AIRCRAFT LEASE
COMMON TERMS AGREEMENT
DATED AS OF APRIL 20, 2000
BETWEEN
GENERAL ELECTRIC CAPITAL CORPORATION
And
FRONTIER AIRLINES INC.
CONTENTS
Page
CLAUSE
1.
INTERPRETATION...............................................1
2. REPRESENTATIONS AND WARRANTIES...............................2
3. CONDITIONS PRECEDENT........................................2
4. COMMENCEMENT.................................................3
5. PAYMENTS.....................................................5
6. MANUFACTURER'S WARRANTIES...................................19
7. LESSOR'S COVENANTS..........................................20
8. LESSEE'S COVENANTS..........................................22
9. INSURANCE...................................................35
10. INDEMNITY...................................................37
11. EVENTS OF LOSS..............................................40
12. RETURN OF AIRCRAFT..........................................41
13. DEFAULT.....................................................43
14. TRANSFER....................................................47
15. MISCELLANEOUS...............................................49
16. DISCLAIMERS AND WAIVERS.....................................54
17. BROKERS AND OTHER THIRD PARTIES.............................56
INDEX OF SCHEDULES
Schedule 1 Definitions
Schedule 2 Representations and Warranties
Schedule 3 Conditions Precedent
Schedule 4 Pre-Delivery Procedures and Delivery Condition
Requirements
Part 1 (New Aircraft)
Part 2 (Used Aircraft)
Schedule 5 Certificate of Technical Acceptance
Part 1 (New Aircraft)
Part 2 (Used Aircraft)
Schedule 6 Procedures and Operating Condition at Redelivery
Schedule 7 Insurance Requirements
Schedule 8 Form of Legal Opinion
Schedule 9 Events of Default
Schedule 10 Form of Lease Termination Certificate
Schedule 11 Intentionally Omitted
Schedule 12 Lease Supplement No. 1
Schedule 13 Technical Report on Aircraft Usage
Schedule 14 Form of Redelivery Certificate
Schedule 15 Form of GECC Guaranty
COMMON TERMS AGREEMENT
THIS COMMON TERMS AGREEMENT (this "CTA") is made as of April 20, 2000 BETWEEN:
(1) GENERAL ELECTRIC CAPITAL CORPORATION; and
(2) FRONTIER AIRLINES, INC.
WHEREAS:
(A) From time to time, Frontier Airlines, Inc. or one of its Affiliates
may wish to lease commercial aircraft from General Electric Capital
Corporation ("GECC") or one of its Affiliates, and GECC or one of its
Affiliates may wish to lease commercial aircraft to Frontier Airlines,
Inc. or one of its Affiliates;
(B) Each party hereto wishes to provide in one document for certain common
terms and conditions, as hereinafter provided in this CTA, that will be
applicable, unless otherwise stated, to each such lease referred to in
Recital (A);
(C) Each such lease transaction will be concluded only on the terms of an
agreement entitled "Aircraft Lease Agreement," which together with this
CTA (which will be incorporated into and become part of such Aircraft
Lease Agreement), will constitute the lease for the applicable aircraft
as identified therein.
NOW, THEREFORE, for good and valuable consideration the receipt and sufficiency
of which are hereby acknowledged, the parties hereto hereby agree as follows:
1. INTERPRETATION
1.1 Definitions
All references herein to "Lease" mean the integrated agreement
consisting of the various documents comprising the Lease as defined
in Schedule 1. In the Lease, capitalized words and expressions have
the meanings set out for them in Schedule 1 and in the Aircraft
Lease Agreement.
1.2 Construction
(a) In the Lease, unless otherwise stated, a reference
(i) "Lessor," "Lessee," "GECAS," "Owner" or any other Person includes any
of their successors and assignees;
(ii) plural concepts shall include the singular and vice versa;
(iii) any document (except this CTA unless Lessor and Lessee otherwise
expressly agree) shall include such document as amended and
supplemented from time to time and any replacement for it;
(iv) a Section or a Schedule is a reference to a clause of or a schedule to
this CTA;
(v) any Regulation shall include any changes to that Regulation and any
replacement for it;
(vi) an obligation of a Person refers to any obligation that Person has
under or in relation to the Lease; and
(vii) "includes," "including", "include" or similar terms shall not be
construed as limiting and shall mean "including, without limitation."
(b) Headings to Sections and Schedules in the Lease are not intended to
affect their meaning.
2. REPRESENTATIONS AND WARRANTIES
2.1 Lessee's Representations and Warranties
Lessee hereby makes the representations and warranties set out in Section
1.1 of Schedule 2 as of the date of execution of the Aircraft Lease
Agreement and as of each Delivery Date, and Lessee understands that
these statements shall be true, both when the Aircraft Lease
Agreement is executed and on each Delivery Date.
2.2 Lessor's Representations and Warranties
Lessor hereby makes the representations and warranties set out in Section
1.2 of Schedule 2 as of the date of execution of each Aircraft Lease
Agreement and as of each Delivery Date, and Lessor understands that
these statements shall be true, both when each Aircraft Lease
Agreement is executed and on each Delivery Date.
3. CONDITIONS PRECEDENT
3.1 Conditions Precedent
Lessor need not deliver any Aircraft under each Lease, and Lessee need not
accept Delivery unless each of their respective Conditions Precedent
listed in Schedule 3 is satisfied.
3.2 Waiver
(a) Lessor's Waiver. If any Condition Precedent in Section 1 of Schedule 3 is
not satisfied on the Delivery Date and Lessor (in its absolute discretion)
nonetheless agrees to deliver the Aircraft to Lessee and to start the
leasing of the Aircraft, Lessee will ensure that such Condition Precedent
is fulfilled within * days after the Delivery Date, and Lessor may treat as
an Event of Default the failure of Lessee to do so.
(b) Lessee's Waiver. If any Condition Precedent in Section 2 of Schedule 3 is
not satisfied on the Delivery Date and Lessee (in its absolute discretion)
nonetheless agrees to accept Delivery of the Aircraft from Lessor and to
start the leasing of the Aircraft, Lessor will ensure that such Condition
Precedent is fulfilled within * days after the Delivery Date, and Lessee
may treat Lessor's failure to do so as a breach of the Lease.
4. COMMENCEMENT
4.1 Leasing
(a) Lessor shall notify Lessee as soon as possible, but no later than at least
* (*) days prior to the Scheduled Delivery Month, of the Scheduled Delivery
Week and Lessor shall notify Lessee as soon as possible, but no later than
at least * (*) week prior to the Scheduled Delivery Week, of the Scheduled
Delivery Date. Subject to Section 4.4, Lessor will lease the Aircraft to
Lessee and Lessee will take the Aircraft on lease for the Term, which shall
commence upon Lessee's execution and delivery of the Lease Supplement on
the Delivery Date.
(b) If (i) Lessee is unwilling or unable to accept delivery of the Aircraft on
the date on which Lessor tenders the Aircraft for Delivery to Lessee under
and in accordance with Section 4.3(a), or Lessee fails to fulfil any
Condition Precedent in Section 1 of Schedule 3 on or before such date and
(ii) each of the Delivery Condition Requirements and the Conditions
Precedent in Section 2 of Schedule 3 are met or waived, then the Rent
Commencement Date for the Aircraft shall be deemed to have occurred on the
date on which it is tendered by Lessor for Delivery in accordance with
subclause (ii) of this Section 4.1(b), and Lessee shall be obligated to pay
Rent for the Aircraft on and from such date regardless of whether the
Delivery Date occurs, but Lessor shall have no obligation to deliver, and
Lessee shall have no lease interest in the Aircraft or other right to,
possession of the Aircraft, unless and until Lessee fulfils all Conditions
Precedent specified in Section 1 of Schedule 3 as and when provided in the
Lease and Lessee accepts delivery of the Aircraft by executing and
delivering Lease Supplement No. 1 or a Lease Supplement substantially in
the form of Lease Supplement No. 1 for subsequent Aircraft deliveries, and
so long as no Default has occurred and is continuing.
(c) Lessee will be responsible for all risks associated with any loss of or
damage to the Aircraft from the Delivery Date until the Return Occasion.
4.2 Procedure Before Delivery
Lessor and Lessee will follow the Pre-Delivery Procedure.
4.3 Delivery and Acceptance
After the Pre-Delivery Procedure has been carried out and so long as
the Delivery Condition Requirements are met, the Conditions
Precedent in Section 2 of Schedule 3 are satisfied and Lessor's
representations and warranties referred to in Section 2.2 are true
and correct on such date:
(a) Lessor will tender the Aircraft for Delivery to Lessee at the Delivery
Location.
(b) Lessee will accept the Aircraft by signing Lease Supplement No. 1, if
the first Aircraft to deliver under the Lease, or a Lease Supplement
substantially in the form of Lease Supplement No. 1 for each subsequent
Aircraft to deliver under the Lease, and delivering the same to Lessor.
(c) Lessee's acceptance of the Aircraft shall be regarded as absolute,
unconditional and irrevocable.
4.4 Delayed Delivery
If Delivery(i)takes place after the Scheduled Delivery Date or (ii)
does not occur, in either case, for any reason other than the gross
negligence or wilful misconduct of Lessor, or a breach by Lessor
hereunder or a payment default under any purchase agreement relating
to any Aircraft:
(a) Lessor will not be responsible for any Losses that Lessee suffers resulting
from the delay or from the non-delivery of the Aircraft;
(b) Lessee will not be entitled to terminate the Lease or to reject the
Aircraft when it is tendered for Delivery because of the delay; provided,
however, that if the Aircraft has not been tendered for Delivery, in
accordance with Section 4.3, by the Final Delivery Date, either party may
terminate the Lease by delivering notice to the other party within * days
of such Final Delivery Date (and if such notice is not delivered within
such *-day period the Final Delivery Date will be deemed extended for one
additional period of * days); provided, further, however, that with respect
to a new Aircraft delivery, in the event of an Excusable Delay, and upon
receipt of written notice of Lessee to Lessor requesting an extension of
the Final Delivery Date, Lessor agrees, subject to its rights under any
purchase agreement to do so, to extend the Final Delivery Date to a
delivery date notified to Lessor by the Manufacturer, which occurs within
twelve months following the originally Scheduled Delivery Month and each of
Lessee and Lessor agree that upon delivery of such written notice, neither
party shall have the right to terminate until the Final Delivery Date as so
extended. The foregoing *-day automatic extension of the Final Delivery
Date shall not apply to an extension requested by Lessee based on an
Excusable Delay. Upon the delivery of any such notice or automatically on
the expiration of such *-day period if no such notice has been delivered,
all obligations of each party under the Lease with respect to such Aircraft
will end on the date of such notice or the date of the expiration of such
period, as the case may be, except that Lessor will repay to Lessee the
Deposit (if any) with respect to such Aircraft or return to Lessee or
cancel any Letter of Credit relating to such Aircraft and the parties will
remain obligated under their respective indemnities set forth in Section 3
of Schedule 4.
(c) Lessee hereby agrees that its only right or remedy for such delay in
delivery of the Aircraft is the remedy set forth in Section 4.4(b) above
and Lessee hereby waives any rights it may have under Section 2A-406 of the
UCC or otherwise for any delay in delivery; provided, however, that with
respect only to a new Aircraft, if Lessor receives payment of any
liquidated damages from the Manufacturer pursuant to its purchase agreement
with the Manufacturer relating to an inexcusable delay in the delivery of
such new Aircraft, Lessor shall pay to Lessee all such liquidated damages
received which exceed all Losses of Lessor resulting from delay.
5. PAYMENTS
5.1 Deposit
Lessee shall pay Lessor any Deposit that is specified in Section 3 of the
Aircraft Lease Agreement.
5.2 Rental Periods
The first Rental Period will start on the Rent Commencemen Date and
each subsequent Rental Period will start on the date immediately
following the last day of the previous Rental Period. Each Rental
Period will end on the date immediately before the numerically
corresponding day in the next month, except that:
(a) if there is no numerically corresponding day in that month, it will end on
the last day of that month; and
(b) if a Rental Period would otherwise extend beyond the Expiry Date, it will
end on the Expiry Date.
5.3 Rent
(a) Time of Payment: Lessee will pay to Lessor or its order Rent in advance on
each Rent Date. If a Rental Period begins on a day which is not a Business
Day, the Rent payable in respect of that Rental Period shall be paid on the
immediately preceding Business Day.
(b) Amount: The Rent payable during the Term shall be calculated in accordance
with Schedule B of the Aircraft Lease Agreement.
5.4 Supplemental Rent and Maintenance Adjustment
(a) Amount: If, under the Aircraft Lease Agreement, Lessee is required to pay
Supplemental Rent or any Maintenance Adjustment, Lessee will pay (i)
Supplemental Rent, at the rates referred to in Section 3 of the Aircraft
Lease Agreement, to Lessor in relation to each calendar month (or part of a
month) of the Term, on the * (*) day following the end of that calendar
month (except that the last payment of Supplemental Rent during the Term
shall be paid on the Expiry Date) or (ii) any Maintenance Adjustment in the
amounts and at the time specified in Section 3.3 of the Aircraft Lease
Agreement.
(b) Adjustment: The Supplemental Rent rates shall be adjusted after the
Delivery Date not more frequently than annually, for the previous year's
utilization, as appropriate, to reflect the provisions of paragraphs (ii)
and (iii) below) based on the following:
(i) Annual Supplemental Rent Adjustment: The Supplemental Rent rates shall
be increased annually by the Annual Supplemental Rent Adjustment,
compounded annually commencing on the first anniversary of the Delivery
Date.
(ii) Hour to Cycle Ratio Adjustment: Lessor and Lessee acknowledge that the
Engine Supplemental Rent Rate and the Engine LLP Supplemental Rent Rate are
based upon the assumption that the Aircraft will operate on an Assumed
Ratio. If that assumption proves to be incorrect at any time during the
Term based upon Lessee's actual operating experience during the previous *
(*) months, and the hour to cycle ratio differs from the Assumed Ratio by
more than * during such * (*) month period, Lessor shall have the right,
upon written notice to Lessee, to adjust the Engine Supplemental Rent Rate
and the Engine LLP Supplemental Rent Rate (in the case of a decrease in the
ratio below the Assumed Ratio) and Lessor, upon written request from
Lessee, will make that adjustment (in the case of an increase in the ratio
above the Assumed Ratio). Any such adjustment shall be based on the table
contained in Schedule B, Part V of each Aircraft Lease Agreement. Actual
hour to cycle ratios may fall outside the ratios identified in that table.
In that case, the actual values shall be determined by extrapolating the
closest observed intervals in the table.
(iii)Assumed Utilization Adjustment: Lessor and Lessee acknowledge that
Airframe Supplemental Rent, APU Supplemental Rent and Landing Gear
Supplemental Rent payable by Lessee are based upon the assumption that the
Aircraft will operate on an Assumed Utilization. If that assumption proves
to be incorrect at any time during the Term based upon Lessee's actual
operating experience during the previous * (*) months such that Lessee's
actual utilization of the Aircraft during the previous * (*) months differs
from the Assumed Utilization by more than * during such * (*) month period,
Lessor may make, and notify Lessee of, such adjustment as Lessor determines
is necessary (in the case of a decrease in actual utilization below the
Assumed Utilization) in its reasonable discretion to maintain the rates of
Airframe Supplemental Rent, APU Supplemental Rent and Landing Gear
Supplemental Rent at levels which accurately reflect the costs associated
with obtaining relevant maintenance services at prevailing industry rates
and Lessor, upon written request from Lessee, will make such adjustment (in
the case of an increase in the ratio above the Assumed Utilization).
(iv) Material Revision to Maintenance Program: If the Lessee's Maintenance
Program is materially revised, (A) Lessor may make, and notify Lessee of,
and (B) upon written request from Lessee, Lessor may make, such adjustment
as Lessor determines is necessary in its reasonable discretion to maintain
the Supplemental Rent at levels which accurately reflect the costs
associated with obtaining relevant maintenance services at prevailing
industry rates.
(v) Each notice or request delivered pursuant to paragraphs (ii), (iii) and
(iv) above shall specify (A) the revised Supplemental Rent rates, (B) the
reason for such revision, (C) the method by which such revision was
calculated (with sufficient specificity to enable the party receiving such
notice or request to verify such calculation, and (D) the effective date of
such revision and Lessee shall be bound by such revision, absent manifest
error.
(c) Lessor's Property: Lessee acknowledges and agrees that Supplemental Rent is
additional rent for the leasing of the Aircraft and not cash collateral or
other collateral security for Lessee's maintenance obligations under the
Lease. Once paid all Supplemental Rent is the property of Lessor, it is not
refundable to Lessee under any circumstances whatsoever and Lessee has no
interest therein whatsoever.
5.5 Payments
All payments by Lessee to Lessor under the Lease will be made for
value on the due date in Dollars and in immediately available funds
by wire transfer to the Lessor's Account as specified in the
Aircraft Lease Agreement.
5.6 Withholding and Tax Credit
(a) Withholding: Lessee shall not deduct any amount from any of its payments
under the Lease, for or on account of any Taxes, unless it is required by
law to do so, in which case Lessee shall:
(i) deduct the minimum amount necessary to comply with applicable Law;
(ii) except as provided in Section 5.7(c), pay Lessor an additional amount so
that Lessor receives a net amount on the relevant payment date, that is
equal to the amount that it would have received if the deduction had not
been made. The amount of any such payment to Lessor shall take into account
the tax treatment of that payment to Lessor applying the principles of
Section 5.9 such that Lessor shall be in no worse position than it would
have been if the deduction had not applied in the first place;
(iii)pay the Tax to the relevant taxing authority according to applicable Law;
and
(iv) obtain a receipt (if one is available) from the relevant taxing authority
and furnish a certified copy thereof to Lessor.
(b) Tax Credit: If Lessor, in good faith, determines 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 5.6(a), and such tax
benefit was not taken into account in calculating the amount of such
payment in accordance with the definition of "After-Tax Basis," Lessor
shall pay to Lessee as soon as practicable after the tax benefit has been
realized (but not before Lessee has made all payments and indemnities to
Lessor required under this Section), an amount which will ensure that
(after taking account of the payment itself) Lessor is in no better and no
worse position than it would have been if the deduction had not applied.
Nothing in this Section 5.6(b) shall:
(i) interfere with the right of Lessor to arrange its tax affairs in whatever
manner it thinks fit; or
(ii) oblige Lessor to disclose any information relating to its Tax affairs or
any Tax computations.
5.7 Tax Indemnity
(a) General:
(i) Except as provided in Section 5.7(c), Lessee will on demand pay and
indemnify each Tax Indemnitee against any and all Taxes levied or imposed
against or upon or payable by such Tax Indemnitee or Lessee and arising
from, with respect to or in connection with the transactions pursuant to
the Lease, including all Taxes relating or attributable to Lessee, the
Lease or the Aircraft, directly or indirectly, in connection with the
importation, exportation, registration, ownership (but only to the extent
relating to or attributable to or arising as a result of the possession,
operation, use or maintenance of the Aircraft by Lessee), leasing,
sub-leasing, purchase, delivery, possession, use, operation, repair,
maintenance, overhaul, transportation, landing, storage, presence or
redelivery of the Aircraft or any part thereof or any rent, receipts,
insurance proceeds, income, indemnification payment or other amounts
arising therefrom, or the making of any Equipment Change or the permanent
replacement of any Engine.
(ii) All Taxes indemnified pursuant to this Section 5.7(a) shall be paid by
Lessee directly to the appropriate taxing authority (to the extent
permitted by applicable Law) at or before the time prescribed by applicable
Law. After any payment by Lessee of any Tax directly to a taxing authority,
Lessee shall furnish to Lessor, on request, a certified copy of a receipt
for Lessee's payment of such Tax or such other evidence of payment of such
Tax as is reasonably obtainable by Lessee and reasonably acceptable to
Lessor.
(iii)Any amount payable by Lessee to a Tax Indemnitee pursuant to this Section
5.7(a) shall be paid within ten days after receipt of a written demand
therefor from the relevant Tax Indemnitee accompanied by a written
statement describing in reasonable detail the basis for such indemnity and
the computation of the amount so payable, provided that if an amount of any
indemnified Tax is being contested in accordance with Section 5.8 and
Lessee shall have duly performed (and shall continue to perform) all its
obligations under Section 5.8 with respect to such contest, then payment of
the indemnity with respect to such Tax under Section 5.7(a) shall, at
Lessee's election, be deferred until the date the contest has been
completed.
(b) Sales and Use Taxes:
(i) Without limiting Section 5.7(a) above, Lessee shall pay to Lessor (or, if
permitted by applicable Law and if requested by Lessor, Lessee shall pay to
the relevant tax authority for the account of Lessor):
(y) all sales, use, rental, value added, goods
and services and similar taxes ("Sales
Taxes") required to be paid to the tax
authority of the jurisdiction in which the
Delivery Location is situated or to the
jurisdiction of the Habitual Base or the
State of Incorporation with respect to the
lease of the Aircraft to Lessee pursuant to
the Lease unless Lessee delivers to Lessor
on or prior to the Delivery Date such
exemption certificate or other document as
may be required by applicable Law to
evidence Lessee's entitlement to exemption
from all Sales Taxes imposed by such
jurisdiction with respect to the lease of
the Aircraft pursuant to the Lease; and
(z) all Sales Taxes required to be paid to the
tax authority of any jurisdiction in which
the Aircraft may be used, operated or
otherwise located from time to time unless
Lessee delivers to Lessor such exemption
certificates or other documents as may be
required by applicable Law to evidence
Lessee's entitlement to exemption from all
Sales Taxes imposed by each such
jurisdiction with respect to the lease of
the Aircraft pursuant to the Lease.
(ii) Lessee and Lessor will cooperate with each other in connection with the
preparation and filing of any exemption application or similar document
that is reasonably necessary or desirable under applicable Law to avoid the
imposition of any Sales Taxes with respect to the transactions contemplated
by the Lease.
(iii)The specific obligations with respect to Sales Taxes set forth in this
Section 5.7(b) are in addition to, and are not in substitution for,
Lessee's obligation to indemnify for such Sales Taxes pursuant to Section
5.7(a).
(c) Notwithstanding anything to the contrary contained or implied in the Lease,
Lessee shall not be required to pay any additional amounts under Section
5.6(a)(ii) on account of, or indemnify a Tax Indemnitee under Section
5.7(a) to the extent that the Tax arises solely as a result of :
(i) the willful misconduct or gross negligence of such Tax Indemnitee;
(ii) a Tax liability of such Tax Indemnitee has which would have arisen even if
the Lease had not been entered into;
(iii)a Tax liability charged on the net income, profits or gains of such Tax
Indemnitee by any Government Entity in the United States; but excluding any
taxes indemnified under Sections 5.7 (d) or (e) below and any Tax that is a
Sales Tax; or
(iv) a Tax liability charged with respect to the period, or an event occurring,
(x) prior to the Delivery Date or (y) after the Expiry Date and, in either
case, unrelated to Lessor's dealings with Lessee or to the transactions
contemplated by the Lease.
(d) MACRS Tax Indemnity. Lessee will on demand pay and indemnify each Tax
Indemnitee for any loss, disallowance, or deferral of, or delay in
claiming, the MACRS Deductions resulting from (A) Lessee's using the
Aircraft in such a manner as to cause the Aircraft to be treated as "used
predominantly outside the United States" within the meaning of Section
168(g) of The Internal Revenue Code of 1986, as amended (the "Code") or (B)
the Aircraft being treated as "tax-exempt use property" within the meaning
of Section 168(h) of the Code other than as a result of the Lessor being a
"tax-exempt entity" under Section 168(h)(2) of the Code (either (A) or (B)
hereinafter referred to as a "MACRS Loss"). In determining the indemnity
required in connection with a MACRS Loss to the Tax Indemnitee under this
Clause, the Tax Indemnitees shall be assumed to be subject to a combined U.
S. and state income tax rate of (after giving effect to the deductibility
of such state income taxes for U. S. income tax purposes) * in 2000 and in
each year thereafter (the "Assumed Tax Rate"), and the Tax Indemnitee will
have sufficient taxable income to be taxed at the Assumed Tax Rate after
full utilization of the MACRS Deductions. The amount of the MACRS Loss for
any taxable year or years shall be computed as the difference between (X)
the present value of the MACRS Deductions for such year or years and all
subsequent years using a discount rate of * (*) per annum, and (Y) the
present value of the actual cost recovery deductions attributable to the
Aircraft realized by the Tax Indemnitee as a result of the MACRS Loss (but
assuming that the Aircraft is sold by the Lessor at the end of the Term of
[X] months using a discount rate of * (*) per annum. The amount payable
under this indemnity shall be the amount that, after deduction by the Tax
Indemnitee of the amount of all additional U.S., state, local and foreign
taxes required to be paid by the Tax Indemnitee in respect of the receipt
or accrual of such amount, will equal the amount of the MACRS Loss as
computed in the preceding sentence, plus the amount of any actual interest,
penalties and additions to tax payable by the Tax Indemnitee with respect
to the MACRS Loss.
(e) Foreign Tax Credit Indemnity. If, as a result of the use or operation or
location of the Aircraft outside the United States by Lessee, more than the
* (the "Permitted Percentage") of any item of income, deduction, or loss
with respect to the transactions contemplated by the Lease will be treated
for Federal income tax purposes as derived from, or allocable to, sources
outside the United States (an "Excess Foreign Allocation"), and if as a
result thereof the amount of the foreign tax credits available for
utilization by a Tax Indemnitee for any taxable year shall be less than the
amount of the foreign tax credits that would have been available for
utilization by any Tax Indemnitee if the Lessee had not used the Aircraft
outside the United States more than the Permitted Percentage (such event
being referred to herein as a "Foreign Tax Credit Loss"), then the Lessee
shall pay to the Lessor as an indemnity an amount which, after deduction of
the amount of all additional federal, state, local and foreign taxes
actually required to be paid by the Lessor in respect of the receipt or
accrual of such amount, is equal to the actual increase in the Federal
income taxes payable by (or not refundable to) the Tax Indemnitee for such
taxable year as a result of such Foreign Tax Credit Loss, plus the amount
of any interest, penalties and additions to tax payable by the Tax
Indemnitee as a result of such Foreign Tax Credit Loss.
(f) Payment. Each payment by the Lessee pursuant to Clauses 5.7(d) and (e)
shall be made within * days after receipt of a written demand therefor
accompanied by a written statement describing in reasonable detail the
MACRS Loss or Foreign Tax Credit Loss in question, the amount of additional
Federal income tax, interest, penalties and additions to tax and the
calculation of the payment due in request thereof (but in no event shall be
required to be paid earlier than * (*) Business Days prior to the date such
additional Federal income taxes are due); provided that, if a contest of
the MACRS Loss or Foreign Tax Credit Loss is being conducted pursuant to
Clause 5.8 hereof, payment (other than payments required under Clause 5.8)
shall not be required from the Lessee until * days after the final
determination of such contest.
(g) Tax Indemnity Lessee shall indemnify, on an After-Tax Basis, Lessor, Owner
and each other Tax Indemnitee for all fees, expenses and Taxes incurred by
Lessor, Owner or any other Tax Indemnitee in connection with any transfer
pursuant to Sections 8.13 and 11.1 herein.
5.8 Tax Contest and Information
(a) If a Tax Indemnitee receives a written claim for any Tax for which Lessee
would be required to pay an indemnity pursuant to Section 5.7(a, such Tax
Indemnitee shall notify Lessee promptly of such claim, provided that, any
failure to provide such notice will not relieve Lessee of any
indemnification obligation pursuant to Section 5.7, but only to the extent
that Lessee's right to contest is not precluded by such failure. If
requested by Lessee in writing promptly after receipt of such Tax
Indemnitee's notice, such Tax Indemnitee shall, upon receipt of indemnity
satisfactory to it and at the expense of Lessee (including, without
limitation, all costs, expenses, legal and accountants' fees and
disbursements, and penalties, interest and additions to tax incurred in
contesting such claim) in good faith contest or (if permitted by applicable
Law) permit Lessee to contest such claim by (i) resisting payment thereof
if practicable and appropriate, (ii) not paying the same except under
protest if protest is necessary and proper, or (iii) if payment is made,
using reasonable efforts to obtain a refund of such Taxes in appropriate
administrative and judicial proceedings. Such Tax Indemnitee shall
determine the method of any contest conducted by such Tax Indemnitee and
(in good faith consultation with Lessee) control the conduct thereof.
Lessee shall determine the method of any contest conducted by Lessee and
(in good faith consultation with such Tax Indemnitee) control the conduct
thereof. Lessee shall pay in full all payments of Rent and other amounts
payable pursuant to the Lease, without reduction for or on account of any
Tax, while such contest is continuing. Such Tax Indemnitee shall not be
required to contest, or to continue to contest, a claim for Taxes under
this Section 5.8 if (x) such contest would result in a risk of criminal
penalties or of a sale, forfeiture or loss of, or the imposition of a Lien
(other than a Permitted Lien) on, the Aircraft, or (y) Lessee shall not
have furnished an opinion of independent tax counsel selected by such Tax
Indemnitee and reasonably satisfactory to Lessee, that a reasonable basis
exists for such contest, or (z) a Default shall be continuing (unless
Lessee shall have provided security reasonably satisfactory to such Tax
Indemnitee securing Lessee's performance of its obligations under this
Section 5.8). If a Tax Indemnitee contests any claim for Taxes by making a
payment and seeking a refund thereof, then Lessee shall advance to such Tax
Indemnitee, on an interest-free basis, an amount equal to the Taxes to be
paid by such Tax Indemnitee in connection with the contest and shall
indemnify Such Tax Indemnitee on an After-Tax Basis for any adverse tax
consequences to such Tax Indemnitee of such interest-free advance. Upon the
final determination of any contest pursuant to this Section 5.8 in respect
of any Taxes for which Lessee shall have made an advance to a Tax
Indemnitee in accordance with the immediately preceding sentence, the
amount of Lessee's obligation shall be determined as if such advance had
not been made; any indemnity obligation of Lessee to such Tax Indemnitee
under this Section 5.8 and such Tax Indemnitee's obligation to repay the
advance will be satisfied first by setoff against each other, and any
difference owing by either party shall be paid within ten days after such
final determination.
(b) If a Tax Indemnitee obtains a refund or reimbursement of all or any part of
any Taxes for which a full indemnity was paid by Lessee, such Tax
Indemnitee shall pay Lessee the amount of such refund or reimbursement,
reduced by any Taxes imposed on such Tax Indemnitee on receipt or accrual
of such refund or reimbursement and increased by any Taxes saved by such
Tax Indemnitee by reason of the deductibility of such payment by Lessor.
If, in addition to such refund or reimbursement, a Tax Indemnitee receives
an amount of interest on such refund or reimbursement, such Tax Indemnitee
shall pay to Lessee the portion of such interest which is fairly
attributable to such refund, reduced by any Taxes imposed by such Tax
Indemnitee on receipt or accrual of such interest and increased by any
Taxes saved by reason of the deductibility of such payment by such Tax
Indemnitee. No Tax Indemnitee shall be required to make any payment to
Lessee pursuant to this Section 5.8 if, and for so long as, a Default shall
have occurred and be continuing.
(c) Any Tax Indemnitee, in its sole discretion (by written notice to Lessee),
may waive its rights to indemnification pursuant to Section 5.7 with
respect to any claim for any Tax and may refrain from contesting or
continuing the contest of such claim, in which event Lessee shall have no
obligation to indemnify such Tax Indemnitee for the Taxes that are the
subject of such claim. If a Tax Indemnitee agrees to a settlement of any
contest conducted pursuant to this Section 5.8 without the prior written
consent of Lessee, which consent shall not be unreasonably withheld, then
such Tax Indemnitee shall be deemed to have waived its rights to the
indemnification provided for in Section 5.7 with respect to the Tax
liability accepted in such settlement.
(d) Information:
(i) If Lessee is required by any applicable Law, or by any third party, to
deliver any report or return in connection with any Taxes for which Lessee
would be obligated to indemnify any Tax Indemnitee under the Lease, Lessee
will complete the same and, on request, supply a copy of the report or
return to such Tax Indemnitee.
(ii) If any report, return or statement is required to be made by any Tax
Indemnitee with respect to any Tax for which there is an indemnity
obligation of Lessee under the Lease, Lessee will promptly notify such Tax
Indemnitee of the requirement and:
(y) if permitted by applicable Law, make and
timely file such report, return or statement
(except for any report, return or statement
that any Tax Indemnitee has notified Lessee
that such Tax Indemnitee intends to prepare
and file), prepare such return in such
manner as will show Lessor as lessor of the
Aircraft and the ownership of the Aircraft
in Lessor if required or appropriate, and
provide Lessor upon request a copy of each
such report, return or statement filed by
Lessee, or
(z) if Lessee is not permitted by return or
statement, Lessee will prepare and deliver
to Lessor a proposed form of such report,
return or statement within a reasonable
time prior to the time such report,
return or statement is to be filed.
(iii)Lessee will provide such information and documents as Lessor may
reasonably request to enable any Tax Indemnitee to comply with its tax
filing, audit and litigation obligations.
5.9 Indemnity Payments - After-Tax Basis
The amount of any payment made under Section 5.7 (Tax Indemnity)
(including Section 5.7(d)), Section 5.20 (Expenses) or Section 10
(Indemnity) to or for the benefit of any Indemnitee, shall include
such amount as may be necessary to hold such Indemnitee harmless on
an After-Tax Basis from all Taxes required to be paid by such
Indemnitee with respect to such payment or indemnity (including any
payments pursuant to this Section 5.9).
5.10 Lessor Obligations Following Expiry Date
Within * days (or such shorter period of not less than * days after
the Expiry Date to which Lessor may agree after Lessee demonstrates
to Lessor's reasonable satisfaction that there is no risk whatsoever
of any payment made or to be made under the Lease being avoided (or
otherwise rescinded) under Section 547 of the United States
Bankruptcy Code of 1978, as amended, or any similar occurrence under
any analogous provision of applicable United States federal or state
law) after:
(a) redelivery of the Aircraft to Lessor in accordance with and in the
condition required by the Lease; or
(b) payment to Lessor of the Agreed Value following an Event of Loss after the
Delivery Date;
or in each case such later time as Lessor is reasonably satisfied
that Lessee has irrevocably paid to Lessor all amounts which may
then be outstanding under the Lease and the Other Agreements and no
Default has occurred and is continuing:
(i) Lessor will pay to Lessee the balance of the Deposit (if any);
(ii) Lessor will pay to Lessee the amount of any Rent received in respect of any
period falling after the date of redelivery of the Aircraft or payment of
the Agreed Value, as the case may be; and
(iii)Lessor will return to Lessee or cancel any Letter of Credit.
5.11 Net Lease
The Lease is a net lease. The Lessee's obligation to pay Rent and to perform all
of its other obligations under the Lease is absolute and unconditional no matter
what happens and no matter how fundamental or unforeseen the event, including
any of the following: (a) any right of set-off, counterclaim, recoupment,
defense or other right which either party to the Lease may have against the
other (including any right of reimbursement) or which Lessee may have against
the Manufacturer, any manufacturer or seller of or any Person providing services
with respect to the Aircraft, any Engine or any Part or any other Person, for
any reason whatsoever; (b) any unavailability of the Aircraft for any reason,
including a requisition of the Aircraft or any prohibition or interruption of or
interference with or other restriction against Lessee's use, operation or
possession of the Aircraft (whether or not the same would, but for this
provision, result in the termination of the Lease by operation of law); (c) any
lack or invalidity of title or any other defect in title, airworthiness,
merchantability, fitness for any purpose, condition, design, or operation of any
kind or nature of the Aircraft for any particular use or trade, or for
registration or documentation under the Laws of any relevant jurisdiction, or
any Event of Loss in respect of or any damage to the Aircraft; (d) any
insolvency, bankruptcy, reorganization, arrangement, readjustment of debt,
dissolution, liquidation or similar proceedings by or against Lessor, Lessee or
any other Person; (e) any invalidity or unenforceability or lack of due
authorization of, or other defect in, the Lease; (f) any Security Interests or
Taxes; and/or (g) any other cause or circumstance which but for this provision
would or might otherwise have the effect of terminating or in any way affecting
any obligation of Lessee under the Lease. Lessee acknowledges and agrees that it
has used its own judgement in selecting the Aircraft, and has not relied on
Lessor or on any information supplied by Lessor, that Lessor is not a
manufacturer of or dealer in aircraft and that Lessor has all of the rights and
benefits of a lessor under a lease to which Section 2A-407 of the UCC applies as
provided in such Section 2A-407.
Except as expressly set forth elsewhere in the Lease, Lessee hereby waives, to
the extent permitted by applicable Law, any and all right which it may now have
or which at any time hereafter may be conferred upon it, by statute or
otherwise, to terminate, abate, cancel, quit, reduce, defer, suspend or
surrender the Lease or the Aircraft or any obligation imposed upon Lessee under
the Lease (including payment of Rent or Supplemental Rent).
Each payment of Rent or Supplemental Rent made by Lessee shall be final. Lessee
will not seek to recover all or any part of any payment of Rent or Supplemental
Rent for any reason whatsoever except manifest error.
If for any reason whatsoever the Lease shall be terminated in whole or in part
by operation of Law, except as specifically provided in the Lease, Lessee waives
all rights (if any) to any termination or diminution in its Rent or Supplemental
Rent obligations hereunder and nonetheless agrees to pay to Lessor an amount
equal to each Rent and Supplemental Rent payment at the time such payments would
have become due and payable in accordance with the terms thereof had the Lease
not been terminated in whole or in part and so long as such payments are made
and all other terms and conditions hereof are complied with by Lessee, Lessor
and Lessee will deem the Lease to remain in full force and effect and Lessee
shall continue in possession of the Aircraft under the terms and conditions of
the Lease.
Nothing in this Section 5.11 will be construed to limit Lessee's right to
institute separate legal proceedings against Lessor in the event of Lessor's
breach of the Lease or to limit Lessee's rights and remedies against any other
person.
5.12 Further Provisions regarding Deposit
(a) If, under the Lease, Lessee is required to pay a Deposit, Lessee hereby
grants a security interest in the Deposit to Lessor and the remaining
provisions of this Section shall apply. Lessee agrees that Lessor shall be
entitled to commingle the Deposit with Lessor's general or other funds,
Lessor will have no obligation to pay any interest thereon and Lessor will
not hold any such funds as agent or in trust for Lessee or in any similar
fiduciary capacity. In this regard, Lessee acknowledges and agrees that it
is not located in the State of New York within the meaning of Section 7-101
1-c. (b) of the New York General Obligations Law and, therefore, the
requirements of Section 7-101 of the New York General Obligations Law to
the effect that Lessor hold the Deposit in a separate, interest bearing
account do not apply.
(b) If any Event of Default shall have occurred and be continuing under the
Lease or any Other Agreement, in addition to all rights and remedies
accorded to Lessor elsewhere in the Lease or under Law in respect of the
Deposit, Lessor may immediately or at any time thereafter, without prior
notice to Lessee, apply all or part of the Deposit in or towards the
payment or discharge of any matured obligation owed by Lessee or any
Affiliate of Lessee under the Lease or the Other Agreements, in such order
as Lessor sees fit, and/or exercise any of the rights of set-off described
in Section 5.19 against all or part of the Deposit.
(c) If Lessor exercises the rights described in Section 5.12(b) above, Lessee
shall, following a demand in writing from Lessor, promptly restore the
Deposit to the level at which it stood immediately prior to such exercise.
5.13 Letter of Credit
(a) If, under the Lease, Lessee is required or elects to provide Lessor with a
Letter of Credit, the provisions of this Section shall apply. Any Letter of
Credit provided by Lessee to Lessor will be issued and payable by a
Pre-Approved Bank or another bank reasonably acceptable to Lessor in its
reasonable discretion and in form and substance reasonably acceptable to
Lessor, and, if not issued by a Pre-Approved Bank or by the New York branch
of a major bank reasonably acceptable to Lessor in its reasonable
discretion from time to time, will be confirmed by and payable at the New
York branch of a major bank reasonably acceptable to Lessor in its
reasonable discretion from time to time, and will be issued in lieu of a
cash Deposit as security for all payment obligations of Lessee under the
Lease and each Other Agreement (including any and all obligations to
indemnify Lessor for Losses suffered or incurred by it), which shall remain
in full force and effect and may be drawn down by Lessor upon demand at any
time or times following the occurrence of an Event of Default until the
Required LC Expiry Date.
(b) With the prior written consent of Lessor, the Letter of Credit may have a
validity period or periods ending prior to the Required LC Expiry Date,
provided that (i) the Letter of Credit shall, in each case, be renewed and
delivered to Lessor not later than * days prior to its expiry; and (ii) a
Letter of Credit shall remain in force at all times up to the Required LC
Expiry Date.
(c) If at any time during the Term, Lessor reasonably determines in its
reasonable discretion that the current issuing or confirming bank for the
Letter of Credit is no longer an acceptable issuing or confirming bank
(whether by virtue of a material adverse change in its financial condition,
a decrease in any credit rating of its long-term unsecured debt
obligations, or for any other reason) Lessee shall promptly procure that
the Letter of Credit is replaced by a Letter of Credit issued by another
bank reasonably acceptable to Lessor in its reasonable discretion and (if
reasonably requested by Lessor in its reasonable discretion) that such
replacement Letter of Credit is confirmed by another bank reasonably
acceptable to Lessor in its reasonable discretion.
(d) If Lessor makes a drawing under the Letter of Credit, Lessee shall,
following a demand in writing by Lessor, procure that the maximum amount
available for drawing under the Letter of Credit is promptly restored to
the level at which it stood immediately prior to such drawing.
5.14 Guarantee
If, under the Aircraft Lease Agreement, Lessee is required to
provide Lessor with a Guarantee, Lessee will on or prior to the
Delivery Date provide Lessor with the Guarantee.
5.15 Late Payment Interest
If Lessee fails to pay any amount payable under the Lease on the due
date, Lessee will pay on demand from time to time to Lessor interest
(both before and after judgement) on that amount, from the due date
to the date of payment in full by Lessee to Lessor, at the Interest
Rate. All such interest will be compounded monthly and calculated on
the basis of the actual number of days elapsed in the month,
assuming a * day month and a * day year.
5.16 Currency
(a) Except for Losses and expenses suffered or incurred by Lessor, which shall
be payable by Lessee to Lessor in the currency and in the amount in which
such Loss is suffered or incurred, all amounts payable to Lessor under the
Lease shall be payable in Dollars in New York and payment in Dollars in New
York is of the essence. Lessee shall indemnify Lessor against any Loss
Lessor suffers if:
(i) Lessor receives an amount relating to Lessee's obligations in a different
currency from that in which payments should be made under the Lease; or
(ii) Lessee pays a judgement or claim in a different currency from that in which
payments should be made under the Lease.
(b) Lessee relinquishes any right to pay any amount under the Lease in a
currency which is different from the currency provided in the Lease.
Notwithstanding any such receipt, judgement or claim described in Section
5.16(a), Lessee shall have a separate obligation to pay, and Lessor shall
have a separate claim against Lessee for, amounts to be indemnified by
Lessee under this Section 5.16.
5.17 Certificates
Except where expressly provided in the Lease, any certificate or
determination by Lessor as to any rate of interest or as to any
other amount payable under the Lease will, in the absence of
manifest error, be presumed to be correct.
5.18 Appropriation
If any sum paid or recovered by Lessor in respect of the liabilities
of Lessee under the Lease is less than the amount then due, Lessor
may apply that sum to amounts due under the Lease in such
proportions and order and generally in such manner as Lessor may
determine in its sole discretion.
5.19 Set-off
(a) In this sub-clause, references to Lessee will also include Lessee
Affiliates.
(b) Lessor may set-off any obligations owed by Lessee under the Lease or under
the Other Agreements against any obligation Lessor owes Lessee under the
Lease or owed to Lessee by any Person under the Other Agreements or
otherwise, regardless of the place of payment or currency. Promptly after
making any such set-off, Lessor shall notify Lessee thereof, but failure to
give such notice shall not affect the effectiveness of any such set-off.
(c) If the obligations are in different currencies, Lessor may convert either
obligation at the market rate of exchange available in New York. If the
amount of an obligation is unknown, Lessor may estimate the amount. Any
difference between the estimated obligation and the actual obligation will
be paid by either Lessor or Lessee, as appropriate, when the amount becomes
known.
5.20 Expenses
Whether or not the Aircraft is delivered to Lessee, Lessee will
pay to Lessor on demand all reasonable expenses (including all
reasonable legal fees and expenses and the reasonable fees and
expenses of other professional advisers) that the Lessor has to pay:
(a) to deal with any amendments, extensions, consents or waivers that are
required in connection with the Lease (but excluding any expenses incurred
in connection with the financing or any change in the ownership of the
Aircraft or a change in the Lease that is otherwise requested by Lessor or
Owner or required by Lessor, Owner or any Financing Party outside of the
terms and conditions of this Agreement, and in each case unrelated to any
consent, waiver or amendment requested by Lessee or any Default by Lessee
under the Lease) or to deal with any replacement of any Engine or Part
(except for the replacement of an Engine by or at the request of Lessor
prior to the Delivery Date);
(b) for FAA counsel and otherwise to act upon any advice and obtain assistance
to perfect the Lease in the State of Registry and the State of
Incorporation (and any other appropriate place); and
(c) in connection with, the enforcement or preservation of any of Lessor's
rights under the Lease (including under Section 10) or in respect of the
repossession of any Aircraft.
(d) All amounts payable pursuant to this Section 5.20 will be paid in the
currency in which they are incurred by Lessor.
5.21 Other Payments
Lessee will promptly pay all Taxes, other than any Taxes described
in Section 5.7 (which are addressed separately in such Section),
which it is required to pay and all other amounts of any nature
imposed by any Government Entity with respect to the Aircraft and/or
the Lease except to the extent that, such payment is being contested
in good faith by appropriate proceedings in respect of which
adequate reserves have been provided by Lessee and non-payment of
which does not give rise to any material likelihood of the Aircraft
or any interest therein being sold, forfeited or otherwise lost or
of criminal liability on the part of Lessor or Owner.
6. MANUFACTURER'S WARRANTIES
(a) So long as no Event of Default has occurred which is continuing and with
effect from Delivery, Lessor assigns to Lessee, and authorizes Lessee to
exercise such rights as Lessor may have under any warranty with respect to
the Aircraft, any Engine or any Part made by any manufacturer, vendor,
sub-contractor or supplier (including compensation for loss of use of the
Aircraft) to the extent that the same may be assigned or otherwise made
available to Lessee. In furtherance of the foregoing, Lessor shall take
such actions, at Lessee's cost and expense, as Lessee may reasonably
request to make such warranties available to Lessee. The Manufacturer shall
deliver its consent to the assignment of any such warranties upon Delivery
of the Aircraft. Lessee will give Lessor prompt written notice of any
warranty claim which is settled with Lessee on the basis of a cash payment
other than reimbursements for work performed directly by Lessee.
(b) With effect from Delivery, or such earlier date as Lessor, Manufacturer and
Lessee may mutually agree, Lessor shall transfer over to the Manufacturer
such rights as Lessor may have under any product support agreement Lessor
may have with the Manufacturer relating to the Aircraft. In consideration
for such transfer, Lessee shall agree with the Manufacturer an independent
package of product support. If an Event of Default shall have occurred and
is continuing on or before Delivery, Lessee shall promptly pay Lessor upon
receipt of a written invoice the value, as determined by the Manufacturer
or vendor, as applicable, of such product support as used by Lessee if such
support has been used by Lessee prior to Delivery. and Lessee does not
accept Delivery of the Aircraft in accordance with the provisions set forth
herein.
(c) If an Event of Default has occurred and is continuing Lessor may
immediately recover from Lessee the proceeds of any warranty claims
previously paid to Lessee to the extent that such claims relate to any
defect in the Aircraft not fully and completely rectified by Lessee before
such Event of Default and Lessor may:
(i) retain for its own account any such proceeds previously paid to Lessor
which would have been remitted to Lessee under this Section 6 in the
absence of such Event of Default; and
(ii) cause any proceeds of any pending claims to be paid to Lessor, rather than
Lessee.
(d) Upon Redelivery of each Aircraft, Lessee assigns to Lessor, and authorizes
Lessor to exercise such rights as Lessee may have under any warranty with
respect to the Aircraft, any Engine or any Part made by any manufacturer,
vendor, sub-contractor or supplier (including compensation for loss of use
of the Aircraft) to the extent that the same may be assigned or otherwise
made available to Lessor.In furtherance of the foregoing, Lessee shall take
such actions, at Lessee's cost and expense, as Lessor may reasonably
request to make such warranties available to Lessor.
7. LESSOR'S COVENANTS
7.1 Quiet Enjoyment
So long as no Event of Default has occurred and is continuing,
neither Lessor nor a Person lawfully claiming through Lessor
(excluding a Person claiming through Lessor with respect to
any Losses, Taxes or other liability for which Lessee is
obligated to indemnify Lessor under the Lease or for which
Lessee is otherwise responsible under the Lease), will
interfere with Lessee's right to quiet use and possession of
the Aircraft during the Term. Exercise by Lessor of its rights
of inspection or other rights expressly provided to it under
the Lease in the absence of an Event of Default shall not be
considered to be a breach of the foregoing covenant. Lessee
agrees that its only right with respect to a default by Lessor
under the Lease is to make a claim against Lessor for actual
damages resulting directly therefrom and in any event subject
to Section 16.3 hereof, and Lessee hereby waives any and all
other rights or remedies it may have under Section 2A-211 of
the UCC or Sections 2A-508 through 2A-522 of the UCC or
otherwise.
7.2 Maintenance Contributions
(a) If, under the Aircraft Lease Agreement for the Aircraft, Lessee is required
to pay Supplemental Rent, then provided no Event of Default has occurred
and is continuing, Lessor will pay (as a separate and independent
obligation and not as a return of Supplemental Rent) the following amounts
to Lessee by way of contribution to the cost of maintenance of the
Aircraft, UPON RECEIPT BY LESSOR, WITHIN * MONTHS AFTER CONCLUSION OF SUCH
MAINTENANCE AND IN ANY EVENT WITHIN * MONTHS AFTER THE EXPIRY DATE, of an
invoice and supporting documentation reasonably satisfactory to Lessor
evidencing performance of any of the following work by the Maintenance
Performer:
(i) Airframe: With respect to the Airframe, the completion, in accordance with
the Lease, of the Airframe Structural Check , the lesser of (aa) the amount
of that invoice and (bb) an amount equal to the aggregate amount of the
Airframe Supplemental Rent paid under the Lease at the date such work
starts less the aggregate amount previously paid by Lessor under this
sub-clause;
(ii) Engine Life-Limited Parts: With respect to life-limited Parts within any
Engine, the performance, in accordance with the Lease, of any replacement
or repair of those Parts ("Engine LLP Replacement"), the lesser of (x) the
amount of that invoice and (y) an amount equal to the aggregate amount of
the Engine LLP Supplemental Rent paid in respect of that Engine under the
Lease at the date such work starts less the aggregate amount previously
paid in respect of that Engine by Lessor under this sub-clause;
(iii)Engine Refurbishment: With respect to any Engine, the performance, in
accordance with the Lease, of Engine Refurbishment in respect of that
Engine the lesser of (x) the amount of that invoice and (y) an amount equal
to the aggregate amount of the Engine Supplemental Rent paid under the
Lease in respect of that Engine at the date such work starts less the
aggregate amount previously paid in respect of that Engine by Lessor under
this sub-clause;
(iv) APU: With respect to the APU, the performance, in accordance with the
Lease, of all shop visits requiring APU removal and disassembly, the lesser
of (x) the amount of that invoice and (y) an amount equal to the aggregate
amount of the APU Supplemental Rent paid under the Lease at the date such
work starts less the aggregate amount previously paid by Lessor under this
sub-clause; and
(v) Landing Gear: With respect to the Landing Gear, the performance in
accordance with the Lease, of all work on the landing gear in the nature of
overhaul and requiring removal and disassembly, the lesser of (x) the
amount of that invoice and (y) an amount equal to the aggregate amount of
the Landing Gear Supplemental Rent paid under the Lease at the date such
work starts less the aggregate amount previously paid by Lessor under this
sub-clause.
PROVIDED THAT Lessor will not pay any such contribution:
(b) in respect of paragraphs (i)-(v) above, for repairs arising as a result of
accidents or incidents (whether or not eligible for recovery under Lessee's
insurance), operational or maintenance mishandling or, except as and to the
extent otherwise expressly agreed by Lessor, airworthiness directive work;
nor
(c) in respect of paragraphs (ii) and (iii) above, for repairs arising as a
result of foreign object damage, the removal, installation, maintenance and
repair of QEC (Quick Engine Change Kits) and/or any replacement of parts
not required under the Maintenance Program to be replaced as part of the
maintenance described in clause (i) through (v) above, as the case may be.
8. LESSEE'S COVENANTS
8.1 Duration: Lessee shall perform and comply with its undertakings and
covenants in the Lease at all times during the Term. All such undertakings
and covenants shall, except where expressly otherwise stated, be performed
at the expense of Lessee.
8.2 Information
Lessee will:
(a) provide Lessor with a Technical Report for the Aircraft within * days
after the end of each calendar month throughout the Term;
(b) provide Lessor with the Financial Information;
(c) promptly notify Lessor of any Event of Loss and, promptly after Lessee
becomes aware thereof, of any event which is likely to result in an
insurance claim in excess of the Damage Notification Threshold and details
of any negotiations with insurers or insurance brokers relating to such
claim;
(d) promptly notify Lessor of any Default;
(e) provide Lessor, upon request, with evidence that all Taxes and charges
incurred by Lessee in connection with the Aircraft, its location and its
operations, including those invoiced by airports and air traffic control
authorities have been paid in full;
(f) provide Lessor with such other information concerning the location,
condition, use and operation of the Aircraft or concerning the business or
financial affairs of Lessee, as Lessor may from time to time reasonably
request;
(g) give Lessor not less than * days written notice as to the scheduled tim
and location of all Major Checks;
(h) notify Lessor, promptly, of the removal of any Engine for the purpose of
Engine Refurbishment; and
(i) provide Lessor with all information concerning the Aircraft, or its
location, condition, use and/or operation or concerning Lessee as
reasonably requested by Lessor.
8.3 Lawful and Safe Operation
Lessee will operate the Aircraft for commercial purposes from the
Delivery Date until the Return Occasion from a base within the
State of Registry or from such other base outside the State of
Registry pursuant to a sub-lease or a wet-lease complying with
Section 8.4(a),provided, always that Lessee shall not use or operate
the Aircraft or suffer or permit the Aircraft to be used or operated
(a) in violation of any applicable Regulations or in a manner causing Lessor
to be in violation of any applicable Regulations;
(b) for any purpose for which the Aircraft was not designed or which is illegal
(c) to carry cargo which could reasonably be expected to damage the Aircraft;
(d) in any circumstances or place where the Aircraft is not covered by the
Insurances; or
(e) for purposes of training, qualifying or re-confirming the status of cockpit
personnel except for the benefit of Lessee's cockpit personnel, and then
only if the use of the Aircraft for such purpose is not disproportionate to
the use for such purpose of other aircraft of the same type operated by
Lessee.
8.4 Subleasing
(a) AT NO TIME WILL LESSEE SUB-LEASE, WET-LEASE OR OTHERWISE GIVE POSSESSION OR
CONTROL OF THE AIRCRAFT OR ANY ENGINE TO, OR OTHERWISE PERMIT THE AIRCRAFT
OR ANY ENGINE TO BE IN THE POSSESSION OR CONTROL OF, ANY PERSON EXCEPT:
(i) when the prior written consent of Lessor has been obtained such consent no
to be unreasonably withheld; or
(ii) where the Aircraft or Engine is delivered to a manufacturer or maintenance
facility for testing or work to be done on it as required or permitted
under the Lease; or
(iii)to a Permitted Sub-Lessee pursuant to a sub-lease which complies with the
conditions set out in Clause 8.4(b) and provided that no Default shall have
occurred and be continuing (a "Permitted Sub-lease");
(iv) on a wet- lease which complies with Section 8.4(c); or
(v) with respect to an Engine, as permitted under Section 8.11.
(b) Lessor will not unreasonably withhold or delay its consent to a proposed
Permitted Sub-Lease and to a proposed Permitted Sub-Lessee; provided that,
if Lessor grants its consent, then in addition to any conditions required
by Lessor as part of such consent, each of the following conditions shall
be required to be satisfied in relation to any Permitted Sub-Lease prior to
any sub-leasing pursuant to this Section:
(i) Notification: at least * days prior to entering into any Permitted
Sub-Lease, Lessee shall give Lessor written notice, specifying the identity
of the Permitted Sub-Lessee, the term of the Permitted Sub-Lease, the
scheduled delivery date under the Permitted Sub-Lease and the habitual base
of the Permitted Sub-Lessee;
(ii) Term: the term of the Permitted Sub-Lease shall not extend beyond the
scheduled Expiry Date;
(iii)Form: a Permitted Sub-Lease shall:
(aa) not contain provisions inconsistent with the
provisions of the Lease (but may impose
additional or more stringent obligations on
any Permitted Sub-Lessee than are imposed on
Lessee under the Lease);
(bb) provide that no further subleases of the
Aircraft by such Permitted Sub-Lessee are
permitted; and
(cc) include provisions substantially identical
to or having substantially the same effect
as Sections 2.1, 5.6, 5.7, 5.9, 5.11, 5.15,
5.16, 5.21, 8, 9, 10, 11, 13, 15.1, 15.8 and
16 and Schedules 2 (Section 1.1), 7 and 9 of
the Lease (but the Permitted Sub- Lease may
impose additional or more stringent
obligations on any Permitted Sub-Lessee than
are imposed on Lessee under the Lease);
(iv) Subordination and Assignment: the Permitted Sub-Lease shall provide that
(aa) the Permitted Sub- Lease is subject and subordinate to the Lease in
all respects and the rights of the Permitted Sub-Lessee under the Permitted
Sub-Lease are subject and subordinate in all respects to the rights of
Lessor under the Lease; and (bb) prior to delivery of the Aircraft to the
Permitted Sub-Lessee (as a condition precedent thereof), the Permitted
Sub-Lessee shall provide an acknowledgement to Lessor and Owner in a form
reasonably satisfactory to Lessor, confirming its agreement to this
provision and confirming that its rights to possession of the Aircraft
under the Permitted Sub-Lease will terminate immediately upon the
termination of the Lease, and that it will redeliver the Aircraft to
Lessor, upon notification from Lessor that an Event of Default has occurred
and that it has, as a result thereof, terminated Lessee's right to
possession of the Aircraft under the Lease (the "Subordination
Acknowledgement"). The Permitted Sub-Lease shall be assigned to Lessor
pursuant to an agreement reasonably acceptable to Lessor (the "Sub-Lease
Assignment");
(v) Quiet Enjoyment: the Permitted Sub-Lease shall provide that the Permitted
Sub-Lessee shall have the right to quiet enjoyment of the Aircraft for
so long as no Event of Default has occurred under the Lease and/or no event
of default or termination event (howsoever described) has occurred under
the Permitted Sub-Lease;
(vi) Obligations of Lessee: Lessee shall remain primarily liable under the Lease
for the performance and observance of all its obligations to the same
extent as if no Permitted Sub-Lease had been entered into. To the extent
that the Permitted Sub-Lessee properly performs an obligation under the
Permitted Sub-Lease, Lessor agrees that such performance shall also be
regarded as discharging (to such extent) Lessee's corresponding obligation;
(vii)Insurances: all insurance requirements herein shall be complied with
either by Lessee or by the Permitted Sub-Lessee as if references in the
insurance provisions of the Lease to "Lessee" were references to "the
Permitted Sub-Lessee", and Lessee shall cause the Permitted Sub-Lessee to
provide the insurance certificate and brokers' letter of undertaking
referred to in Section 9.3(c)(ii) at least * (*) Business Days prior to the
commencement of the Permitted Sub-Lease;
(viii)Registration: there shall be no change in the registration of the Aircraft
from its State of Registry;
(ix) Repossession or Political Risk Insurance: if reasonably required by Lessor
repossession or political risk insurance, as the case may be, shall be
obtained by Lessor at Lessee's cost, provided that repossession or
political risk insurance , as the case may be, will not be required if the
Permitted Sub-Lessee meets the requirements of Sections 8.7(a)(iv) and (v).
If repossession or political risk insurance is required, the Permitted
Sub-Lease shall provide that, if any such repossession or political risk,
as the case may be, insurance cannot be obtained or renewed, a termination
event will occur upon notice by Lessor to Lessee or the Permitted
Sub-Lessee of an inability to procure repossession or political risk, as
the case may be, insurance;
(x) Legal Opinions: as a condition precedent to the effectiveness of the
Permitted Sub-Lease, Lessee shall provide to Lessor the following legal
opinions (at Lessee's or Permitted Sub-Lessee's expense) addressed to
Lessor, Owner and the Financing Parties' Representative from counsel
reasonably acceptable to Lessor;
(aa) a legal opinion in relation to the
Permitted Sub-Lease in form and
substance reasonably satisfactory
to, and containing such other
matters set out in Schedule 8
requested by, Lessor and confirming
further that each of the
Subordination Acknowledgement, the
Permitted Sub-Lease and the
Sub-Lease Assignment is valid,
binding and (except as limited by
any equitable principles and
applicable bankruptcy, insolvency,
reorganization, moratorium or
similar laws affecting creditors' or
lessors' rights generally)
enforceable against Permitted
Sub-Lessee and, in the case of the
Sub-Lease Assignment, properly
perfected as against Lessee; and
(bb) one or more legal opinions in a form
and from counsel reasonably
acceptable to Lessor in the State of
Registration, the State of
Incorporation for each of Lessee and
the Permitted Sub-Lessee and, if not
in the United States, State of the
Habitual Base to the effect, inter
alia, that Lessor's, Owner's and
Financing Parties' Representative's
interests in the Aircraft will be
recognized under the laws of such
country or countries.
The foregoing opinion or opinions (x) shall be forwarded promptly to Lessor at
least * Business Days prior to the effective date of the Permitted Sub-Lease,
and (y) may, if different opinions are required hereunder, be made by a single
counsel qualified to render opinions in each such country;
(xi) Filings: Lessee shall co-operate with Lessor (at no cost to Lessor) in
connection with the execution and filing of any documents reasonably
required by Lessor to be executed and filed from time to time with any
registry or authority in the Habitual Base, the State of Registration and
State of Incorporation (of each of Lessee and the Permitted Sub-Lessee) in
order to protect the interests of Lessor, Owner and Financing Parties'
Representative in and to the Aircraft, the Lease or the Permitted Sub-
Lease and/or to ensure the validity, enforcement or priority thereof;
(xii)Expenses: Lessee will pay to Lessor on demand all reasonable out of pocket
expenses (including legal, survey and other costs) and Taxes payable or
incurred by Lessor, Owner or Financing Parties' Representative in
connection with the review and approval of the documentation required
pursuant to this Section or otherwise incurred in connection with any
requested sub-lease or the sub-leasing of the Aircraft thereunder;
(xiii)Permitted Sub-Lease: Promptly after its execution, Lessee shall provide
Lessor with a copy of the signed Permitted Sub-Lease;
(xiv)Acknowledgement by Guarantor: If a Guarantee is required under the
Aircraft Lease Agreement, Lessee shall provide to Lessor at least *
Business Days prior to the effective date of the Permitted Sub-Lease an
acknowledgement by Guarantor of the Permitted Sub-Lease and confirmation
that the Guarantee will remain in full force and effect during the term of
such Permitted Sub-Lease.
(c) Notwithstanding Section 8.4 (a), Lessee shall be permitted to make the
Aircraft available to the United States under the CRAF program as provided
in Section 12.7 and Lessee shall be permitted to otherwise wet lease the
Aircraft provided the Aircraft (i) shall be operated solely by regular
employees of Lessee possessing all current certificates and licenses that
are required by applicable Regulations, including by the State of Registry,
and shall remain in the operational control and possession of Lessee, (ii)
shall be subject to insurance coverage as provided for in the Lease, (iii)
shall be used and operated in accordance with the Lease and shall be
maintained or caused to be maintained by Lessee in accordance with Lessee's
Maintenance Program and Lessee's normal maintenance practices, and (iv)
shall not be subject to any change in its State of Registry; and provided
always that, except in respect of CRAF, such arrangement is expressly
subordinated to the Lease and the rights of Lessor thereunder and to the
Aircraft, and Lessee provides Lessor with all opinions, certificates and
other documents requested by Lessor which are required to be provided, and
takes all other action requested by Lessor.
8.5 Inspection
(a) Lessee will permit Lessor's representatives to inspect the Aircraft at any
time. Unless an Event of Default has occurred and is continuing, any such
Person will give Lessee reasonable notice of inspection and such inspection
will not result in a disruption to the scheduled operation of the Aircraft.
Lessee shall comply with the reasonable requests of Lessor's
representatives during the course of an inspection, including any request
to travel on the flight deck of the Aircraft as an observer, subject to any
applicable Regulations.
(b) The cost of conducting an inspection shall be borne by Lessor, unless, as a
result of that inspection, Lessee is found to be in default of its
obligations under the Lease in which case the cost shall be borne by
Lessee.
(c) No liability or obligation will be incurred by Lessor by reason of
non-exercise by it of the inspection rights referred to in this Section.
(d) Lessor hereby indemnifies and agrees to hold harmless Lessee from and
against all Losses relating to or arising out of the death or injury to any
such observer or any employee of Lessor in connection with any such
inspection.
8.6 Ownership; Property Interests; Related Matters
(a) Lessee will:
(i) fix and maintain Nameplates containing the Nameplate Inscription in a
prominent position in the cockpit or cabin of the Aircraft and on each
Engine; and
(ii) take all reasonable steps as Lessor may reasonably request to make sure
that such Persons as Lessor reasonably specifies know about the interests
of Owner, Lessor and Financing Parties' Representative in the Aircraft.
(b) Lessee will not:
(i) represent that it is the owner of the Aircraft or that it has an economic
interest (equivalent to ownership) in the Aircraft for Tax treatment or
other purposes;
(ii) represent to others that Owner, Lessor or Financing Parties' Representative
is associated with or responsible for the business activities and/or flight
operations of Lessee;
(iii)allow the Aircraft or the Lease to become or remain subject to any Security
Interest (other than a Permitted Lien); or
(iv) allow the name of any Person other than Lessor, Owner or any Financing
Party to be placed on the Aircraft or any Engine as a designation that
could reasonably be interpreted as a claim of ownership or as a Security
Interest; provided, that Lessee may place thereon, or allow a Permitted
Sub-Lessee to place thereon, its customary insignia and colors.
8.7 General
(a) Lessee will:
(i) maintain its business as a commercial airline, will preserve its corporate
existence (other than as permitted in Section 8.7 (vii) below) and will
maintain all rights, privileges, licenses and franchises material thereto
or material to performing its obligations under the Lease;
(ii) not operate, maintain, insure or deal with, or keep records with respect
to, the Aircraft in a manner which discriminates against the Aircraft
adversely insofar as Lessor's, Owner's or Financing Parties' interests are
concerned, when compared with the manner in which Lessee operates,
maintains, insures or deals with, or keep records with respect to, similar
aircraft, engines or parts in Lessee's fleet;
(iii)not change the location of its chief executive office from that described
in the heading of the Aircraft Lease Agreement or otherwise be located (as
defined in Section 9-103(3)(d) of the UCC) at any place in the United
States other than the location described the heading of the Aircraft Lease
Agreement, except upon 30 days prior written notice thereof to Lessor;
(iv) remain a Certificated Air Carrier and maintain its status so as to fall
within the purview of Section 1110 of Title 11 of the U.S.C. or any
analogous statute;
(v) remain a "citizen of the United States" as defined in Section 40102(a) (15)
(c) of Title 49 of the U.S.C.;
(vi) not liquidate or dissolve; and
(vii)not consolidate with or merge into or with any other corporation or other
Person, and not convey, transfer, lease or otherwise dispose of all or
substantially all of its property and other assets to, or acquire all or
any substantial part of the property or other assets or capital stock of
(if such acquisition is analogous in either purpose or effect to a
consolidation or merger), any corporation or other Person, unless:
(x) such transaction shall not have any material
adverse effect on the rights of Lessor under
or in respect of the Lease or the Aircraft;
(y) 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 or stock (the
"Successor Entity"):(A)shall be a corporation
organized and existing under the laws of the
United States or any State thereof or the
District of Columbia; (B) immediately after
giving effect to such transaction, shall be
Lessee or shall have acquired or succeeded to
all or substantially all of the property and
other 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 Certificated Air Carrier; and (D)
shall execute and deliver to Lessor such
recordations and filings with any
Governmental Entity and such other documents
as Lessor determines shall be reasonably
necessary or advisable to evidence, or in
connection with, such consolidation, merger,
sale, lease, transfer or other disposition
and an agreement, in form and substance
reasonably satisfactory to Lessor which is a
legal, valid, binding and enforceable
assumption by such Successor Entity of the
due and punctual performance and observance
of each covenant and condition of the Lease
and the other related documents to which
Lessee is a party, and an officer's
certificate to such effect and to the effect
that the other requirements of this Section
have been satisfied, and a legal opinion from
counsel to such effect and otherwise in such
form and substance reasonably satisfactory to
Lessor; and
(z) no Default shall have occurred and be
continuing or shall occur as a result
thereof.
8.8 Records
Lessee will keep all Aircraft Documents and Records in English and
so they meet the requirements of applicable Regulations (including
FAR 91.417) and Lessee's Maintenance Program.
8.9 Protection
Lessee will:
(a) take all actions reasonably requested by Lessor that are within its control
to keep the Aircraft registered with the Air Authority in the name of Owner
and subject to the first-priority Security Interest in favor of Financing
Parties' Representative; and
(b) make any and all filings required to be made with the Air Authority
registry that are within its control and take all other actions within its
control that are necessary or advisable to reflect on the Air Authority
registry any (i) change in the ownership of the Aircraft, or (ii) change in
the interests of Lessor, Owner or the Financing Parties' Representative in
the Lease or the Aircraft, (iii) modification to the Aircraft (such as the
permanent replacement of any Engine or Part in accordance with the Lease)
or (iv) change in applicable Regulation. Lessor will bear any costs
incurred as a consequence of a transfer by Lessor, Owner or the Financing
Parties' Representative in the interests of Lessor, Owner or the Financing
Parties' Representative in the Lease or the Aircraft or a change in the
identity of Lessor, Owner or the Financing Parties' Representative (in each
case, unrelated to the replacement of any Engine or Part or a Default) in
connection with the preceding sub-clauses (i) and (ii), and Lessee will
bear any other costs incurred in complying with this Section, including in
connection with the replacement of any Engine or Part.
8.10 Maintenance and Repair
Lessee will maintain, overhaul and repair the Aircraft (or arrange
for the Aircraft to be maintained, overhauled and repaired, through
the Maintenance Performer), so that:
(a) the Aircraft is kept in as good operating condition and repair as the
condition of the Aircraft as at Delivery and after giving effect to any
post-Delivery modifications, repairs or maintenance paid for or otherwise
provided by or on behalf of Lessor, except for ordinary wear and tear;
(b) the Lessee has a current certificate of airworthiness (issued by the Air
Authority in the appropriate public transport category) for the Aircraft in
good standing at all times;
(c) the Aircraft complies with (i) all applicable Regulations including the
standard stipulated by FAR Part 121 Subpart L and any other rules and
regulations of the FAA and in at least the same manner and with at least
the same care, including record keeping, maintenance scheduling,
modification status and technical condition, as is the case with respect to
similar aircraft owned or otherwise operated by Lessee and as if Lessee
were to retain and continue operating the Aircraft in its fleet after the
Expiry Date, including all maintenance to the Airframe, any Engine or any
Part required to maintain all warranties, performance guaranties or service
life policies in full force and effect; and (ii) the requirements of all
Airworthiness Directives and all service bulletins issued during the Term
designated by the State of Design or State of Registry as "mandatory," and
to be carried out before the Return Occasion or within a period of * days
after the Return Occasion; provided, that, Lessor shall reimburse Lessee
for a portion of the cost of certain Airworthiness Directives in excess of
the AD Threshold, in accordance with Schedule B, Part VI of the Aircraft
Lease Agreement; and
(d) all maintenance is carried out according to Lessee's Maintenance Program in
at least the same manner and with at least the same care, including
maintenance scheduling, modification status and technical condition, as is
the case with respect to similar aircraft owned or otherwise operated by
Lessee.
8.11 Removal of Engines and Parts
(a) General: Lessee shall replace, within * (*) days thereof, any Engine that
has suffered an Engine Event of Loss in accordance with Section 8.11(b),
and any Part which is permanently removed from the Aircraft shall be
replaced in accordance with Section 8.11(b). Any Engine or Part which
otherwise is lost, stolen, destroyed, seized, obsolete, confiscated,
damaged beyond repair or permanently rendered unfit for any reason, shall
be replaced in accordance with Section 8.11(b). Any Engine or Part may be
installed on another aircraft Lessee owns or leases in accordance with
Section 8.11(c). Lessee may temporarily install an engine or part in
accordance with Section 8.11(d). Lessee shall obtain from any person to
whom possession of an Engine is given, and from the lessor of any airframe
on which an Engine is installed and from any holder of a Security Interest
in any airframe on which an Engine is installed, an agreement in writing
(which agreement, in the case of a lease or Security Interest, may be
contained in the applicable lease or Security Interest agreement covering
such airframe) to Lessor, Owner and Financing Parties' Representative, in
form and substance reasonably satisfactory to Lessor, that such Person and
its successors and assigns will respect the interests of Owner and Lessor
as owner and lessor, respectively, and of the Financing Parties'
Representative as holding a Security Interest in, such Engine and will not
seek to acquire, claim or exercise any rights whatsoever in relation to
such Engine. In the event Lessee shall have received from a lessor of or
secured party holding a Security Interest in any airframe leased to Lessee
or owned by Lessee a written agreement pursuant to the foregoing sentence
and the lease or Security Interest covering such airframe also covers an
engine or engines owned by the lessor under such lease or subject to such
Security Interest in favor of the secured party under such Security
Interest, Lessor hereby agrees for the benefit of such lessor or secured
party that Lessor will not acquire, claim or exercise as against such
lessor or secured party, any right, title or interest in any such engine as
the result of such engine being installed on the Airframe at any time while
such engine is subject to such lease or Security Interest and owned by such
lessor or subject to a Security Interest in favor of such secured party.
(b) Permanent Replacement: If Lessee permanently replaces an Engine or Part:
(i) in the case of an Engine, the replacement engine shall be of the same
manufacturer and model, or at Lessee's option an engine of an improved
model, and have equivalent or better remaining useful life, modification
status, time elapsed since hot section refurbishment, cold section
refurbishment, reduction gear overhaul, life limited part utility,
serviceability and equivalent remaining warranty status as the Engine it
replaces, and is otherwise of an equivalent or better value and utility and
suitable for installation and use on the Airframe without impairing the
value or utility of the Airframe and compatible with the remaining
installed Engine(s);
(ii) in the case of a Part, the replacement part shall be in good operating
condition, have a value and utility the same or better than the Part it is
replacing, have as much useful life available until the next scheduled
maintenance procedure, be of the same or a more advanced make and model and
of the same interchangeable modification status as the Part it is
replacing;
(iii)the replacement engine or part shall have become and remain, until
replaced in accordance with this Section, the property of Owner free from
Security Interests (other than Permitted Liens), and subject to the
applicable Financing Documents; and
(iv) Lessee shall have full details of the source and maintenance records of the
replacement engine or part and in the case of serialized rotable parts,
also have a complete service history as required by the Air Authority.
(c) Other Aircraft: An Engine or Part may be installed on an aircraft which
Lessee owns or leases if:
(i) no payment Default or Event of Default has occurred and is continuing;
(ii) Lessee has operational control over the aircraft;
(iii)Owner keeps the ownership of the Engine or Part concerned until replaced in
accordance with this Section;
(iv) the Engine or Part does not become subject to a Security Interest and the
applicable airframe is not subject to any Security Interest except a
Permitted Lien or a lease or Security Interest described in Section 8.11(a)
above; and
(v) the Engine or Part is removed from the aircraft not later than the Expiry
Date;
(d) Temporary Replacement:Lessee may install any engine or part on the Aircraft
as a temporary replacement if:
(i) no payment Default or Event of Default has occurred and is continuing;
(ii) there is not available an engine or part complying with the requirements of
the Lease for a replacement Engine or Part;
(iii)it would result in an unreasonable disruption of the operation of the
Aircraft or the business of Lessee to have the Aircraft grounded until such
time as an engine or part complying with the requirements of the Lease for
a replacement Engine or Part becomes available for installation;
(iv) as soon as practicable after an engine or part is installed on the
Aircraft, but before the Expiry Date, Lessee removes that engine or part
and replaces it with the original Engine or Part (or by an engine or part
which is allowed by Section 8.11(b)); and
(v) the Insurances for the Aircraft are not adversely affected.
(e) Pooling/Interchange: Lessee shall not subject any Engine or Part to any
pooling, interchange, lease or similar arrangement unless Lessee obtains
Lessor's prior written consent thereto, which consent shall not be
unreasonably withheld.
8.12 Equipment Changes
Lessee will not make any modification or addition to the Aircraft
(each an "Equipment Change"), except for an Equipment Change which:
(i) is required by applicable Law or expressly permitted or required by the
Lease; or
(ii) has the prior written approval of Lessor or does not diminish the
condition, utility, airworthiness or value of the Aircraft and costs less
than $*; or
(iii)is otherwise permitted by Section 8.14 herein.
So long as no Default has occurred and is continuing, Lessee may remove any
Equipment Change provided that the Equipment Change is not required pursuant to
the terms of the Lease or to maintain the Insurances and removal does not
diminish the value, utility, airworthiness or condition of the Aircraft below
what it would have been if such Equipment Change had never occurred.
Furthermore, Lessor may require Lessee to remove any Equipment Change (other
than those required by applicable Law) on the Expiry Date and to restore the
Aircraft to its condition prior to that Equipment Change. Any Equipment Change
not so removed becomes the property of Lessor or Owner, as the case may be.
8.13 Title on an Equipment Change
Title to any equipment that becomes a Part or an Engine after the Delivery Date
shall vest in Owner solely by virtue of its attachment to the Airframe or an
Engine and it shall then be subject to the Lease and, if applicable, the
Financing Documents, as if it were attached to the Aircraft at Delivery. If so
requested by Lessor, Lessee will provide a properly executed bill of sale or
similar instrument to evidence the vesting of good and marketable title, free
and clear of Liens (except Lessor Liens), to any such equipment in Owner. After
Lessee has permanently replaced an Engine in accordance with Section 8.11(b) and
this Section 8.13, Lessor will, or will procure that Owner will transfer to
Lessee, all of Lessor's or Owner's, as the case may be, rights to the engine
that has been replaced, on an AS IS, WHERE IS basis without recourse or warranty
(except as to the absence of Lessor's Liens), and will at Lessee's expense
provide or will procure that Owner provides a bill of sale or similar instrument
as Lessee may reasonably request to evidence such transfer. Lessee shall
indemnify, on an After-Tax Basis, Lessor, Owner and each other Tax Indemnitee
for all fees and expenses incurred by Lessor, Owner or any other Tax Indemnitee
in connection with any such transfer.
8.14 Inflight Equipment
Notwithstanding any other provision of this Agreement, Lessor acknowledges that
Lessee may at any time during the Term install a telephone system and/or an
inflight entertainment system for passenger use (collectively, the "Inflight
Equipment") on the Aircraft notwithstanding that the Inflight Equipment may not
be owned by Lessee provided that:
(a) Lessee shall give Lessor notice of the installation of any Inflight
Equipment on the Aircraft and the name and address of the owner of such
Inflight Equipment (including Lessee as owner, if applicable);
(b) the documents pursuant to which the owner of the Inflight Equipment
installs same on the Aircraft shall provide that such owner shall not have
any lien, security interest, claim or other encumbrance on or against the
Aircraft, and such owner's only right with respect to the Aircraft shall be
to remove the Inflight Equipment from the Aircraft and, such documents
shall also provide that such owner shall remove the Inflight Equipment from
the Aircraft not later than the earlier of (A) * (*) days after notice from
Lessor of the occurrence of an Event of Default, and (B) the Expiry Date;
(c) such right of removal is subject to and conditional upon such owner
restoring, or causing Lessee to restore, all alterations made to the
Aircraft in connection with the installation of the Inflight Equipment to
the condition prior to the installation thereof (ordinary wear and tear
excepted).
Lessor acknowledges that at all times:
(i) the owner of the Inflight Equipment has and will retain sole and exclusive
right and title to and in the Inflight Equipment;
(ii) the Inflight Equipment shall not constitute a Part or a part of the
Aircraft;
(iii)title to the Inflight Equipment shall not transfer to or from Lessor
pursuant to Clauses 8.12 and 8.13; and
(iv) the Inflight Equipment shall not become subject to the Security Interest of
any person to whom Lessor grants a Security Interest in the Aircraft
pursuant to Clause 14.1.
9. INSURANCE
9.1 Insurances
Lessee will maintain the Insurances in full force during the Term, and
thereafter as expressly required in the Lease, which Insurance shall be through
such brokers and with such insurers of recognised standing and reputation and
shall be subject to such exclusions consistent with the customary standard for
similar operators, operating similar equipment in similar circumstances. The
Insurances shall in any event meet the requirements set forth in Schedule 7. If
the Insurances do not meet the requirements set forth in Schedule 7, Lessor may
require that the Insurances be amended if the scope and level of cover does not
protect the interests of Lessor and each Indemnitee to at least the same extent
as they were at the commencement of the Term.
9.2 Insurance Undertakings and Information: Lessee will:
(a) comply with the terms and conditions of each policy of the Insurances and
not do, consentor agree to any act or omission which:
(i) invalidates or may invalidate the Insurances; or
(ii) renders or may render void or voidable the whole or any part of any of the
Insurances; or
(iii)brings any particular liability within the scope of an exclusion or
exception to the Insurances;
(b) not take out without the prior written approval of Lessor any insurance or
reinsurance in respect of the Aircraft other than that which is required
under the Lease unless relating solely to hull total loss, business
interruption, profit commission and deductible risk and which does not in
any event adversely affect the Insurances required to be maintained
hereunder;
(c) commence renewal procedures at least * days prior to expiry of any of th
Insurances and provide to Lessor:
(i) if requested by Lessor, a written status report of renewal negotiation *
days prior to each expiry date;
(ii) telecopy confirmation of completion of renewal prior to each policy expiry
date;
(iii)certificates of insurance (and where appropriate certificates of
reinsurance), and broker's (and any reinsurance broker's) letter of
undertaking in a form reasonably acceptable to Lessor, detailing the
coverage and confirming the insurers' (and any reinsurers') agreement to
the specified insurance requirements of the Lease on or before each renewal
date;
(d) on request, provide to Lessor copies ofdocuments or other information
evidencing the Insurances; and
(e) provide any other insurance and reinsurance related information, or
assistance, in respect of the Insurances as Lessor may reasonably require.
9.3 Failure to Insure
If Lessee fails to maintain any of the Insurances in compliance with the Lease,
each of the Indemnitees will be entitled but not bound (without prejudice to any
other rights of Lessor under the Lease):
(a) to pay the premiums due or to effect and maintain insurances satisfactory
to it or otherwise remedy Lessee's failure in such manner (including,
without limitation to effect and maintain an "owner's interest" policy) as
it considers appropriate. Any sums so expended by it will become
immediately due and payable by Lessee to Lessor together with interest
thereon at the Interest Rate, from the date of expenditure by it up to the
date of reimbursement by Lessee; and
(b) at any time while such failure is continuing to require the Aircraft to
remain at any airport or to proceed to and remain at any airport designated
by it until the failure is remedied to its satisfaction.
9.4 Continuing Indemnity
Lessee shall effect and maintain insurance after the Expiry Date with respect to
its liability under Section 10 (Indemnity) for * years, and such insurance shall
name each Indemnitee as an additional insured.
10. INDEMNITY
(a) Except as provided in Section 10(b) below, Lessee agrees to assume
liability for and to indemnify each of the Indemnitees against and agrees
to pay on demand any and all Losses which an Indemnitee may at any time
suffer or incur at any time, whether directly or indirectly, arising out
of, related to or in any way connected with:
(i) the ownership, maintenance, overhaul, service, repair, delivery,
possession, transfer of ownership or possession, import, export,
registration, control, storage, modification, leasing, insurance,
inspection, testing, design, date processing, sub-leasing, use, condition,
redelivery or other matters relating to the Aircraft, any Engine or any
Part (regardless of whether in the air or on the ground, and regardless of
whether such Losses are based on strict liability in tort, any act or
omission, including the negligence, of any Indemnitee, or otherwise); or
(ii) any breach by the Lessee of any of its obligations under the Lease; or
(iii)the design, testing or use of or any article or material in, the Aircraft,
any Engine or any Part or its use or operation, including any defect in
design and regardless of whether it is discoverable, and any infringement
of patent, copyright, trademark, design or other proprietary right claimed
by any Person or a breach of any obligation of confidentiality claimed to
be owed to any Person.
For the avoidance of doubt, the reference to "ownership" in clause (i)
shall not require Lessee to indemnify Lessor in respect of (y) any defect
in Lessor's or Owner's title to the Aircraft or (z) any decline in residual
value of the Aircraft if Lessee shall have fully complied with its
obligations under the Lease. (b) Lessee is not required to indemnify any
particular Indemnitee under this Section, to the extent a particular Loss:
(i) is caused by the willful misconduct of that Indemnitee or gross negligence
of that Indemnitee, other than gross negligence imputed to that Indemnitee
by reason of its interest in the Aircraft or the Lease;
(ii) is caused by Lessor's breach of the Lease which does not result from a
Default;
(iii)is related to any Taxes (but without prejudice to any Indemnitee's rights
under any other provision of this Lease relating to Taxes);
(iv) arises from a claim made, or is based on any event occurring, prior to the
commencement of the Term;
(v) arises from a claim made, and is based on any event occurring, after the
redelivery of the Aircraft to Lessor in compliance with the Lease;
(vi) caused as a result of any sale, assignment, transfer or other disposition
(whether voluntary or involuntary) by such Indemnitee of the Aircraft or
Engine or any interest therein, unless such sale, transfer or other
disposition has resulted from or occurred following an Event of Default; or
(vii)consists of normal administrative costs and expenses of such Indemnitee
(but excluding any such costs or expenses resulting from the occurrence of
any Default); or
(viii)consists of costs or expenses for which Lessor has expressly agreed to be
responsible under any other provision of the Lease; or
(ix) related to a Lessor Lien.
(c) Notwithstanding anything to the contrary in this Section 10 and subject in
all cases to such Losses not being subject to coverage under the Insurances
or any contest being commenced in violation of the exercise of rights of
any insurer pursuant to the Insurances,
(i) if requested by Lessee for any Losses, each Indemnitee shall contest (or,
if Lessee desires and such Indemnitee consents (which consent shall not be
unreasonably withheld or delayed), allow Lessee to contest in the name of
such Indemnitee) the payment for which it seeks indemnification hereunder;
(ii) if Lessee desires to contest the payment of any amount for which an
Indemnitee seeks indemnification hereunder and such Indemnitee is required
to make a payment of any such amount as a condition precedent to contesting
payment of such amount, Lessee shall advance to such Indemnitee the amount
of such payment on an interest-free basis;
(iii)in the event of a contest Lessee shall indemnify each Indemnitee promptly
for all reasonable out-of-pocket expenses incurred by each Indemnitee in
connection with any participation by such Indemnitee in such contest,
including without limitation, all reasonable legal, accounting and
investigatory fees and disbursements;
(iv) in the event any contest is conducted by an Indemnitee (rather than by
Lessee in the name of such Indemnitee) such Indemnitee shall consider in
good faith any views with respect to such contest offered by Lessee and
shall keep Lessee reasonably informed as to the progress of such contest
and Lessee shall have no liability hereunder for any portion of such
dispute settled by such Indemnitee without the prior consent of Lessee;
(v) Lessee shall not be entitled to undertake, or to request than an Indemnitee
undertake, any contest without first providing to such Indemnitee (1) an
opinion (obtained at Lessee's expense) of legal counsel (reasonably
acceptable to such Indemnitee) to the effect that a reasonable basis exists
to contest and (2) evidence satisfactory to such Indemnitee that such
Losses are not covered by the Insurances required pursuant to Section 9 and
Schedule 7 herein;
(vi) Lessee shall not have any right to contest such Losses if an Event of
Default has occurred and is outstanding, including without limitation
failure to comply with any operational conditions set forth in the
Insurances pursuant to Section 9 or Schedule 7 herein;
(vii)Lessee shall not be entitled to contest, or to require an Indemnitee to
contest, any Losses if such Indemnitee agrees in writing not to seek
indemnification from Lessee for (or not to require Lessee to pay) the
Losses that would be the subject of such contest; and
(viii) Lessee shall not be entitled to contest, or require an Indemnitee to
contest, any Losses in a proceeding which involves any possibility of the
sale, forfeiture or loss of the Aircraft or any interest therein, the loss
of any coverage under any Insurances or the imposition of any criminal
penalties or sanctions against any Indemnitee.
11. EVENTS OF LOSS
11.1 Events of Loss
(a) If an Event of Loss occurs prior to Delivery of an Aircraft, the Lease will
immediately terminate with respect to such Aircraft and except as expressly
stated in the Lease neither party will have any further obligation with
respect to such Aircraft other than pursuant to Section 5.20 and Section 3
of Schedule 4, except that Lessor will return the Deposit (if any) to
Lessee and return to Lessee or cancel any Letter of Credit.
(b) If an Event of Loss occurs after Delivery, Lessee will pay the Agreed Value
to Lessor on or prior to the earlier of (i) * (*) days after the Event of
Loss and (ii) the date of receipt of insurance proceeds in respect of that
Event of Loss.
(c) Subject to the rights of any insurers and reinsurers or other third party,
upon irrevocable payment in full to Lessor of the Agreed Value and all
other amounts which may be or become payable to Lessor under the Lease, and
if Lessee requests such transfer, Lessor will, or will procure that Owner
will transfer to Lessee all of Lessor's or Owner's, as the case may be,
rights to the Aircraft, on an AS IS, WHERE IS basis, without recourse or
warranty (except as to the absence of Lessor's Liens) and will at Lessee's
expense, execute and deliver or will procure that Owner executes and
delivers such bills of sale and other documents and instruments as Lessee
may reasonably request to evidence (on the public record or otherwise) such
transfer, free and clear of all rights of Lessor and Owner and Lessor
Liens. Lessee shall indemnify, on an After-Tax Basis, Lessor, Owner and
each other Tax Indemnitee for all fees and expenses incurred by Lessor,
Owner or any other Tax Indemnitee in connection with any such transfer.
11.2 Requisition
During any requisition for use or hire of the Aircraft, any Engine or Part which
does not constitute an Event of Loss:
(a) the Rent and other charges payable under the Lease will not be suspended or
abated either in whole or in part, and Lessee will not be released from any
of its other obligations (other than operational obligations with which
Lessee is unable to comply solely by virtue of the requisition); and
(b) so long as no (i) Default relating to payment hereunder or under any Other
Agreement or (ii) Event of Default has occurred and is continuing, Lessee
will be entitled to any compensation paid by the requisitioning authority
in respect of such authority's use of the Aircraft, such Engine or such
Part during the Term. Lessee will, as soon as practicable after the end of
any such requisition, cause the Aircraft to be put into the condition
required by the Lease. Lessor will be entitled to all compensation payable
by the requisitioning authority in respect of any change in the structure,
state or condition of the Aircraft arising during the period of
requisition, and Lessor will apply such compensation in reimbursing Lessee
for the cost of complying with its obligations under the Lease in respect
of any such change, but, if (y) any Default relating to payment hereunder
or under any Other Agreement or (z) an Event of Default has occurred and is
continuing, Lessor may apply the compensation in or towards settlement of
any amounts owing by Lessee under the Lease and/or under any Other
Agreement.
12. RETURN OF AIRCRAFT
12.1 Return
On the Expiry Date, Lessee will, unless an Event of Loss has occurred, redeliver
the Aircraft and the Aircraft Documents and Records at Lessee's expense to
Lessor at the Redelivery Location, in accordance with the procedures and in
compliance with the conditions set forth in Schedule 6, free and clear of all
Security Interests (other than Lessor Liens) and in a condition qualifying for
and having a valid and fully effective certification of airworthiness under FAR
Part 121.
12.2 Non-Compliance
If at the time of Final Inspection Lessee has not fully complied with any of its
obligations under the Lease (including Schedule 6), or Lessee fails to make the
Aircraft available to Lessor on a timely basis for inspection and redelivery
pursuant to Section 12.1 and Schedule 6 (whether such failure is due to any act
or omission of Lessee or any other circumstance whatsoever), the Term shall be
extended until the time when the Aircraft has been redelivered to Lessor in full
compliance with the Lease, for the sole purpose of enabling such non-compliance
or failure to be promptly rectified, and during such extension period:
(a) Lessee shall not use the Aircraft in flight operations except those related
directly to the redelivery of the Aircraft to Lessor;
(b) all Lessee's obligations and covenants under the Lease will remain in
full force until Lessee so redelivers the Aircraft; and
(c) Lessee shall pay Rent to Lessor at a rate per month equal to the amount of
Rent payable in respect of the last scheduled Rental Period during the
first * (*) days of such extension period and at a rate equal to the
monthly Rent plus * percent (*) during the next * (*) days next succeeding
such first * (*) days of such extension period and at a rate equal to the
monthly Rent plus * (*) thereafter, calculated on a per diem basis.
Any such extension shall not prejudice Lessor's right to treat such
non-compliance or failure as an Event of Default at any time, and to
enforce such rights and remedies as may be available to Lessor in respect
thereof under the terms of the Lease or applicable Law. Without limiting
the generality of the foregoing, Lessee's Rent obligation under paragraph
(c) above shall be without prejudice to Lessor's rights to terminate the
letting of the Aircraft and to indemnification pursuant to Section 13.3.
Lessor may agree (either on first tender of the Aircraft by Lessee or at
any time during the said extension period) to accept redelivery of the
Aircraft notwithstanding non-compliance with Section 12.1 or Schedule 6, in
which case Lessee will indemnify Lessor on an After-Tax Basis, and provide
cash to Lessor (in an amount satisfactory to Lessor) as security for that
indemnity, in respect of the cost to Lessor of putting the Aircraft into
the condition required by the Lease.
12.3 Redelivery
Upon redelivery Lessee will provide to Lessor, upon Lessor's written notice
received within a reasonable period in advance of the Expiry Date, (i) a valid
and subsisting export certificate of airworthiness for the Aircraft; (ii) such
other documents, which are unrelated to the export certificate of airworthiness
or the condition of the Aircraft, necessary to export the Aircraft from the
United States which documents cannot be obtained by Lessor and (iii) are
required in relation to the deregistration of the Aircraft with the Air
Authority if the Aircraft is subject to a Permitted Sub-Lease outside of the
United States.
12.4 Acknowledgement
Provided Lessee has complied with its obligations under Section 12 and Schedule
6 of the Lease, following redelivery of the Aircraft by Lessee to Lessor at the
Redelivery Location, Lessor will deliver to Lessee an acknowledgement,
substantially in the form attached as Schedule 14 confirming that Lessee has
redelivered the Aircraft to Lessor in accordance with the Lease.
12.5 Storage
If Lessor so requests, Lessee shall provide up to * days storage for the
Aircraft following the last day of the Term at the Lessor's risk and expense.
12.6 Civil Reserve Air Fleet:
Lessor consents and agrees to the allocation of the Aircraft by Lessee to the
Civil Reserve Air Fleet ("CRAF") in terms of the laws and regulations of the
government of the Untied States and its agencies. Lessor understands that the
United States government has the right to activate the CRAF fleet in times of
air lift emergency and in such event the Lessee may not be able to return the
Aircraft at the termination of the Lease. Accordingly, the Term shall be
extended through the period that CRAF remains activated and all the terms and
conditions of the Lease shall continue to apply during this extended period.
Lessee shall give Lessor notice in advance if the Aircraft is to be allocated to
CRAF.
In the event that CRAF activation occurs with respect to the Aircraft then (i)
Lessor will accept indemnification by the United States government in lieu of
the Insurances, provided that such indemnification is at least substantially
equivalent to the Insurances, as and to the extent provided in Schedule 7; and
(ii) Lessor shall inform such United States government official or agency as
shall be advised by Lessee to Lessor prior to CRAF activation if an Event of
Default shall occur.
13. DEFAULT
13.1 Events
The occurrence of any of the events or conditions set forth in Schedule 9 will
constitute an Event of Default by Lessee (whether the occurrence of any such
Event of Default is voluntary or involuntary or occurs by operation of Law or
pursuant to or in compliance with any judgement, decree or order of any court or
any order, rule or regulation of any Government Entity).
13.2 Rights and Remedies
If an Event of Default occurs, Lessor may at its option (and without prejudice
to any of its other rights under the Lease), at any time thereafter (without
notice to Lessee except as required under applicable Law):
(a) by notice to Lessee and with immediate effect cancel the leasing of the
Aircraft (but without prejudice to the continuing obligations of Lessee
under the Lease), whereupon all rights of Lessee under the Lease shall
cease; and/or
(b) proceed by appropriate court action or actions to enforce performance of
the Lease including the payment of all Rent and all other amounts payable
to Lessor or any Indemnitee pursuant to the terms of the Lease; and/or
(c) proceed by appropriate court action or actions to recover damages for the
breach of the Lease which shall include:
(i) all Rent and other amounts which are or become due and payable hereunder
prior to the earlier to occur of the date Lessor sells or re-leases the
Aircraft or receives payment of the amount calculated pursuant to clause
(ii) below;
(ii) an amount equaling the aggregate Rent for the remainder of the Term
(determined without reference to any right of Lessor to cancel the leasing
of the Aircraft, whether or not such right is exercised), discounted
periodically (equal to installment frequency) to present worth at the
Discount Rate to the date of payment by Lessee to Lessor, less the amount,
if any, of the Mitigation Credit (calculated as provided below in Section
13.4);
(iii)all costs and other incidental damages associated with Lessor's exercise
of its remedies hereunder or otherwise incurred by Lessor as a result of an
Event of Default, including repossession costs, legal fees, Aircraft
storage, maintenance and insurance costs, Aircraft re-lease or sale costs
(including, in the case of a re-lease, any costs incurred to transition the
Aircraft to the next operator's maintenance program) and Lessor's internal
costs and expenses (including the cost of personnel time calculated based
upon the compensation paid to the individuals involved on an annual basis
and a general Lessor overhead allocation), all such costs and incidental
damages being referred to herein collectively as "Enforcement and
Remarketing Costs";
(iv) 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, all such amounts being referred to herein collectively as "Unwind
Expenses";
(v) any loss, cost, expense or liability sustained by Lessor due to Lessee's
failure to maintain the Aircraft in accordance with the terms of this
Agreement or Lessee's failure to redeliver the Aircraft in the condition
required by this Agreement, including any consequential loss of revenues or
profits, (collectively, the "Aircraft Condition Damages"; and
(vi) such additional amount, if any, as may be necessary to place Lessor in the
same economic position, on an After-Tax Basis, as Lessor would have been in
if Lessee had timely performed each of its obligations under this
Agreement; and/or
(d) either:
(i) enter upon the premises where all or any part of the Aircraft is located
and take immediate possession of and, at Lessor's sole option, remove the
same (and/or any engine which is not an Engine but which is installed on
the Airframe, subject to the rights of the lessor or secured party
thereof), all without liability accruing to Lessor for or by reason of such
entry or taking of possession whether for the restoration of damage to
property, conversion or otherwise, caused by such entry or taking, except
damages caused by gross negligence or willful misconduct; or
(ii) by delivering notice to Lessee, require Lessee to redeliver the Aircraft to
Lessor at Denver (or such other location as Lessor may require) on the date
specified in such notice and in all respects in the condition required by
the Lease upon the Return Occasion (it being understood that Lessee shall
not delay any such return for the purpose of placing the Aircraft in such
condition, but shall nevertheless be liable to Lessor for the failure of
the Aircraft to be in such condition); and/or
(e) sell at private or public sale, as Lessor may determine, or hold, use,
operate or lease to others the Aircraft as Lessor in its sole discretion
may determine, all free and clear of any rights of Lessee; and/or
(f) by written notice to Lessee specifying a payment date (which shall be a
date not earlier than * (*) Business Days following the date of such
notice), Lessor may demand that Lessee pay to Lessor, and Lessee shall pay
to Lessor on the payment date specified in such notice (in lieu of the Rent
due for the period commencing after the date specified for payment in such
notice) the sum of the following amounts:
(i) all Rent and other amounts which are or are expected to become due and
payable hereunder prior to the payment date specified by Lessor;
(ii) an amount equaling the aggregate Rent for the remainder of the Term
(determined without reference to any right of Lessor to cancel the leasing
of the Aircraft, whether or not such right is exercised), discounted
periodically (equal to installment frequency) to present worth at the
Discount Rate to the payment date specified by Lessee to Lessor, less the
amount, if any, of the Mitigation Credit (calculated as provided in Section
13.4 below);
(iii)an amount equaling Lessor's actual Enforcement and Remarketing Costs,
Unwind Expenses and Aircraft Condition Damages;
(iv) such additional amount, if any, as may be necessary to place Lessor in the
same economic position, on an After-Tax Basis, as Lessor would have been in
if Lessee had timely performed each of its obligations under this
Agreement; and
(g) draw upon the Deposit or the Letter of Credit and apply such amounts to any
amounts owing to Lessor hereunder and/or make demand against any Guarantor
for any or all of the foregoing.
In addition to the foregoing, Lessor shall be entitled to exercise such
other rights and remedies as may be available under applicable Law and
Lessee shall be liable on an After-Tax Basis for, and shall pay Lessor on
demand: (i) interest on all unpaid amounts at the Interest Rate, from the
due date until the date of payment in full; (ii) all reasonable legal fees
and other reasonable costs and expenses incurred by Lessor by reason of the
occurrence of any Event of Default or the exercise of Lessor's remedies
with respect thereto; and (iii) all reasonable expenses, disbursements,
costs and fees incurred in (A) repossessing, storing, preserving, shipping,
maintaining, repairing and refurbishing the Aircraft, the Airframe, any
Engine or Part to the condition required by Section 12 hereof and (B)
preparing the Aircraft, the Airframe, an Engine or Part for sale or lease,
advertising the sale or lease of the Aircraft, the Airframe, an Engine or
Part and selling or releasing the Aircraft, the Airframe, an Engine or
Part. Lessor is hereby authorized and instructed, but shall have no
obligation, to make any expenditures which Lessor, in its sole discretion,
considers advisable to repair and restore the Aircraft, the Airframe, an
Engine or Part to the condition required by Section 12 hereof (it being
understood that Lessee shall be liable for all such expenditures).
Lessee hereby agrees that, in the event of the return to or repossession by
Lessor of the Aircraft, the Airframe, an Engine or Part, any rights in any
warranty (express or implied) previously assigned to Lessee or otherwise
held by Lessee shall without further act, notice or writing be assigned or
reassigned to Lessor, if assignable.
No remedy referred to in this Section 13 is intended to be exclusive, but,
to the extent permissible under the Lease or under applicable Law, each
shall be cumulative and in addition to any other remedy referred to above
or otherwise available to Lessor at Law or in equity; and the exercise or
beginning of exercise by Lessor of any one or more of such remedies shall
not preclude the simultaneous or later exercise by Lessor of any or all of
such other remedies; provided, however, that nothing in this Section 13
shall be construed to permit Lessor to obtain a duplicate recovery of any
element of damages to which Lessor is entitled. No express or implied
waiver by Lessor of any Default or Event of Default shall in any way be, or
be construed to be, a waiver of any future or subsequent Default or Event
of Default.
13.3 Power of Attorney: Lessee hereby appoints Lessor as the attorney-in-fact of
Lessee, with full authority in the place and stead of Lessee and in the
name of Lessee or otherwise, for the purpose of carrying out the provisions
of the Lease and taking any action and executing any instrument that Lessor
may deem necessary or advisable to accomplish the purposes hereof;
provided, however, that Lessor may only take action or execute instruments
under this Section 13 after an Event of Default has occurred and is
continuing. Lessee hereby declares that the foregoing powers are granted
for valuable consideration, constitute powers granted as security for the
performance of the obligations of Lessee hereunder and are coupled with an
interest and shall be irrevocable. Without limiting the generality of the
foregoing or any other rights of Lessor under the Lease, upon the
occurrence and during the continuation of an Event of Default, Lessor shall
have the sole and exclusive right and power to (i) settle, compromise,
compound, adjust or defend any actions, suits or proceedings relating to or
pertaining to the Aircraft, Airframe or any Engine, or the Lease and (ii)
make proof of loss, appear in and prosecute any action arising from any
policy or policies of insurance maintained pursuant to the Lease, and
settle, adjust or compromise any claims for loss, damage or destruction
under, or take any other action in respect of, any such policy or policies.
13.4 Mitigation Credit: Lessee shall be entitled to have a Mitigation Credit
deducted from any recovery by Lessor from Lessee of Rent for the unexpired
portion of the Term. Such "Mitigation Credit" shall be in one of the
following amounts, with Lessor to select the amount which in its reasonable
judgement will place Lessor in the same economic position, on an After-Tax
Basis, as Lessor would have been in if Lessee had timely performed each of
its obligations under the Lease:
(a) in the event that Lessor has re-let the Aircraft on terms (other than
rental payment terms) which, taken as a whole, Lessor reasonably regards as
being substantially similar to the terms of the Lease, an amount equaling
the aggregate basic rental payments to become due for the period coinciding
with the remainder of the Term (determined without reference to any right
of Lessor to cancel the leasing of the Aircraft, whether or not such right
is exercised), discounted periodically (equal to installment frequency) to
present worth at the Discount Rate to the date of payment by Lessee; or
(b) in the event that Lessor has not re-let the Aircraft or has re-let the
Aircraft on terms (other than rental payment terms) which, taken as a
whole, Lessor does not reasonably regard as being substantially similar to
the terms of the Lease, an amount equaling the fair market rental value
(determined pursuant to the Appraisal Procedure) of the Aircraft for the
period commencing with the date that Lessor reasonably anticipates that the
Aircraft could be re-let at such rental rate and ending with the date that
the Term was scheduled to expire (determined without reference to any right
of Lessor to cancel the leasing of the Aircraft, whether or not such right
is exercised), discounted periodically (equal to installment frequency) to
present worth at the Discount Rate to the date of payment by Lessee.
13.5 Sale or Re-Lease
If an Event of Default occurs, Lessor may sell or re-lease or otherwise deal
with the Aircraft at such time and in such manner and on such terms as Lessor
considers appropriate in its absolute discretion, free and clear of any interest
of Lessee, as if the Lease had never been entered into. Lessor shall have no
duty or obligation to sell the Aircraft, and Lessor shall be obligated to
attempt to re-lease the Aircraft only to the extent, if any, that it is required
to do so under Article 2A of the UCC, and Lessee hereby disclaims any right to
compel Lessor to sell or otherwise re-lease the Aircraft.
13.6 Removal of Lease from FAA Registry
If an Event of Default occurs, Lessee will at the request of Lessor immediately
take all steps necessary to enable the Aircraft to be redelivered to Lessor in
accordance with and free and clear of the Lease and Lessee hereby irrevocably
and by way of security for its obligations under the Lease appoints (which
appointment is coupled with an interest) Lessor as its attorney-in-fact to
execute and deliver any documentation and to do any act or thing not prohibited
by Law required in connection with the foregoing. Without limiting the
foregoing, Lessor may file with the FAA the Lease Termination provided to Lessor
under the Lease.
14. TRANSFER
14.1 Lessee
LESSEE WILL NOT ASSIGN, DELEGATE OR OTHERWISE TRANSFER (VOLUNTARILY,
INVOLUNTARILY, BY OPERATION OF LAW OR OTHERWISE), EXCEPT TO A SUCCESSOR ENTITY
AS PERMITTED BY THIS AGREEMENT IN SECTION 8.7(a)(vii) HEREOF, ANY OF ITS RIGHTS
OR OBLIGATIONS UNDER THE LEASE (INCLUDING THE AIRCRAFT LEASE AGREEMENT OR THIS
CTA), OR CREATE OR PERMIT TO EXIST ANY SECURITY INTEREST (OTHER THAN PERMITTED
LIENS) OVER ANY OF ITS RIGHTS UNDER THE LEASE (INCLUDING THE AIRCRAFT LEASE
AGREEMENT OR THIS CTA), AND ANY ATTEMPT TO DO SO SHALL BE NULL AND VOID.
14.2 Lessor
Lessee acknowledges and agrees that Lessor will, if applicable under the
Financing Documents, assign as security Lessor's interest in the Lease as
described in the Acknowledgement and Agreement referred to in Schedule 3.
In addition insofar as Lessee is concerned, Lessor may, without the consent of
Lessee, further transfer all or any of its rights or obligations under the Lease
or all or any of its right, title or interest in and to the Aircraft (each a
"Transfer"), including pursuant to:
(a) a sale and leaseback; or
(b) a novation or assignment of the Lease and/or a sale of the Aircraft
(including to a special purpose or securitization or monetization trust,
fund, limited liability company, corporation, partnership or other vehicle
or in connection with any other direct or indirect raising of capital); or
(c) a secured loan financing.
Lessor will promptly notify Lessee of any transfer and Lessee agrees
promptly to execute and deliver in connection with any transfer such
documents and assurances (including an acknowledgement of the transfer and
a certificate as to the absence of any Default under the Lease) and to take
such further action as Lessor may reasonably request to establish or
protect the rights and remedies created or intended to be created in favor
of the transferee in connection with any transfer. After any transfer, the
transferee shall be entitled to be an Indemnitee and to such other rights
under the Lease as Lessor shall specify. Upon an assignment or novation
described in clause (b), Lessor shall be released from all obligations and
liabilities under the Lease to the extent such obligations and liabilities
are assumed by such transferee, and the Lease, including this CTA as in
effect at that time and as incorporated in the Aircraft Lease Agreement,
shall be deemed applicable as between Lessee and the transferee of the
Lease and may be amended, supplemented or otherwise modified without the
consent of the transferor (if this CTA is applicable to the Other
Agreements not so transferred, it shall remain in full force and effect and
may be amended, supplemented or otherwise modified without the consent of
the transferee). Notwithstanding any such assignment or novation, Lessor,
Owner, Financing Parties' Representative and each other Indemnitee shall
continue to be entitled to indemnification under Section 10, and shall
continue to be named as an additional insured under all Insurances referred
to in Section 9 for a period of not less than two years after such
transfer. The agreements, covenants, obligations and liabilities contained
in the Lease, including all obligations to pay Rent and indemnify each
Indemnitee, are made for the benefit of Lessor (and, in the case of Section
10, each other Indemnitee) and its or their respective successors and
assigns, notwithstanding the possibility that any such Person was not
originally a party to the Lease or may, at the time such enforcement is
sought, not be a party to the Lease.
14.3 Conditions
In connection with any such transfer by Lessor:
(a) Quiet Enjoyment: as a condition precedent to such transfer becoming
effective, Lessor will procure that the transferee or any new owner of the
Aircraft (except where such new owner is also the "Lessor" hereunder) or
any new holder of a Security Interest in the Aircraft or any holder of an
interest in the Aircraft or the Lease (by way of security or otherwise), as
the case may be, shall execute and deliver to Lessee a letter of quiet
enjoyment in respect of Lessee's use and possession of the Aircraft in a
form substantially similar to Section 7.1 hereof;
(b) Costs: Lessor shall reimburse to Lessee its reasonable out-of-pocket
expenses (including reasonable legal fees and expenses) actually incurred
in connection with co-operating with Lessor in relation to any such
transfer referred to in this Section 14, provided that such expenses are
substantiated to Lessor's reasonable satisfaction;
(c) Net Worth of Transferee. Without Lessee's prior written consent, Lessor
shall not effect such assignment, transfer, sale, encumbrance or other
disposition to any proposed transferee having a net worth of less than the
greater of (i) * US Dollars ($*) and (ii) * US Dollars ($*) multiplied by
the number of Aircraft so transferred in one or more transactions to the
proposed transferee. The foregoing requirement as to net worth shall not
apply if the obligations of the relevant transferee to the Lessee are
guaranteed by an entity which meets the requirements set forth in this
Clause 14.3; and
(d) Permitted Transferee. Any Transfer shall be made by Lessor only to a
Permitted Transferee.
15. MISCELLANEOUS
15.1 Survival
Section 3 of Schedule 4, Sections 5.6, 5.7, 5.9, 5.20, 9.5, 10, 12, and 13.3 and
any other provision of the Lease providing for an obligation on the part of
either party to indemnify the other party or any other Indemnitee shall survive
the expiration or any termination of the Lease and continue in full force and
effect.
15.2 Waivers, Remedies Cumulative
The rights of Lessor under the Lease may be exercised as often as necessary, are
cumulative and not exclusive of its rights under any Law; and may be waived only
in writing and specifically. Delay by Lessor in exercising, or non-exercise of,
any such right will not constitute a waiver of that right.
15.3 Delegation
Lessor may delegate to any Person all or any of the rights, powers or
discretions vested in it by the Lease, and any such delegation may be made upon
such terms and conditions and subject to such regulations (including power to
sub-delegate) as Lessor in its absolute discretion thinks fit.
15.4 Severability
If a provision of the Lease is or becomes illegal, invalid or unenforceable in
any jurisdiction, that will not affect:
(a) the legality, validity or enforceability in that jurisdiction of any other
provision of the Lease; or
(b) the legality, validity or enforceability in any other jurisdiction of that
or any other provision of the Lease.
15.5 Remedy
If Lessee fails to comply with any provision of the Lease, Lessor may, without
being in any way obliged to do so or responsible for so doing and without
prejudice to the ability of Lessor to treat such non-compliance as a Default,
effect compliance on behalf of Lessee, whereupon Lessee shall become liable to
pay immediately any sums expended by Lessor together with all costs and expenses
(including legal fees and expenses) in connection with the non-compliance.
15.6 Time of Essence
The time stipulated in the Lease for all payments payable by Lessee and the
prompt, punctual performance of Lessee's other obligations under the Lease are
of the essence of the Lease.
15.7 Notices
All notices under, or in connection with, the Lease will, unless otherwise
stated, be given in writing by letter or facsimile. Any such notice is deemed
effectively to be given as follows:
(i) If by letter, on the earlier of the date when delivered and the seventh day
after dispatch; and
(ii) if by facsimile, when transmitted and full transmission has been separately
notified by telephone by the transmitting party.
The addresses and facsimile and telephone numbers of Lessee and Lessor are
as set forth in the Aircraft Lease Agreement.
15.8 Governing Law; Jurisdiction; WAIVER OF JURY TRIAL
(a) PURSUANT TO AND IN ACCORDANCE WITH SECTION 5-1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAW, THE PARTIES HERETO AGREE THAT THE LEASE IN ALL RESPECTS
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK, UNITED STATES, AS APPLIED TO CONTRACTS TO BE PERFORMED
WHOLLY WITHIN THE STATE OF NEW YORK (EXCLUSIVE OF SECTION 7-101 OF THE NEW
YORK GENERAL OBLIGATIONS LAW WHICH IS INAPPLICABLE TO THE LEASE). THE
PARTIES AGREE THAT THE LEASE WAS EXECUTED AND DELIVERED IN THE STATE OF NEW
YORK.
(b) Pursuant to and in accordance with Section 5-1402 of the New York General
Obligations Law, Lessee and Lessor each agree that the United States
District Court for the Southern District of New York and any New York state
court sitting in The City of New York, New York, and all related appellate
courts, are to have non-exclusive jurisdiction to settle any disputes
arising out of or relating to the Lease and submits itself and its property
to the non-exclusive jurisdiction of the foregoing courts with respect to
such disputes.
(c) Without prejudice to any other mode of service:
(i) (1) Lessee appoints Corporation Service Company, 80 State Street, 6th
Floor, Albany, New York 12207-2543 as its agent for service of process
relating to any proceedings before the New York courts in connection with
the Lease and agrees to maintain the process agent in New York notified to
Lessor and (2) Lessor appoints General Electric Capital Corporation, 260
Long Ridge Road, Stamford, Connecticut 06927 as its agent for service of
process relating to any proceedings before the New York courts in
connection with the Lease and agrees to maintain the process agent in New
York notified to Lessee
(ii) Lessee and Lessor each agrees that failure by a process agent to notify the
other party of the process shall not invalidate the proceedings concerned;
(iii)Lessee and Lessor each consents to the service of process relating to any
such proceedings by prepaid mailing of a copy of the process to the other
party's agent at the address identified in paragraph (i) or by prepaid
mailing by air mail, certified or registered mail of a copy of the process
to the other party at the address set forth in Section 15.7.
(d) Each of Lessee and Lessor:
(i) waives to the fullest extent permitted by Law any objection which either
may now or hereafter have to the courts referred to in Section 15.8(b)
above on grounds of inconvenient forum or otherwise as regards proceedings
in connection with the Lease;
(ii) waives to the fullest extent permitted by Law any objection which either
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to the Lease brought in the courts
referred to in Section 15.8(b); and
(iii)agrees that a judgement or order of any court referred to in Section
15.8(b) in connection with the Lease is conclusive and binding on it and
may be enforced against it in the courts of any other jurisdiction.
(e) Nothing in this Section 15.8 limits the right of Lessor to bring
proceedings against Lessee in connection with the Lease:
(i) in any other court of competent jurisdiction; or
(ii) concurrently in more than one jurisdiction.
(f) Lessee irrevocably and unconditionally:
(i) agrees that if Lessor brings legal proceedings against it or its assets in
relation to the Lease no sovereign or other immunity from such legal
proceedings (which will be deemed to include suit, court jurisdiction,
attachment prior to judgement, attachment in aid of execution of a
judgement, other attachment, the obtaining of judgement, execution of a
judgement or other enforcement or legal process or remedy) will be claimed
by or on behalf of itself or with respect to its assets;
(ii) waives any such right of immunity which it or its assets now has or may in
the future acquire and agrees that the foregoing waiver shall have the
fullest extent permitted under the Foreign Sovereign Immunities Act of 1976
of the United States and is intended to be irrevocable for the purposes of
such Act; and
(iii)consents generally in respect of any such proceedings to the giving of any
relief or the issue of any process in connection with such proceedings
including, without limitation, the making, enforcement or execution against
any property whatsoever (irrespective of its use or intended use) of any
order or judgement which may be made or given in such proceedings.
(g) EACH OF LESSEE AND LESSOR HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY
AND ALL RIGHTS TO A JURY TRIAL IN RESPECT OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF THE LEASE OR ANY DEALINGS BETWEEN THEM
RELATING TO THE SUBJECT MATTER OF THE TRANSACTIONS CONTEMPLATED THEREBY OR
THE LESSOR/LESSEE RELATIONSHIP BEING ESTABLISHED, including, without
limitation, contract claims, tort claims, breach of duty claims and other
common law and statutory claims. Each of Lessor and Lessee represents and
warrants that each has reviewed and voluntarily waives its jury trial
rights following consultation with its legal counsel. THIS WAIVER IS
IRREVOCABLE, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THE LEASE. In the event of
litigation, this Section may be filed as a written consent to a trial by
the court.
15.9 Sole and Entire Agreement; True Lease; Section 1110
(a) Entire Agreement: The Lease is the sole and entire agreement between Lessor
and Lessee in relation to the leasing of the Aircraft, and supersedes all
previous agreements in relation to that leasing. Any amendments to the
Lease shall be made in writing and signed on behalf of Lessor and Lessee.
(b) True Lease: The parties intend and agree that the Lease:
(i) constitutes a "true lease", and not a "security interest" as defined in
Section 1-201(37) of the UCC;
(ii) constitutes a "true lease" for United States Federal income tax purposes;
and
(iii)confers only a leasehold interest on Lessee in and to the Aircraft on and
subject to the terms of the Lease, and no ownership or other interest with
respect to the Aircraft is provided to Lessee under the Lease.
Lessee shall not file a tax return that is inconsistent with the provisions of
this Section 15.9(b).
(c) Section 1110: Lessee acknowledges that Lessor would not have entered into
the Lease unless it had available to it the benefits of a lessor under
Section 1110 of Title 11 of the U.S.C. Lessee covenants and agrees with
Lessor that to better ensure the availability of such benefits, Lessee
shall support any motion, petition or application filed by Lessor with any
bankruptcy court having jurisdiction over Lessee whereby Lessor seeks
recovery of possession of the Aircraft under said Section 1110 and shall
not in any way oppose such action by Lessor unless Lessee shall have
complied with the requirements of said Section 1110 to be fulfilled in
order to entitle Lessee to continued use and possession of the Aircraft
hereunder. In the event said Section 1110 is amended, or if it is repealed
and another statute is enacted in lieu thereof, Lessor and Lessee agree to
amend the Lease and take such other action not inconsistent with the Lease
as Lessor reasonably deems necessary so as to afford to Lessor the rights
and benefits as such amended or substituted statute confers upon owners and
lessors of aircraft similarly situated to Lessor.
15.10 Indemnitees
All rights expressed to be granted to each Indemnitee (other than Lessor) under
the Lease are given to Lessor on behalf of that Indemnitee, and each Indemnitee
is an express third party beneficiary thereof.
15.11 Counterparts
The Lease (including the Aircraft Lease Agreement and this CTA) may be executed
in two or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument. To the extent,
if any, that the Lease constitutes chattel paper (as such term is defined in the
Uniform Commercial Code as in effect in any applicable jurisdiction), no
security interest in the Lease may be created through the transfer or possession
of any counterpart other than the original counterpart, which shall be
identified as the counterpart designated as the "original" on the signature page
of the Aircraft Lease Agreement by Financing Parties' Representative, Owner or
Lessor, as the case may be.
15.12 Language
All notices to be given under the Lease will be in English. All documents
delivered to Lessor pursuant to the Lease (including any documents to be
delivered pursuant to the Conditions Precedent) will be in English.
16. DISCLAIMERS AND WAIVERS
LESSOR AND LESSEE AGREE THAT THE DISCLAIMERS, WAIVERS AND CONFIRMATIONS SET
FORTH IN CLAUSES 16.1 TO 16.4 BELOW SHALL APPLY AT ALL TIMES DURING THE TERM.
LESSEE'S ACCEPTANCE OF THE AIRCRAFT IN ACCORDANCE WITH SECTION 4.3 SHALL BE
CONCLUSIVE EVIDENCE THAT LESSEE HAS FULLY INSPECTED THE AIRCRAFT AND EVERY PART
THEREOF AND THAT THE AIRCRAFT, THE ENGINES, THE PARTS AND THE AIRCRAFT DOCUMENTS
AND RECORDS ARE TECHNICALLY ACCEPTABLE TO LESSEE AND SATISFY THE DELIVERY
CONDITION REQUIREMENTS AND ARE IN SUITABLE CONDITION FOR DELIVERY TO AND
ACCEPTANCE BY LESSEE.
16.1 Exclusion
THE AIRCRAFT IS LEASED AND DELIVERED UNDER THE LEASE "AS IS, WHERE IS," AND
LESSEE AGREES AND ACKNOWLEDGES THAT:
(a) LESSOR WILL HAVE NO LIABILITY IN RELATION TO, AND LESSOR HAS NOT AND WILL
NOT BE DEEMED TO HAVE ACCEPTED, MADE OR GIVEN (WHETHER BY VIRTUE OF HAVING
DONE OR FAILED TO DO ANY ACT, OR HAVING ACQUIRED OR FAILED TO ACQUIRE ANY
STATUS UNDER OR IN RELATION TO THE LEASE OR OTHERWISE), ANY GUARANTEES,
COVENANTS, WARRANTIES OR REPRESENTATIONS, EXPRESS OR IMPLIED, WITH RESPECT
TO, THE AIRCRAFT OR ANY ENGINE OR PART OR ANY SERVICES PROVIDED BY LESSOR
UNDER THE LEASE, INCLUDING (BUT NOT LIMITED TO) THE TITLE (EXCEPT AS AND TO
THE EXTENT EXPRESSLY PROVIDED IN SECTIONS 2.2 AND 7.1), DESCRIPTION,
AIRWORTHINESS, COMPLIANCE WITH SPECIFICATIONS, OPERATION, MERCHANTABILITY,
QUALITY, FREEDOM FROM INFRINGEMENT OF PATENT, COPYRIGHT, TRADEMARK OR OTHER
PROPRIETARY RIGHTS, FITNESS FOR ANY PARTICULAR USE OR PURPOSE, VALUE,
DURABILITY, DATE PROCESSING, CONDITION, OR DESIGN, OR AS TO THE QUALITY OF
THE MATERIAL OR WORKMANSHIP, THE ABSENCE OF LATENT OR OTHER DEFECTS,
WHETHER OR NOT DISCOVERABLE, OR AS TO ANY OTHER MATTER WHATSOEVER, EXPRESS
OR IMPLIED (INCLUDING ANY IMPLIED WARRANTY ARISING FROM A COURSE OF
PERFORMANCE OR DEALING OR USAGE OF TRADE) WITH RESPECT TO THE AIRCRAFT, ANY
ENGINE OR ANY PART OR ANY SERVICES PROVIDED BY LESSOR UNDER THE LEASE; AND
(b) LESSOR SHALL NOT HAVE ANY OBLIGATION OR LIABILITY WHATSOEVER TO LESSEE
(WHETHER ARISING IN CONTRACT OR IN TORT, AND WHETHER ARISING BY REFERENCE
TO NEGLIGENCE, MISREPRESENTATION OR STRICT LIABILITY OF LESSOR OR
OTHERWISE) FOR:
(i) ANY LIABILITY, LOSS OR DAMAGE CAUSED OR ALLEGED TO BE CAUSED DIRECTLY OR
INDIRECTLY BY THE AIRCRAFT OR ANY ENGINE OR BY ANY INADEQUACY THEREOF OR
DEFICIENCY OR DEFECT THEREIN OR BY ANY OTHER CIRCUMSTANCE IN CONNECTION
THEREWITH (EXCEPT AS AND TO THE EXTENT EXPRESSLY PROVIDED IN SECTIONS 2.2
and 7.1 HEREOF);
(ii) THE USE, OPERATION OR PERFORMANCE OF THE AIRCRAFT OR ANY RISKS RELATING
THERETO;
(iii)ANY INTERRUPTION OF SERVICE, LOSS OF BUSINESS OR ANTICIPATED PROFITS OR ANY
OTHER DIRECT, INDIRECT OR CONSEQUENTIAL LOSS OR DAMAGE; OR
(iv) THE DELIVERY, OPERATION, SERVICING, MAINTENANCE, REPAIR, IMPROVEMENT OR
REPLACEMENT OF THE AIRCRAFT, ANY ENGINE OR ANY PART.
16.2 Waiver
LESSEE HEREBY WAIVES, AS BETWEEN ITSELF AND LESSOR, ALL ITS RIGHTS IN RESPECT OF
ANY CONDITION, WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, ON THE PART OF
LESSOR AND ALL CLAIMS AGAINST LESSOR HOWSOEVER AND WHENEVER ARISING AT ANY TIME
IN RESPECT OF OR OUT OF ANY OF THE MATTERS REFERRED TO IN SECTION 16.1.
16.3 Disclaimer of Consequential Damages
LESSEE AGREES THAT IT SHALL NOT BE ENTITLED TO RECOVER, AND HEREBY DISCLAIMS AND
WAIVES ANY RIGHT THAT IT MAY OTHERWISE HAVE TO RECOVER, LOST PROFITS OR REVENUES
OR CONSEQUENTIAL DAMAGES (AS DEFINED IN SECTION 2A-520 OF THE UCC OR OTHERWISE)
AS A RESULT OF ANY BREACH OR ALLEGED BREACH BY LESSOR OF ANY OF THE AGREEMENTS,
REPRESENTATIONS OR WARRANTIES OF THE OTHER PARTY CONTAINED IN THE LEASE.
16.4 Confirmation
LESSEE CONFIRMS THAT IT IS FULLY AWARE OF THE PROVISIONS OF THIS SECTION 16 AND
ACKNOWLEDGES THAT RENT AND OTHER AMOUNTS PAYABLE UNDER THE LEASE HAVE BEEN
CALCULATED BASED ON ITS PROVISIONS.
17. BROKERS AND OTHER THIRD PARTIES
17.1 No Brokers
Each of the parties hereby represents and warrants to the other that it has not
paid, agreed to pay or caused to be paid directly or indirectly in any form, any
commission, percentage, contingent fee, brokerage or other similar payments of
any kind, in connection with the establishment or operation of the Lease, to any
Person (other than fees payable to legal advisers or portfolio services).
17.2 Indemnity
Each party agrees to indemnify and hold the other harmless from and against any
and all claims, suits, damages, costs and expenses (including, reasonable legal
fees and expenses) asserted by any agent, broker or other third party for any
commission or compensation of any nature whatsoever based upon the Lease or the
Aircraft, if such claim, suit, damage, cost or expense arises out of any breach
by the indemnifying party, its employees or agents of Section 17.1.
IN WITNESS WHEREOF the parties hereto have executed the Common Terms Agreement
on the date shown at the beginning of the document.
GENERAL ELECTRIC CAPITAL CORPORATION
By: ___________________________
Name: ___________________________
Title: ___________________________
FRONTIER AIRLINES INC.
By: ___________________________
Name: ___________________________
Title: ___________________________
SCHEDULE 1
Definitions
The following words and expressions have the respective meanings set forth
below:
AD Threshold has the meaning given in Schedule B, Part VI of the Aircraft Lease
Agreement.
Act means the Federal Aviation Act of 1958, as amended, and as recodified in
Title 49 U.S.C. pursuant to Public Law 103-272, or any similar legislation of
the United States enacted in substitution or replacement thereof.
Affiliate means as to any Person, any other Person that, directly or indirectly,
is in control of, is controlled by, or is under common control with, such
Person. For purposes of this definition, "control" of a Person means the power,
directly or indirectly, either to (a) vote more than * of the securities having
ordinary voting power for the election of directors (or persons performing
similar functions) of such Person or (b) direct or cause the direction of the
management and policies of such Person, whether by contract or otherwise.
After-Tax Basis means in the case of any amount payable on an "After-Tax Basis"
to or for the benefit of any Person (including any amount payable pursuant to
this definition), after deduction of the net amount of all Taxes required to be
paid by such Person with respect to the receipt or accrual by it of such amount
(and assuming that such Person is subject to (i) United States Federal income
tax at the highest marginal statutory rate imposed on corporations for the
relevant period, (ii) United States state and local income taxes at the
composite of the highest marginal statutory rates imposed on such Person for the
relevant period, as such composite rate shall be certified by a financial
officer of such Person, and (iii) income taxes (if any) imposed by countries
outside the United States at the actual rates imposed on such Person).
Agreed Value has the meaning given in the Aircraft Lease Agreement.
Air Authority means the FAA.
Aircraft has the meaning given in the Aircraft Lease Agreement.
Aircraft Lease Agreement means the specific aircraft lease agreement for the
lease of any Aircraft entered or to be entered into between the parties hereto
or Affiliates thereof and incorporating therein by reference the CTA.
Aircraft Documents and Records means the documents, data and records identified
in the list attached to the Certificate of Technical Acceptance, and any other
documents and records required in connection with Lessee's obligations under
Section 8.8, and all additions, renewals, revisions and replacements from time
to time made to any of the foregoing in accordance with the Lease.
Airframe means the Aircraft, excluding the Engines and Aircraft Documents and
Records.
Airframe Flight Hour means each hour or part thereof elapsing from the moment
the wheels of the Aircraft leave the ground on take off until the wheels of the
Aircraft next touch the ground.
Airframe Structural Check has the meaning given in the Aircraft Lease Agreement.
Airframe Supplemental Rent has the meaning given in Schedule B, Part V of the
Aircraft Lease Agreement.
Airworthiness Directive means an airworthiness directive issued by the State of
Design or the State of Registry.
Annual Supplemental Rent Adjustment has the meaning given in Schedule B, Part V
of the Aircraft Lease Agreement.
Appraisal Procedure means the following procedure for determining the "fair
market rental value" of the Aircraft pursuant to Sections 13.2 and 13.4 of the
CTA: (a) Lessor shall select BK Associates, Avitas or Airclaims (other their
successors or assigns) who shall make a determination of "fair market rental
value" of the Aircraft; and (b) the fees and expenses of the appraiser shall be
paid by Lessee. "Fair market rental value" shall mean the value determined by an
appraisal completed on an "as-is" and "where-is" basis.
APU means the auxiliary power unit installed on the Aircraft on the Delivery
Date and any replacement auxiliary power unit installed on the Aircraft and
title to which is transferred to Owner in accordance with the Lease.
APU Supplemental Rent has the meaning given in Schedule B, Part V of the
Aircraft Lease Agreement.
Assumed Ratio has the meaning given in the Aircraft Lease Agreement.
Assumed Utilization has the meaning given in the Aircraft Lease Agreement.
Business Day means any day other than a Saturday, Sunday or other day on which
banking institutions in New York, New York are authorized or required by Law to
be closed.
"C" Check means a "C" check in accordance with the Lessee's Maintenance Program
and the Manufacturer's Maintenance Planning Document each in effect on the
relevant date.
Certificate of Technical Acceptance means a certificate of technical acceptance
in the form of Part 1 or Part 2, as applicable, of Schedule 5.
Certificated Air Carrier means any Person (except the United States 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 United
States Government) that is a citizen of the United States (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 United States of America, 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 so as to entitle
Lessor, as a lessor, to the benefits of Section 1110 of Title 11 of U.S.C. with
respect to the Aircraft.
Conditions Precedent means the conditions specified in Schedule 3.
Cycle means one take-off and landing of the Aircraft.
Damage Notification Threshold has the meaning given in the Aircraft Lease
Agreement.
Deductible Amount has the meaning given in the Aircraft Lease Agreement.
Default means any Event of Default or any event or circumstance which, with the
giving of notice and/or lapse of time and/or determination of materiality and/or
fulfillment of any other condition, would constitute an Event of Default.
Defect means any defect or non-conformity with the Delivery Condition
Requirements notified by Lessee to Lessor during the Pre-Delivery Procedure.
Delivery means the delivery of the Aircraft by Lessor to Lessee under the Lease.
Delivery Condition Requirements has the meaning given in the Aircraft Lease
Agreement.
Delivery Date means with respect to any Aircraft, the date on which Lessee
executes and delivers the Lease Supplement with respect to such Aircraft and
Delivery occurs.
Delivery Location has the meaning given in the Aircraft Lease Agreement.
Deposit has the meaning given in the Aircraft Lease Agreement.
Discount Rate has the meaning given in the Aircraft Lease Agreement.
Dollars and $ means the lawful currency of the United States.
Engine means, whether or not installed on the Aircraft:
(a) each engine of the manufacture and model specified in the Aircraft Lease
Agreement for the Aircraft which Lessor offers to Lessee for delivery with
the Airframe on the Delivery Date, such engines being described as to
serial numbers on the Certificate of Technical Acceptance; and
(b) any Replacement Engine, with effect from the time when title thereto has
passed to Owner in accordance with the Lease;
and in each case includes all modules and Parts from time to time belonging to
or installed in that engine but excludes any properly replaced engine title to
which should have passed to Lessee pursuant to the Lease.
Engine Cycle means operation of an engine on an aircraft from and including a
take-off to and including the landing of that aircraft.
Engine Event of Loss means the occurrence, with respect to the Engine only,
whether or not installed on the Airframe, of any of those events described in
the definition of Event of Loss.
Engine Flight Hour means each hour or part thereof an Engine is operated,
elapsing from the moment the wheels of an aircraft on which such Engine is
installed leave the ground until the wheels of such aircraft next touch the
ground.
Engine LLP Replacement has the meaning given in Section 7.2(a)(ii);
Engine LLP Supplemental Rent has the meaning given in Schedule B, Part V of the
Aircraft Lease Agreement.
Engine Refurbishment means all scheduled and unscheduled off the wing Engine
maintenance and repair accomplished for each module in accordance with the
performance restoration or full overhaul sections of the Manufacturer's
workscope planning guide.
Engine Supplemental Rent has the meaning given in the Aircraft Lease Agreement.
Equipment Change has the meaning given in Section 8.12.
ERISA means the Employee Retirement Income Security Act of 1974, as amended.
Event of Default means any event or condition referred to in Section 13.1 and
further specified in Schedule 9.
Event of Loss means with respect to the Aircraft (including for the purposes of
this definition the Airframe):
(a) the actual or constructive, compromised, arranged or agreed total loss of
the Aircraft (including any damage to the Aircraft which results in an
insurance settlement on the basis of a total loss); or
(b) the Aircraft being destroyed, damaged beyond economic repair or permanently
rendered unfit for normal use [by Lessee] for any reason whatsoever; or
(c) the Aircraft being condemned, confiscated or requisitioned for title, or
title to the Aircraft being otherwise compulsorily acquired by the
government of the State of Registry or any other Government Entity; or
(d) the Aircraft being hijacked, stolen, confiscated, detained, seized,
condemned or requisitioned for use or hire for the lesser of (i) a period
of more than * days (or * days in the case of requisition for use or hire
by the government of the State of Registry) or (ii) a period equal to or
exceeding the remaining balance of the Term; or
(e) as a result of any rule, regulation, order or other action by the FAA the
use of the Aircraft by Lessee or any Permitted Sub Lessee shall have been
prohibited for a period of * (*) consecutive months.
Expiry Date means the Scheduled Expiry Date or, if earlier (i) the date when
Lessor acting in accordance with the provisions of the Lease, terminates the
leasing of the Aircraft to Lessee under the Lease, or (ii) subject to the
provisions of Section 11.1 and 11.2, the date when Lessor receives the Agreed
Value together with any other amounts then due and unpaid under the Lease and
the Other Agreements following an Event of Loss; provided, that if the Term is
extended pursuant to Section 12.2, the Expiry Date shall be extended to the date
when the Aircraft has been redelivered to Lessor in full compliance with the
Lease;
FAA means the Federal Aviation Administration of the United States and any
successor thereof.
FAR means the Federal Aviation Regulations set forth in Title 14 of the United
States Code of Federal Regulations, as amended and modified from time to time.
Final Delivery Date has the meaning given in the Aircraft Lease Agreement.
Final Inspection has the meaning given in Section 1.1 of Schedule 6.
Financial Indebtedness means any indebtedness in respect of:
(a) moneys borrowed or raised;
(b) any liability under any debenture, bond, note, loan stock, acceptance,
documentary credit or other security;
(c) the acquisition cost of any asset to the extent payable before or after the
time of acquisition or possession; or
(d) any guarantee, indemnity or similar assurance against financial loss of any
person in respect of the above.
Financial Information means:
(a) as soon as available but not in any event later than * days after the last
day of each fiscal quarter of Lessee, the consolidated financial statements
of Lessee (consisting of a balance sheet and statements of operations and
of retained earnings and cash flows) prepared for the most recent previous
fiscal quarter certified by a qualified financial officer of Lessee as
being true and correct; and
(b) as soon as available but not in any event later than * days after the last
day of each fiscal year of Lessee, the audited consolidated financial
statements of Lessee (consisting of a balance sheet and statements of
operations and of retained earnings and cash flows), prepared for the
fiscal year then most recently ended certified by the independent auditors
of Lessee without qualification.
Financing Parties (if applicable) has the meaning given in the Aircraft Lease
Agreement.
Financing Parties' Representative (if applicable) has the meaning given in the
Aircraft Lease Agreement.
Financing Statements means Uniform Commercial Code Financing Statements in
respect of the Lease and the Aircraft and Engines leased thereunder prepared in
a form acceptable for filing with the applicable Government Entities in the
state in which Lessee's chief executive office is located (as the term "chief
executive office" is defined in Article 9 of the Uniform Commercial Code as in
effect in such state) and such other jurisdictions as Lessor shall reasonably
require.
Flight Hour means each hour or part thereof elapsing from the moment the wheels
of the Aircraft leave the ground on take off until the wheels of the Aircraft
next touch the ground.
GAAP means generally accepted accounting principles in the United States.
GE Capital means General Electric Capital Corporation.
GE Capital Guaranty means the guaranty substantially in the form of Schedule 15
to be delivered by GE Capital to Lessee.
GECAS means either or both of GE Capital Aviation Services, Limited and GE
Capital Aviation Services, Inc.
Government Entity means:
(a) national government, political subdivision thereof, or local jurisdiction
therein;
(b) any instrumentality, board, commission, court, or agency of any of the
above, however constituted; and
(c) any association, organization, or institution of which any of the above is
a member or to whose jurisdiction any thereof is subject or in whose
activities any of the above is a participant.
Guarantee means a guarantee in a form to be agreed by Lessor and Lessee,
including any guarantee of Lessee's maintenance obligations under the applicable
Lease; and references to the Guarantee include references to any replacement or
re-issued guarantee.
Guarantor (if applicable) has the meaning given in the Aircraft Lease Agreement.
Habitual Base means the United States and the state thereof in which Lessee's
primary aircraft operations center is located.
Indemnitee has the meaning given in the Aircraft Lease Agreement.
Interest Rate has the meaning given in Schedule B, Part II of the Aircraft Lease
Agreement.
Insurances means insurances in respect of the Aircraft in form and substance
satisfactory to Lessor, and includes (without limitation) any insurances and
reinsurances required by Section 9 and Schedule 7.
Landing Gear means the landing gear assembly of the Aircraft excluding any
rotable components.
Landing Gear Supplemental Rent has the meaning given in the Aircraft Lease
Agreement.
Law means and includes (a) any statute, decree, constitution, regulation, order,
judgement or other directive of any Government Entity; (b) any treaty, pact,
compact or other agreement to which any Government Entity is a signatory or
party; (c) any judicial or administrative interpretation or application of any
Law described in (a) or (b) above; and (d) any amendment or revision of any Law
described in (a), (b) or (c) above.
LC Amount has the meaning given in the Aircraft Lease Agreement.
Lease means the Aircraft Lease Agreement for the Aircraft (of which this CTA
forms a part), any schedules or documents executed pursuant to the Schedules
hereto or pursuant to the Aircraft Lease Agreement, any Lease Supplement to the
Lease (including Lease Supplement No. 1), and any side letters related to the
Lease.
Lease Supplement means any Lease Supplement executed and delivered with respect
to the Lease.
Lease Supplement No. 1 means a Lease Supplement No. 1 substantially in the form
of Schedule 12.
Lessee means the Person named as Lessee in the applicable Aircraft Lease
Agreement.
Lessee Affiliate means any Subsidiary or other Affiliate for the time being of
Lessee.
Lessee's Maintenance Program means the Maintenance Program specifically approved
by the Air Authority for Lessee's maintenance of the Aircraft.
Lessor means the Person named as Lessor in the applicable Aircraft Lease
Agreement.
Lessor Lien means any Security Interest whatsoever from time to time created by
Lessor or Owner in connection with the financing of the Aircraft, including the
Financing Documents, and any other Security Interest in the Aircraft which
results from acts of or claims against Lessor or Owner not related to the
transactions contemplated by or permitted under the Lease.
Lessor/Owner Tax Jurisdiction has the meaning given in the Aircraft Lease
Agreement.
Letter of Credit means any letter of credit issued in relation to the Lease
pursuant to Section 5.13 and any replacement or renewal of that letter of
credit.
Losses means any and all cost, expense (including any and all reasonable legal
fees and expenses and the fees and expenses of other professional advisers),
claims, proceedings, losses, liabilities, obligations, damages (whether direct,
indirect, special, incidental or consequential), suits, judgements, fees,
penalties or fines (whether criminal or civil) of any kind or nature whatsoever,
including any of the foregoing arising or imposed with or without any
Indemnitee's fault or negligence, whether passive or active or under the
doctrine of strict liability.
Maintenance Adjustment means all the amounts payable by Lessee pursuant to
Clause 5.4 of this Agreement and Section 3 of each Aircraft Lease Agreement.
Maintenance Contributions means, as and if applicable, all amounts payable by
Lessor pursuant to Section 7.2.
Maintenance Performer means Lessee and such other Person or Persons as are
approved by the Air Authority to perform maintenance and/or modification
services on commercial aircraft and/or commercial aircraft engines, which Person
shall be agreed by Lessor and Lessee to have recognized standing and experience
and facilities and equipment suitable to perform such services on aircraft
and/or engines of the same or improved model as the Aircraft or, in the case of
engines, the Engines.
Maintenance Program means an Air Authority approved maintenance program for the
Aircraft in accordance with the Manufacturer's specifications, service
bulletins, planning documents, maintenance manuals and documents and
encompassing scheduled maintenance (including block maintenance),
condition-monitored maintenance, and/or on-condition maintenance of Airframe,
Engines and Parts, including servicing, testing, preventive maintenance,
repairs, structural inspections, system checks, overhauls, approved
modifications, service bulletins, engineering orders, airworthiness directives,
corrosion control, inspections and treatments.
Major Checks means any C-check, multiple C-check or heavier check (including
structural inspections and CPCP) suggested for commercial aircraft of the same
model as the Aircraft by its manufacturer (however denominated) as set out in
the Lessee's Maintenance Program.
Manufacturer has the meaning given in the Aircraft Lease Agreement.
Manufacturer's Maintenance Planning Document means the recommended maintenance
program for the Aircraft issued by the Manufacturer as in effect at the time of
any applicable determination.
Minimum APU Limit has the meaning given in Schedule B, Part VI of the Aircraft
Lease Agreement.
Minimum Component Calendar Life has the meaning given in Schedule B, Part VI of
the Aircraft Lease Agreement.
Minimum Component Cycles has the meaning give in Schedule B, Part VI of the
Aircraft Lease Agreement.
Minimum Component Flight Hour has the meaning given in Schedule B, Part VI of
the Aircraft Lease Agreement.
Minimum "D" Check Redelivery Status has the meaning given in the Aircraft Lease
Agreement.
Minimum Engine Cycles has the meaning given in Schedule B, Part VI of the
Aircraft Lease Agreement.
Minimum Engine Flight Hours has the meaning given in Schedule B, Part VI of the
Aircraft Lease Agreement.
Minimum Hard Time Component Cycles has the meaning given in Schedule B, Part VI
of the Aircraft Lease Agreement.
Minimum Hard Time Component Flight Hours has the meaning given in Schedule B,
Part VI of the Aircraft Lease Agreement.
Minimum Landing Gear Calendar Time has the meaning given in Schedule B, Part VI
of the Aircraft Lease Agreement.
Minimum Landing Gear Cycles has the meaning given in Schedule B, Part VI of the
Aircraft Lease Agreement.
Minimum Landing Gear Flight Hours has the meaning given in Schedule B, Part VI
of the Aircraft Lease Agreement.
Minimum Liability Coverage has the meaning given in the Aircraft Lease
Agreement.
Minimum Measurable Fuel Requirement has the meaning given in Schedule B, Part VI
of the Aircraft Lease Agreement.
Mitigation Credit has the meaning given in Section 13.4.
Nameplate Inscription means the inscription to be included on the Nameplates as
requested by Lessor from time to time.
Nameplates means the fireproof plates to be installed on the Aircraft in
accordance with Section 8.6(a).
Other Agreements means any aircraft lease agreement or other material agreement
from time to time entered into between Lessor (or any Subsidiary, Associate or
Affiliate of Lessor), on the one hand, and Lessee (or any Subsidiary, associate
or Affiliate of Lessee), on the other hand.
Owner has the meaning given in the Aircraft Lease Agreement.
Part means, whether or not installed on the Aircraft:
(a) any component, part, furnishing or equipment (other than a complete Engine
or engine) incorporated or installed in or attached to or furnished with
the Aircraft (including any Engine) on the Delivery Date or thereafter if
paid for or otherwise provided by or on behalf of Lessor or so long as
title to such Parts shall remain vested in Lessor in accordance with
Section 8 hereof after removal from the Airframe or any Engine; and
(b) any other component, part, furnishing or equipment (other than a complete
Engine or engine and a temporary replacement part as provided for in
Section 8.11(d)), with effect from the time when title thereto has passed
to Lessor pursuant to the Lease;
but excludes any such items title to which should have passed to Lessee pursuant
to the Lease.
Part 36 or FAR Part 36 means Part 36 of the FAR, as amended or modified from
time to time.
Part 121 or FAR Part 121 means Part 121 of the FAR, as amended or modified from
time to time.
Permitted Lien means:
(a) any lien for Taxes not assessed or, if assessed, not yet due and payable,
or being diligently contested in good faith by appropriate proceedings;
(b) any lien of a repairer, mechanic, hangar-keeper or other similar lien
arising in the ordinary course of business by operation of Law in respect
of obligations which are not overdue or are being diligently contested in
good faith by appropriate proceedings;
(c) any Lessor Lien; and
(d) the rights of others under any sub-lease or arrangements to the extent
expressly permitted under Section 8.4.
(e) but only if (in the case of both (a) and (b)) (i) adequate reserves have
been provided by Lessee for the payment of such Taxes or obligations; and
(ii) such proceedings, or the continued existence of the lien, do not give
rise to any material danger of the sale, forfeiture or other loss of the
Aircraft or any interest therein or of criminal liability on Lessor or
Owner.
Permitted Sub-Lease means any sub-lease of the Aircraft to a Permitted
Sub-Lessee as provided for in Section 8.4(a) to which Lessor has consented.
Permitted Sub-Lessee means any sub-lessee of the Aircraft to which Lessor has
consented as provided in Section 8.4(a).
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 the Lease;
(b) is not, and is not affiliated with, a Certificated Air Carrier; and
(c) enters into a binding agreement pursuant to which it agrees to be bound by
the terms of the Lease and agrees to perform all of the obligations of
Lessor thereunder.
Person means any individual person, any form of corporate or business
association, trust, Government Entity, or organization or association of which
any of the above is a member or a participant.
Pre-Approved Bank has the meaning given in the Aircraft Lease Agreement.
Pre-Delivery Procedure means the procedure leading to Delivery as specified in
Schedule 4.
Pre-Delivery Termination Value has the meaning given in Schedule B, Part II of
the Aircraft Lease Agreement.
Redelivery Location has the meaning given in the Aircraft Lease Agreement.
Regulations means any Law or regulation (including any internal corporate
regulation), official directive or recommendation, mandatory requirement or
contractual undertaking, or airworthiness requirements or limitations.
Rent has the meaning given in the Aircraft Lease Agreement.
Rent Commencement Date has the meaning given in the Aircraft Lease Agreement.
Rental Period means each period ascertained in accordance with Section 5.2.
Rent Date means the first day of each Rental Period.
Replacement Engine means an "Engine" that has duly replaced an "Engine" in
accordance with the requirements of Section 8.11(b).
Required LC Expiry Date means the date being * days after the Expiry Date.
Return Occasion means the date on which the Aircraft is redelivered to Lessor in
accordance with Section 12.
Scheduled Delivery Date has the meaning given in the Aircraft Lease Agreement.
Scheduled Delivery Month has the meaning given in the Aircraft Lease Agreement.
Scheduled Delivery Week has the meaning given in the Aircraft Lease Agreement.
Scheduled Expiry Date has the meaning given in the Aircraft Lease Agreement.
Security Interest means any mortgage, chattel mortgage, security interest,
charge, pledge, lien, conditional sale agreement, title retention agreement,
equipment trust agreement, encumbrance, assignment, hypothecation, right of
detention, right of set-off or any other agreement or arrangement having the
effect of conferring security.
State of Design means the state having jurisdiction over the Person responsible
for the type design of the Aircraft or any Engine or Part.
State of Incorporation means the United States and the state of organization of
Lessee as identified in the heading of the Aircraft Lease Agreement.
State of Registry has the meaning given in the Aircraft Lease Agreement.
Subsidiary means in relation to any reference to accounts, any company whose
accounts are consolidated with the accounts of Lessee in accordance with
accounting principles generally accepted under accounting standards of the State
of Incorporation or for any other purpose, an entity from time to time of which
another has direct or indirect control or owns directly or indirectly more than
* (*) of the voting share capital
Supplemental Rent has the meaning given in the Aircraft Lease Agreement.
Taxes means any and all present and future taxes, duties, withholdings, levies,
assessments, imposts, fees and other governmental charges of all kinds
(including any value added or similar tax and any stamp, documentary, license,
registration or similar fees or tax), together with any penalties, fines,
surcharges and interest thereon and any additions thereto.
Tax Indemnitee has the meaning given in the Aircraft Lease Agreement.
Technical Report means a monthly report of the Flight Hours, Cycles, Engine
Flight Hours and Engine Cycles operated by the Airframe and Engines in respect
of each calendar month in the form set forth in Schedule 13 attached hereto or
as otherwise agreed between Lessor and Lessee.
Term means the period commencing on the Delivery Date and ending on the Expiry
Date.
UCC means the Uniform Commercial Code as in effect in the State of New York.
Unforeseen Event means:
(a) civil disturbance or act of any Government Entity;
(b) natural disaster or any other act of God;
(c) Law of, or any allocation or other action by, a Government Entity or any
unexpected shortage of labor, materials or facilities affecting the
Aircraft;
(d) any damage or Defect;
(e) labor disputes;
(f) breach of contract by any Person (other than Lessor), or other failure to
deliver or redeliver the Aircraft by any Person (whether or not a breach)
with possession or control of the Aircraft (other than by Lessor, if it has
possession and control of the Aircraft), including any failure to deliver
or delay in delivery by any prior lessee and any breach by any prior lessee
or failure to cooperate by any prior lessee under any previous lease, or
any "excusable" or "inexcusable" delay under any previous lease or purchase
agreement for the Aircraft, or any purchase agreement for the Aircraft
terminating prior to Delivery (including due to Lessor or an Affiliate of
Lessor voluntarily terminating such agreement);
(g) delays in obtaining the Aircraft or any equipment or services for the
Aircraft;
(h) any delay due to Air Authority certifications; or
(i) any other cause beyond the control of Lessor or not occasioned by Lessor's
gross negligence or willful misconduct.
United States means the United States of America.
U.S.C. means the United States Code.
SCHEDULE 2
REPRESENTATIONS AND WARRANTIES
1. Lessee's Representations and Warranties
Lessee's representations and warranties to Lessor are as follows:
(a) Status: It is duly organized, validly existing and in good standing in its
State of Incorporation.
(b) Non-Conflict: Execution, delivery and performance of the Lease do not
contravene or breach any Regulation applicable to Lessee.
(c) Power and Authority: It has all corporate and other power and authority to
execute, deliver and perform the Lease, and the Lease has been duly
authorized, executed and delivered by Lessee.
(d) Legal Validity: The Lease is its legal, valid and binding obligation,
enforceable against Lessee in accordance with its terms.
(e) No Event of Default: No Event of Default has occurred and is continuing or
would occur because of Delivery.
(f) Litigation: It is not involved in any litigation or other dispute which, if
adversely determined, would materially and adversely affect its financial
condition or its ability to perform its obligations under the Lease.
(g) Financial Information: Its audited financial statements most recently
delivered to Lessor:
(i) have been prepared in accordance with GAAP; and
(ii) present fairly the financial condition and results of operations of
Lessee as at the date thereof and for the period then ending.
(h) Full Disclosure: Neither its audited financial statements referred to in
paragraph (g) nor any other financial, operational or credit-related
information provided to Lessor by Lessee for the purposes of the Lease
contains any untrue statement of a material fact or omits to state any
material fact necessary in order to make the statements therein not
misleading.
(i) Location: Lessee's chief executive office (as that term is defined in
Article 9 of the UCC) is located at the address set forth in the heading of
the Aircraft Lease Agreement; and the records of the Lessee concerning the
Aircraft are maintained at such chief executive office or at the operations
center in Denver, Colorado where Lessee normally maintains aircraft
records.
(j) Certificated Air Carrier: Lessee is a Certificated Air Carrier and Lessor,
as lessor of the Aircraft to Lessee, is entitled to the benefits of Section
1110 of Title 11 of the U.S.C. with respect to the Aircraft.
(k) Citizen of the United States: Lessee is a "citizen of the United States" as
defined in Section 40102 of Title 49 of the U.S.C.
(l) ERISA: Lessee is not engaged in any transaction in connection with which it
could be subjected to either a civil penalty assessed pursuant to Section
502 of ERISA or any tax imposed by Section 4975 of the Internal Revenue
Code; no material liability to the Pension Benefit Guaranty Corporation has
been or is expected by Lessee to be incurred with respect to any employee
pension benefit plan (as defined in Section 3 of ERISA) maintained by
Lessee or by any trade or business (whether or not incorporated) which
together with Lessee would be treated as a single employer under Section
4001 of ERISA and Section 414 of the Internal Revenue Code; there has been
no reportable event (as defined in Section 4043(b) of ERISA) with respect
to any such employee pension benefit plan; no notice of intent to terminate
any such employee pension benefit plan has been filed or is expected to be
filed, nor has any such employee pension benefit been terminated; no
circumstance exists or is anticipated that constitutes or would constitute
grounds under Section 4042 of ERISA for the Pension Benefit Guaranty
Corporation to institute proceedings to terminate, or to appoint a trustee
to manage the administration of, such an employee pension benefit plan; and
no accumulated funding deficiency (as defined in Section 302 of ERISA or
Section 412 of the Internal Revenue Code), whether or not waived, exists
with respect to any such employee pension benefit plan.
(m) Material Adverse Change: there has been no material adverse change in the
financial condition or operations of Lessee and Lessee Affiliates or in the
ability of Lessee to comply with its obligations under the Lease since the
date of the financial statements most recently provided to Lessor on or
prior to the Delivery Date.
1.2 Lessor's Representations and Warranties
Lessor's representations and warranties to Lessee are as follows:
(a) Status: It is duly organized, validly existing and in good standing in its
State of Incorporation.
(b) Non-Conflict: Execution, delivery and performance of the Lease do not
contravene or breach any Regulation applicable to Lessor.
(c) Power and Authority: It has all corporate and other power and authority to
execute, deliver and perform the Lease, and the Lease has been duly
authorized, executed and delivered by Lessor.
(d) Legal Validity: The Lease is its legal, valid and binding obligation,
enforceable against Lessor in accordance with its terms.
(e) Title: On each Delivery Date, Lessor will have good and valid title to the
Aircraft being delivered on such date and, with respect to new Aircraft,
will be entitled to the benefit of the Manufacturer's warranties under the
purchase agreement with respect to such Aircraft.
(f) Citizen of the United States: Lessor is a "citizen of the United States" as
defined in Section 40102 of Title 49 of the U.S.C.
SCHEDULE 3
CONDITIONS PRECEDENT
2. Lessor's Conditions Precedent
The conditions precedent to Lessor's obligation to deliver and to commence the
leasing of the Aircraft are as follows. All documents delivered to Lessor
pursuant to this Schedule 3 will be in English, or if not in English, will be
accompanied by a certified English translation:
2.1 Preliminary Conditions
Lessor will receive from Lessee, not later than two Business Days prior to the
Scheduled Delivery Date, each of the following, reasonably satisfactory in form
and substance to Lessor:
(a) Opinion(s): evidence that an opinion(s) in the form of Schedule 8 will be
issued on the Delivery Date by legal counsel(s) reasonably acceptable to
Lessor with respect to the laws of the State of the Governing Law and the
State of Incorporation;
(b) Approvals: evidence of the issue of each approval, license and consent
which is required in relation to, or in connection with the performance by
Lessee of any of its obligations under the Lease;
(c) Import: evidence that any required import license, and all customs
formalities, relating to the import of the Aircraft into the Habitual Base
have been obtained or complied with, and that the import of the Aircraft
into the Habitual Base is exempt from Taxes;
(d) Process Agent: a letter from the process agent appointed by Lessee in the
Lease accepting that appointment;
(e) Licenses: copies of Lessee's air transport license, air operator's
certificates and all other licenses, certificates and permits required by
Lessee in relation to, or in connection with, the operation of the
Aircraft, including authority to operate the Aircraft under FAR Part 121
and a Certificate of Public Convenience and Necessity issued under Section
40102 of Title 49 of U.S.C.;
(f) UCC: Financing Statements with respect to the Lease and the Aircraft in a
form acceptable to Lessor shall have been executed and delivered by Lessee
and duly filed in each jurisdiction reasonably requested by Lessor;
(g) Letter of Credit (if applicable): the form of the Letter of Credit; and
(h) General: such other documents as Lessor may reasonably request.
2.2 Final Conditions
(a) Final Documents: Lessor shall receive on or before the Delivery Date each
of the following:
(i) Certificate of Technical Acceptance and Lease Supplement No. 1: each
of the Certificate of Technical Acceptance and Lease Supplement No. 1,
or a Lease Supplement substantially in the form of Lease Supplement
No. 1 for subsequent Aircraft deliveries, dated and fully completed,
and executed by Lessor and Lessee, and, in the case of the Lease
Supplement, filed for recording at the FAA;
(ii) Opinions: a signed original of each of the opinions referred to in
Section 1.1(a) of this Schedule, dated the Delivery Date;
(iii)Payments: all sums due to Lessor under the Lease on or before the
Delivery Date, including the first payment of Rent and, if applicable,
the balance of the Deposit;
(iv) Insurances: certificates of insurance, an opinion and undertaking from
Lessee's insurance broker and other evidence satisfactory to Lessor
that Lessee is taking the required steps to ensure due compliance with
the provisions of the Agreement as to Insurances with effect on and
after the Delivery Date;
(v) Financial Information: the latest Financial Information of Lessee as
requested by Lessor;
(vi) Letter of Credit (if applicable): the Letter of Credit;
(vii)Lessee's Maintenance Program: such information and documents relating
to the Lessee's Maintenance Program as Lessor may reasonably require,
and Lessor having acknowledged in writing the Lessee's Maintenance
Program;
(viii) Filings: evidence that on the Delivery Date all filings,
registrations, recordings and other actions have been or will be taken
which are necessary or advisable to ensure the validity, effectiveness
and enforceability of the Lease and to protect the interests of Owner
and the Financing Parties in the Aircraft, any Engine or any Part and
in the Lease;
(ix) FAA Opinion: evidence that there will be issued an opinion of Crowe &
Dunlevy or other counsel reasonably acceptable to Lessor who are
recognized specialists with regard to FAA registration matters in a
form reasonably acceptable to Lessor as to the due filing for
recordation of the Lease (the costs for which shall be paid by
Lessee);
(x) Certificate of Lease Termination: a certificate of lease termination
executed by a duly authorized officer of Lessee substantially in the
form of Schedule 10 acknowledging that the Lease is no longer in
effect with respect to the Aircraft and Engines, which certificate
Lessor will hold in escrow to be filed at the FAA upon the expiration
or other termination of the Lease in accordance with its terms;
(xi) Acknowledgement and Agreement re Assignment (if applicable): an
acknowledgement of and certain agreements with respect to the
assignment by Lessor of this Lease to Owner and Financing Parties'
Representative in the form previously provided to Lessee or as Owner
or Financing Parties' Representative may otherwise reasonably request;
and
(xii) General: such other documents as Lessor may reasonably request;
(b) Representations/Warranties: the representations and warranties of Lessee in
Schedule 2 shall be correct, and would be correct if repeated on Delivery;
and
(c) No Default: no Default shall have occurred and be continuing on Delivery or
might result from the leasing of the Aircraft to Lessee under the Lease.
20. LESSEE'S CONDITIONS PRECEDENT
The conditions precedent to Lessee's obligations to accept delivery of and lease
the aircraft from Lessor are as follows:
(a) Lessor shall tender delivery of the Aircraft meeting all of the Delivery
Condition Requirements as specified by Part III of Schedule A to the
aircraft Lease Agreement or otherwise as permitted by a waiver of Lessee or
mutual agreement between Lessor and Lessee;
(b) Delivery to Lessee of a Lease Supplement in the form of Schedule 12 hereto,
dated and fully completed, and executed by Lessor, to be filed for
recording at the FAA;
(c) Representations and Warranties: the representations and warranties of
Lessor in Schedule 2 shall be correct and would be correct if repeated on
Delivery and
(d) Delivery to Lessee of the Manufacturer's Consent and the Participation
Agreement pursuant to Section 6 of the Lease, as applicable for any new
aircraft. Manufacturer's Consent means, with respect to any new Aircraft,
the Manufacturer's consent to the assignment to Lessee of the warranteis
with respect to such Aircraft, in form and substance reasonably
satisfactory to Lessee.
(e) Delivery of the GE Capital Guaranty.
SCHEDULE 4
PRE-DELIVERY PROCEDURES AND DELIVERY CONDITION
REQUIREMENTS - PART 1 (NEW AIRCRAFT)
1. Licenses
(a) It is the responsibility of Lessee to obtain all licenses, permits or
approvals necessary to export or transport the Aircraft from the Delivery
Location; provided, however that Lessor shall provide, or cause the
manufacturer to provide Lessee with an Export Certificate of
Airthworthiness from the Delivery Location to the United States.
(b) Lessor will provide Lessee with any required data and information for the
purposes of obtaining any such licenses, permits or approvals.
2. Inspection
Except as otherwise provided in the Aircraft Lease Agreement:
(a) Subject to any applicable purchase agreement, Lessee may inspect the
Aircraft at the Delivery Location (including such rights as Lessor has to
be present and inspect, on an ongoing basis, the manufacture of the
Aircraft and including a demonstration flight with up to two (2)
representatives of Lessee on the Aircraft as observers) to ensure that the
Aircraft fulfils the Delivery Condition Requirements.
(b) If Lessee's inspection of the Aircraft shows that the Aircraft does not
fulfil the Delivery Condition Requirements, Lessor will, as promptly as
practicable, correct any defects and make the Aircraft available for
re-inspection by Lessee provided that, in Lessor's reasonable opinion, the
cost of repair of such defect does not exceed the Pre-Delivery Termination
Value. If the cost of repair of such defect may exceed the Pre-Delivery
Termination Value with respect to the Delivery of any new Aircraft, Lessor
shall not be required to correct such defect. Lessor will conduct further
demonstration flights as may be necessary to verify compliance with the
Delivery Condition Requirements.
(c) If Lessor notifies Lessee that it does not intend to correct the defect,
either party may terminate the Lease with respect to such Aircraft.
3. Indemnity
(a) Lessee is responsible for and will indemnify each Indemnitee against all
Losses arising from death or injury to any observer or any employee of
Lessee in connection with the inspection of the Aircraft; provided that
Lessee shall not be required to indemnify any Indemnitee for Losses caused
by the gross negligence or willful misconduct of any such Indemnitee.
(b) Lessor is responsible for and will indemnify Lessee against all Losses
arising from death or injury to any observer or any employee of Lessor in
connection with the inspection of the Aircraft; provided that Lessor shall
not be required to indemnify Lessee for Losses caused by the gross
negligence or willful misconduct of Lessee.
SCHEDULE 4
PRE-DELIVERY PROCEDURES AND DELIVERY CONDITION
REQUIREMENTS - PART 2 (USED AIRCRAFT)
1. Licenses
(a) It is the responsibility of Lessee to obtain all licenses, permits or
approvals necessary to export or transport the Aircraft from the Delivery
Location.
(b) Lessor will provide Lessee with any required data and information for the
purposes of obtaining any such licenses, permits or approvals.
2. Inspection
Except as otherwise provided in the Aircraft Lease Agreement:
(a) Subject to any applicable purchase agreement or prior lease, Lessee may
inspect the Aircraft (including a demonstration flight with up to two (2)
representatives of Lessee on the Aircraft as observers) to ensure that the
Aircraft fulfils the Delivery Condition Requirements.
(b) If Lessee's inspection of the Aircraft shows that the Aircraft does not
fulfil the Delivery Condition Requirements, Lessor will, as promptly as
practicable, correct any defects and make the Aircraft available for
re-inspection by Lessee provided that, in Lessor's reasonable opinion, the
cost to correct such defect does not exceed the Pre-Delivery Termination
Value. If the cost to correct such defect may exceed the Pre-Delivery
Termination Value with respect to the Delivery of any used Aircraft, Lessor
shall not be required to correct such defect. Lessor will conduct further
demonstration flights as may be necessary to verify compliance with the
Delivery Condition Requirements.
(c) If Lessor notifies Lessee that it does not intend to correct the defect,
either party may terminate the Lease.
3. Indemnity
(a) Lessee is responsible for and will indemnify each Indemnitee against all
Losses arising from death or injury to any observer or any employee of
Lessee in connection with the inspection of the Aircraft; provided that
Lessee shall not be required to indemnify any Indemnitee for Losses caused
by the gross negligence or willful misconduct of any such Indemnitee.
(b) Lessor is responsible for and will indemnify Lessee against all Losses
arising from death or injury to any observer or any employee of Lessor in
connection with the inspection of the Aircraft; provided that Lessor shall
not be required to indemnify Lessee for Losses caused by the gross
negligence or willful misconduct of Lessee.
SCHEDULE 5
CERTIFICATE OF TECHNICAL ACCEPTANCE - PART 1 (NEW AIRCRAFT)
This Certificate of Technical Acceptance is delivered, on the date set out below
by ________ ("Lessee") to ________ ("Lessor") pursuant to the Aircraft Lease
Agreement dated ________ between Lessor and Lessee (the "Lease"). The
capitalized terms used in this Certificate shall have the meaning given to such
terms in the Lease.
DETAILS OF ACCEPTANCE
Lessee hereby confirms to Lessor that Lessee has at [ ] o'clock on this ________
day of ________, at ________ , technically accepted the following, in accordance
with the provisions of the Lease:
________ Aircraft, Manufacturer's Serial Number ________;
________ Engines:
Engine Number Manufacturer's Serial Number
[To be completed at Delivery]
(each of which has 750 or more rated take off horsepower or the equivalent of
such horsepower)
Fuel Status: Kilos/lbs ________ ; and
Loose Equipment Check List: in accordance with the list signed by Lessor and
Lessee and attached hereto.
Aircraft Documents and Records: in accordance with the list signed by Lessor and
Lessee and attached hereto.
LOPA drawing attached.
HOURS AND CYCLES DATA (as of Delivery Date)
Airframe:
Time Since New :--------------- Cycles Since New :---------
Landing Gear (Main and Nose)
Time Since New : [, Center] Cycles Since New :---------
Engines
Position: Time Since New: -----------
Cycles Since New: ---------
Auxiliary Power Unit :
Number of Flight Hours/APU Hours
(as applicable) since New : --------------------
ACCEPTANCE:
Lessee hereby confirms that the Aircraft, Engines, Parts and Aircraft Documents
and Records are technically acceptable to it, satisfy all of the Delivery
Condition Requirements and, except as noted on the attached Exceptions Schedule,
are in the condition for delivery and acceptance as required under the Lease.
IN WITNESS WHEREOF, Lessee and Lessor have, by their duly authorized
representative, executed this Certificate of Technical Acceptance on the date in
paragraph 1 above.
LESSEE: ________________________
By: _________________________
Title: _________________________
LESSOR: _______________________
By: _________________________
Title: _________________________
ATTACHMENT
EXCEPTIONS LIST
The items set forth below represent non-conformities to the Delivery
Condition Requirements as of the Delivery Date, the corrective action (or
payment to Lessee in lieu thereof), if any, to be taken by Lessor and the date
of accomplishment. LESSEE ACKNOWLEDGES AND AGREES THAT LESSOR'S UNDERTAKINGS SET
FORTH HEREIN ARE IN FURTHERANCE OF AND SUBJECT TO THE AIRCRAFT LEASE AGREEMENT
DATED AS OF _____________ BETWEEN LESSOR AND LESSEE (THE "LEASE"), THAT LESSOR
MAKES NO REPRESENTATIONS OR WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED,
HEREUNDER AND THAT LESSORS UNDERTAKINGS ARE SUBJECT TO EACH AND EVERY DISCLAIMER
OF LESSOR SET FORTH IN THE LEASE INCLUDING, WITHOUT LIMITATION, THOSE SET FORTH
IN CLAUSE 17 THEREOF.
LESSOR LESSEE
19. BY:_______________________ BY:_____________________
20. TITLE:______________________ TITLE:____________________
SCHEDULE 5
CERTIFICATE OF TECHNICAL ACCEPTANCE - PART 2 (USED AIRCRAFT)
This Certificate of Technical Acceptance is delivered, on the date set out below
by ________ ("Lessee") to ________ ("Lessor") pursuant to the Aircraft Lease
Agreement dated ________ between Lessor and Lessee (the "Lease"). The
capitalized terms used in this Certificate shall have the meaning given to such
terms in the Lease.
DETAILS OF ACCEPTANCE
Lessee hereby confirms to Lessor that Lessee has at [ ] o'clock on this ________
day of ________, at ________ , technically accepted the following, in accordance
with the provisions of the Lease:
________ Aircraft, Manufacturer's Serial Number ________;
________ Engines:
Engine Number Manufacturer's Serial Number
[to be completed at Delivery]
(each of which has 750 or more rated take off horsepower or the equivalent of
such horsepower)
Fuel Status: Kilos/lbs ________ ; and
Loose Equipment Check List: in accordance with the list signed by Lessor and
Lessee and attached hereto.
Aircraft Documents and Records: in accordance with the list signed by Lessor and
Lessee and attached hereto.
HOURS AND CYCLES DATA (as of Delivery Date)
Airframe:
Number of Hours since last Airframe Structural Check: ________ hours
"C" Check (or Equivalent)
Interval: _______________________
Time Since: _____________________
Landing Gear Overhaul:
Number of Cycles Since Last Overhaul:
[ ] Gear __________________________ cycles
Interval: __________________________
Engines:
Number of Hours Since Last Engine Refurbishment:
S/N __________ : __________ hours
Hot Section Inspection:
Interval: ___________________________
Time Since (S/N __________) : ______________
Time Remaining to First Restriction:
Engine S/N:
Hours: _____________ Restriction: _____________
Cycles: _____________ Restriction: _____________
Average Cycles in Life Limited Parts (see attached Schedule): _______________
Auxiliary Power Unit:
Number of APU Hours since Last Heavy Shop Visit:
______________ hours Date accomplished ___________
Hot Section Inspection:
Interval: _______________________
Time Since: _______________________
Interior Equipment:
LOPA - attached _______________________
Emergency drawing - attached _______________________
Galley Equipment _______________________
ACCEPTANCE:
Lessee hereby confirms that the Aircraft, Engines, Parts and Aircraft Documents
and Records are technically acceptable to it, satisfy all of the Delivery
Condition Requirements and, except as noted on the attached Exceptions Schedule,
are in the condition for delivery and acceptance as required under the Lease.
IN WITNESS WHEREOF, Lessee and Lessor have, by their duly authorized
representative, executed this Certificate of Technical Acceptance on the date in
paragraph 1 above.
LESSEE:
By: _________________________
Title: _________________________
LESSOR:
By: _________________________
Title: _________________________
ATTACHMENT
EXCEPTIONS LIST
The items set forth below represent non-conformities to the Delivery
Condition Requirements as of the Delivery Date, the corrective action (or
payment to Lessee in lieu thereof), if any, to be taken by Lessor and the date
of accomplishment. LESSEE ACKNOWLEDGES AND AGREES THAT LESSOR'S UNDERTAKINGS SET
FORTH HEREIN ARE IN FURTHERANCE OF AND SUBJECT TO THE AIRCRAFT LEASE AGREEMENT
DATED AS OF FEBRUARY 7, 2000 BETWEEN LESSOR AND LESSEE (THE "LEASE"), THAT
LESSOR MAKES NO REPRESENTATIONS OR WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED,
HEREUNDER AND THAT LESSORS UNDERTAKINGS ARE SUBJECT TO EACH AND EVERY DISCLAIMER
OF LESSOR SET FORTH IN THE LEASE INCLUDING, WITHOUT LIMITATION, THOSE SET FORTH
IN CLAUSE 17 THEREOF.
LESSOR LESSEE
21. BY:_______________________ BY:_____________________
22. TITLE:______________________ TITLE:____________________
SCHEDULE 6
Procedures And Operating Condition At Redelivery
On the Return Occasion the Aircraft, subject to fair ordinary wear and tear of a
kind and to an extent consistent with similar aircraft engaged in commercial
airline operations, will be redelivered to Lessor by Lessee in accordance with
the procedures and in any event in the condition set out below. For the
avoidance of doubt, any damage assessment and/or rectification criteria used in
assessing the redelivery condition shall be as prescribed in the Manufacturer's
structural repair manual ("SRM") and/or the Manufacturer's maintenance manual,
as appropriate. Any damage outside the scope of the SRM shall require FAA 8110-3
certification.
3.1 FINAL INSPECTION
Immediately prior to the Return Occasion, Lessee will make the Aircraft
available to Lessor and Owner at Denver, Colorado for inspection ("Final
Inspection") in order to verify that the condition of the Aircraft complies with
the Lease. The Final Inspection will include, and be long enough to permit
Lessor to:
(a) inspect the Aircraft Documents and Records;
(b) inspect the Aircraft (including an examination of all compartments and
bays, with Lessee to open or remove panels as reasonably required by Lessor
or Owner), uninstalled Parts and the APU (including a complete video
borescope inspection of the APU);
(c) inspect the Engines, including (i) a complete video borescope inspection of
(A) the low pressure and high pressure compressors and (B) turbine area and
(ii) engine condition runs (including full take-off power engine run-up
performed in accordance with the performance test in the Manufacturer's
maintenance manual, and the Engines shall not exceed corrected limits for
all parameters using temperature corrected charts), and power assurance
runs; and
(d) observe a two hour demonstration flight at Lessee's cost (with up to 3 of
Lessor's and Owner's representatives as on-board observers).
Furthermore, Lessee acknowledges that a purchaser or the next operator of the
Aircraft will need to inspect the Aircraft, the Engines and the Aircraft
Documents and Records prior to redelivery and Lessee hereby agrees to cooperate
reasonably at all times during the Term with Lessor, Owner and/or such purchaser
or such next operator, who shall accompany Lessor, to participate in such
inspections in order to coordinate, assist and grant access for the above
inspections and/or meetings as necessary.
Lessor or Owner, as the case may be, is responsible for and will indemnify
Lessee against all Losses arising from the death or injury to any observer or
any employee of Lessor or Owner, as the case may be, in connection with the
inspection of the Aircraft and any ferry flight under this Section 1.1.
3.2 GENERAL CONDITION
The Aircraft will:
(a) be in the same configuration as at Delivery after giving effect to any
post-Delivery modifications, repairs or maintenance to the Aircraft paid
for or otherwise provided by or on behalf of Lessor (or as otherwise
mutually agreed), be in as good operating condition and appearance as when
delivered to Lessee (after giving effect to any post-Delivery
modifications, repairs or maintenance paid for or otherwise provided by or
on behalf of Lessor, hereafter, the "Modifications"), except for ordinary
wear and tear and alterations and modifications authorized or required
under the Lease and paid for by Lessee or a Sub-Lessee, and be clean by
major commercial airline standards, and all structural damage shall have
been repaired to a permanent standard as per the SRM or, if the SRM is not
applicable as per the requirements of the Manufacturer;
(b) have installed the full complement of equipment, parts, accessories,
furnishings and loose equipment as when originally delivered to Lessee (and
after giving effect to any Modifications) and as normally installed in the
Aircraft for continued regular service and the Aircraft (including the
Aircraft Documents and Records) shall be in a condition suitable for
immediate registration with the FAA (assuming that the Owner qualifies for
such registration) and immediate operations under FAR Part 121 with a new
operator, without waiver, unless the benefit of such waiver is applicable
to the next operator of the Aircraft, or restriction; and if any of the
engines or parts tendered for redelivery with the Aircraft is not one of
the Engines referred to in the Certificate of Technical Acceptance or a
Replacement Engine installed pursuant to Section 8.11(b) following an
Engine Event of Loss, Lessor shall have no obligation to accept such engine
or part unless Lessee furnishes to Lessor all the documents and evidence in
respect of such engine or part in accordance with Section 8.11(b), as if
such engine were a Replacement Engine or replacement part, and otherwise
complies with such Section 8.11(b) with respect thereto;
(c) have in existence a valid and effective certificate of airworthiness (and
if required by Lessor, a valid and effective export certificate of
airworthiness) with respect to the Aircraft issued by the Air Authority (in
the case of an export certificate of airworthiness no earlier than 30 days
prior to the redelivery);
(d) comply with the manufacturer's original specifications as at the Delivery
Date (after giving effect to the Modifications), except as modified during
the Term in accordance with the Manufacturer's service bulletins or
letters, Airworthiness Directives, Air Authority approved data or otherwise
as permitted by the Lease;
(e) have undergone, immediately prior to redelivery, the next relevant "C"
Check (or higher check if applicable) in block format so that all airframe
inspections falling due within the next "C" Check interval, as defined in,
and in accordance with, Lessee's Maintenance Program on the Redelivery Date
and the Manufacturer's Maintenance Planning Document have been
accomplished;
(f) have had accomplished all outstanding Airworthiness Directives affecting
that model of Aircraft issued by the FAA prior to the Expiry Date and
requiring action during the Term or within * days after the Expiry Date;
for this purpose, compliance shall be by terminating action if:
(i) Lessee has complied by terminating action for other aircraft of the
same model and series then operated by Lessee; or
(ii) the latest date permitted by such Airworthiness Directive for required
compliance by terminating action falls within * days after the Expiry
Date.
In no event shall there be any non transferable time extensions, waivers,
deviations or alternative means of compliance with any Airworthiness
Directives or other regulations. (g) have installed all applicable vendor's
and manufacturer's service bulletin kits received free of charge by Lessee
during the Term that are appropriate for the Aircraft and to the extent not
installed, those kits will be furnished free of charge to Lessor;
(h) have the fuselage, empennage, wings and pylons stripped (or sanded if only
three or less coats of paint) and painted white in accordance with standard
industry practice;
(i) have all signs and decals clean, secure and legible;
(j) meet the requirements of FAR Part 36, Appendix C, Stage 3 noise compliance
as in effect at the Delivery Date, without waiver or restriction;
(k) have no open, deferred, continued, carry over or placarded maintenance
items or watch items or placarded log book items, and all other log book
discrepancies shall be cleared;
(l) all discrepancies discovered during the inspections described above which
exceed the Manufacturer's maintenance manual allowable limits for
in-service aircraft shall have been repaired in accordance with
FAA-approved procedures;
(m) all repairs of a temporary or interim nature, requiring repetitive
inspections or future upgrading, including external doublers with blind
fasteners, shall be upgraded to permanent repair in accordance with the
Manufacturer's maintenance manual or structural repair manual; and
(n) all systems shall be fully operational for their intended functions in
accordance with the Manufacturer's -maintenance manual specifications.
3.3 COMPONENTS
(a) Each Airframe Flight Hour and Cycle controlled Hard Time Component (as
defined below and other than the APU) shall have not less than the Minimum
Component Flight Hours and the Minimum Component Cycles of life remaining
to the next scheduled removal, in accordance with the Lessee's Maintenance
Program and shall be supported by appropriate certification documentation
indicating TSN, CSN, TSO and CSO such as FAA form 8130-1; for this purpose
"Hard Time Component" means any component which has a limited on-wing life
in accordance with the Manufacturer's Maintenance Planning Document and
which can have life fully restored through appropriate maintenance;
(b) Each calendar-limited component including safety equipment will have not
less than its Minimum Component Calendar Life remaining to the next
scheduled removal in accordance with the Lessee's Maintenance Program;
(c) Each "on-condition" and "condition-monitored" component will be
serviceable;
(d) The installed components as a group will have an average of total flight
time since new of not more than that of the Airframe;
(e) Each Airframe Life-Limited Component (as defined below) will have not less
than the Minimum Component Flight Hours and the Minimum Component Cycles
remaining to next scheduled removal in accordance with Lessee's Maintenance
Program and will be supported by certification documentation necessary to
demonstrate back-to-birth traceability; for this purpose "Airframe-Life
Limited Component" means a component with an ultimate life which cannot be
restored through appropriate maintenance.
3.4 ENGINES
Each Engine will be installed on the Aircraft and comply with the following:
(a) Each Engine will have not less than the Minimum Engine Flight Hours and
Minimum Engine Cycles expected life remaining to the next expected removal.
The expected life remaining will be as reasonably determined by the
inspection and checks accomplished by Lessor in accordance with the Lease;
(b) Each Engine shall have completed during the Final Inspection a hot
(including combustion chamber) and cold section video borescope inspection,
which inspection shall be performed at Lessor's expense, and a power
assurance run performed at Lessee's expense in accordance with the Lessee's
Maintenance Program or Manufacturer's maintenance manual and any defects
discovered in such inspections which exceed the Engine manufacturer's
in-service limits shall be corrected at Lessee's expense. Lessee shall
cause such borescope inspections to be performed and to be recorded on
videotape by Lessee, or if Lessee does not perform the same, by an agency
selected by Lessor and shall provide Lessor with a copy of such videotape
on the Return Occasion. No Engine shall be on "watch" for any reason
requiring any special or out of sequence inspection. Each Engine shall
comply with the operations specification of Lessee without waiver or
exceptions. All items beyond the Engine manufacturer's in-service limits
shall be repaired;
(c) Each Engine Life-Limited Component (as defined below) will have not less
than the Minimum Engine Cycles remaining per the manufacturer's then
current limitations for the part number in question, and will be supported
by certification documentation necessary to demonstrate back-to-birth
traceability; for this purpose "Life Limited Component" means a component
with an ultimate life which cannot be restored through appropriate
maintenance; and
(d) Each Engine will have no defect which places less than the Minimum Engine
Flight Hours and the Minimum Engine Cycles of remaining life pursuant to
Manufacturer's or airworthiness requirements until scheduled removal.
3.5 FUSELAGE, WINDOWS AND DOORS
(a) The fuselage will be free of major dents and abrasions in excess of the
limits specified in Manufacturer's maintenance manual or structural repair
manual, loose or pulled or missing rivets and all structural repairs shall
be permanent repairs;
(b) Windows will be free of delamination, blemishes, crazing, in excess of the
limits specified in the Manufacturer's maintenance manual or structural
repair manual and will be properly sealed; and
(c) Doors will be free moving, correctly rigged and be fitted with serviceable
seals.
3.6 WINGS AND EMPENNAGE
(a) Leading edges will be free from damage in excess of the limits specified in
the Manufacturer's maintenance manual or structural repair manual; and
(b) Unpainted surfaces will be polished.
3.7 INTERIOR AND COCKPIT
Carpets and seat covers will be in good condition, clean and free of stains and
meet FAR fire resistance regulations.
3.8 LANDING GEAR; WHEELS AND BRAKES
(a) The Landing Gear and wheel wells will be clean, free of leaks and repaired
as necessary;
(b) Each installed Landing Gear shall have no more than * of the Cycles
accumulated on the Airframe; provided, however, that if such Cycles exceed
* of the Cycles accumulated on the Airframe, then Lessee shall pay to
Lessor an amount equal to the product of the number of Cycles by which each
Landing Gear exceeds the Cycles accumulated on the Airframe multiplied by
the Landing Gear Supplemental Rent Rate. In any event, each Landing Gear
shall have not less than the Minimum Landing Gear Flight Hours and the
Minimum Landing Gear Cycles and the Minimum Landing Gear Calendar Time to
the next scheduled overhaul or removal, as the case may be, in accordance
with the then current Manufacturer's Maintenance Planning Document and
Lessee's Maintenance Program; and
(c) The wheels and brakes will have not less than half of their useful life
remaining.
3.9 RETURN OF AUXILIARY POWER UNIT (APU)
The APU shall have completed a borescope inspection during the Final
Inspection and shall meet all air outputs and temperature limitations under
load in accordance with the Lessee's Maintenance Program and the
Manufacturer's maintenance manual, and any defects discovered in such
inspection, which exceed the APU manufacturer's in-service limits, shall be
corrected at Lessee's expense. The APU shall have not more than the Minimum
APU Limit since the last gas path refurbishment. APU Life Limited Parts
shall have not less than one half useful life remaining on average.
3.10 CORROSION
(a) The Aircraft shall be in compliance with the Manufacturer's corrosion
prevention and control program (CPCP) requirements. All CPCP inspections
which would normally be accomplished while access is provided during
structural inspection in accordance with the Lessee's Maintenance Program
during the Term shall have been accomplished;
(b) The entire fuselage will be substantially free from corrosion and will be
adequately treated in accordance with Lessee's corrosion prevention program
and the Manufacturer's Maintenance Planning Document; and
(c) (c) Fuel tanks will be free from contamination and corrosion and
a tank treatment program will be in operation.
3.11 FUEL
At redelivery, the Aircraft fuel tanks shall contain the Minimum Measurable
Fuel Requirement.
3.12 MAINTENANCE PROGRAM
(a) Prior to the Return Occasion and upon Lessor's or Owner's request, Lessee
will provide Lessor or Owner or its agent reasonable access to the Lessee's
Maintenance Program and the Aircraft Documents and Records in order to
facilitate the Aircraft's integration into any subsequent operator's fleet;
and
(b) Lessee will, if requested by Lessor or Owner to do so, provide sufficient
access to Lessee's Maintenance Program in order to integrate the Aircraft
to the next operator's maintenance program. Lessor and any Person to whom
Lessor grants access to Lessee's Maintenance Program shall agree that it
will not disclose the contents of the Lessee's Maintenance Program to any
Person except to the extent necessary to monitor Lessee's compliance with
the Lease and/or to bridge the maintenance program for the Aircraft from
the Lessee's Maintenance Program to another program after the Return
Occasion.
3.13 AIRCRAFT DOCUMENTS
At redelivery Lessee will deliver to Lessor and Owner all current and
complete historical records required to be maintained relevant to the
Aircraft, including documents, manuals, data, overhaul records, life
limited part traceability to "zero time since new", log books, original
delivery documents serviceable parts tags, FAA forms, modification records
and inspection records, and including each of the following Aircraft
Documents and Records:
A. Certificates
A001 Certificate of Airworthiness
A002 Current Aircraft Registration
A003 C of A for Export (if applicable)
A004 Noise Limitation Certificate (AFM page)
A005 Radio Station License
A007 Aircraft deregistration confirmation
A008 Burn Certificates - Cabin Interiors - as follows:
Certification of compliance with the fire blocking requirements as outlined in
FAR Part 25 including:
- - Seat cushions*
- - Back rest cushions*
- - Dress covers*
- - Carpets
- - Curtains
- - Interior Surfaces (if refurbished)
* Including "in combination" burn certification
B. Aircraft Maintenance Status Summaries
B001 Certified current Time in Service (Hours & Cycles) and maintenance
status
B002 Certified status of Airworthiness Directives including method of
compliance
B003 Certified status of Service Bulletin Status
B004 Certified status of SSI
B005 Certified status of CPCP (if applicable)
B006 Certified inventory of Hard Time Components (Fitted listing)
B007 Certified inventory of OC/CM Components (Fitted listing)
B008 Certified status of all non-SB and Major Modifications/STC's including
acceptable State of Manufacture Certification
B009 Certified status of Check/Inspection History & Current Status of Checks
B010 List of Deferred Maintenance Items
B011 List of Out of Phase Checks, Special Requirements, Time Limited Repairs
(if any).
B012 Aircraft Accident & Incident Report.
B013 Structural repairs and damage (including Dent & Buckle Chart).
C. Aircraft Maintenance Records
C001 Technical Logs (Minimum of 2 years)
C002 A Checks
Last complete cycle of A Checks (or equivalent)
C003 C Checks
Last Complete cycle of C Checks (or equivalent)
C004 All Major Checks
C005 CPCP Tasks (if applicable)
C006 Periodic Tasks
C007 Dirty Finger Print Certification - AD's
C008 Dirty Finger Print Certification - SB's
C009 Dirty Finger Print Certification - All other modification
C010 Last Weight Report including Schedule
C011 Compass Swing Report
C012 Last Test Flight Report
C013 Certified ETOPS compliance report (if applicable)
C014 Dirty Finger Print certification - All Structural repairs/structural
damage
C015 Details of State of Manufacture certification basis - A non-SRM
Structural repairs
C016 Aircraft Log Book(s) if applicable
D. Configuration Status
D001 Approved and certified LOPA
D002 Galley Drawings/Component OHM
D003 Emergency Equipment Drawing/Listing
D004 Loose Equipment Inventory
D005 Inventory Listing of Avonic installed Units.
E. Aircraft Historical Records
E001 C of A (Export) from State of Manufacture
E002 Manufacturer's AD Report
E003 Manufacturer's Inspection Report, Initial Equipment list
E004 Manufacturer's repair/alteration report
E005 Manufacturer's SB Report
E006 Service Difficulty Reports (if any)
E007 Aircraft Historical Log
E008 Last Flight Data Recorder Read-Out & Corrections
E009 Weighing report
F. Engine Records
F001 Certified Statement of Status of Each Engine
F002 AD Compliance Report and Compliance Documents
F003 Manufacturer's Modifications & SB Status
F004 In-house Modifications (if applicable)
F005 Certified LLP Listing
F006 Certified listing of installed units
F007 Manufacturer Delivery Document
F008 Complete copies of all historical engine/module Shop Visit Reports
F009 State of Manufacture LLP Traceability
F010 Conditioning Monitoring Report
F011 Engine Log Book/Master Records of Installation/Removals
F012 Last Borescope Report, including video if available
F013 Test Cell Run Report
F014 Last On-Wing Ground Run
F015 Certified Statement that Engines are not involved in an Accident
F016 Approved Release to Service Certification for installed rotables
F017 Approved ETOPS compliance report (if applicable)
G. APU
G001 Certified Statement on Status of APU (if applicable)
G002 Certified SB Compliance Report/AD Status Report
G003 Approved Release to Service Certification for installed units
G004 APU Log Book/Master Record of Installation/Removals
G005 Complete copies of all APU Shop Visit Reports & Reason for Removal
G006 Statement of APU Hours to Aircraft Flying Hours
G007 LLP Status and Full Traceability to birth
G008 APU Borescope Report
G009 Last On-Wing/Health Check Data sheets (if applicable)
G010 Last Test Cell Run
G011 Approved ETOPS compliance report
H. Component Records
H001 Approved Release to Service Certification for Hard Time Components
H002 Approved Release to Service Certification for OC/CM Components
I. Landing Gears
I001 Approved Release to Service Certification for major assemblies on each
Gear
I002 Approved LLP Listings for each Gear (with FULL Traceability to Birth)
I003 Last Shop Visit Report (OH)
J. Manuals
All Manufacturer's Manuals delivered with the Aircraft under the Lease updated
to the latest revision standard (applicable as at the Return Occasion) as may be
reasonably requested by Lessor
K. Microfilm:
J006 WDM
J007 IPC
J008 Maintenance Manual
J009 Schematics
J010 Hook Up Listing
L. Miscellaneous
K006 Maintenance Program Specifications (Operator's)
K007 Reference Material for Interpretation of Status Summaries, or
cross-reference for Part Numbers
SCHEDULE 7
INSURANCE REQUIREMENTS
3.1 Types of Insurance
The Insurances required to be maintained are as follows:
(a) Hull All Risks of loss or damage while flying, taxiing and on the ground
with respect to the Aircraft on an agreed value basis for the Agreed Value
and with a deductible not exceeding the Deductible Amount, or such other
amount agreed by Lessor from time to time;
(b) Hull War and Allied Perils, being such risks excluded from the Hull All
Risks Policy to the fullest extent available from the leading international
insurance markets, including confiscation and requisition by the State of
Registry for the Agreed Value; provided that, when the Aircraft is being
operated solely in or over the United States or Canada, coverage may be
limited to such coverage as is usual and customary for similar airlines
operating similar equipment in similar circumstances, namely, the North
American buy-backs;
(c) All Risks (including War and Allied Risk except when on the ground or in
transit other than by air) property insurance on all Engines and Parts when
not installed on the Aircraft on an "agreed value" basis for their full
replacement value and including engine test and running risks;
(d) Comprehensive Aircraft Third Party, Property Damage, Passenger, Baggage,
Cargo and Mail and Airline General Third Party (including Products) Legal
Liability for a combined single limit (bodily injury/property damage) of an
amount not less than the Minimum Liability Coverage for the time being for
any one occurrence (but in respect of products and personal injury
liability, this limit may be an aggregate limit for any and all losses
occurring during the currency of the policy). War and Allied Risks are also
to be covered under the policy in line with prudent market practice for
comparable airlines operating similar equipment in similar circumstances;
3.2 Terms of Hull and Spares Insurance
All required hull and spares insurance, so far as it relates to the Aircraft,
will:
(a) Additional Insureds: name Lessor, Owner, Financing Parties' Representative
as additional insureds for their respective rights and interests (without
imposing on any such Person any obligation imposed on the insured,
including the liability to pay any calls, commissions or premiums);
(b) Settlement of Losses: provide that any loss will be settled jointly with
Lessor and Lessee, and will be payable in Dollars to Owner and/or the
Financing Parties' Representative, if any, as sole loss payee, for the
account of all interests, except where the insurance payment does not
exceed the Damage Notification Threshold, and no material Default is in
existence, in which case the loss will be settled with and paid to Lessee;
(c) 50/50 Provision: if separate Hull "all risks" and "war risks" insurances
are arranged, include a 50/50 provision in accordance with market practice
(AVS. 103 is the current London market language);
(d) No Option to Replace: confirm that the insurers are not entitled to replace
the Aircraft in the event of an insured Event of Loss.
3.3 Terms of Liability Insurance
All required liability insurances will:
(a) Additional Insureds: include each Indemnitee, as additional insureds for
its respective rights and interests, warranted, each as to itself only, no
operational interest (without imposing on any such Person any obligation
imposed on the insured, including the liability to pay any calls,
commissions or premiums);
(b) Severability: include a severability of interests clause which provides
that the insurance, except for the limit of liability, will operate to give
each insured the same protection as if there was a separate policy issued
to each insured;
(c) Primary Policy: contain a provision confirming that the policy is primary
without right of contribution and the liability of the insurers will not be
affected by any other insurance of which Lessor, each Indemnitee or Lessee
have the benefit so as to reduce the amount payable to the additional
insureds under such policies;
3.4 Terms of All Insurances
All Insurances will:
(a) Best Industry Practice: be in accordance with normal industry practice of
persons operating similar aircraft in similar circumstances;
(b) Dollars: provide cover denominated in Dollars and any other currencies
which Lessor may reasonably require in relation to liability insurance;
(c) Worldwide: operate on a worldwide basis subject to such limitations and
exclusions as Lessor may agree;
(d) Breach of Warranty: provide that, in relation to the interests of each of
the additional assureds, the Insurances will not be invalidated by any act
or omission by Lessee, or any other person other than the respective
additional assureds seeking protection and shall insure the interests of
each of the additional assureds regardless of any breach or violation by
Lessee, or any other person other than the respective additional assured
seeking protection of any warranty, declaration or condition, contained in
such Insurances;
(e) Subrogation: provide that the insurers will hold harmless and waive any
rights of recourse or subrogation against the additional insureds;
(f) Premiums: provide that the additional insureds will have no obligation or
responsibility for the payment of any premiums due (but reserve the right
to pay the same should any of them elect so to do) and that the insurers
will not exercise any right of set-off, counter-claim or other deduction,
by attachment or otherwise, in respect of any premium due against the
respective interests of the additional insureds other than outstanding
premiums relating to the Aircraft, any Engine or Part the subject of the
relevant claim;
(g) Cancellation/Change: provide that the Insurances will continue unaltered
for the benefit of the additional insureds for at least * days after
written notice by registered mail or telex of any cancellation, change,
event of non-payment of premium or installment thereof has been sent by
insurer(s) to Lessor, or where an insurance broker is appointed to the
insurance broker who shall promptly send on such notice to Lessor, except
in the case of war risks for which * days (or such lesser period as is or
may be customarily available in respect of war risks or allied perils) will
be given, or in the case of war between the 5 great powers or nuclear peril
for which termination is automatic;
(h) Reinsurance: if reinsurance is a requirement of the Lease such reinsurance
will:
(i) be on the same terms as the original insurances and will include the
provisions of this Schedule;
(ii) provide that notwithstanding any bankruptcy, insolvency, liquidation,
dissolution or similar proceedings of or affecting the reinsured that
the reinsurers' liability will be to make such payments as would have
fallen due under the relevant policy of reinsurance if the reinsured
had (immediately before such bankruptcy, insolvency, liquidation,
dissolution or similar proceedings) discharged its obligations in full
under the original insurance policies in respect of which the then
relevant policy of reinsurance has been effected; and
(iii)contain a "cut-through" clause in the following form (or otherwise
satisfactory to Lessor):
"The Reinsurers and the Reinsured hereby mutually agree that in the
event of any claim arising under the reinsurances in respect of a
total loss or other claim where as provided by the Agreement dated [ ]
and made between [ ] and [ ] such claim is to be paid to the person
named as sole loss payee under the primary insurances, the Reinsurers
will in lieu of payment to the Reinsured, its successors in interest
and assigns pay to the person named as sole loss payee under the
primary insurances effected by the Reinsured that portion of any loss
due for which the Reinsurers would otherwise be liable to pay the
Reinsured (subject to proof of loss), it being understood and agreed
that any such payment by the Reinsurers will (to the extent of such
payment) fully discharge and release the Reinsurers from any and all
further liability in connection therewith"; subject to such provisions
not contravening any Law of the State of Incorporation; and
(i) Initiating Claims: contain a provision entitling any Indemnitee to initiate
a claim under any policy in the event of the refusal or failure of Lessee
to do so; and
(j) Indemnities: accept and insure the indemnity provisions of the Lease to the
extent of the risks covered by the policies.
3.5 Deductibles
Lessee shall be responsible for any and all deductibles under the Insurances.
3.6 Application of Insurance Proceeds
The Insurances will be endorsed to provide for payment of proceeds as follows:
(a) Event of Loss: all insurance payments received as the result of an Event of
Loss occurring during the Term will be paid to Financing Parties'
Representative as sole loss payee, and Lessor will pay or cause to be paid
any remaining balance of those amounts to Lessee after deduction of all
amounts which may be or become payable by Lessee to Lessor under the Lease
and the Other Agreements (including under Section 11.1(b));
(b) Exceeding Damage Notification Threshold: all insurance proceeds of any
property, damage or loss to the Aircraft, any Engine or any Part occurring
during the Term not constituting an Event of Loss and in excess of the
Damage Notification Threshold will be paid to Financing Parties'
Representative as sole loss payee, and applied in payment (or to reimburse
Lessee) for repairs or replacement property upon Lessor, being satisfied
that the repairs or replacement have been effected in accordance with the
Lease. Any balance remaining may be retained by Lessor or Owner, as the
case may be;
(c) Below Damage Notification Threshold: insurance proceeds in amounts below
the Damage Notification Threshold may be paid by the insurer directly to
Lessee;
(d) Liability Proceeds: all insurance proceeds in respect of third party
liability will, except to the extent paid by the insurers to the relevant
third party, be paid to Lessor, Owner or Financing Parties' Representative
to be paid directly in satisfaction of the relevant liability or to Lessee
in reimbursement of any payment so made;
(e) Default: notwithstanding any of the foregoing paragraphs, if at the time of
the payment of any such insurance proceeds a payment Default or an Event of
Default has occurred and is continuing, all such proceeds will be paid to
Lessor, Owner or Financing Parties' Representative, as the case may be, or
retained to be applied toward payment of any amounts which may be or become
payable by Lessee in such order as Lessor or Owner, as the case may be, may
elect; and
To the extent that insurance proceeds are paid to Lessee which are required to
be paid to another Person hereunder, Lessee agrees to hold such proceeds in
trust and comply with the foregoing provisions and apply or pay over such
proceeds as so required.
3.7 United States Governmental Indemnity
Notwithstanding any of the foregoing paragraphs, in the event of a Permitted
Sub-Lease to, or a requisition of use by, or activation of the CRAF program with
respect to the Aircraft by, the United States or any Governmental Entity whose
obligations have the full faith and credit of the federal Government of the
United States, Lessor agrees to accept in lieu of insurance required hereunder
indemnification or insurance from the United States or such a Governmental
Entity in a form reasonable acceptable to Lessor and Owner and against such
risks and in such amounts and on such terms such that when added to the
Insurances maintained by Lessee, Lessee is in full compliance with the
requirements of Section 9 and this Schedule.
SCHEDULE 8
FORM OF LEGAL OPINION
The following form shall be delivered by Lessee's counsel to Lessor or such
other form as Lessor shall reasonably agree.
[Lessor]
[Owner]
[Financing Parties' Representative]
Ladies and Gentlemen:
3.1 You have asked us to render an opinion in connection with the
transaction governed by or subject to, inter alia, the under-mentioned
documents.
3.2 the Agreement as defined in paragraph 1.3 below;
3.3 the [Articles/Certificate of Incorporation and By-laws]* of Lessee; and
[*Counsel should amend this reference as necessary to describe the
actual constitutional documents of Lessee].
3.4 all other documents, approvals and consents of whatever nature and
wherever kept which it was, in our judgement and to our knowledge,
necessary or appropriate to examine to enable us to give the opinion
expressed below.
Words and expressions used and not otherwise defined herein will bear
the same meanings as defined in an Aircraft Lease Agreement dated
________, ____ between ________ ("Lessor") and ________ ("Lessee") in
respect of one ________ aircraft with manufacturer's serial number
________ together with the ____ installed ________ engines (the
"Aircraft"). As used herein the term "Lease" means and includes the
Aircraft Lease Agreement which incorporates the Common Terms Agreement
(as defined therein) and Lease Supplement No. Also, for the purposes of
this opinion, the term "Lease" includes the Acknowledgment and
Agreement dated as of the date hereof executed by Lessee in favor of
Owner and Financing Parties' Representative.
4. Having considered the documents listed in paragraph 1 above, and having
regard to the relevant laws of ________ we are pleased to advise that
in our opinion: -
(a) Lessee is a company duly incorporated and in good standing under the laws
of ________, and is qualified to do business as a foreign corporation in
each jurisdiction where failure to so qualify would have a materially
adverse effect on Lessee's business or its ability to perform its
obligations under the Lease;
(b) Lessee has the corporate power to enter into and perform, and has taken all
necessary corporate action to authorize the entry into, and the execution,
delivery and performance by it of, the Lease and the transactions
contemplated by the Lease;
(c) the entry into and performance by Lessee of, and the transactions
contemplated by, the Lease do not and will not:
(i) conflict with any laws binding on Lessee; or
(ii) conflict with the [Articles/Certificate of Incorporation or By-laws]
of Lessee; or
(iii)conflict with or result in default under any agreement or instrument
which is binding upon Lessee or any of its assets or result in the
creation of any Security Interest on any of its assets.
(d) no authorizations, consents, licenses, approvals and registrations (other
than those which have been obtained and of which copies are attached
hereto) are necessary or desirable to be obtained from any governmental or
other regulatory authorities in the United States or any other jurisdiction
having jurisdiction over Lessee, its operations or its properties to enable
Lessee:
(i) to enter into and perform the transactions contemplated by the Lease;
(ii) to import the Aircraft into ______ for the duration of the Term;
(iii)to operate the Aircraft in ______ and on international flights for
the transport of fare-paying passengers; or
(iv) to make the payments provided for in the Lease;
(e) except for the filing and recordation of [ a bill of sale in favor of the
Owner,] the Financing Documents and the Lease with the FAA (which filing
has been duly made on or before this date) and the filing of Financing
Statements in ________, it is not necessary or desirable, to ensure the
priority, validity and enforceability of all the obligations of Lessee
under the Lease, as against Lessee and all third parties, or to perfect the
interests of Lessor, Owner or Financing Parties' Representative in and to
the Aircraft or the Lease, that the Lease be filed, registered, recorded or
notarized in any public office or elsewhere or that any other instrument be
signed, delivered, filed, registered or recorded, that any tax or duty be
paid or that any other action whatsoever be taken;
(f) the Lease has been duly executed and delivered on behalf of Lessee and
constitutes the legal, valid and binding obligation of Lessee, enforceable
against Lessee in accordance with its terms;
(g) there is no withholding tax or other Tax to be deducted from any payment
whatsoever which may be made by Lessee pursuant to the Lease; with respect
to any withholdings, the provisions of Section 5.6 of the Lease are fully
effective; and the arrangements contemplated by the Lease do not give rise
to Taxes in ________;
(h) there is no applicable usury or interest limitation law in ________
applicable to payments in accordance with the Lease;
(i) there are no registration, stamp or other taxes or duties of any kind
payable in ________ in connection with the execution, performance or
enforcement by legal proceedings of the Lease;
(j) the choice of New York law to govern the Lease will be upheld as a valid
choice of law in any action in the courts of ________;
(k) the consent to the jurisdiction by Lessee contained in the Lease is valid
and binding on Lessee;
(l) Lessee is a Certificated Air Carrier;
(m) Lessee is a "citizen of the United States" as defined in 49 U.S.C. Section
40102(a)(15);
(n) Lessee's "chief executive office" (as referenced in the Uniform Commercial
Code adopted in the State of _________________) is _____________________;
(o) Lessor will not violate any law or regulation of the States of _________ or
New York or any federal laws or regulations of the United States of America
and Lessor will not become liable to income tax in the State of
____________ solely by reason of Lessor entering into the Lease with Lessee
or performing its obligations thereunder;
(p) It is not necessary for Lessor to establish a place of business or be
licensed or qualified to do business in the State of _________ or New York
in order for Lessor to enforce any provisions of the Lease; and
(q) Lessor is entitled to the benefits of Section 1110 of Title 11 of the
U.S.C. with respect to the Aircraft and the Lease.
Very truly yours,
[If there is a Guarantor/Guarantee the opinion shall also include paragraphs
(a), (b), (c), (d), (e), (f), (g), (h), (i), (j), (k), (o) and (p) revised to be
applicable to the Guarantor/Guarantee]
SCHEDULE 9
EVENTS OF DEFAULT
Each of the following events or conditions constitutes an Event of Default:
(a) Non-payment: Lessee fails to make any payment of Rent or Supplemental Rent
under the Lease on the due date and such failure continues for * (*)
Business Days or more, or Lessee fails to make any other payment under the
Lease within * Business Days of the due date therefor under the Lease; or
(b) Insurance: Lessee fails to comply with any provision of Section 9 or
Schedule 7, or any insurance required to be maintained under the Lease is
cancelled or terminated, or a notice of cancellation is given in respect of
any such insurance; or
(c) Breach: Lessee fails to comply with any other provision of the Lease not
referenced in this Schedule 9 and, if such failure is capable of remedy,
such failure continues for * days after notice from Lessor to Lessee; or
(d) Representation: any representation or warranty made (or deemed to be
repeated) by Lessee in or pursuant to the Lease or in any document or
certificate or statement delivered to Lessor thereunder or in connection
therewith is or proves to have been incorrect in any material respect when
made or deemed to be repeated; or
(e) Cross-Default:
(i) any Financial Indebtedness of Lessee or any Lessee Affiliate having a
principal amount in excess of $* becomes due as a result of an event
of default or termination event, howsoever described, on the part of
Lessee or any Affiliate of Lessee prior to the date when it would
otherwise have become due; or
(ii) material steps are taken by the holder of any such Financial
Indebtedness to realize on the security for any such Financial
Indebtedness; or
(iii)any event of default or termination event, howsoever described, occurs
under (a) any Other Agreement, or any aircraft lease agreement or
other material agreement from time to time entered into between GE
Capital, GECAS or any Person whose aircraft or engines are managed by
GE Capital or GECAS (or in each case any Subsidiary of GE Capital), on
the one hand, and Lessee (or any Subsidiary of Lessee), on the other
hand or (b) any other material lease, hire purchase, conditional sale
or credit sale agreement of Lessee relating to aircraft or aviation
related equipment; or
(f) Approvals: any consent, authorization, licence, certificate or approval of
or registration with or declaration to any Government Entity required to be
obtained or maintained by Lessee in connection with the Lease and/or the
operation of the Aircraft (including any airline licence or air transport
licence including authority to operate the Aircraft under Part 121 of the
FARs, a Certificate of Convenience and Necessity issued under the Act and
an aircarrier operating certificate issued under the Act) is modified in a
materially prejudicial manner or is withheld, or is revoked, suspended,
cancelled, withdrawn, terminated or not renewed, or otherwise ceases to be
in full force, (each a "De-registration") in each case for a period of *
(*) days or more and such De-registration has a material adverse effect on
(i) Lessee's ability to perform its obligations under the Lease or (ii) the
interests of Lessor or Owner in the Aircraft; or
(g) Bankruptcy, etc:
(i) Lessee consents to the appointment of a custodian, receiver, trustee
or liquidator of itself or all or substantially all of Lessee's
property or Lessee's consolidated property, or Lessee admits in
writing its inability to, or is unable to, or does not, pay its debts
generally as they come due, or makes a general assignment for the
benefit of creditors, or Lessee files a voluntary petition in
bankruptcy or voluntary petition seeking reorganization in a
proceeding under any bankruptcy or insolvency laws (as now or
hereafter in effect), or an answer admitting the material allegations
of a petition filed against Lessee in any such proceeding, or Lessee
by voluntary petition, answer or consent seeks relief under the
provisions of any other bankruptcy, insolvency or other similar law
providing for the reorganization or winding-up of corporations, or
provides for an agreement, composition, extension or adjustment with
its creditors, or any board of directors or shareholder action is
taken by Lessee in furtherance of any of the foregoing, whether or not
the same is fully effected or accomplished; or
(ii) An order, judgement or decree is entered by any court appointing,
without the consent of Lessee, a custodian, receiver, trustee or
liquidator of Lessee's property is sequestered, and any such order,
judgement or decree of appointment or sequestration remains in effect,
undismissed, unstayed or unvacated for a period of * days after the
date of entry thereof or at any time an order for relief is granted;
or
(iii)An involuntary petition against Lessee is a proceeding under the
United States Federal Bankruptcy laws or other insolvency laws (as now
or hereafter in effect) is filed and is not withdrawn or dismissed
within * days thereafter or at any time an order for relief is granted
in such proceeding, or if, under the provisions of any law providing
for reorganisation or winding-up of corporations which may apply to
Lessee, any court of competent jurisdiction assumes jurisdiction over,
or custody or control of, Lessee or of all or any material part of
Lessee's property, or Lessee's property and such jurisdiction, custody
or control remains in effect, unrelinquished, unstayed or unterminated
for a period of [*] days or at any time an order for relief is granted
in such proceeding; or
(h) Suspension of Business: Lessee suspends or ceases or takes substantive
steps to suspend or cease to carry on all or a substantial part of its
business as a Certificated Air Carrier (other than as a result of a labor
dispute with Lessee's employees); or
(i) Rights and Remedies: Lessee or any other Person claiming by or through
Lessee challenges the existence, validity, enforceability or priority of
the Lease or the rights of Lessor as lessor or of Owner as owner in respect
of the Aircraft or Financing Parties' Representative as holder of a first
priority Security Interest in the Aircraft and the Lease; or
(j) Delivery: Lessee fails to comply with its obligation under Section 4 to
accept delivery of the Aircraft; or
(k) Adverse Change: any event or series of events occurs which has a material
adverse effect on the financial condition or operations of Lessee and on
the ability of Lessee to comply with its obligations under the Lease; or
(l) Letter of Credit:
(i) the issuer of the Letter of Credit (if any) fails to make any payment
under that Letter of Credit when due; or
(ii) any such Letter of Credit is not in full force or, for any reason
ceases to constitute the legal, valid and binding obligation of the
issuer; or
(iii)any of the events listed in paragraph (g) above applies to the issuer
of any Letter of Credit (references in such paragraph to Lessee being
deemed to be to the issuer); or
(iv) where applicable, any Letter of Credit is not renewed within the time
required by Section 5.13;
and each reference in this paragraph (m) to "the issuer" shall include a
reference to any confirming bank for the Letter of Credit.
(m) Redelivery: Lessee fails to return the Aircraft to Lessor on the Expiry
Date in accordance with Section 12; or
(n) Litigation: a judgement for the payment of money not covered by insurance
in excess of $* (or the equivalent thereof in other currencies) shall be
rendered against Lessee and the same shall remain undischarged for a period
of * days, unless during such period, execution of such judgement shall
have been effectively stayed by agreement of the parties involved or by
court order or such judgement shall have been adequately bonded; or
(o) Unlawful: if the State of Registration is outside of the United States and
it becomes unlawful in such State of Registration or other jurisdiction
outside of the United States for Lessee to perform any of its material
obligations under the Lease or the Lease becomes invalid or unenforceable
in whole or in material part ; or
(p) Transfer: Lessee makes or permits any assignment or transfer of the Lease,
or any interest herein, or of the right to possession of the Aircraft, the
Airframe, or any Engine, or any obligations under the Lease, or Lessee
subleases the Aircraft, in any case except as expressly permitted in the
Lease; or
(q) Disposal: Lessee disposes, conveys or transfers or has taken material steps
to dispose, convey or transfer all or substantially all of its assets,
liquidates or dissolves or consolidates or merges with any other Person
whether by one or a series of transactions, related or not, other than for
the purpose of a reorganization of the terms of which have received the
previous consent in writing of Lessor or as permitted pursuant to Section
8.7(a)(vii) herein.
SCHEDULE 10
FORM OF LEASE TERMINATION CERTIFICATE
The undersigned hereby certify that the Aircraft Lease Agreement dated as of
_________, ____ between the undersigned Lessor and undersigned Lessee, and as
further described in the Appendix attached hereto, has terminated (except as
described in Section 15.1 thereof) and the aircraft and aircraft engines covered
thereby are no longer subject to the terms thereof. This certificate may be
executed in one or more counterparts each of which when taken together shall
constitute one and the same instrument.
DATED this __________ day of ____________________, __________
LESSOR LESSEE
[ INSERT LESSOR'S NAME ] [ INSERT LESSEE'S NAME ]
By:________________________________ By:_______________________________
Title:_______________________________ Title:_____________________________
Schedule 11
Intentionally Omitted
SCHEDULE 12
LEASE SUPPLEMENT NO. 1
LEASE SUPPLEMENT NO. 1, dated ___________, ______, between
____________________________________________, [a corporation organized under the
laws of ______________] [, not in its individual capacity, but solely as owner
trustee] ("Lessor"), and ___________________________________, a corporation
organized under the laws of the ____________________("Lessee").
Lessor and Lessee have previously entered into that certain Aircraft Lease
Agreement dated as of _____________________, including the Common Terms
Agreement as defined therein (collectively, herein referred to as the
"Agreement" and the defined terms therein being hereinafter used with the same
meaning). The Agreement provides for the execution and delivery from time to
time of a Lease Supplement substantially in the form hereof for the purpose of
leasing the aircraft described below under the Agreement as and when delivered
by Lessor to Lessee in accordance with the terms thereof.
The Agreement and this Lease Supplement relate to the Aircraft, Engines
and Parts as more precisely described below and in the Certificate of Technical
Acceptance. A counterpart of the Agreement is attached hereto and this Lease
Supplement and the Agreement shall form one document.
In consideration of the premises and other good and sufficient
consideration, Lessor and Lessee hereby agree as follows:
1. Lessor hereby delivers and leases to Lessee under the Agreement and Lessee
hereby accepts, acknowledges receipt of possession and leases from Lessor under
the Agreement, that certain ______________ aircraft, and the ________ (___)
_____________________ Engines (each of which Engines has 750 or more rated
takeoff horsepower or the equivalent of such horsepower) described in Schedule 1
hereto, together with the Aircraft Documents and Records described in the
Agreement (the "Delivered Aircraft").
2. The Delivery Date of the Delivered Aircraft is the date of this Lease
Supplement set forth in the opening paragraph hereof.
3. The Term for the Delivered Aircraft shall commence on the Delivery Date and
shall end on the Expiry Date, which shall be [insert date].
4. The amount of Rent for the Delivered Aircraft is set forth in Schedule B to
the Agreement.
5. Lessee hereby confirms to Lessor that (i) the Delivered Aircraft and each
delivered Engine have been duly marked in accordance with the terms of Section
8.6(a) of the Agreement, (ii) the Aircraft is insured as required by the
Agreement, (iii) the representations and warranties of Lessee referred to in
Section 2.1 of the Agreement are hereby repeated with effect as of the date
first above written, (iv) having inspected the Delivered Aircraft, Lessee
acknowledges that the Delivered Aircraft satisfies all conditions required for
Lessee's acceptance of delivery as set forth in the Agreement, and (v) the
execution and delivery of this Lease Supplement signifies absolute and
irrevocable acceptance by Lessee of the Delivered Aircraft for all purposes
hereof and of the Agreement.
6. All of the terms and provisions of the Agreement are hereby incorporated by
reference in this Lease Supplement to the same extent as if fully set forth
herein.
7. This Lease Supplement may be executed in any number of counterparts; each of
such counterparts, shall for all purposes be deemed to be an original; and all
such counterparts shall together constitute but one and the same Lease
Supplement.
IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease Supplement
No. 1 to be duly executed as of the day and year first above written.
LESSOR, LESSEE,
[INSERT LESSOR'S NAME] [INSERT LESSEE'S NAME]
By:_____________________________ By:_____________________________
Name:__________________________ Name:__________________________
Title:____________________________ Title:____________________________
SCHEDULE 13
TECHNICAL REPORT ON AIRCRAFT USAGE
Aircraft Hours/Cycles Monthly Report
SCHEDULE 14
FORM OF
REDELIVERY CERTIFICATE
REDELIVERY CERTIFICATE dated _______________, ____, between Aviation
Financial Services Inc., a corporation organized under the laws of Delaware
("Lessor"), and Frontier Airlines, Inc., a corporation organized under the laws
of the Colorado ("Lessee").
Lessor and Lessee have previously entered into that certain Aircraft Lease
Agreement dated as of April 20, 2000 (herein referred to as the "Agreement", the
defined terms therein being hereinafter used with the same meaning). The
Agreement and this Redelivery Certificate relate to the Aircraft, Engines and
Parts as more precisely described below.
1. Lessee hereby redelivers to Lessor under the Agreement and Lessor
hereby accepts and acknowledges receipt of possession from Lessee under
the Agreement, of that certain [insert aircraft type] commercial jet
Aircraft, and the two (2) CFM International CFM-56-[____]Engines (each
of which Engines has 750 or more rated takeoff horsepower or the
equivalent of such horsepower) described in Schedule 1 hereto, together
with the Aircraft Documents described in the Agreement (the
"Redelivered Aircraft").
2. Lessor hereby confirms to Lessee that (i) having inspected the
Redelivered Aircraft, Lessor acknowledges that the Redelivered Aircraft
satisfies all conditions required for Lessor's acceptance of redelivery
as set forth in the Agreement, except as noted in the Discrepancy List
attached to the Certificate of Technical Acceptance annexed as Schedule
2 hereof, and (ii) the execution and delivery of this Redelivery
Certificate signifies absolute and irrevocable acceptance by Lessor of
the Redelivered Aircraft for all purposes hereof and of the Agreement.
3. This Redelivery Certificate may be executed in any number of
counterparts, each of such counterparts, shall for all purposes be
deemed to be an original; and all such counterparts shall together
constitute but one and the same Redelivery Certificate.
IN WITNESS WHEREOF, Lessor and Lessee have caused this
Redelivery Certificate to be duly executed as of the day and year first above
written.
LESSOR, LESSEE,
AVIATION FINANCIAL SERVICES INC. FRONTIER AIRLINES, INC.
By: By:
------------------------- --------------------------
Name: Name:
----------------------- ------------------------
Title: Title:
---------------------- -----------------------
SCHEDULE 1
TO
REDELIVERY CERTIFICATE
One Used
[Airbus A319/Boeing 737-3B7]
Airframe
Registration Mark
Manufacturer's
Serial No. Total Time* Total Cycles*
Installed CFM International, Inc.
Engines
Model No. Serial No. Total Time* Total Cycles*
- --------- ---------- ---------- ------------
CFM-56-[____] ____________ ____________ ____________
CFM-56-3-B2 ____________ ____________ ____________
Each of the above-described Aircraft Engines is 750 or more rated takeoff
horsepower or its equivalent.
* The total time and total cycles referred to above are as of
________[AM][PM], _______ Time. Such times and cycles are with ____ hours
and ____ cycles of the actual hours and cycles at the time of this
Redelivery Certificate.
SCHEDULE 2
TO
REDELIVERY CERTIFICATE
CERTIFICATE OF TECHNICAL ACCEPTANCE
This Certificate of Technical Acceptance is delivered, on the
date set out below to Aviation Financial Services Inc.("Lessor"), by Frontier
Airlines, Inc. ("Lessee"), pursuant to the Aircraft Lease Agreement dated as of
__________, 2000 between Lessor and Lessee (the "Agreement"). The capitalized
terms used in this Certificate shall have the meaning given to such terms in the
Agreement.
1. DETAILS OF ACCEPTANCE
Lessor hereby confirms to Lessee that Lessor has at [__] o'clock of
this [__] day of [____________], 20__, at [ ], technically accepted the
following, in accordance with the provisions of the Agreement:
(a) [Airbus/Boeing Model ________ [Aircraft] airframe, Manufacturer's
Serial No. [___________].
(b) CFM International, Inc. Model CFM 56-[_____] (operating at [B-1]
power) Engines: Engine Number Manufacturer's Serial No.
------------------------------------------------------------
1.____________; and _____________ 2.____________; and
_____________ (Each of which shall have more than 750 rated
takeoff horsepower or the equivalent of such horsepower).
(c) Fuel Status: Pounds [________________]; and
(d) Loose Equipment Check List: as per list signed by Lessor and
Lessee and attached hereto.
(e) Aircraft Documents: as per list signed by Lessor and Lessee and
attached hereto.
2. HOURS AND CYCLES DATA (as of Redelivery Date)
(a) Airframe:
--------
Number of Hours since last phase "D" Check (Heaviest Check):
Flight Hours
-----------------------------------------------------------
"C" Check (or Equivalent):
-------------------------
Interval: _
-------------------------
Time Since: _
-----------------------
(b) Landing Gear Overhaul:
---------------------
Number of Cycles Since Last Overhaul:
Left Gear Cycles
Right Gear Cycles
Nose Gear Cycles
Center Gear Cycles
Interval: Left Gear Cycles
Right Gear Cycles
Nose Gear Cycles
Center Gear Cycles
(c) Engines:
-------
Number of Hours Since Last Heavy Shop Visit (Refurbishment):
S/N ________:________ Engine Flight Hours
S/N ________:________ Engine Flight Hours
Number of Hours Since Last Hot Section Refurbishment:
S/N ________:________ Engine Flight Hours
S/N ________:________ Engine Flight Hours
Number of Hours Since Last Cold Section Refurbishment:
S/N ________:________ Engine Flight Hours
S/N ________:________ Engine Flight Hours
Hot Section Inspection:
Interval: _
-------------------------
Time Since (S/N_________): _
-----------------------
Time Since (S/N_________): _
-----------------------
Time Remaining to First Restriction:
Engine S/N: ________
Engine Flight Hours: ________ Restriction: ________
Cycles: _______ Restriction: ________
Engine S/N: ________
Engine Flight Hours: ________ Restriction: ________
Cycles: _______ Restriction: ________
Average Cycles in Life Limited Parts (see attached Schedule):\
--------------------
Number of APU Hours Since Last Heavy Shop Visit:
________ hours Date Accomplished ________
Hot Section Inspection:
Interval:
------------------------
Time Since:
----------------------
(e) Time Controlled Components: [See attached DUJX Report]
--------------------------
(f) Fuel on Board on Inspection Date:
-------------------------------- -----------------------
(g) Interior Equipment:
------------------
Number of Passenger Seats and Configuration:
Number of Galleys and Location: ________ ________
Number of Lavatories and Location: ________ ________
LOPA - Attached: ________ ________
List of Loose Equipment on Board:
-------------------------------------- ---------------
-------------------------------------- ---------------
-------------------------------------- ---------------
-------------------------------------- ---------------
-------------------------------------- ---------------
(h) Avionics:
--------
Description Model Part No.
---------------------------------- --------- ---------
---------------------------------- --------- ---------
---------------------------------- --------- ---------
---------------------------------- --------- ---------
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(i) Audio System
3. ACCEPTANCE:
The undersigned hereby confirms that the Aircraft, Engines, Parts and
Aircraft Documents are technically acceptable to it, satisfy all Redelivery
Condition Requirements and, except as noted on the attached Discrepancies
Schedule, are in the condition for redelivery and acceptance required under the
Agreement.
IN WITNESS WHEREOF, Lessor has, by its duly authorized representative,
executed this Certificate on the date in paragraph 1 above.
LESSOR:
AVIATION FINANCIAL SERVICES INC.
By:
--------------------------
Title:
-----------------------
SCHEDULE 15
FORM OF GECC GUARANTY
GUARANTY
GUARANTY (this "Guaranty"), dated April __, 2000 by GENERAL ELECTRIC CAPITAL
CORPORATION, a New York corporation ("Guarantor") in favor of Frontier Airlines,
Inc., a company incorporated under the laws of Colorado ("Lessee"). Capitalized
terms used and not otherwise defined herein shall have the meanings ascribed to
them in the Lease (as defined below).
Recitals
WHEREAS, Aviation Financial Services Inc., a company incorporated under
the laws of Delaware ("Lessor") and Lessee have entered into [an Aircraft Lease
Agreement, dated as of April 20, 2000 (the "Lease"), relating to * (*) Airbus
A319 aircraft bearing manufacturer's serial numbers to be determined]
(collectively, the "Aircraft" and each an "Aircraft"); and
WHEREAS, in order to induce Lessee to lease the Aircraft from Lessor
under each Lease, Guarantor, as the parent of Lessor, is entering into this
Guaranty;
NOW, THEREFORE, Guarantor hereby agrees as follows:
Section 1. Guaranty.
(a) Guarantor hereby unconditionally guarantees the payment and performance, and
not of collection, of the obligations of Lessor under each Lease, in each case
after any applicable notice requirements in accordance with each Lease (such
obligations of Lessor being referred to herein as the "Guaranteed Obligations");
provided, however, that Guarantor shall not be liable to perform the Guaranteed
Obligations unless Lessee makes written demand upon the Guarantor for the
performance of the Guaranteed Obligations then due and owing and such Guaranteed
Obligations are not performed in full within ten Business Days (as used herein a
"Business Day" shall refer to a day other than a Saturday or Sunday on which
commercial banks are open for business in New York City) of such demand.
Guarantor hereby agrees that its obligations hereunder shall be unconditional,
irrespective of the validity, regularity or enforceability of the Lease, any
change in or amendment thereto, the absence of any action to enforce the same,
any waiver or consent by Lessee with respect to any provision thereof, the
recovery of any judgment against Lessor or any action to enforce the same, or
any other circumstances which may otherwise constitute a legal or equitable
discharge or defense of a guarantor (other than complete performance) and (ii)
any difference between the law selected as the governing law of the Lease and
the law selected as the governing law of this Guaranty; provided, however, that
nothing contained herein shall be construed to be a waiver by Guarantor of
presentment, demand of performance as described above, protest or notice with
respect to the Lease and the obligations evidenced thereby or hereby. Guarantor
covenants that this Guaranty will not be discharged except by complete
performance of the Guaranteed Obligations and the obligations in this Guaranty.
(b) Guarantor shall be subrogated to all rights of the Lessee in respect of any
amounts paid by Guarantor pursuant to the provisions of this Guaranty, provided,
however, that Guarantor shall be entitled to enforce, or to receive any payments
arising out of or based upon, such right of subrogation only after the
Guaranteed Obligations and all amounts owed to Lessee thereunder have been paid
in full.
(c) This Guaranty shall continue to be effective or be reinstated, as the case
may be, if at any time any payment of the Guaranteed Obligations or any other
amount owed to the Lessee hereunder or thereunder is rescinded or must otherwise
be returned by the Lessee upon the insolvency, bankruptcy or reorganisation of
the Guarantor, the Lessor or otherwise, all as though such payment had not been
made.
Section 2. Miscellaneous.
2.1 Notices.
All notices to Guarantor under this Guaranty and copies of all notices to
Lessor under the Lease shall, until Guarantor furnishes written notice to the
contrary, be mailed or delivered to Guarantor at 260 Long Ridge Road, Stamford,
Connecticut 06927-9400, and directed to the attention of the Senior Vice
President - Corporate Treasury and Global Funding Operation of General Electric
Capital Corporation. All notices shall be effective when received by the
addressee thereof.
2.2 Governing Law.
This Guaranty shall be construed and enforced in accordance with, and
governed by, the laws of the State of New York, United States of America.
2.3 Interpretation.
The headings of the section and other subdivisions of this Guaranty are
inserted for convenience only and shall not be deemed to constituted a part
hereof.
2.4 Attorney's Cost.
Guarantor agrees to pay all reasonable attorney's fees and disbursements
and all other reasonable and actual costs and expenses which may be incurred by
Lessee in the enforcement of this Guaranty.
2.5 Termination.
This Guaranty shall continue in full force and effect until the earliest to
occur of the following: (i) the complete performance of the Guaranteed
Obligations, (ii) the transfer (other than to an affiliate of Guarantor) of
Lessor's interest in the Lease under and in compliance with the terms and
conditions of the Lease, or (iii) the transfer (other than to an affiliate of
Guarantor) by Guarantor (or, if applicable, the affiliate of Guarantor that owns
the stock of Lessor) of all of its right, title and interest in and to the stock
of Lessor, provided that (a) the transferee enters into a guaranty substantially
in the form of this Guaranty pursuant to which the transferee guarantees the
Guaranteed Obligations of Lessor and (b) any such entity complies with the terms
and conditions of the Lease. In connection with any such termination, Lessee
shall provide such documents or release or discharge as Guarantor may reasonably
request.
2.6 Indemnity; No Set-off.
(a) In consideration of the execution and delivery of this Guaranty by
Guarantor, Lessee hereby agrees, as evidenced by its signature set
forth on the signature page of this Guaranty, to indemnify Guarantor
as an "Indemnitee" in accordance with Clause 10 of the Common Terms
Agreement, and such Clause is incorporated by reference in full for
the benefit of Guarantor with the same force and effect and subject to
the same limitations and exclusions as though fully set forth herein.
(b) By acceptance of this Guaranty, Lessee shall be deemed to have waived
any right to set-off, combine, consolidate, or otherwise appropriate
and apply (i) any assets of Guarantor at any time held by Lessee or
(ii) any indebtedness or other liabilities at any time held or owing
by Lessee to Guarantor, as the case may be, or on account of, the
obligations or liabilities owed by Guarantor to the Lessee under this
Guaranty.
2.7 Counterparts.
This Guaranty may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original,
but all such counterparts shall together constitute but one and the same
instrument.
2.8 Currency of Payment.
Any payment to be made by Guarantor shall be made in the same currency as
designated for payment in the Lease and such designation of the currency of
payment is of the essence.
IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be duly
executed as of the day and year first above written.
GENERAL ELECTRIC CAPITAL
CORPORATION
By: ________________________
Name:
Title:
Accepted and Agreed:
FRONTIER AIRLINES, INC.
By: ________________________
Name:
Title: