1.2 Scheduled Delivery Date and Location
On or about May 31, 2000 at the TIMCO maintenance facility at
Greensboro, North Carolina.
1.3 Initial Lease Term
32 months
1.4 Lease Extension Option
One (1) Lease extension option of seven (7) months
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.
"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.
"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 6.4.
"Delivery Date" means the date on which Delivery takes place.
"Dollars" and "$" means the lawful currency of the U.S.
"Engine" means (a) each of the engines listed on the Estoppel
and Acceptance Certificate; (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 The Boeing Company.
"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 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.
"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 $*, (ii) a corporation which has (or a general
partnership whose general partners have) a consolidated net
worth of at least $* 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 $* 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.
"Prior Lessee" means Pro Air, Inc.
"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 23.17.1
CRAF Program Requisition Period 23.17.1
Default Interest 5.6
Delivery Location 3.1
Engine Reserves 5.4.1
Expenses 17.1
Expiration Date 4.3
Extension Lease Term 4.2.1
ndemnitees 17.1
Initial Lease Term 4.3
Landing Gear Reserves 5.4.1
Lease Term 4.3
LESSOR's Assignee 24.2.1
LESSOR's Bank 5.5
LESSOR's Lender 24.3
Modification 12.8.1
Net Total Loss Proceeds 19.1
Outside Delivery Date 3.5
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.1 Place of Delivery.1 Place of Delivery.1 Place of
Delivery. LESSOR will deliver the Aircraft to LESSEE at the TIMCO maintenance
facility at Greensboro, North Carolina or such other place as may be agreed in
writing between the parties (the "Delivery Location").
3.2 Scheduled Delivery Date.2 Scheduled Delivery Date.2 Scheduled Delivery
Date.2 Scheduled Delivery Date. As of the date of this Lease, Delivery of the
Aircraft from LESSOR to LESSEE is scheduled to occur on or about May 31, 2000.
LESSOR will notify LESSEE from time to time and in a timely manner of the exact
date on which LESSOR expects Delivery to take place (the "Scheduled Delivery
Date").
3.3 No LESSOR Liability.3 No LESSOR Liability.3 No LESSOR Liability.3 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.
3.4 Total Loss of Aircraft prior to Delivery.4 Total Loss of Aircraft prior to
Delivery.4 Total Loss of Aircraft prior to Delivery.4 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.
3.5 Cancellation for Delay.5 Cancellation for Delay.5 Cancellation for Delay.5
Cancellation for Delay. Promptly after LESSOR becomes aware that a delay will
cause Delivery to be delayed beyond June 15, 2000 (the "Outside Delivery Date"),
LESSOR will notify LESSEE. By written notice given within *(*) 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 * (*) day period, then the period for
termination shall be deemed to be extended for an additional * (*) days after
the expiration of such * (*) day period. In the event that neither party gives a
notice of termination within such * (*) 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.
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 * (*) months (the
"Initial Lease Term").
4.2 Lease Extension Option
4.2.1 So 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 extension lease term with respect to such option,
LESSEE will have one (1) option to extend the term of the Lease for a period of
* (*) months (the "Extension Lease Term").
4.2.2 In order to exercise its option, LESSEE must give written notice to LESSOR
not less than * (*) months prior to the then-existing Expiration Date of this
Lease. Any notice given by LESSEE in accordance herewith will be irrevocable.
4.3 "Lease Term" and "Expiration Date".3 LeaseTerm and ExpirationDate24.3
LeaseTerm and ExpirationDate.3 LeaseTerm and ExpirationDate. "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 3.4;
(ii) cancellation of this Lease occurs pursuant to Article 3.5;
(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 *
5.3.2 *
5.4 Reserves
5.4.1 *
5.4.2 The amount of the Engine 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 *
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.7 No Deductions or Withholdings.7 No
Deductions or Withholdings.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.9 Wire Transfer Disbursement Report.9 Wire
Transfer Disbursement Report.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, Prior Lessee, 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, Prior 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.11 LESSOR Performance of LESSEE
Obligation.11 LESSOR Performance of LESSEE Obligation.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.12 Consideration for Rent and
other Amounts.12 Consideration for Rent and other Amounts.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 DELIVERY CONDITION AND INSPECTION OF AIRCRAFT
6.1 LESSEE Selection of Aircraft.1 LESSEE Selection of Aircraft.1 LESSEE
Selection of Aircraft.1 LESSEE Selection of Aircraft. 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 Condition at Delivery.2 Condition at Delivery.2 Condition at Delivery.2
Condition at Delivery. LESSOR has advised LESSEE that at Delivery the Aircraft
will be as set forth in Exhibit A and in the condition set forth in Exhibit B.
To the extent that at Delivery there are non-substantial or minor deviations
from the condition set forth in Exhibit B which do not affect the airworthiness
of the Aircraft, LESSEE will nonetheless accept the Aircraft subject to such
deviations and LESSEE and LESSOR will mutually agree to either (i) adjust the
return conditions of the Aircraft set forth in Article 23 accordingly or (ii)
arrange for LESSOR to reimburse LESSEE for the reasonable cost of rectification
of such deviations.
6.3 LESSEE Inspection of Aircraft at Delivery.3 LESSEE Inspection of Aircraft at
Delivery.3 LESSEE Inspection of Aircraft at Delivery.3 LESSEE Inspection of
Aircraft at Delivery. LESSEE will have the ground inspection and acceptance
flight rights set forth in Exhibit B. 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.
6.4 Delivery of Aircraft to LESSEE.4 Delivery of Aircraft to LESSEE.4 Delivery
of Aircraft to LESSEE.4 Delivery of Aircraft to LESSEE. Subject to LESSEE having
performed all of the conditions precedent to Delivery set forth herein, LESSOR
will deliver the Aircraft to LESSEE at the Delivery Location. Provided that the
Aircraft is in the condition required by Article 6.2, 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.
6.5 LESSEE Acceptance of Aircraft.5 LESSEE Acceptance of Aircraft.5 LESSEE
Acceptance of Aircraft.5 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 on the Scheduled Delivery Date 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.
ARTICLE 7 PRE-DELIVERY, DELIVERY AND POST-DELIVERY DOCUMENTARY AND OTHER
REQUIREMENTS
7.1 Pre-Delivery Requirements. LESSEE will deliver to LESSOR each of the
following prior to the Scheduled Delivery Date of the Aircraft:
(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.
(c) 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;
(d) a copy of LESSEE's Air Operator's Certificate;
(e) 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;
(f) a power of attorney in the form of Exhibit G; and
-
(g) such other documents as LESSOR may reasonably request.
7.2 LESSOR's Pre-Delivery Requirements.2 LESSOR's Pre-Delivery Requirements.2
LESSOR's Pre-Delivery Requirements.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 6.2;
(b) The Aircraft shall be registered 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; and (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.
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 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.
7.3.4 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.
7.3.5 If any Creditor Agreement provides or contemplates that such Creditor will
obtain any right, title or interest in an Engine which is installed on such
Creditor's aircraft, 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.4 Post-Delivery Requirements.4 Post-Delivery
Requirements.4 Post-Delivery Requirements. Within fourteen (14) days after
Delivery, if not previously provided, LESSOR will deliver to LESSEE (a) the
Airframe Warranty Assignment duly executed by LESSOR and acknowledged by
Manufacturer and (b) the Engine Warranty Assignment duly executed by LESSOR.
ARTICLE 8 DISCLAIMERS
LESSOR HAS COMMITTED TO LESSEE THAT ON THE DELIVERY DATE THE
AIRCRAFT WILL BE IN THE CONDITION REQUIRED BY EXHIBIT B. 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".1 AsIs,WhereIs.1 AsIs,WhereIs.1 AsIs,WhereIs. 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.2 Waiver of Warranty of Description.2
Waiver of Warranty of Description.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.3 LESSEE Waiver.3 LESSEE Waiver.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.4 Conclusive Proof.4 Conclusive Proof.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.5 No LESSOR Liability for Losses.5 No LESSOR
Liability for Losses.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.6 No Liability to Repair or Replace.6 No
Liability to Repair or Replace.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.1 Warranties.1 Warranties.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.2 Non-Assignable Warranties.2 Non-Assignable
Warranties.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.3 Reassignment.3 Reassignment.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.1 Costs of Operation.1 Costs of Operation.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.2 Compliance with Laws.2 Compliance with Laws.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 it will not use the
Aircraft for training any more than it utilizes for training the other B737-300
aircraft in its fleet.
10.4 No Violation of Insurance Policies.4 No Violation of Insurance Policies.4
No Violation of Insurance Policies.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.5 Flight Charges.5 Flight Charges.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.1 No Sublease without LESSOR Consent.1
No Sublease without LESSOR Consent.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.2 LESSOR Costs.2 LESSOR Costs.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.3 Any Approved Sublease.3 Any Approved Sublease.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.5 Continued Responsibility of LESSEE.5
Continued Responsibility of LESSEE.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 B737 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 B737
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 FAA-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.5 Pooling of Engines and Parts.5 Pooling of
Engines and Parts.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 B737 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.6 Installation of Engines on
other aircraft.6 Installation of Engines on other aircraft.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.7 Engine Thrust Rating.7 Engine Thrust Rating.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 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.9 Performance of Work by Third
Parties.9 Performance of Work by Third Parties.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.12 LESSOR Rights to Inspect Aircraft.12
LESSOR Rights to Inspect Aircraft.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.1 Airframe Reserves.1 Airframe Reserves.1 Airframe
Reserves. The Airframe Reserves payable by LESSEE hereunder will be retained by
LESSOR as LESSEE's contribution toward payment of the cost of performance of the
"C7"inspection and the 22,400 flight hour structural inspection of the Aircraft
pursuant to the MPD. LESSEE and LESSOR acknowledge and agree that such "C7" and
22,400 flight hour structural inspection tasks will not be due to be performed
until after return of the Aircraft by LESSEE. As a result, the parties agree
that the Airframe Reserves are not reimburseable to LESSEE hereunder and that
LESSOR will retain all Airframe Reserves paid by LESSEE; provided, however, in
the event of the Total Loss of the Aircraft, fifty percent (50%) of the Airframe
Reserves held by LESSOR will be retained by LESSOR and the remaining portion of
such Reserves will be paid to LESSEE in accordance with Article 19.9.
13.2 Engine Reserves
13.2.1 Subject to the limitations set forth in Article 13.2.2, LESSOR will
reimburse LESSEE from the Engine Reserves for the actual cost associated with
performance restoration, the replacement of life limited Parts 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 13.5. 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 Reserves applicable to such Engine
at the time of removal of such Engine.
13.2.2 Twenty-three percent (23%) of the per hour Engine Reserve payable by
LESSEE for an Engine will be designated and will be reimbursable solely for the
replacement of life limited parts in such Engine. With respect only to Engine
Reserves applicable to performance restoration of an Engine, reimbursement will
be further limited as to each module of such Engine in accordance with the
following percentages of the remaining total amount in the Engine Reserves for
such Engine:
18% Fan & Accessory Gearbox
22% High Pressure Compressor Module
44% High Pressure Turbine Module
16% Low Pressure Turbine Module
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 Landing Gear Reserves.3 Landing Gear Reserves.3 Landing Gear Reserves.3
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 13.5.
13.4 Reimbursement. LESSEE will be entitled to reimbursement from the Engine
Reserves and the Landing Gear Reserves after the work is completed and the
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
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.
13.5 Reimbursement Adjustment.5 Reimbursement Adjustment.5 Reimbursement
Adjustment.5 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).
13.6 Costs in Excess of Reserves.6 Costs in Excess of Reserves.6 Costs in Excess
of Reserves.6 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 Engine Reserves or Landing Gear Reserves for a
particular Engine or Landing Gear (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 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.
13.7 Reimbursement after Termination Date.7 Reimbursement after Termination
Date.7 Reimbursement after Termination Date.7 Reimbursement after Termination
Date. LESSEE may not submit any invoice for reimbursement from the Engine
Reserves or Landing Gear 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.1 Title to the Aircraft During
Lease Term.1 Title to the Aircraft During Lease Term.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.2 Registration of Aircraft.2 Registration of
Aircraft.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.3 Filing of this Lease.3 Filing of this Lease.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.4 Evidence of Registration and
Filings.4 Evidence of Registration and Filings.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: 26293
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.1 General Obligation of LESSEE.1 General
Obligation of LESSEE.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.4 Timing of Payment.4 Timing of Payment.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.5 Contests.5 Contests.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.7 Cooperation in Filing Tax Returns.7
Cooperation in Filing Tax Returns.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.1 General Indemnity.1 General Indemnity.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.3 After-Tax Basis.3 After-Tax Basis.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.4 Timing of Payment.4 Timing of Payment.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.6 Notice.6 Notice.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.8 Defense of Claims.8 Defense of Claims.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.9 Survival of Obligation.9 Survival of Obligation.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.1 Categories of Insurance.1 Categories of
Insurance.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.2 Write-back of any Date
Recognition Exclusion.2 Write-back of any Date Recognition Exclusion.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.3 Insurance for Indemnities.3 Insurance for
Indemnities.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.4 Insurance required by Manufacturer.4
Insurance required by Manufacturer.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.5 Renewal.5 Renewal.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.6 Assignment of Rights by LESSOR.6
Assignment of Rights by LESSOR.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.7 Other Insurance.7 Other Insurance.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.10 Grounding of Aircraft.10 Grounding of Aircraft.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.11 Failure to Insure.11 Failure to Insure.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.13 Limit on Hull in favor of LESSEE.13
Limit on Hull in favor of LESSEE.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).4 Surviving Engine(s).4 Surviving Engine(s).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.7 Copy of Insurance Policy.7 Copy of Insurance
Policy.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.8 Government Requisition.8 Government Requisition.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
.9 LESSOR Retention of Reserves; Return of Security Deposit and Prepaid Rent .9
LESSOR Retention of Reserves; Return of Security Deposit and Prepaid Rent .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 13.4, 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.1 Representations and Warranties.1
Representations and Warranties.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.).
21.1.7 Airframe and Engine Warranty Assignments. The Airframe Warranty
Assignment and the Engine Warranty Assignment when executed and delivered by
LESSOR in accordance with Article 7.4 represent the valid and enforceable
assignment to LESSEE of the warranties set forth therein.
21.2 Covenant of Quiet Enjoyment.2 Covenant of Quiet Enjoyment.2 Covenant of
Quiet Enjoyment.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.1 Date of Return.1 Date of Return.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.2 Technical Report.2 Technical Report.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
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.4 Full Aircraft Documentation Review.4
Full Aircraft Documentation Review.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 23.13.3) 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 for transport category aircraft in accordance with FAR
Part 21 and FAR Part 121 (although this Certificate of Airworthiness may later
be substituted by the Export Certificate of Airworthiness or equivalent if
requested by LESSOR pursuant to Article 23.12).
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 23.6.2. The records and historical
documents set forth in Attachment 1 of Exhibit J 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 the FAA.
23.7.5 The interior of the Aircraft (including cabin and windows) will be in a
reasonable condition and cosmetically acceptable, with no cracks, tears or rips.
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 the FARs or Manufacturer's Structural Repair
Manual (or FAA-approved data supported by FAA Form 8110-3) for the Aircraft, as
applicable.
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; provided, however, that if any Airworthiness Directive has been
deemed terminated by means of an alternate means of compliance that is widely
accepted by the international airline industry, such alternative means of
compliance will be deemed to satisfy the terms of this Article 23.7.11.
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.
23.7.16 The Aircraft will be painted in LESSEE's livery.
23.8 Checks Prior to Return. 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 "C" check as described in the MPD. 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 All required 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.
23.9 Engine Return Requirements.
23.9.1 Immediately prior to the return of the Aircraft to LESSOR, LESSEE at
LESSEE's expense will perform each of the following on the Engines:
(a) With LESSOR or its representatives present, LESSEE will
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.
(b) 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.
(c) With LESSOR or its representatives present, LESSEE will
accomplish a maximum power assurance run and an acceleration
check 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.
23.9.2 At return, each Engine will meet all of the following:
(a) Each Engine will have at least 4,000 hours and 3,000 cycles
remaining until its next anticipated removal regardless of the
operating environment of such Engine. In determining whether an
Engine has at least 4,000 hours and 3,000 cycles remaining until
its next anticipated removal, the following will be considered:
(i) the Engine manufacturer's estimated mean time between
removals for engines of the same type as the Engines;
(ii) the remaining EGT margin on such Engine; and
(iii)the Engine historical and technical records, borescope
inspection, trend monitoring, the maximum power
assurance run and the acceleration check;
(b) The Engine historical and technical records, borescope
inspection, trend monitoring, the maximum power assurance run
and the acceleration check do not reveal any condition which
would cause the Engines or any module to be serviceable with an
increased frequency of inspection or with calendar time, flight
hour or flight cycle restrictions under the Engine
manufacturer's maintenance manual;
(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 3,000 cycles remaining to operate until its next
scheduled Overhaul. Each Part of an Engine which has a life
limit will have at least 3,000 cycles remaining to operate until
its removal.
LESSEE will correct any discrepancies in the required condition of the Engines
set forth in this Article 23.9.2 in accordance with the guidelines set out by
the Engine manufacturer. If there is a dispute as to whether an Engine meets the
requirements of this Article 23.9.2, LESSEE and LESSOR will consult with Engine
manufacturer and follow Engine manufacturer's recommendations (including the
accomplishment of an Engine test cell operational check) and the manner in which
any discrepancies from the requirements of this Article 23.9.2 will be
rectified.
23.10 Hour/Cycle/Calendar Time Requirements. At return, the condition of the
Aircraft will be as follows:
23.10.1 The Aircraft will have not more than one-hundred (100) hours consumed
since completion of the last "C" check in accordance with the MPD (excluding
hours consumed on the acceptance flight).
23.10.2 The APU will be in serviceable condition.
23.10.3 The Landing Gear will be cleared for at least eight (8) months (or one
(1) month if LESSEE exercises its extension option) of operation until the next
Overhaul or scheduled removal; provided, however, that at LESSOR's request by
notice at least six (6) months prior to the Expiration Date, LESSEE will cause
to be performed an Overhaul the Landing Gear prior to return of the Aircraft and
the costs of such Overhaul will be paid as follows: (i) first, by application of
the Landing Gear Reserves paid by LESSEE and (ii) second, the balance will be
paid by LESSOR.
23.10.4 Each Part of the Aircraft which has a hard time (hour/cycle) limit to
Overhaul of less than four thousand (4,000) hours or three thousand (3,000)
cycles will be freshly overhauled or replaced and each Part of the Aircraft
which has a hard time (hour/cycle) limit to Overhaul of more than four thousand
(4,000) hours or three thousand (3,000) cycles will have four thousand (4,000)
hours and three thousand (3,000) cycles (whichever is applicable) remaining to
operate until its next scheduled Overhaul or removal.
23.10.5 Each life-limited Part of the Aircraft will have four thousand (4,000)
hours and three thousand (3,000) cycles (whichever is applicable) remaining to
operate until its next scheduled removal.
23.10.6 Each Part (excluding Landing Gear) which has a calendar limit (including
emergency equipment) will have remaining to operate the lesser of the following
calendar times: (i) one (1) year from the return of the Aircraft to LESSOR or
(ii) one hundred percent (100%) of such Part's total approved life.
23.10.7 With respect to all installed Parts as a group, such Parts will have an
average total time since new no greater than that of the Airframe.
23.10.8 The Aircraft Landing Gear tires and brakes will have at least fifty
percent (50%) life remaining until their next Overhaul (except for the
acceptance flight).
23.11 Like for Like.11 Like for Like.11 Like for Like.11 Like for Like.
Notwithstanding anything in this Article 23 to the contrary, in the event that
at Delivery the Aircraft did not meet a particular standard with respect to a
specific item set forth in Exhibit B, and such deficiency was noted on the
Estoppel and Acceptance Certificate, then LESSEE's return obligations with
respect to such specific item will be modified accordingly so that LESSEE is not
required to return such specific item with greater time remaining than existed
at Delivery.
23.12 Export and Deregistration of Aircraft.12 Export and Deregistration of
Aircraft.12 Export and Deregistration of Aircraft.12 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 (except as set forth in the second
sentence of this Article 23.12) 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.
23.13 LESSEE's Continuing Obligations.13 LESSEE's Continuing Obligations223.13
LESSEE's Continuing Obligations.13 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):
23.13.1 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.
23.13.2 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.
23.13.3 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 23.13.3 until the actual Termination Date.
23.13.4 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.
23.14 Airport and Navigation Charges.14 Airport and Navigation Charges223.14
Airport and Navigation Charges.14 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.
23.15 Return Acceptance Certificate.15 Return Acceptance Certificate.15 Return
Acceptance Certificate.15 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.
23.16 Indemnities and Insurance.16 Indemnities and Insurance.16 Indemnities and
Insurance.16 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.
23.17 Civil Reserve Air Fleet.
23.17.1 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.
23.17.2 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.
23.17.3 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.
23.17.4 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.
23.17.5 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
23.17.6 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.1 No Assignment by LESSEE.1 No Assignment by
LESSEE.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.3 LESSOR's Lender.3 LESSOR's Lender.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.4 LESSEE Cooperation.4 LESSEE Cooperation.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.1 LESSEE Notice to LESSOR.1 LESSEE Notice to
LESSOR.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. *
25.3 LESSOR's General Rights.3 LESSOR's General Rights.3 LESSOR's General
Rights.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.4 Deregistration and Export of
Aircraft.4 Deregistration and Export of Aircraft.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.5 LESSEE Liability for Damages.5 LESSEE
Liability for Damages.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 23.13.3; 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.6 Waiver of Default.6 Waiver of Default.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.7 Present Value of Payments.7 Present Value of
Payments.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".8 Use of TerminationDate.8 Use of
TerminationDate.8 Use of TerminationDate. 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.9 LESSEE's Remedies.9 LESSEE's Remedies.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.10 Waiver of Consequential Damages225.10
Waiver of Consequential Damages.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.1 Manner of Sending Notices.1 Manner of Sending
Notices.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.2 Non-Exclusive Jurisdiction in
California.2 Non-Exclusive Jurisdiction in California.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.3 Service of Process.3 Service of Process.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.4 Prevailing Party in Dispute.4 Prevailing
Party in Dispute.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.1 Transportation of Personnel.1 Transportation
of Personnel.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.3 Power of Attorney.3 Power of Attorney.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.4 LESSOR Performance for LESSEE.4 LESSOR
Performance for LESSEE.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.5 LESSOR's Payment Obligations.5 LESSOR's
Payment Obligations.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.6 Application of Payments.6 Application of
Payments.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.7 Usury Laws.7 Usury Laws.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.8 Delegation by LESSOR.8 Delegation by LESSOR.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.9 Confidentiality.9 Confidentiality.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.10 Rights of Parties.10 Rights of Parties.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.11 Further Assurances.11 Further Assurances.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.14 Invalidity of any Provision.14 Invalidity
of any Provision.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.15 Time is of the Essence.15 Time is of the
Essence.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.18 Delivery of Documents by Fax.18 Delivery
of Documents by Fax.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.19 Entire Agreement.19 Entire Agreement.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 B AIRCRAFT DESCRIPTION
Aircraft Manufacturer and Model: B737-300
Seating Configuration: None*
Manufacturer's Serial Number: 26293
Registration Mark: N-_____
Engine Manufacturer and Model: CFM56-3C1
Engine Serial Numbers: 724885 and 724886
Engine Thrust Rating: 22,000 pounds
Maximum Gross Takeoff Weight: 139,500 pounds
*The Aircraft is being delivered to LESSEE without seats and
will be returned to LESSOR without seats.
EXHIBIT C CONDITION AT DELIVERY
1. Technical Report
Prior to the Delivery Date, LESSOR will provide LESSEE with a Technical
Evaluation Report in the form and substance of Exhibit M, as revised,
and, in addition upon LESSEE's request, will make copies available of
(a) drawings of the interior configuration of the Aircraft as it will
exist at Delivery, (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 Prior Lessee-initiated
modifications and alterations, (f) information regarding Prior Lessee's
maintenance program for the Aircraft, (g) the complete workscope for
the checks, inspections and other work to be performed prior to
Delivery, (h) a list of all no-charge service bulletin kits with
respect to the Aircraft which were ordered by LESSOR from Manufacturer
or Engine manufacturer, (i) current Engine disk sheets and a
description of the last shop visit for each Engine and (j) any other
data which is reasonably requested by LESSEE.
2. Full Aircraft Documentation Review
Prior to the Scheduled Delivery Date and continuing until the date on
which the Aircraft is delivered to LESSEE in the condition required by
this Exhibit B, LESSOR will provide for the review of LESSEE and/or its
representative all of the Aircraft records and historical documents
described in Exhibit L in one central room at the Aircraft delivery
location.
3. Aircraft Inspection
(a) During the maintenance checks performed prior to Delivery, LESSEE
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 LESSEE's satisfaction. Any deficiencies from the
delivery condition requirements set forth in this Exhibit B will be
corrected by LESSOR at its cost prior to Delivery.
(b) Immediately prior to the Delivery of the Aircraft, LESSOR will carry
out for LESSEE and/or LESSEE's representatives one takeoff and one
landing phase. If LESSEE identifies any discrepancies immediately
following such takeoff and landing phase and requests LESSOR to correct
such discrepancies at LESSOR's cost, such discrepancies will be
corrected.
4. Certificate of Airworthiness Matters
The Aircraft will possess a current Certificate of Airworthiness issued
by the FAA.
5. General Condition of the Aircraft at Delivery
(a) The Aircraft, Engines and Parts will have been maintained and repaired
in accordance with Prior Lessee's maintenance program and the rules and
regulations of the FAA.
(b) Aircraft Documentation (including records and manuals) will have been
maintained in accordance with the rules and regulations of the FAA.
(c) All pilot discrepancies and deferred maintenance items will be cleared
on a terminating action basis.
(d) The Aircraft will be airworthy (conform to type design and be in a
condition for safe operation under FAR Part 121), with all Aircraft
equipment, components and systems operating in accordance with their
intended use and within limits approved by Manufacturer and the FAA.
(e) The interior of the Aircraft (including cabin and windows) will be in a
reasonable condition and cosmetically acceptable, with no cracks, tears
or rips.
(f) No special or unique Manufacturer, Engine manufacturer or FAA
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.
(g) All repairs, modifications and alterations to the Aircraft will have
been accomplished in accordance with the FARs or Manufacturer's
Structural Repair Manual (or FAA-approved data supported by FAA Form
8110-3) for the Aircraft, as applicable.
(h) All Airworthiness Directives which are issued prior to the Delivery
Date and require compliance (either by means of repetitive inspections,
modifications or terminating action) prior to Delivery of the Aircraft
to LESSEE or within one (1) year after the Delivery Date will have been
complied with on the Aircraft 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.
(i) The Aircraft will be in compliance with Manufacturer's Corrosion
Prevention and Control Program (CPCP) specified for the model type by
Manufacturer.
(j) If any waivers, deviations, dispensations, alternate means of
compliance, extensions or carry-overs with respect to maintenance or
operating requirements, repairs or Airworthiness Directives were
granted by the FAA or permitted by Prior Lessee's maintenance program,
such maintenance or operating requirements, repairs or Airworthiness
Directives will have been performed as if such waivers, deviations,
dispensations, alternate means of compliance, or extensions or
carry-overs did not exist.
(k) The Aircraft will be free of fuel, oil and hydraulic leaks. Any
temporary fuel leak repairs will have been replaced by permanent
repairs.
(l) 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.
(m) The Aircraft will be fully fueled.
(n) The Aircraft will be painted in the livery of Prior Lessee.
6. Checks Prior to Delivery
Prior to Delivery of the Aircraft to LESSEE, the following will have
been performed:
(a) A full and complete zonal, systems and structural check ("C" or its
equivalent) and the corresponding lower checks ("A" and "B" or
equivalent) at an FAA-approved repair station in accordance with the
MPD sufficient to clear the Aircraft until the next full and complete
zonal, systems and structural check. Any discrepancies revealed during
such inspection will be corrected in accordance with Manufacturer's
maintenance and repair manuals or FAA-approved data.
(b) All required external placards, signs and markings will be properly
attached, free from damage, clean and legible.
(c) Cleaning the exterior and interior of the Aircraft.
(d) If reasonably required by LESSEE, repainting the interior of the
Aircraft, including flight deck, and replace placards.
(e) In accordance with Manufacturer's Structural Repair Manual, permanently
repairing damage to the Aircraft that exceeds Manufacturer's limits.
Any non-flush structural patch repairs installed on the Airframe will
be replaced with flush-type repairs if such flush-type repairs are
available unless it is unreasonable to install a flush-type repair.
7. Condition of the Engines At Delivery
(a) Prior to Delivery of the Aircraft to LESSEE, the following checks of
the Engines will have been performed:
(i) With LESSEE or its representatives present, performance of 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.
(ii) 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, LESSOR will correct, to LESSEE's
satisfaction, such conditions which are determined to be causing
such accelerated rate of deterioration.
(iii) With LESSEE or its representatives present, LESSOR will
accomplish a maximum power assurance run and an acceleration
check on the Engines. LESSEE will evaluate the Engine
performance and record the Engine maximum power assurance test
conditions and results on the Estoppel and Acceptance Receipt.
(b) Each Engine will meet all of the following:
(i) Each Engine will have at least 4,000 hours and 3,000 cycles
remaining until its next anticipated removal regardless of the
operating environment of such Engine. In determining whether an
Engine has at least 4,000 hours and 3,000 cycles remaining until
its next anticipated removal, the following will be considered:
(1) the Engine manufacturer's estimated mean time
between removals for engines of the same type as
the Engines;
(2) the remaining EGT margin on such Engine; and
(3) the Engine historical and technical records,
borescope inspection, trend monitoring, the
maximum power assurance run and the acceleration
check;
(ii) the Engine historical and technical records, borescope
inspection, trend monitoring, the maximum power assurance run
and the acceleration check do not reveal any condition which
would cause the Engines or any module to be serviceable with an
increased frequency of inspection or with calendar time, flight
hour or flight cycle restrictions under the Engine
manufacturer's maintenance manual;
(iii) No life limited Part of an Engine will have more hours or
cycles consumed than such Engine's data plate; and
(iv) Each Part of an Engine which has a hard time limit will
have at least 3,000 cycles remaining to operate until its next
scheduled Overhaul. Each Part of an Engine which has a life
limit will have at least 3,000 cycles remaining to operate until
its removal.
LESSOR will correct any discrepancies in the required condition of the
Engines set forth in this Exhibit B in accordance with the guidelines
set out by the Engine manufacturer. If there is a dispute as to whether
an Engine meets the requirements of this Exhibit B, LESSEE and LESSOR
will consult with Engine manufacturer and follow Engine manufacturer's
recommendations (including the accomplishment of an Engine test cell
operational check) and the manner in which any discrepancies from the
requirements of this Exhibit B will be rectified.
8. Hour/Cycle/Calendar Times At Delivery
The condition of the Aircraft and installed systems upon Delivery to
LESSEE will be as follows:
(a) The Aircraft will have no more that fifteen (15) months consumed since
the last 24,000 Hour Structural Check.
(b) The Aircraft will have not more than one-hundred (100) hours consumed
since the last "C" check or its equivalent in accordance with the MPD.
(c) The APU will be in serviceable condition.
(d) The Landing Gear will be cleared for four thousand five hundred (4,500)
cycles/hours (depending on Prior Lessee's maintenance program) of
operation until the next Overhaul or scheduled removal.
(e) Each Part of the Aircraft which has a hard time (hour/cycle) limit to
Overhaul of less than four thousand (4,000) hours or three thousand
(3,000) cycles will be freshly overhauled or replaced and each Part of
the Aircraft which has a hard time (hour/cycle) limit to Overhaul of
more than four thousand (4,000) hours or three thousand (3,000) cycles
will have four thousand (4,000) hours and three thousand (3,000) cycles
(whichever is applicable) remaining to operate until its next scheduled
Overhaul or removal.
(f) Each life-limited Part of the Aircraft will have four thousand (4,000)
hours and three thousand (3,000) cycles (whichever is applicable)
remaining to operate until its next scheduled removal.
(g) Each Part which has a calendar limit (including emergency equipment and
excluding Landing Gear which is addressed in paragraph 8(d) above) will
have remaining to operate the lesser of the following calendar times:
(i) one (1) year from the Delivery Date of the Aircraft to LESSEE or
(ii) one hundred percent (100%) of such Part's total approved life.
(h) With respect to all installed Parts as a group, such Parts will have an
average total time since new no greater than that of the Airframe.
(i) The Aircraft Landing Gear tires and brakes will have at least fifty
percent (50%) life remaining until their next Overhaul (except for the
acceptance flight).
EXHIBIT D 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")
Boeing B737-300
Manufacturer's Serial No.: 26293
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: *
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
(a) *
(b) *
(c) Insurers have no right to replace the Aircraft on a Total
Loss (arranged, constructive or otherwise).
(d) Insurers recognize that LESSEE and LESSOR have agreed that a
Total Loss of the Airframe will constitute a Total Loss of the
Aircraft.
(e) 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.
(f) "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.
(g) 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 E 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")
B737-300
Manufacturer's Serial No.: 26293
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 F ESTOPPEL AND ACCEPTANCE CERTIFICATE
FRONTIER AIRLINES, INC. ("LESSEE"), a corporation organized under the lereby
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) Boeing B737-300 aircraft bearing Manufacturer's
serial number 26293 and United States registration mark N-_____,
together with two (2) CFM56-3C1 engines bearing manufacturer's serial
numbers 725885 and 724886 (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 G OPINION OF COUNSEL
[SEE ATTACHED]
EXHIBIT H 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 Boeing B737-300 aircraft bearing manufacturer's serial number
26293 (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: US$*. 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 I ASSIGNMENT OF RIGHTS (AIRFRAME)
[DATE]
Boeing Commercial Airplane Group
P.O. Box 3707
Seattle, Washington 98124-2207
Attention: Vice President-Contracts
Mail Code 21-34
Subject: Full Assignment of Rights and Obligations - International Lease
Finance Corporation as Lessor and Frontier Airlines, Inc. as Lessee of
Model B737-300 aircraft bearing manufacturer's serial number 26293
Ladies and Gentlemen:
In connection with International Lease Finance Corporation's lease to
Frontier Airlines, Inc. ("Lessee") of a Boeing aircraft (more fully described
below), reference is made to the following documents:
A. Purchase Agreement No. 1500 dated August 25, 1988 between The Boeing
Company ("Boeing") and International Lease Finance Corporation ("ILFC")
(the "Boeing Agreement") under which ILFC purchased a certain Boeing Model
B737-300 aircraft bearing manufacturer's serial number 26293 (the
"Aircraft").
B. Aircraft Lease Agreement (the "Lease") for the Aircraft dated as of
November __, 1999 between ILFC and Lessee.
Capitalized terms used herein without definition will have the same
meaning as in the Boeing Agreement.
In connection with ILFC's lease of the Aircraft under the Lease, ILFC
is transferring to Lessee certain rights of ILFC related to the Aircraft under
the Boeing Agreement. To accomplish this transfer of rights, as authorized by
the provisions of the Boeing Agreement:
1. Lessee acknowledges that it has received copies of the following
specific provisions of the Boeing Agreement applicable to the Aircraft and
agrees to be bound by and comply with all the terms, conditions, and limitations
contained in such provisions, including without limitation the disclaimer and
release, exclusion of liabilities, indemnity and insurance provisions thereof:
(a) Boeing Agreement
Article 6 - Excusable Delay
6.1 General
Article 8 - Assignment, Resale or Lease
8.1 Title and Risk with Boeing
8.2 Buyer's Indemnification of Boeing; Insurance
Article 10 - Assignment, Resale or Lease
10.1 No Increase in Boeing Liability
10.3 Sale by Buyer after Delivery
10.4 Lease by Buyer after Delivery
10.5 No Increase in Boeing Liability
10.6 Exculpatory or Indemnity Clause in Post-delivery
Sale or Lease
Article 12 - Product Assurance; Disclaimer and Release;
Exclusion of Liabilities; Customer Support; Indemnification and Insurance (in
its entirety)
Article 14 - Contractual Notices and Requests
Article 15 - Miscellaneous
15.4 Governing Law
Exhibit B - Product Assurance Document
Part A Boeing Warranty
Part B Warranty Repairs and Modifications by Buyer
Part C Boeing Service Life Policy
Part D Boeing Indemnity Against Patent Infringement
Part D-1 Boeing Indemnity Against Copyright Infringement
Part E Supplier Warranties and Patent Indemnities
Part G Boeing Interface Commitment
Part H General
Exhibit C-1- Customer Support Document
Part B Boeing Customer Support Services
Part D Technical Data and Documents
Part E Buyer's Indemnification of Boeing and Insurance
Exhibit E - Buyer Furnished Equipment Provisions Document
Paragraph 8 Indemnification of Boeing
Paragraph 9 Patent Indemnity
Paragraph 10 Definitions
Paragraph 11 Notice of Claim
Letter Agreement No. 1500-__ - Seller Purchased Equipment
Paragraph 6 Buyer's Indemnification of Boeing
2. Lessee recognizes that Boeing's obligation to provide support and
services to Lessee pursuant to Exhibit C of the Boeing Agreement is conditioned
on the receipt by Boeing of evidence of compliance by Lessee with the insurance
requirements set forth in paragraph 2 of Part E of Exhibit C or in such other
form as may be satisfactory to Boeing, prior to the commencement of such support
and services.
3. ILFC reserves to itself all rights, claims and interests it may have
under the Boeing Agreement not expressly assigned to Lessee hereunder. ILFC will
remain responsible to Boeing for any amounts with respect to the Aircraft owed
to Boeing under the Boeing Agreement prior to the effective date of this letter,
including any amounts owed by ILFC to Boeing under the specific portions of the
Boeing Agreement referenced in paragraph 1 above based upon the events or
incidents relating to the Aircraft occurring prior to the effective date of this
letter.
4. ILFC hereby assigns to Lessee the sole authority to exercise in
Lessee's name all rights and powers of ILFC with respect to the Aircraft under
the specific portions of the Boeing Agreement referenced in paragraph 1 above.
Such authorization will continue until Boeing receives from ILFC written notice
to the contrary addressed to Boeing's Vice President, Contracts, P.O. Box 3707,
Seattle, Washington 98124-2207 with a copy to Lessee. Until Boeing receives such
notice, Boeing will be entitled to deal exclusively with Lessee with respect to
the Aircraft under the specific portions of the Boeing Agreement referenced in
paragraph 1 above and, with respect to the rights, powers, duties or obligations
under such portions of the Boeing Agreement, any and all actions taken by Lessee
or agreements entered into by Lessee during the period prior to Boeing's receipt
of such notice will be final and binding on ILFC. In addition, any payment made
by Boeing as a result of claims made by Lessee will be made to the credit of
Lessee.
5. Lessee hereby accepts the authorization set forth in paragraph 4
above and agrees to be bound by and to comply with all the terms, conditions and
limitations of the portion of the Boeing Agreement referenced in paragraph 1
above.
6. This Assignment may be signed by the parties hereto in separate
counterparts, each of which when executed and delivered shall be an original,
but all such counterparts shall together constitute but one and the same
instrument.
7. This Assignment shall be governed by, and construed in accordance
with, the laws of the State of Washington, including all matters of
construction, validity and performance.
We request that Boeing, upon receipt of this letter, acknowledge
receipt thereof and the transfer of rights set forth above by signing the
acknowledgment and forwarding one copy of this letter to each of the
undersigned.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment
Agreement to be duly executed as of the dates written below.
INTERNATIONAL LEASE FINANCE CORPORATION, FRONTIER AIRLINES, INC., as Lessee
as Lessor and Buyer
By: By:
Its: Its:
Receipt of the above letter is acknowledged and transfer of certain rights under
the Boeing Agreement with respect to the Aircraft is confirmed, effective as of
this date.
THE BOEING COMPANY
By:
Its:
Date:
EXHIBIT J ASSIGNMENT OF RIGHTS (ENGINES)
November __, 1999
CFM INTERNATIONAL, INC.
1 Neumann Way, F-17
Cincinnati, Ohio 45215
Attention: Riv Goldman
Commercial Contracts -
Warranty Assignment Administrator
Dear Ms. Goldman:
Reference is hereby made to that Consent to Assignment made as of April
29, 1988, (the "Consent to Assignment"), by and between CFM INTERNATIONAL, INC.
("CFMI") and INTERNATIONAL LEASE FINANCE CORPORATION ("ILFC"). Terms defined in
the Consent to Assignment are used herein with the same meaning as in the
Consent to Assignment.
As of November ___, 1999, ILFC has assigned all of its rights and
interest in, to and under the Engine Warranties to Frontier Airlines, Inc.
("Assignee") in connection with its lease to Assignee of a used B737-300
aircraft (the "Aircraft") together with two (2) CFMI Model 56-3C1 bearing
Manufacturer's Serial Numbers 724885 and 724886 (the "Engines") as of the date
each such Engine was delivered to Assignee. Such assignment shall be effective
from such date until ILFC provides written notice to CFMI (with a copy to
Assignee) that such assignment has been terminated.
The Assignee has accepted such assignment and all the limitations and
liabilities pertaining to the Engine Warranties as stated in the provisions of
the GTA listed in Schedule 2 to the Consent to Assignment.
A copy of the aforesaid assignment is attached hereto.
Very truly yours,
INTERNATIONAL LEASE FINANCE CORPORATION
By:
Title:
cc: Ruben M. Cabrera
Director, Commercial Contracts
ASSIGNMENT OF WARRANTIES
November __, 1999
In consideration of Frontier Airlines, Inc. ("Lessee") leasing from
International Lease Finance Corporation ("ILFC") one (1) B737-300 aircraft
together with two (2) CFMI Model 56-3C1 engines bearing manufacturer's serial
numbers 724885 and 724886, it is hereby agreed as follows:
1. ILFC hereby assigns and transfers to Lessee all of ILFC's respective
rights and interest in and to and in and under the Engine Warranties
set forth in and subject to the limitations and liabilities set forth
in Exhibit B Warranty, Section X (the "Engine Warranties") of CFM
International, Inc. - ILFC General Terms Agreement No. 6-3987 dated 22
June 1984 (the "GTA") during the term of such leases so long as Lessee
is not in default thereunder.
2. Lessee hereby accepts such assignment including all the limitations and
liabilities pertaining to said Engine Warranties as stated in the
provisions of Exhibit B Warranty, Section X of the GTA. In addition,
any payment made by CFM International, Inc. as a result of claims made
by Lessee will be made to the credit of Lessee.
3. This Agreement shall be binding upon and inure to the benefit of each
of the parties hereto and their respective successors and assigns to
the extent permitted by the GTA and hereunder.
4. This Agreement shall be governed by and construed in accordance with
the laws of the State of California.
5. This Agreement may be executed in any number of counterparts, each of
which when executed and delivered is an original but all of which taken
together constitute one and the same instrument and any party may
execute this Agreement by signing any counterpart.
IN WITNESS WHEREOF, the authorized representative of the parties hereto
have executed this Agreement as of the day and year first above written.
For and on behalf of For and on behalf of
INTERNATIONAL LEASE FINANCE CORPORATION FRONTIER AIRLINES, INC.
By: By:
Its: Its:
EXHIBIT K 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) Boeing B737-300 Aircraft bearing Manufacturer's
serial number 26293, together with two (2) CFM 56-3C1 Engines bearing
manufacturer's serial numbers 724885 and 724886, 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 Cycles
MSN
MSN
(c) APU: MSN __________
Total hours: __________
______ hours/ ______ cycles since last Overhaul
______ hours/ ______ cycles remaining on APU life-limited
Parts
(d) Landing Gears:
Position Serial No. Total Hrs/Cycles 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 13.7 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 or
which survive the termination of the Lease by their terms and accrue after the
date hereof, will remain in full force and effect until all such obligations
have been satisfactorily completed.
9. This Return Acceptance Supplement is executed and delivered by the
parties in [place].
IN WITNESS WHEREOF, the parties hereto have caused this Return
Acceptance Receipt to be executed in their respective corporate names by their
duly authorized representatives as of the day and year first above written.
INTERNATIONAL LEASE FINANCE CORPORATION FRONTIER AIRLINES, INC.
By: By:
Its: Its:
ATTACHMENTS:
1. List of Aircraft Documentation
2. List of Loose Equipment
3. List of Discrepancies
4. Engine Maximum Power Assurance Test Conditions and Results
5. Dent and Damage Chart
6. Form of No Accident/Incident Letter
7. Technical Evaluation Report (in the form of Exhibit M)
ATTACHMENT 1 TO RETURN ACCEPTANCE RECEIPT
LIST OF AIRCRAFT DOCUMENTATION
[INSERT LIST]
.
ATTACHMENT 2 TO RETURN ACCEPTANCE RECEIPT
LIST OF LOOSE EQUIPMENT
ATTACHMENT 3 TO RETURN ACCEPTANCE RECEIPT
LIST OF DISCREPANCIES
ATTACHMENT 4 TO RETURN ACCEPTANCE RECEIPT
ENGINE MAXIMUM POWER ASSURANCE TEST CONDITIONS AND RESULTS
ATTACHMENT 5 TO RETURN ACCEPTANCE RECEIPT
DENT AND DAMAGE CHART
ATTACHMENT 6 TO RETURN ACCEPTANCE RECEIPT
FORM OF NO ACCIDENT/INCIDENT LETTER
EXHIBIT L MONTHLY REPORT
(SEE FOLLOWING SHEET)
MONTHLY AIRCRAFT UTILIZATION AND STATUS REPORT
Page 1 of 2
Report Due Date:
To: INTERNATIONAL LEASE FINANCE CORPORATION Fax: (310) 788-1990
1999 Avenue of the Stars, 39th Floor
Los Angeles, California 90067, United States
Attn: Finance Department
From: FRONTIER AIRLINES
Contact: Fax:
AIRCRAFT TYPE: Boeing B737-300
ENGINE TYPE: CFM56-3C1 REGISTRATION: N-_____
SERIAL NUMBER: 26293 MONTH OF:
NOTE: PLEASE RECORD TIME IN HOURS AND MINUTES NOT DECIMALS.
Aircraft Total Time Since New As Of Last Month: Hours: Min:
Aircraft Total Time Since New: Hours: Min:
Aircraft Total Cycles Since New: Cycles:
Airframe Hours Flown During Month: Hours: Min:
Airframe Cycles/Landings During Month: Cycles:
Time Remaining to "D" or Heavy Maintenance Check:
HOURS OR CYCLES FLOWN x US$ PER HOUR OR = RESERVES
DURING MONTH (as CYCLE (as applicable)
applicable)
TOTAL AIRFRAME: Hrs: x =
TOTAL LANDING GEAR: Hrs: x =
Original Engine Serial Number: Hrs: Min: x =
Cycles =
Original Engine Serial Number: Hrs: Min: x =
Cycles =
-------------------------------------------------
TOTAL AMOUNT OF RESERVES (US$) PAID THIS MONTH: US$
Monthly Aircraft Utilization and Status Report
From: FRONTIER AIRLINES Page 2 of 2
ENGINE SERIAL NUMBER: ENGINE SERIAL NUMBER:
ORIGINAL POSITION: ORIGINAL POSITION:
ACTUAL LOCATION: ACTUAL LOCATION:
CURRENT THRUST RATING: CURRENT THRUST RATING:
HOURS:/MIN: HOURS:/MIN:
Total Time Since New As Of Last Total Time Since New As Of Last
Month: Month:
Total Time Since New: Total Time Since New:
Total Cycles Since New: Total Cycles Since New:
Hours Flown During Month: Hours Flown During Month:
Cycles During Month: Cycles During Month:
IMPORTANT: IF ILFC-OWNED ENGINE IS REMOVED OR INSTALLED ON ANOTHER AIRCRAFT, IT
MUST BE REPORTED MONTHLY ON THIS FORM.
138
EXHIBIT M AIRCRAFT DOCUMENTATION
AIRCRAFT RECORDS
1. Copies of original Certificates delivered by Boeing
a. Airworthiness Certificate for Export
b. Radio installation conformity certificate
c. Noise limitation certificate
2. Copies of original Documents delivered by Boeing:
a. Airworthiness Directive Compliance list
b. Aircraft inspection report
c. Aircraft Definition Report
d. Weighing report
3. Copies of current Certificates:
a. Airworthiness Certificate
b. Noise limitation
c. Radio license
d. Interior material burn certificates
e. Certificate of Export
f. Aircraft deregistration confirmation
e. Aircraft Registration
4. Letters signed and stamped by Quality Assurance:
a. Current aircraft hours and cycles
b. Current engines hours and cycles
c. Accident and Incident report
d. Summary of Maintenance Program
e. AD compliance during the lease term
5. Aircraft log books and Aircraft readiness log.
6. Aircraft Hard Time (HT) inspection status.
7. One year forecast for HT inspection.
8. Aircraft Modification status, including service bulletins.
9. Last weighing report prior to redelivery.
10. AD compliance report with original signoffs.
11. Routine and non-routine job cards of the last "C" and "D" checks.
12. Past year pilots and maintenance discrepancies.
13. Major and Minor structural repairs with applicable approvals.
14. Compass Swing report of the last three years.
15. Cabin Configuration drawing (LOPA).
16. Emergency equipment location drawing.
17. Last X-RAYs
ENGINES RECORDS
1. Last test cell run reports.
2. Life Limited Parts status and traceability.
3. AD compliance report with original signoffs.
4. Engine Modification / service bulletin /inspection report and applicable f
5. Last heavy maintenance records for each module.
6. Engine log books.
7. Engine removal history.
8. Past year trend monitoring reports.
9. Historical borescope reports.
10. Engine component report.
APU RECORDS
1. APU status (FH, FC, limits).
2. Life limited Part status and traceability.
3. AD compliance with original signoffs.
4. Modification status.
5. Last heavy maintenance documents.
6. APU log books.
7. Last test cell report.
COMPONENT RECORDS
1. Aircraft component inventory.
2. Hard time component inventory.
3. All serviceable tags.
4. Landing Gear status with last overhaul and life limited Part status.
5. AD compliance with original signoffs.
6. Modification status.
EXHIBIT N TECHNICAL EVALUATION REPORT
(SEE FOLLOWING SHEETS)
INTERNATIONAL LEASE FINANCE CORPORATION
AIRCRAFT / OPERATOR
TECHNICAL EVALUATION REPORT
TABLE OF CONTENTS
AIRCRAFT SUMMARY..............................................................1
MAINTENANCE & INSPECTION......................................................2
LANDING GEAR..................................................................4
ENGINES.......................................................................5
AUXILIARY POWER UNIT (APU)....................................................8
PASSENGER CABIN CONFIGURATION (Seating).......................................9
GALLEY PROVISIONS............................................................10
LAVATORIES, AUDIO/ENTERTAINMENT, CARGO, INTERIOR.............................11
HYDRAULIC, FUEL, WEIGHT & BALANCE............................................12
AVIONICS SYSTEMS.............................................................13
INSPECTOR RECORD.............................................................16
AIRCRAFT SUMMARY as of / /
Aircraft Make Boeing Model
FUS No. S/N
MFG Date:
Current Registration: Country:
Previous Registration: Country:
Annual Utilization: Hour/Cycle Ratio:
Total Aircraft Time: TAT (Hrs) As of (date):
Total Aircraft Cycles: TAC (Cyc)
Time Since Last "C" or equivalent Check: (Hrs) (Cyc)
Time Since Last Structural Check: (Hrs) (Cyc)
Engine Make: Model: Thrust Rating:
Engine: 1 S/N: 2 S/N:
TSN: (Hrs)
CSN: (Cyc)
IMPORTANT NOTE: THE ENGINE SERIAL NUMBERS SPECIFIED ON THIS REPORT
REFLECT THE ENGINE SERIAL NUMBERS THAT DELIVERED WITH THE AIRCRAFT. IF
THE ENGINE SERIAL NUMBER HAVE NOT BEEN FILLED IN FOR YOU, PLEASE
PROVIDE DATA FOR THE ENGINES ORIGINALLY DELIVERED WITH THE AIRCRAFT
(LESSOR OWNED ENGINES).
MAINTENANCE PROGRAM GENERAL
Aircraft Maintenance Program Provided By: [ ] Operator [ ] Other:
Program Approved By Authority Of: [ ] FAA Approved [ ] Other:
Repair Station Providing Service:
Repair Station Number: FAA Approved?: [ ] Yes [ ] No
Primary Line Maintenance Provided By: [ ] Operator [ ] Contract Service
Reliability Controlled Maintenance Program?: [ ] Yes [ ] No
Component Tags Available For Controlled Components: [ ] Yes [ ] No
At Aircraft Delivery Currently Approved By Local Currently Operated/Maintained
Aviation Authority
ETOPS Qualification: Minutes Minutes Minutes
Auto Land Qualification: CAT I, II, IIIa, IIIb, IIIc CAT I, II, IIIa, IIIb, IIIc CAT I, II, IIIa, IIIb, IIIc
(Circle one that applies)
MAINTENANCE & INSPECTION PROGRAM DESCRIPTION
Check Operator's Calendar Frequency Hours Cycles Number of Phases
Nomenclature
"C"
"D" or Structural Program
MAINTENANCE & INSPECTION PROGRAM STATUS
Phase or Date Aircraft TAT Aircraft TAC
Equivalent
Next "C" Phase or Equivalent:
/......../
Last "C" Phase or Equivalent:
/......../
Time Remaining to Next Phase: (Days) (Hrs) (Cyc)
Structural Cards Worked During Last "C" Phase?: [ ] Yes [ ] No
CPCP Cards Worked During Last "C" Phase?: [ ] Yes [ ] No
Next "D" Phase or Equivalent
Structural: /......../
Last "D" Phase or Equivalent
Structural: /......../
Time Remaining to Next Phase: (Days) (Hrs) (Cyc)
CPCP Cards Worked During Last "D" Phase?: [ ] Yes [ ] No
Next CPCP Phase: /......../
Last CPCP Phase: /......../
Time Remaining to Next Phase: (Days) (Hrs) (Cyc)
Date of Last ATC Transponder Test: #1 #2
Date of Last Flight Recorder Check:
Date of Last Aircraft Weighing:
LANDING GEAR
MLG Tires: (Size) (MPH Rating) (MFG)
NLG Tires: (Size) (MPH Rating) (MFG)
Brake Manufacture: Type: [ ] Steel [ ] Carbon
LEFT MAIN: P/N S/N
Last Overhaul:(Date) _____/_____/_____ (Hrs) (Cyc)
Agency Performing Service: Cert #
Approved Overhaul Interval: (Hrs) (Cyc)
Present Landing Gear Total Time: (Hrs) (Cyc)
Time Remaining to Next Overhaul: (Hrs) (Cyc)
RIGHT MAIN: P/N S/N
Last Overhaul:(Date) _____/_____/_____ (Hrs) (Cyc)
Agency Performing Service: Cert #
Approved Overhaul Interval: (Hrs) (Cyc)
Present Landing Gear Total Time: (Hrs) (Cyc)
Time Remaining to Next Overhaul: (Hrs) (Cyc)
NOSE: P/N S/N
Last Overhaul:(Date) _____/_____/_____ (Hrs) (Cyc)
Agency Performing Service: Cert #
Approved Overhaul Interval: (Hrs) (Cyc)
Present Landing Gear Total Time: (Hrs) (Cyc)
Time Remaining to Next Overhaul: (Hrs) (Cyc)
ENGINES
ENGINE MAINTENANCE PROGRAM
Engine Maintenance Program Provided By:
Engine Condition Monitoring Trend Analysis Program?: [ ] Yes [ ] No
Engine Oil Type:
Engine(s) operated at INCREASED or DECREASED Thrust Rating; Program limitations
& required Mods. to operate at designated thrust rating
ENGINE SPECIFICATIONS
ENGINE NUMBER 1
Engine Make: Model: S/N:
Date of Mfg: Total Time: (Hrs) (Cyc)
Time Since Last Performance Restoration Visit: (Visit Date) (Hrs) (Cyc)
Time Since Last Shop Visit: (visit Date) (Hrs) (Cyc)
Test Cell EGT Margin:
Work Scope of Last Shop Visit:
Agency Performing Service:
Agency FAA Approved?: [ ] Yes [ ] No Cert. #:
1st LIMITER* Part Name:
Allowable Life/Insp Limit: (Hrs) (Cyc)
Total Component Time: (Hrs) (Cyc)
Time Remaining: (Hrs) (Cyc)
2nd LIMITER* Part Name:
Allowable Life/Insp Limit: (Hrs) (Cyc)
Total Component Time: (Hrs) (Cyc)
Time Remaining: (Hrs) (Cyc)
*Provide a copy of a current Disk Sheet for all modules.
ENGINE SPECIFICATIONS
ENGINE NUMBER 2
Engine Make: Model: S/N:
Date of Mfg: Total Time: (Hrs) (Cyc)
Time Since Last Performance Restoration Visit: (Visit Date) (Hrs) (Cyc)
Time Since Last Shop Visit: (visit Date) (Hrs) (Cyc)
Test Cell EGT Margin:
Work Scope of Last Shop Visit:
Agency Performing Service:
Agency FAA Approved?: [ ] Yes [ ] No Cert. #:
1st LIMITER* Part Name:
Allowable Life/Insp Limit: (Hrs) (Cyc)
Total Component Time: (Hrs) (Cyc)
Time Remaining: (Hrs) (Cyc)
2nd LIMITER* Part Name:
Allowable Life/Insp Limit: (Hrs) (Cyc)
Total Component Time: (Hrs) (Cyc)
Time Remaining: (Hrs) (Cyc)
*Provide a copy of a current Disk Sheet for all modules.
AUXILIARY POWER UNIT
APU Make: Model: S/N:
Date of Mfg: Total Time: (Hrs) (Cyc)
APU Times Are Recorded By: [ ] APU Clock or [ ] A/C Time Ratio _____:_____
Time Between Overhaul: (Hrs) (Cyc)
Time @ Last Hot Section (Date) (Hrs) (Cyc)
Refurbishment:
Time @ Last Overhaul: (Date) (Hrs) (Cyc)
Time @ Last Shop Visit: (Date) (Hrs) (Cyc)
Work Scope:
Agency Performing Service: Location: Cert. #:
Agency FAA Approved?: [ ] Yes [ ] No APU Oil Type:
1st LIMITER Part Name:
Allowable Life/Insp Limit: (Hrs) (Cyc)
Total Component Time: (Hrs) (Cyc)
Time Remaining: (Hrs) (Cyc)
2nd LIMITER Part Name:
Allowable Life/Insp Limit: (Hrs) (Cyc)
Total Component Time: (Hrs) (Cyc)
Time Remaining: (Hrs) (Cyc)
PASSENGER CABIN CONFIGURATION
SEATING CONFIGURATION
Present Configuration Occupancy: No. of Handicap Seats Installed:
Passenger Exit Door Configuration:
Air Stairs: Installed / Partial Provision/ Full Provision (Circle One)
FIRST CLASS.
Pax Qty: Seat Mfg: Model: P/N:
Seats Fireblocked? [ ] Yes [ ] No Color:
16 G Seat Installation: [ ] Yes [ ] No
BUSINESS CLASS
Pax Qty: Seat Mfg: Model: P/N:
Seats Fireblocked? [ ] Yes [ ] No Color:
16 G Seat Installation: [ ] Yes [ ] No
COACH CLASS
Pax Qty: Seat Mfg: Model: P/N:
Seats Fireblocked? [ ] Yes [ ] No Color:
16 G Seat Installation: [ ] Yes [ ] No
Provisions for Life Vests Under Seats?: [ ] Yes [ ] No
Entertainment Controls(PCU) Installed?: [ ] Yes [ ] No
Manufacturer: Part Number:
Emergency Escape Path Lighting: [ ] Floor Mounted [ ] Seat Mounted
Configuration Drawing Number: Source:
Engineering Order / Installation Document:
Installation FAA Approved?: [ ] Yes [ ] No Method of Approval:
GALLEY PROVISIONS
GALLEY's ARE (Check one): (___) Atlas Standard (___) KSSU Standard (____) Other
GALLEY LOCATION MANUFACTURER MODEL NUMBER PART NUMBER EQUIPPED
WaterPower
1. [ ] [ ]
2. [ ] [ ]
3. [ ] [ ]
4. [ ] [ ]
5. [ ] [ ]
6. [ ] [ ]
7. [ ] [ ]
8. [ ] [ ]
9. [ ] [ ]
10. [ ] [ ]
NOTE: Galley Locations per Spec or LOPA drawing i.e., G1, G2 etc. Galley
Location numbers above correspond to the numbers below.
OVENS BUN WARMERS REFER CHILLERS COFFEE WATER HOT HOT BEV
UNITS MAKERS BOILERS JUGS CUPS JUGS
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
LAVATORIES
Number of Lavatories: Handicap Provisions?: [ ] Yes [ ] No
Locations:
IN-FLIGHT AUDIO & ENTERTAINMENT SYSTEM
Boarding Music: [ ] Yes [ ] No
Auto Evac & Warning: [ ] Yes [ ] No
Pre-Recorded Announcement: [ ] Yes [ ] No
Passenger Entertainment (Audio): [ ] Yes [ ] No
Passenger Entertainment (Video): [ ] Yes [ ] No
VTR Format: [ ] VHS [ ]Hi-8 [ ] Other
[ ] Projector [ ] PSU Monitor [ ] Isle Monitor [ ] In-Seat
(Check All That Apply)
Passenger En-Route Information Display: [ ] Yes [ ] No
Telephone: [ ] Yes [ ] No [ ] Leased [ ] Owned
Satellite: [ ] Yes [ ] No
CARGO COMPARTMENT
Cargo Loading System Installed: [ ] Yes [ ] No
Smoke\Fire Detection System installed: [ ] Yes [ ] No
Fire Suppression System installed: [ ] Yes [ ] No
INTERIOR COLORS
Interior Color Scheme: Carpets: Curtains:
PLACARDS & LIGHTED SIGNS
English?: [ ] Yes [ ] No Bi-Lingual?: [ ] Yes [ ] No
First Language: Second Language:
HYDRAULIC SYSTEM
Type of Hydraulic Fluid Used: (MFG):
FUEL SYSTEM
Total Fuel Capacity: U.S. gallons [ ] lbs or [ ] kilos
Number of Tanks: Auxiliary Tanks Installed?: [ ] Yes [ ] No
Auxiliary Tank Capacity: U.S. gallons [ ] lbs or [ ] kilos
Fuel Instrumentation / Calibration: [ ] U.S. pounds [ ] kilograms
WEIGHT & BALANCE
Has Aircraft Been Modified For Increased Gross Weight by Current Lessee?:
[ ] Yes [ ] No
From MTOGW To MTOGW
Weight & Balance Manual Document No.: Rev:
For the below weights specify AFM approved limits:
POUNDS KILOS
Maximum Takeoff Gross Weight: (MTOGW) /
Maximum Taxi Weight: (MTW) /
Maximum Landing Weight: (MLW) /
Manufacturer's Empty Weight: (MEW) /
Maximum Zero Fuel Weight: (MZFW) /
Operational Empty Weight: (OEW) /
AVIONICS SYSTEMS
22 AUTO FLIGHT
QTY COMPONENT MANUFACTURER MODEL or PART NUMBER
FMGC - Flight Management & Guidance
Computer:
FAC - Flight Augmentation Computer:
FCU - Flight Control Unit:
MCDU - Multipurpose Control Display Unit:
23 COMMUNICATIONS
QTY COMPONENT MANUFACTURER MODEL or PART NUMBER
CIDS Director - Cabin
Intercommunications Data System
HF Transceiver:
VHF Transceiver:
Cockpit Voice Recorder:
PRAM Tape Reproducer (Pre-Recorded PAX Address):
MPES Tape Reproducer (Audio
Entertainment):
Tape Reproducer (Video Entertainment):
Audio management unit/SELCAL Decoder:
ACARS Management Unit:
RMP - Radio Management Panel:
AVIONICS SYSTEMS (continued)
27 FLIGHT CONTROL COMPUTER
QTY COMPONENT MANUFACTURER MODEL or PART NUMBER
ELAC - Elevator/Aileron Computer:
SFCC - Slat/flap Control Computer:
SEC - Spoiler/Elevator Computer:
FCDC - Flight Control Data Concentrator:
31 INDICATING AND RECORDING
QTY COMPONENT MANUFACTURER MODEL or PART NUMBER
Multifunction Printer:
DFDR - Flight Data Recorder:
FDIU - Digital Flight Data Interface
Unit:
Accelerometer:
FWC - Flight Warning Computers:
Windshear Activated: Yes / No
QAR - Quick Access Recorder:
AIDS - Aircraft Integrated Data System:
ELECTRONI INSTRUMENT SYSTEM (EIS)
PFD - Primary Flight Display:
ND - Navigation Display:
SDACS - System Data Acquisition
Concentrators:
Display Management Computers:
EWD - Engine/Warning Display:
SD - System Display:
CFDIU - Centralized Fault Display
Interface:
34 NAVIGATION
QTY COMPONENT MANUFACTURER MODEL or PART NUMBER
ADIRU - Air Data/Intertial Reference System:
DME - Distance Measuring Equipment
Interrogators:
VHF VOR/Marker Beacon Receiver:
VHF ILS Receiver:
DDRMI - Digital Distance & Radio
Magnetic Indicator:
Radio Altimeter Transceiver:
Weather Radar Transceiver:
TCAS - Traffic Alert and Collision
Avoidance System Computer:
ATC - Air Traffic Control System
Transponder:
Microwave Landing Receiver:
GPWS - Ground Proximity Warning System:
ADF - Automatic Direction Finder
Receiver:
INSPECTOR RECORD
INSPECTED BY: DATE:
OPERATOR: REGISTERED OWNER:
ADDRESS OF OPERATOR:
CONTACT (Name/Title):
TELEPHONE: TELEFAX:
Email Address:
Department Contact Name Phone Fax Email
Quality Control:
Power Plant Engineering:
Maintenance
Programs/Planning: