Conformed Copy
February 27, 2001
TO THE PERSONS LISTED ON SCHEDULE A ATTACHED HERETO
ASSUMPTION AND LEASE AGREEMENT
Ladies and Gentlemen:
American Airlines, Inc., a Delaware corporation ("AMERICAN"), and Trans
World Airlines, Inc., a Delaware corporation (together with any predecessors or
affiliates, "TWA") have entered into an Asset Purchase Agreement (as amended
from time to time, the "ASSET PURCHASE AGREEMENT"), dated as of January 9, 2001
pursuant to which American has agreed with TWA, subject to certain terms and
conditions, to enter into a leasing transaction at the Commencement Time (as
defined below) with respect to the aircraft (the "AIRCRAFT") specified in
Schedule A attached hereto. All capitalized terms used but not defined herein
shall have the respective meanings given them in Appendix A hereto or, if not
defined herein, in the Schedule of Terms attached hereto as Appendix B. This
Assumption and Lease Agreement, together with all annexes, schedules and other
attachments hereto, is referred to collectively as this "AGREEMENT".
American and the other parties hereto (such other parties, the "LESSOR
PARTIES") hereby agree as follows:
SECTION 1. TRANSACTION.
(a) Subject to the conditions precedent set forth in Section 5, the
person listed on Schedule A hereto as lessor (the "LESSOR") hereby agrees to
lease to American or to a Certificated Air Carrier that is a Citizen of the
United States and is a wholly-owned subsidiary of American to which American
shall assign its rights under this Agreement as provided and subject to the
terms herein, and American hereby agrees to lease, or to cause one of its
wholly-owned subsidiaries to lease, from the Lessor, the Aircraft (such leasing
transaction, the "TRANSACTION"), such Transaction to take effect at the
Commencement Time, PROVIDED that (A) American will have no responsibility or
liability for any act or omission of TWA at any time or for any act, claim,
event, circumstance or condition existing, accruing, arising or occurring at any
time at or prior to the Commencement Time (any of the foregoing, a "PRIOR
CLAIM"); (B) American does not assume or agree to pay, satisfy, discharge or
perform, and will not be deemed for any reason whatsoever to have assumed, or
agreed to pay, satisfy, discharge or perform, any liability, obligation or
indebtedness of TWA with respect to the Aircraft, Airframe or Engines, or
otherwise, whether primary or secondary, direct or indirect, including without
limitation any and all liabilities and obligations of TWA resulting from, caused
by or arising out of, directly or indirectly, any act or omission of TWA, the
conduct of its
ASSUMPTION AND LEASE AGREEMENT (AIRLEASE)
business or ownership or lease of any of its properties or assets (including the
Aircraft) or any properties or assets used by TWA at any time, including without
limitation such of the foregoing as constitute, may constitute or are alleged to
constitute a tort, breach of contract or violation of requirements of any law;
(C) American will not be responsible for any rental or other payments arising or
accruing at any time at or prior to, or in respect of any period at or prior to,
the Commencement Time, even if the payment date therefor under the TWA Lease
Documents would have occurred after the Commencement Time; and (D) American
shall have no liability for any Prior Claim that results or arises from the
execution or performance of this Agreement, the Assignment, Assumption and
Amendment Agreement (as defined below) or any Substitute Transaction Document
(as defined below). American or any wholly-owned subsidiary of American to which
American shall assign its rights hereunder as provided herein is referred to
herein as the "LESSEE".
(b) The Transaction shall have the terms specified by this Agreement
(the "TRANSACTION TERMS"), including without limitation the terms provided in
Appendix B.
(c) In connection with the Transaction, the Lessor Parties hereby agree
to the amendment and restatement and, to the extent necessary, termination,
effective immediately prior to the Commencement Time (subject to the occurrence
of the Commencement Time), of each TWA Lease Document, such that the terms and
conditions of the TWA Lease Documents are replaced, deleted and superseded in
their entirety by this Agreement; PROVIDED, HOWEVER that the TWA Trust
Agreement, if any, and the TWA Purchase Agreement Assignment, if any, listed in
Schedule B shall not be so amended and restated or terminated, but shall only be
amended to the extent necessary to make their respective terms consistent with
the Transaction Terms.
(d) Following the execution of this Agreement, the parties may conduct
good faith negotiations of more extensive leasing documents incorporating all of
the Transaction Terms (such leasing documents, the "SUBSTITUTE TRANSACTION
DOCUMENTS"). Any party wishing to negotiate Substitute Transaction Documents
shall notify the other parties of such fact within 15 days after such execution,
after which American shall prepare drafts of such documents for review by the
Lessor Parties. Negotiations of the Substitute Transaction Documents shall
proceed after such review is completed, it being agreed that the terms of such
documents, to the extent not set forth in this Agreement, shall be reasonably
satisfactory to the Lessor and be based on and similar to, American's standard
terms in other aircraft financing transactions or, to the extent not used in
such transactions, terms customary in leasing transactions with respect to
aircraft of the same make and model as the Aircraft and for an airline of
American's credit and standing, with, such terms in each case being determined
by American in good faith. This Agreement shall be in full force and effect
notwithstanding that Substitute Transaction Documents have not been entered into
or are being negotiated.
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ASSUMPTION AND LEASE AGREEMENT (AIRLEASE)
(e) American makes no representation or warranty and gives no assurance
as to the obligations of TWA or as to the rights of any person with respect to
the obligations of TWA. Each Lessor Party agrees, and will agree with TWA in the
Assignment, Assumption and Amendment Agreement, that, effective at (and subject
to the occurrence of) the Commencement Time, such Lessor Party waives any right
and relinquishes any claim it may have against TWA or against any collateral
securing any such claim with respect to any difference between its rights,
including the amounts to be received, hereunder and its rights, including the
amounts that would be received, under the TWA Lease Documents prior to their
amendment or that arises out of the amendment effected hereby. It is understood
that the Lessor Parties do not, under this Agreement, waive (i) the right they
may have to receive payment from TWA of amounts owed by TWA under the TWA Lease
Documents at any time prior to the Commencement Time or (ii) any rights or
remedies they may have against TWA with respect to events or circumstances
arising or occurring before the Commencement Time (including rights or remedies
arising under Section 1110 of the Bankruptcy Code (11 U.S.C. ss. 1110) or with
respect to Retained Liabilities (as defined in the Asset Purchase Agreement)).
Each Lessor Party acknowledges that it has no right or claim against American or
any of its affiliates with respect to any of the foregoing.
SECTION 2. WARRANTIES.
Subject to the conditions specified in Section 5, the Lessor agrees
that, following the Commencement Time, so long as no Event of Default shall have
occurred and be continuing, without recourse or warranty as against the Lessor
(if the Lessor is an Owner Trustee), American shall have the benefit of and
shall be entitled to enforce, either in its own name or in the name of the
Lessor for the use and benefit of the Lessee, any and all of the Lessor's rights
in, to and under dealer's, manufacturer's, installer's, contractor's or
subcontractor's warranties (whether express or implied) in respect of the
Aircraft, Airframe, any Engine or any Part thereof, and Lessor agrees to execute
and deliver such further documents and take such further action, as may be
reasonably requested by the Lessee and at the Lessee's expense, as may be
necessary to enable the Lessee to obtain such warranty service as may be
furnished for the Aircraft, Airframe, any Engine or any Part thereof by such
dealer, manufacturer, contractor, installer, contractor or subcontractor and as
to which the Lessor has any rights. The Lessor hereby appoints and constitutes
the Lessee, except at such times as an Event of Default shall have occurred and
be continuing, its agent and attorney-in-fact to assert and enforce, from time
to time, in the name and for the account of the Lessor and the Lessee, as their
interests may appear, but in all cases at the sole cost and expense of the
Lessee, whatever claims and rights the Lessor may have against any dealer,
manufacturer, installer, contractor or subcontractor of the Aircraft, Airframe,
any Engine or any Part thereof.
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ASSUMPTION AND LEASE AGREEMENT (AIRLEASE)
SECTION 3. WAIVER AND INSTRUCTION.
(a) Except to the extent duly waived by the Lessor Parties (which
waiver is evidenced by this Agreement) the Lessor Parties confirm that this
Agreement, as of the Commencement Time, complies with all of the requirements in
the TWA Lease Documents necessary to consummate the Transaction and to have this
Agreement be effective.
(b) If Schedule A lists an owner participant (the "OWNER PARTICIPANT"),
the Owner Participant hereby authorizes and directs the Lessor to execute and
deliver this Agreement.
SECTION 4. CLOSING.
The Transaction shall begin at the Commencement Time on the date of the
closing under the Asset Purchase Agreement (the "CLOSING DATE"), subject only to
the satisfaction or waiver of the conditions set forth in Section 5 hereof. On
or prior to the Closing Date, (A) American shall sign and each Lessor Party
shall countersign an assignment, assumption and amendment agreement between TWA
and American, substantially in the form of Appendix C hereto (the "ASSIGNMENT,
ASSUMPTION AND AMENDMENT AGREEMENT"), (B) if American shall elect to cause one
of its wholly-owned subsidiaries to lease the Aircraft from Lessor pursuant
hereto, (I) American and the Lessee shall execute and deliver an assignment and
assumption agreement, substantially in the form of Appendix D hereto (the
"LESSEE ASSIGNMENT AND ASSUMPTION AGREEMENT"), and (II) American shall execute
and deliver to Lessor and the Owner Participant, if any, a guaranty,
substantially in the form of Appendix E hereto (the "AMERICAN GUARANTY"), and
(C) the parties will execute and deliver such additional documents as may be
necessary or appropriate to be filed for recordation with the FAA to consummate
the Transaction.
SECTION 5. CONDITIONS TO OBLIGATIONS OF PARTIES.
(a) The obligations of each party hereto to consummate the Transaction,
and the occurrence of the Commencement Time, shall be subject to the
satisfaction, on or prior to the Closing Date, of the following conditions:
(i) the United States bankruptcy court having jurisdiction
over the TWA bankruptcy proceedings (the "BANKRUPTCY COURT") shall have
entered the Approval Order or such other order, in form and substance
reasonably satisfactory to American, as shall approve the assumption of
the TWA Lease Documents by TWA and the assignment to American of the
TWA Lease Documents as amended and restated and/or terminated as
provided herein;
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ASSUMPTION AND LEASE AGREEMENT (AIRLEASE)
(ii) the closing of the purchase by the Lessee of TWA's right,
title and interest in and to substantially all of the assets of TWA as
contemplated by the Asset Purchase Agreement shall have occurred; and
(iii) delivery of the Aircraft by TWA to the Lessee pursuant
to the Asset Purchase Agreement.
(b) In addition to the conditions precedent in clause (a) above, unless
American is the Lessee (in the case of clauses (b)(i) and (b)(ii)), the
obligation of the Lessor under this Agreement to consummate the Transaction, and
the occurrence of the Commencement Time, shall be subject to the satisfaction,
on or prior to the Closing Date, of the following conditions:
(i) American and the Lessee shall have executed and delivered
the Lessee Assignment and Assumption Agreement;
(ii) American shall have executed and delivered to the Lessor
and the Owner Participant, if any, the American Guaranty; and
(iii) TWA shall have made payment of the amount, as determined
by the Bankruptcy Court, required to satisfy the conditions to the
assumption of the lease under Section 365(b) of the Bankruptcy Code (11
U.S.C. ss. 365(b)); and
(iv) the receipt by the Lessor, on or prior to the Closing
Date, of the Assignment, Assumption and Amendment Agreement, duly
executed by TWA and American and of all the requisite consents of each
Person (other than any Lessor Party) required to consummate the
Transaction.
(c) In addition to the conditions precedent in clause (a) above, the
obligation of the Lessee under this Agreement to consummate the Transaction, and
the occurrence of the Commencement Time, shall be subject to the receipt by
American, on or prior to the Closing Date, of the Assignment, Assumption and
Amendment Agreement, duly executed by TWA and the Lessor Parties, and of
evidence (reasonably satisfactory to American) of receipt of all the requisite
consents of each Person (other than any Lessor Party) required to consummate the
Transaction.
SECTION 6. LETTERS OF CREDIT, DEPOSITS, ETC.
Subject to the fulfillment of the condition specified in Section
5(b)(iii):
(a) at the Commencement Time, any security or other deposit,
maintenance or similar reserve, or letter of credit (including any
reimbursement or collateral agreements) to which TWA is a party
relating to the Aircraft or the TWA Lease Documents shall terminate;
5
ASSUMPTION AND LEASE AGREEMENT (AIRLEASE)
(b) each Lessor Party shall surrender for cancellation any
outstanding letter of credit held by it; and
(c) each Lessor Party shall, at the Commencement Time, pay
over to American (1) any deposit, reserve or cash or other collateral
held or reserved by it and (2) any "basic rent" payable in advance and
received by it allocable to any period after the Commencement Time (or,
in either case, make the economic benefits thereof available to
American in a manner reasonably satisfactory to American).
SECTION 7. REPRESENTATIONS AND WARRANTIES.
Each party makes, on the date of this Agreement, to each other party
hereto the representations and warranties of such party contained in Appendix F
hereto, and agrees that such party's participation in the Closing shall
constitute, without further act, a confirmation that the representations and
warranties made by it were true and complete when made and are true and complete
on and as of the Commencement Time as though made on and as of such Commencement
Time. The sole remedy in case of a breach of any representation or warranty by
any party shall be, subject to the limitations on indemnification set forth in
Appendix B hereto, monetary damages (exclusive of consequential, indirect,
speculative or punitive damages), and no party hereto shall be entitled to
refuse to consummate the Closing Transactions as result of any such breach.
SECTION 8. NOTICES.
Unless otherwise expressly specified or permitted by the terms hereof,
all notices required or permitted under the terms and provisions hereof shall be
in English and in writing, and any such notice may be given by U.S. mail,
courier service, or facsimile or any other customary means of communication, and
any such notice shall be effective when delivered to the recipient thereof in
accordance with the provisions of this Section, (i) if to American, to its
address (including facsimile number) set forth below its signature at the foot
of this Agreement, or (ii) if to any other party hereto, to its respective
address set forth on Schedule A to this Agreement.
SECTION 9. CONFIDENTIAL INFORMATION.
The term "CONFIDENTIAL INFORMATION" means: (a) the terms of this
Agreement and any Substitute Transaction Document (or the status of the
negotiations regarding any such Substitute Transaction Document); (b) the
existence and terms of any lease of the Airframe or Engines pursuant to this
Agreement or any Substitute Transaction Document; (c) all information obtained
in connection with any inspection conducted by the Lessor or Owner Participant,
if any, pursuant to this Agreement or any Substitute Transaction Document; and
(d) any report, certification or information furnished to the
6
ASSUMPTION AND LEASE AGREEMENT (AIRLEASE)
Lessor and Owner Participant, if any, pursuant to this Agreement or any
Substitute Transaction Document.
All Confidential Information shall be held confidential by (w) American
and the Lessor, (x) if the Lessor is an owner trustee, by such Lessor in its
individual capacity (the "BANK"), (y) Owner Participant, if any, and (z) each
affiliate of any thereof and shall not be furnished or disclosed by any of them
to anyone other than (i) American, the Lessor, the Bank, if any, and the Owner
Participant, if any, and their respective affiliates, (ii) their respective bank
examiners, auditors, accountants, lawyers and agents, (iii) any person whose
consent is necessary in order for the Lessor to consummate the Transaction
(other than TWA, whose consent, to the extent required, shall be pursuant to
other documents) and (iv) after the Commencement Time, any person with whom the
Lessor or Owner Participant, if any, is in good faith conducting negotiations
relating to the possible transfer, sale, assignment or other disposition of
rights and interest in this Agreement or any Substitute Transaction Document,
if, in the case of any disclosure to any person other than American, such person
shall have entered into an agreement for the express benefit of American to hold
such Confidential Information confidential in accordance with the provisions of
this Section, and except as may be required by an order of any court or
administrative agency or by any statute, rule, regulation or order of any
governmental authority ("COURT ORDER"); PROVIDED that if any of them is required
by such a Court Order to disclose any Confidential Information, it will promptly
notify American prior to such disclosure to enable American to seek a protective
order or to take other action that American in its reasonable discretion deems
appropriate, and such party will cooperate with American in its efforts to
obtain a protective order or other reasonable assurance that confidential
treatment will be accorded the Confidential Information and PROVIDED, further,
that American (or a Lessor Party that has reporting obligations under the U.S.
securities laws) may make such public disclosures as it determines appropriate
to comply with the U.S. securities laws; and PROVIDED, FURTHER, that American
and each Lessor Party may make such disclosure as it determines appropriate in
connection with the TWA bankruptcy proceeding.
SECTION 10. SEPARATE COUNTERPARTS.
This Agreement may be executed in any number of counterparts (and each
of the parties hereto shall not be required to execute the same counterpart).
Any counterpart may be executed by facsimile signature and such facsimile
signature shall be deemed an original. Each counterpart of this Agreement
including a signature page executed by each of the parties hereto shall be an
original counterpart of this Agreement, but all of such counterparts together
shall constitute one instrument.
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ASSUMPTION AND LEASE AGREEMENT (AIRLEASE)
SECTION 11. ENTIRE AGREEMENT.
This Agreement, including all the schedules, exhibits and annexes
hereto, the Assignment, Assumption and Amendment Agreement (when executed and
delivered) and the Substitute Transaction Documents (when executed and
delivered) constitute the entire agreement and supersede all prior agreements
and understandings, both written and oral, between the parties with respect to
the subject matter hereof.
SECTION 12. SURVIVAL
The representations and warranties made by each party hereto pursuant
to Section 7 and the obligations of each party under Section 9 shall survive the
Closing, the delivery of the Aircraft, the termination of this Agreement or any
Substitute Transaction Document and any investigation made at any time by any
party hereto.
SECTION 13. HEADINGS.
The headings of the various sections herein are for convenience of
reference only and shall not define or limit any of the terms or provisions
hereof.
SECTION 14. BINDING EFFECT.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, successors and permitted assigns.
SECTION 15. AMENDMENTS.
(a) The provisions of this Agreement may be modified or amended only by
an instrument or instruments in writing signed by each party hereto.
(b) Except as otherwise provided in this Agreement, each Lessor Party
further agrees it will not change, modify, amend or waive, or consent to any
such change, modification, amendment or waiver of any term or provision of the
TWA Trust Agreement, if any, the TWA Purchase Agreement Assignment, if any, or
any TWA Lease Document to which American is not a party in a way that affects
adversely the rights of American, without the prior written consent of American,
which consent shall not be unreasonably withheld.
SECTION 16. GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL;
MISCELLANEOUS.
(a) THIS AGREEMENT IS BEING DELIVERED IN THE STATE OF NEW YORK AND
SHALL IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE, BE GOVERNED BY,
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ASSUMPTION AND LEASE AGREEMENT (AIRLEASE)
AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK AS APPLIED TO
CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK.
(b) Each of the parties hereto, to the extent it may do so under
applicable law, for purposes hereof and of all Substitute Transaction Documents,
if any, hereby (I) irrevocably submits itself to the non-exclusive jurisdiction
of the courts of the State of New York sitting in the City of New York and to
the non-exclusive jurisdiction of the U.S. District Court for the Southern
District of New York, for the purposes of any suit, action or other proceeding
arising out of this Agreement, the subject matter hereof or any of the
transactions contemplated hereby brought by any party or parties thereto, or
their successors or permitted assigns and (II) waives, and agrees not to assert,
by way of motion, as a defense, or otherwise, in any such suit, action or
proceeding, that the suit, action or proceeding is brought in an inconvenient
forum, that the venue of the suit, action or proceeding is improper or that this
Agreement or the subject matter hereof or any of the transactions contemplated
hereby may not be enforced in or by such courts.
(c) Each of the parties hereto irrevocably and unconditionally waives,
to the fullest extent permitted by applicable law, the right to trial by jury in
any legal or equitable action, suit or proceeding arising out of or relating to
this Agreement, the Assignment, Assumption and Amendment Agreement, the Lessee
Assignment and Assumption Agreement, if applicable, the American Guaranty, if
applicable, any Substitute Transaction Documents or any transaction contemplated
hereby or thereby or the subject matter of any of the foregoing.
(d) Upon request from Lessor, Lessee shall provide Lessor on the
Closing Date with evidence of the authority of the person or persons executing
this Assumption and Lease Agreement, the Lessee Assignment and Assumption
Agreement and the American Guaranty on behalf of Lessee and American (if
American is not the Lessee).
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ASSUMPTION AND LEASE AGREEMENT (AIRLEASE)
The parties hereto have signed this Agreement as of the date first written
above.
Sincerely yours,
AMERICAN AIRLINES, INC.
By: /s/ LESLIE M. BENNERS
-------------------------------------
Name: Leslie M. Benners
Title: Managing Director
Corporate Finance and Banking
Address: 4333 Amon Carter Boulevard
MD 5662
Forth Worth, Texas 76155
Attn: Treasurer
Fax: (817) 967-4318
Tel.: (817) 963-1234
ACKNOWLEDGED AND AGREED
LESSOR/OWNER TRUSTEE
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not in its individual capacity except as otherwise stated herein,
BUT solely as Owner Trustee
By: /s/ NANCY DAHL
----------------------
Name: Nancy Dahl
Title: Vice President
AIRLEASE, LTD., a California limited partnership
By: AIRLEASE MANAGEMENT SERVICES, INC.,
its general partner
By: /s/ DAVID B. GEBLER
----------------------
Name: David B. Gebler
Title: President
SCHEDULE A
AIRCRAFT AND LESSOR PARTIES
AIRCRAFT
U.S. Registration Number: N913TW
Manufacturer Serial Number: 49184
Engine Numbers: Nos. P709733D and P709734D
LESSOR PARTIES
Lessor/Owner Trustee: First Security Bank, National Association
Address: Corporate Trust Services
MAC: U1254-031
79 South Main Street, 3rd Floor
Salt Lake City, Utah 84111
Attn: Nancy Dahl
Facsimile: (801) 246-5053
Phone: (801) 246-5208
Owner Participant: Airlease, Ltd.
Address: c/o Bank of America Leasing and Capital
Group CA57050403
555 California Street, 4th Floor
San Francisco, CA 94104
Attn: David Gebler
Facsimile: (415) 765-1817
Phone: (415) 765-1824
TWA LEASE DOCUMENTS PARTIES
Mortgagee/Indenture Trustee: N/A
Address:
Facsimile:
Phone
Owner Participant Guarantor: N/A
Address:
Facsimile:
Phone
Loan Participant/Lender: The Provident Bank
Address: One East Fourth Street
Cincinnati, Ohio 45202
Attn: Forest C. Frank
Facsimile: (513) 579-2868
Phone: (513) 579-2862
Lessee: Trans World Airlines, Inc.
Address: 515 North 6th Street, 18th Floor
St. Louis, MO 63101
Facsimile: (314) 589-3267
Phone (314) 589-3227
Other: Bank of America Leasing and Capital Group
Address: CA57050403
555 California St., 4th Floor
San Francisco, CA 94104
Attn: David Gebler
Facsimile: (415) 765-1817
Phone: (415) 765-1824
SCHEDULE B
TWA LEASE DOCUMENTS
Lease dated March 15, 1984 between Trans World Airlines, Inc. and DC-9T-III,
Inc.
Lease Supplement No. 1 dated March 22, 1984 between Trans World Airlines, Inc.
and DC-9T-III, Inc.
Amendment Agreement dated December 15, 1986 between Trans World Airlines, Inc.
and DC-9T-III, Inc.
Participation Agreement dated March 15, 1984 between Trans World Airlines, Inc.
and DC-9T-III, Inc.
Assignment and Assumption Agreement dated August 16, 1988 between DC-9T-III,
Inc. and Trust Company for USL, Inc.
Agreement of Assignment and Assumption dated March 31, 1988 between DC-9T-III,
Inc. and Merdian Trust Company
Assignment and Assumption Agreement dated July 19, 1988 between Meridian Trust
Company and DC-9T-III, Inc.
Resignation of Trustee; Appointment of Successor Trustee; Assignment and
Assumption Agreement; and Amendment to Note Purchase Agreement and Security
Agreement (N913TW) dated May 15, 1997 between the Taurus Trust Company, Inc.
formerly known as Trust Company for USL, Inc., First Security Bank, National
Association, Airlease Ltd and The Provident Bank
Note Purchase and Security Agreement dated January 29, 1997 between The
Provident Bank and First Security Bank, National Association, formerly known as
Trust Company for USL, Inc. and the Taurus Trust Company.
Trust Agreement
Letter Agreement dated April 1, 1991 between United States Airlease, Inc. and
Trans World Airlines, Inc.
Letter Agreement dated March 23, 1995 between Trans World Airlines, Inc. and
Trust Company for USL, Inc.
Letter Agreement dated March 23, 1995 between Trans World Airlines, Inc. and USL
Capital Corporation
Estoppel Certificate dated January 1997 by Trans Word Airlines Inc. for benefit
of Airlease Ltd., Taurus Trust Company (formerly Trust Company for USL, Inc.)
and The Provident Bank
Agreement to Manufacture and Lease dated October 29, 1982 between Trans World
Airlines and McDonnell Douglas Corporation
Letter Agreement dated March 15, 1984
Guaranty dated March 15, 1984 by UT Credit Corporation in favor of Trans World
Airlines, Inc.
APPENDIX A
DEFINITIONS
"APPROVAL ORDER" means order of the Bankruptcy Court pursuant to
sections 363 and 365 of the U.S. Bankruptcy Code, in substantially the form
attached as Exhibit D to the Asset Purchase Agreement or otherwise in form and
substance satisfactory to American.
"CERTIFICATED AIR CARRIER" means a Citizen of the United States holding
an air carrier operating certificate issued by the Secretary of Transportation
pursuant to Chapter 447 of Title 49, United States Code, for aircraft capable of
carrying ten or more individuals or 6,000 pounds or more of cargo or that
otherwise is certified or registered to the extent required to fall within the
purview of Section 1110.
"CITIZEN OF THE UNITED STATES" has the meaning specified for such term
in Section 40102(a)(15) of Title 49 of the United States Code or any similar
legislation of the U.S. enacted in substitution or replacement therefor.
"COMMENCEMENT TIME" means the time on the Closing Date when (I) TWA,
American and the Lessor Parties shall have executed and delivered the
Assignment, Assumption and Amendment Agreement and (II) the closing under the
Asset Purchase Agreement shall have occurred.
"DEPARTMENT OF TRANSPORTATION" means the Department of Transportation
of the U.S. and any successor governmental authority.
"EVENT OF DEFAULT" means an event of default under this Agreement or
any Substitute Transaction Document.
"FAA" means the Federal Aviation Administration of the U.S. and any
successor governmental authority.
"LIEN" means any mortgage, pledge, lien, charge, encumbrance, lease,
exercise of rights, security interest or claim.
"TWA TRUST AGREEMENT": the trust agreement listed in Schedule B hereto.
"TWA LEASE DOCUMENTS" means all leases, mortgages, loan agreements,
notes, indentures, trust agreements, participation agreements, purchase
agreement assignments, security agreements, letter agreements and all other
agreements with respect to the Aircraft, in each case, to which TWA is a party
or by which TWA is bound or by which TWA's rights are affected, including,
without limitation, the documents listed in Schedule B hereto but excluding any
purchase agreement with a manufacturer of the Aircraft, the Engines or any
Parts.
APPENDIX B
SCHEDULE OF TERMS
References to (1) this "LEASE" shall mean the Assumption and Lease
Agreement, together with all annexes, schedules and other attachments thereto,
(2) the "SUMMARY OF ECONOMIC TERMS" shall mean the Summary of Economic Terms
attached as Appendix B-1, (3) the "RETURN CONDITIONS" shall mean the Return
Conditions provisions of the Summary of Economic Terms, and (4) the Operative
Documents shall mean this Lease, the TWA Trust Agreement, if any, and the TWA
Purchase Agreement Assignment, if any. All other capitalized terms used but not
defined in this Appendix B shall have the respective meanings ascribed in the
Lease.
I. TRANSACTION PARTIES AND SUBJECT MATTER
AIRCRAFT: The Aircraft, Airframe, and Engines are specified in the
Summary of Economic Terms. Each Engine has 750 or more rated
takeoff horsepower or the equivalent thereof.
LESSEE: American or a wholly-owned subsidiary of American, as provided
in Section 1(a) of this Lease, and its respective successors
and permitted assigns.
GUARANTOR: In the event that a wholly-owned subsidiary of American is
Lessee, American, as guarantor under the American Guaranty.
LESSOR;
OWNER
PARTICIPANT: As specified in Schedule A to this Lease. The owner trustee
of any owner trust and any successor owner trustee must be
reasonably acceptable to Lessee.
AGREEMENT
TO LEASE: Following the Commencement Time, subject to the satisfaction
or waiver of the conditions set forth in Section 5 of the
Assumption and Lease Agreement, Lessor agrees to lease to
Lessee, and Lessee agrees to lease from Lessor, the Aircraft
for the Lease Term (as defined below).
II. CERTAIN ECONOMIC TERMS
LEASE TERM: Except as otherwise provided in this Lease, the Lease Term
will commence at the Commencement Time and end on the Lease
Expiry Date that is specified in the Summary of Economic
Terms.
BASIC RENT: On the 1st day of each calendar month during the Lease Term
and on the Lease Expiry Date (each such date, a "LEASE PERIOD
DATE"), Lessee hereby agrees to pay to Lessor Basic Rent (at
the monthly rate specified in the Summary of Economic Terms)
in arrears for the Aircraft, provided that Basic Rent for any
lease period less than one month shall be the pro rata portion
of the Basic Rent rate specified in the Summary of Economic
Terms.
SUPPLEMENTAL
RENT: Lessee also agrees to pay to Lessor, or to whomsoever shall be
entitled thereto, any and all amounts designated in this Lease
as "SUPPLEMENTAL RENT" promptly as the same shall become due
and owing. "SUPPLEMENTAL RENT" means all amounts, liabilities
and obligations (other than Basic Rent) which Lessee assumes
or agrees to pay hereunder to Lessor or others, including,
without limitation, payments of Stipulated Loss Value, and the
amount of any loss of principal realized as the result of any
investments made pursuant to the section hereof entitled
"Investment of Security Funds". In addition, Lessee will pay
as Supplemental Rent on demand, an amount equal to 1% over the
Prime Rate on any part of any installment of Basic Rent not
paid when due for any period for which the same shall be
overdue and on any payment of Supplemental Rent not paid when
due or demanded, as the case may be, for the period until the
same shall be paid.
"PRIME RATE" means the rate of interest per annum announced by
Citibank, N.A. at its principal office in New York as its
"prime" or "base" rate from time to time; provided that if
Citibank, N.A. shall no longer announce such a "prime" or
"base" rate, the Prime Rate shall be the rate for 90-day
directly placed commercial paper (or the midpoint in the range
of such rate if more than one rate is published) as of the
opening of business on the date in question (or the arithmetic
average of such rates at the opening of business on each day
during any period in question), as quoted in THE WALL STREET
JOURNAL.
MANNER OF
PAYMENT: All Basic Rent and Supplemental Rent (collectively, "RENT")
shall be payable to Lessor's account as specified to Lessee in
writing, in Dollars in immediately available funds in such
account not later than 1:00 p.m. (New York time), on the date
designated for payment under this Lease.
If any Rent is due on a day that is not a Business Day, such
Rent shall be paid on the next succeeding Business Day with
the same force and effect as if paid on the scheduled date of
payment, and no interest shall accrue on the amount of such
payment from and after such scheduled date to the time of
payment on such next succeeding Business Day.
STIPULATED
LOSS VALUES: As specified in the Summary of Economic Terms.
"INDEPENDENT APPRAISA L" means an appraisal mutually agreed to
by two nationally recognized independent aircraft appraisers,
one of which appraisers shall be chosen by Lessor and one by
Lessee, or, if such appraisers cannot agree on such appraisal,
an appraisal arrived at by a third independent aircraft
appraiser chosen by the mutual consent of such two appraisers,
PROVIDED that, if either party shall fail to appoint an
appraiser within 15 days after a written request to do so by
the other party, or if such two appraisers cannot agree on
such appraisal and fail to appoint a third appraiser within 20
days after the date of the appointment of the second of such
appraisers, then either party may apply to the American
Arbitration Association to make such appointment. In the event
such third independent appraiser shall be chosen to provide
such appraisal, unless the parties agree otherwise, such
appraisal shall be required to be made within 20 days of such
appointment. An Independent Appraisal of the fair market
rental value or fair market sales value of the Aircraft shall
mean an appraisal which assumes that the sale or lease
transaction would be an arm's-length transaction between an
informed and willing lessee or buyer, as the case may be,
under no compulsion to lease or buy, as the case may be, and
an informed and willing lessor or seller, as the case may be,
under no compulsion to lease or sell, as the case may be, and
assumes that the Aircraft is unencumbered by this Lease or any
renewal or purchase option under this Lease and is in the
condition required by this Lease; PROVIDED that an Independent
Appraisal undertaken pursuant to Annex D shall value the
Aircraft on an "as-is, where-is" basis. The fees and expenses
of appraisers for an Independent Appraisal, whenever
undertaken pursuant to this Lease, shall be borne equally by
Lessor and Lessee and each shall separately bear any fees,
costs and expenses of its respective attorneys and experts
(other than the appraisers referred to above) incurred in
2
connection with such Independent Appraisal, except that the
costs of an Independent Appraisal undertaken pursuant to Annex
D shall be for the account of Lessee.
END OF
LEASE TERM
PURCHASE
OPTIONS: As specified in the Summary of Economic Terms.
RENEWAL
OPTIONS: As specified in the Summary of Economic Terms.
VOLUNTARY
TERMINATION: As specified in the Summary of Economic Terms.
RETURN
CONDITIONS: Upon the expiration of the Lease Term, Lessee shall return the
Aircraft in compliance with the Return Conditions.
III. OTHER LEASE TERMS AND CONDITIONS
LEASE TERM: Except as otherwise provided in this Lease, the Lease Term
will commence at the Commencement Time and end on the Lease
Expiry Date that is specified in the Summary of Economic
Terms.
REGISTRATION: Lessor at all times must be a Citizen of the United States to
permit registration of the Aircraft with the Federal Aviation
Administration of the United States (such agency or any
successor governmental authority, the "FAA"). Owner
Participant, if any, at all times, must (I) be a Citizen of
the United States or (II) qualify through a voting trust
arrangement that is sufficient to permit registration of the
Aircraft with the FAA (without regard to any provision of
applicable law that permits FAA registration of an aircraft by
limiting its location and usage). Lessor, and if Lessor is an
owner trustee, Bank and Owner Participant, shall indemnify
American and Lessee (if Lessee is not American) for any costs
and expenses arising from its respective failure to be a
Citizen of the United States.
Lessee will cause the Aircraft to remain duly registered at
the FAA in Lessor's name, as owner, except (A) as otherwise
required by the provisions of 49 U.S. Code Subtitle VII (the
"TRANSPORTATION CODE"), or (B) to the extent that such
registration cannot be maintained because of the failure of
Lessor or Owner Participant, if any, to comply with the
citizenship or other eligibility requirements for registration
of aircraft under the Transportation Code; provided that
Lessor and Owner Participant, if any, will execute and deliver
all such documents as Lessee reasonably requests for the
purpose of continuing such registration. Lessee may
re-register the Aircraft in certain other countries to the
extent, if any, set forth in Annex A.
PERMITTED
LIENS: Lessee's only lien-lifting obligations with respect to the
Aircraft are as follows:
Lessee will not permit any Lien on or with respect to the
Airframe or any Engine, title thereto or any interest therein
or in this Lease except: (i) the respective rights of Lessor,
Owner Participant, if any, and Lessee as provided in this
Lease; (ii) the rights of others under agreements or
arrangements to the extent expressly permitted by this Lease;
(iii) Lessor's Liens (as defined in the Section captioned
"QUIET ENJOYMENT; LIEN LIFTING"); (IV) Liens for Taxes either
not yet due or
3
being contested in good faith by appropriate proceedings so
long as such proceedings do not involve any material risk of
the sale, forfeiture or loss of the Airframe or any Engine or
interest therein; (v) materialmen's, mechanics', workmen's,
repairmen's, employees' or other like Liens arising in the
ordinary course of business securing obligations that either
are not yet overdue for a period of more than 60 days or are
being contested in good faith by appropriate proceedings so
long as such proceedings do not involve any material risk of
the sale, forfeiture or loss of the Airframe or any Engine or
interest therein; (vi) Liens (other than Tax liens) arising
out of judgments or awards (A) for 60 days after the entry of
such judgment or award (including any determination of an
appeal or other judicial review), PROVIDED that during such
60-day period there is no material risk of the sale,
forfeiture or loss of the Aircraft or any interest therein or
(B) during an appeal or other proceeding for review regarding
such judgment or award with respect to which there has been
secured a stay of execution pending such appeal or proceeding
for review; (vii) salvage or similar rights of insurers under
insurance policies maintained pursuant to this Lease; (viii)
for a period of 365 days after the Commencement Time, any Lien
arising out of, resulting from or relating to any act or
omission of TWA at any time, or any act, claim, event,
circumstance or condition existing, accruing, arising or
occurring at any time at or prior to the Commencement Time, or
any TWA Liability, PROVIDED that there is no material risk of
the sale, forfeiture or loss of the Airframe or any Engine or
interest therein; and (ix) the respective rights of the
financing parties under any financing arrangements entered
into by Lessor with respect to the Aircraft at any time.
"LIEN" means any mortgage, pledge, lien, charge, encumbrance,
lease, exercise of rights, security interest or claim.
"TWA LIABILITY" means any liability, obligation or
indebtedness of TWA with respect to the Aircraft, Airframe or
Engines, or otherwise, whether primary or secondary, direct or
indirect, including without limitation any and all liabilities
and obligations of TWA resulting from, caused by or arising
out of, directly or indirectly, any act or omission of TWA,
the conduct of its business or ownership or lease of any of
its properties or assets (including the Aircraft) or any
properties or assets used by TWA at any time, including
without limitation such of the foregoing as constitute, may
constitute or are alleged to constitute a tort, breach of
contract or violation of requirements of any law.
MAINTENANCE: Lessee's maintenance obligations with respect to the Aircraft,
Airframe and Engines will be solely as follows:
At the Commencement Time, Lessee will take possession of the
Aircraft, "as-is, where-is and with all faults" and will have
no responsibility or liability for placing the Aircraft and
its records in the condition, status or repair required by
TWA's existing lease documents. However, following the
Commencement Time, Lessee will maintain, service, repair,
overhaul and test the Aircraft in accordance with a
maintenance program for aircraft of such make and model (the
"MAINTENANCE PROGRAM") approved by the FAA or, if the Aircraft
is then registered in another country, the central civil
aviation authority of such country, and in the same manner and
with the same care used by Lessee with respect to comparable
aircraft and engines owned or operated by Lessee and utilized
in similar circumstances, so as to keep the Aircraft in as
good operating condition as when delivered to Lessee at the
Commencement Time, ordinary wear and tear excepted, and in
such condition as may be necessary to enable the airworthiness
certificate to be maintained in good standing at all times
(other than during temporary periods of storage in accordance
with applicable regulations or during periods of grounding by
applicable governmental authorities, except where such periods
of grounding are the result of Lessee's failure to maintain
4
the Aircraft as otherwise required by this Lease) under the
Transportation Code or the applicable laws of any other
jurisdiction in which the Aircraft may then be registered.
Subject to the provisions of the Summary of Economic Terms,
Lessee will comply with all mandatory airworthiness directives
issued by the FAA which require compliance no later than the
last day of the Lease Term, but shall not be required to
comply with any manufacturer service bulletins.
Lessee will promptly furnish to Lessor such information as may
be required to enable Lessor to file any reports, returns or
statements required to be filed by Lessor with any
governmental authority because of Lessor's interest in the
Aircraft.
Following the Commencement Time, Lessee will maintain all
records, logs and other materials required by the appropriate
authorities in the jurisdiction where the Aircraft is
registered to be maintained by Lessee in respect of the
Aircraft.
Notwithstanding anything to the contrary contained in this
Lease, Lessee shall maintain any aircraft engine which is not
an Engine, but which is installed on the Airframe, in
accordance with this Section.
OPERATION: Lessee's maintenance, operation and use of the Aircraft will
be subject only to the following operational restrictions:
The Aircraft will not be maintained, used or operated in
violation of any law or any regulation or order of any
government or governmental authority having jurisdiction in
any country in which the Aircraft is flown, or in violation of
any airworthiness certificate, license or registration
relating to the Aircraft issued by any such authority;
PROVIDED that Lessee may in good faith contest the validity or
application of any such law, regulation or order in any
reasonable manner which does not materially adversely affect
Lessor; and PROVIDED, FURTHER, that Lessee will not be in
default under this sentence if it is not possible for Lessee
to comply with the laws of a jurisdiction other than the U.S.
(or other than any jurisdiction in which the Aircraft is then
registered) because of a conflict with the applicable laws of
the U.S. (or such jurisdiction in which the Aircraft is then
registered), in which event Lessee will use its reasonable
best efforts to cause the Aircraft to be removed, as soon as
practicable, from the jurisdiction other than the U.S. (or
other than the jurisdiction in which the Aircraft is then
registered) creating the conflict or to take such other
reasonable action (including, if necessary, changing the
registration of the Aircraft unless the Aircraft is then
registered in the U.S.), as soon as practicable, as may be
necessary to avoid the conflict.
Lessee or any permitted sublessee may operate the Aircraft in
any geographical area, except (A) in any area excluded from
coverage by any insurance required by the terms of this Lease,
except in the case of a requisition for use by the U.S.
government where Lessee obtains indemnity in lieu of such
insurance from the U.S. government against the risks and in
the amounts required by this Lease covering such area, or (B)
in any war zone or recognized or, in Lessee's reasonable
judgment, threatened area of hostilities unless covered by war
risk insurance or unless the Aircraft is operated by or used
under contract with the U.S. government under which contract
the U.S. government assumes liability for any damage, loss or
destruction or failure to return possession of the Aircraft at
the end of the term of such contract and for injury to persons
or damage to property of others.
5
POSSESSION: Lessee's rights to deliver, transfer or relinquish possession
of the Aircraft, Airframe or any Engine, or to install any
Engine on any airframe other than the Airframe, are specified
in Annex A.
INSIGNIA: As soon as practicable after the Commencement Time, Lessee
shall affix and thereafter maintain in the cockpit of the
Airframe and (if not prevented by applicable law or
regulations or by any governmental authority) on each Engine a
metal nameplate bearing the following legible inscription:
"TITLE TO THIS AIRCRAFT/ENGINE IS HELD BY [NAME OF LESSOR],
LESSOR WHICH HAS LEASED THIS AIRCRAFT/ENGINE TO [AMERICAN
AIRLINES, INC.][NAME OF LESSEE]."
REPLACEMENT
OF PARTS: Lessee, at its own cost and expense, will promptly replace or
cause to be replaced all Parts which may from time to time be
incorporated or installed in or attached to the Airframe or
any Engine and which may from time to time become worn out,
lost, stolen, destroyed, seized, confiscated, damaged beyond
repair or permanently rendered unfit for use for any reason
whatsoever, except as otherwise provided in the Section
captioned "ALTERATIONS AND MODIFICATIONS". In addition, Lessee
may, at its own cost and expense, remove or cause to be
removed in the ordinary course of maintenance, service,
repair, overhaul or testing, any Parts, whether or not worn
out, lost, stolen, destroyed, seized, confiscated, damaged
beyond repair or permanently rendered unfit for use; PROVIDED
that Lessee, exc ept as otherwise provided in the Section
captioned "ALTERATIONS AND MODIFICATIONS", will, at its own
cost and expense, replace or cause to be replaced such Parts
as promptly as practicable. All replacement parts shall be
free and clear of all Liens (except for Permitted Liens), and
shall be in as good operating condition as, and shall have a
value and utility at least equal to, the Parts replaced
assuming such replaced Parts were in the condition and repair
required to be maintained by the terms hereof. Title to all
Parts at any time removed from the Airframe or any Engine
shall remain vested in Lessor, no matter where located, until
such time as such Parts shall be replaced by Parts which have
been incorporated or installed in or attached to the Airframe
or any Engine and which meet the requirements for replacement
parts specified above. Immediately upon any replacement part
becoming incorporated or installed in or attached to the
Airframe or any Engine as above provided, without further act,
(I) title to the replaced Part shall thereupon vest in Lessee,
free and clear of all right, title and interest of Lessor and
of Lessor's Liens, and shall no longer be deemed a Part under
this Lease, (II) title to such replacement part shall
thereupon vest in Lessor free and clear of all Liens (except
Permitted Liens) and (III) such replacement part shall become
subject to this Lease and be deemed part of the Airframe or
such Engine for all purposes to the same extent as the Parts
originally incorporated or installed in or attached to the
Airframe or such Engine.
"PARTS" means all appliances, parts, instruments,
appurtenances, accessories, furnishings and other equipment of
whatever nature (other than (I) complete Engines or engines,
(II) any items leased by Lessee from a third party (other than
items leased under this Lease by Lessee from Lessor), (III)
cargo containers and (IV) any Passenger Convenience Equipment
(as defined in the Section captioned "ALTERATIONS AND
MODIFICATIONS")) that at any time of determination are
incorporated or installed in or attached to the Airframe or
any Engine or the title to which remains vested in Lessor in
accordance with this Section.
PART POOLING: Any Part removed from the Airframe or an Engine as provided in
the Section captioned "REPLACEMENT OF PARTS" may be subjected
by Lessee or a Person permitted to be in possession of the
Aircraft to a normal pooling arrangement customary in the
airline industry entered into in the ordinary course of
Lessee's or such other Person's business; provided that the
part replacing such removed Part shall be incorporated or
installed in or attached to the Airframe or such Engine in
6
accordance with the Section captioned "REPLACEMENT OF PARTS"
as promptly as practicable after the removal of such removed
Part. In addition, any replacement Part when incorporated or
installed in or attached to the Airframe or an Engine in
accordance with the Section captioned "REPLACEMENT OF PARTS"
may be owned by a third party subject to such a normal pooling
arrangement; provided that Lessee, at its expense, as promptly
thereafter as practicable, either (i) causes title to such
replacement Part to vest in Lessor in accordance with the
Section captioned "REPLACEMENT OF PARTS" by Lessee acquiring
title thereto for the benefit of, and transferring such title
to, Lessor free and clear of all Liens (other than Permitted
Liens), or (ii) replaces or causes to be replaced such
replacement Part by incorporating or installing in or
attaching to the Airframe or such Engine a further replacement
Part owned by Lessee free and clear of all Liens (other than
Permitted Liens) and by causing title to such further
replacement part to vest in Lessor in accordance with the
Section captioned "REPLACEMENT OF PARTS".
ALTERATIONS AND
MODIFICATIONS: Lessee's rights and obligations with respect to alterations
and maintenance of the Aircraft, the Airframe, any Engine or
any Part will be solely as follows:
Lessee will make such alterations and modifications in and
additions to the Airframe and the Engines as may be required
from time to time to meet the applicable standards of any
applicable regulatory agency or body of the jurisdiction in
which the Aircraft is then registered; provided that Lessee
may in good faith contest the validity or application of any
such standard in any reasonable manner which does not
materially adversely affect Lessor.
In addition, Lessee may from time to time make such
alterations and modifications in and additions to the Airframe
or any Engine as Lessee may deem desirable in the proper
conduct of its business, including, without limitation,
removal of Parts which Lessee deems to be obsolete or no
longer suitable or appropriate for use on the Airframe or such
Engine (such Parts, "OBSOLETE PARTS"); PROVIDED that no such
alteration, modification, addition or removal materially
diminishes the value or utility of the Airframe or such
Engine, or impairs its condition or airworthiness, below the
value, utility, condition and airworthiness thereof
immediately prior to such alteration, modification, addition
or removal, assuming the Airframe or such Engine was then of
the value and utility and in the condition and airworthiness
required to be maintained by the terms of this Lease, except
that the value (but not the utility, condition or
airworthiness) of the Aircraft may be reduced by the value of
the Obsolete Parts which have been removed, if the aggregate
value of all such Obsolete Parts removed and not replaced does
not exceed the value specified in the Summary of Economic
Terms. Title to all parts incorporated or installed in or
attached or added to the Airframe or any Engine as the result
of such alteration, modification or addition will, without
further act, vest in Lessor. Lessor will not be required under
any circumstances to pay or compensate Lessee for any such
alteration, modification or addition. Notwithstanding the
foregoing, Lessee may at any time remove any Part; PROVIDED
that (i) such Part is in addition to, and not in replacement
of or substitution for, any Part originally incorporated or
installed in or attached to the Airframe or such Engine at the
time of delivery thereof under this Lease or any Part in
replacement of, or substitution for, any such Part, (ii) such
Part is not required to be incorporated or installed in or
attached or added to such Airframe or Engine pursuant to the
second paragraph of this Section and (iii) such Part can be
removed from the Airframe or such Engine without materially
diminishing or impairing its value, utility, condition or
airworthiness required to be maintained by the terms of this
Lease which the Airframe or such Engine would have had at such
time had such removal not occurred. Upon the removal of any
Part as provided in the immediately preceding sentence or the
removal of any Obsolete Part permitted by this Section, title
thereto will, without further act, vest in Lessee, free and
clear of all right, title and interest of
7
Lessor and of Lessor's Liens, and such Part will no longer be
deemed part of the Airframe or Engine from which it was
removed.
Lessee may install in the Airframe severable
telecommunications or other electronic equipment for
individual use by Aircraft passengers ("PASSENGER CONVENIENCE
EQUIPMENT") that are (1) owned by Lessee or American (if
Lessee is not American), (2) owned by another Person and
leased to Lessee, (3) sold to Lessee by another Person subject
to conditional sale contract or other retained security
interest, (4) leased to Lessee pursuant to a lease which is
subject to a security interest in favor of another Person or
(5) owned by another Person and installed on the Aircraft
subject to a license arrangement with Lessee, and in any such
case, Lessor will not acquire or claim any right, title or
interest in any such Passenger Convenience Equipment solely as
a result of its installation on the Airframe.
EVENT OF LOSS: On a date (the "LOSS PAYMENT DATE") within 120 days after the
occurrence of an Event of Loss with respect to the Aircraft,
Lessee shall pay to Lessor Stipulated Loss Value and all other
Supplemental Rent then due and owing to Lessor and Owner
Participant, if any.
"STIPULATED LOSS VALUE" with respect to the Aircraft means the
amount set forth in the Summary of Economic Terms opposite the
Stipulated Loss Value Determination Date next preceding the
applicable Loss Payment Date (or, if such Loss Payment Date
occurs on a Stipulated Loss Value Determination Date, the
amount opposite such Stipulated Loss Value Determination Date)
plus interest at the Prime Rate for the period from and
including such Stipulated Loss Value Determination Date to but
excluding such Loss Payment Date.
Upon making the payment in the first paragraph of this
Section, (1) this Lease, Lessee's obligation to pay Basic Rent
on any Lease Period Date occurring subsequent to the
Stipulated Loss Value Determination Date (it being agreed that
Lessee shall pay any Basic Rent due and owing on the
Stipulated Loss Value Determination Date if the Stipulated
Loss Value Determination Date is a Loss Payment Date), and
Lessee's obligation to pay Supplemental Rent (other than
payments of Supplemental Rent for indemnities surviving
pursuant to Annex E or Annex F or to be made by Lessee in
respect of liabilities and obligations of Lessee which have
accrued but not been paid or which are in dispute as of the
date of such payment) shall terminate, and (2) Lessor shall
(x) transfer to Lessee, without recourse or warranty (except
as to the absence of Lessor's Liens), all of Lessor's right,
title and interest in and to the Airframe and Engines (if any)
with respect to which such Event of Loss occurred free and
clear of all right, title and interest of Lessor and any
Affiliate thereof and of Lessor's Liens, as well as all of
Lessor's right, title and interest in and to any Engines
constituting part of the Aircraft but not installed thereon
when such Event of Loss occurred, free and clear of all right,
title and interest of Lessor and any Affiliate thereof and of
Lessor's Liens, all in as-is where-is condition, and shall, at
Lessee's expense, execute and deliver such bills of sale and
other documents and instruments as Lessee shall reasonably
request to evidence (on the public record or otherwise) such
transfer and the vesting of all such right, title and interest
in and to the Aircraft in Lessee, free and clear of all right,
title and interest of Lessor and any Affiliate thereof and of
Lessor's Liens; and (y) assign to or as directed by Lessee all
claims against third Persons relating to such Airframe and
Engines arising from the Event of Loss.
REQUISITIONS: Any payments (other than insurance proceeds the application of
which is provided for in Annex C) received at any time by
Lessor or by Lessee from any governmental authority or other
Person with respect to an Event of Loss to the Airframe or any
Engine will be applied as follows: (1) if such payments are
received with respect to the Airframe or the Airframe and the
Engines or engines installed on the Airframe, such payments
shall, after reimbursement of Lessor for costs and expenses,
be applied (A) in reduction of Lessee's obligation to pay the
Stipulated Loss Value
8
required to be paid by Lessee pursuant to the Section
captioned "EVENT OF LOSS" if not already paid by Lessee or, if
already paid by Lessee, shall be applied to reimburse Lessee
for its payment of Stipulated Loss Value, and (B) the balance,
if any, of such payment remaining thereafter will be
apportioned between Lessee and Lessor as their interests may
appear; and (2) if such payments are received with respect to
an Engine as to which an Event of Loss has occurred or is
deemed to have occurred, such payments shall be paid over to,
or retained by, Lessee; PROVIDED that Lessee shall have fully
performed the terms of the Section captioned "REPLACEMENT
ENGINES" with respect to the Event of Loss for which such
payments are made.
In the event of the requisition for use by the U.S. government
(including any agency or instrumentality thereof), including,
without limitation, pursuant to the CRAF Program, of the
Airframe and the Engines or engines installed thereon during
the Lease Term not constituting an Event of Loss, Lessee shall
promptly notify Lessor of such requisition and all of Lessee's
obligations under this Lease with respect to the Aircraft
shall (to the extent feasible with respect to obligations
other than payment obligations) continue to the same extent as
if such requisition had not occurred.
All payments received by Lessor or Lessee from the U.S.
government for the use of such Airframe and Engines or engines
during the Lease Term shall be paid over to, or retained by,
Lessee; and all payments received by Lessor or Lessee from the
U.S. government for the use of such Airframe and Engines or
engines after the Lease Term shall be paid over to, or
retained by, Lessor; PROVIDED that if such requisition
constitutes an Event of Loss, then all such payments shall be
applied as provided in the first paragraph of this Section.
In the event of the requisition for use by the U.S. government
(including for this purpose any agency or instrumentality
thereof) of any Engine (but not the Airframe) during the Lease
Term not constituting an Event of Loss, Lessee will replace
such Engine under this Lease by substituting another engine
for such Engine in accordance with the terms of the Section
captioned "REPLACEMENT ENGINES" to the same extent as if an
Event of Loss had occurred with respect to such Engine, and
any payments received by Lessor or Lessee from the U.S.
government with respect to such requisition shall be paid over
to, or retained by, Lessee.
Any amount referred to in this Section which is payable to
Lessee shall not be paid to Lessee, or, if it has been
previously paid directly to Lessee, shall not be retained by
Lessee, if at the time of such payment an Event of Default or
Specified Default shall have occurred and be continuing, but
shall be paid to and held by Lessor pursuant to the Section
captioned "INVESTMENT OF SECURITY FUNDS" as security for the
obligations of Lessee under the Lease, and at such time as
there shall not be continuing any such Event of Default or
Specified Default such amount shall be paid to Lessee;
PROVIDED, that if any such amount has been so held by Lessor
as security for more than 90 days, during which period (i)
Lessor shall not have been limited by operation of law or
otherwis e from exercising remedies and (ii) Lessor shall not
have commenced to exercise any remedy available to it under
Annex D, then such amount shall be paid to Lessee to the
extent not applied as provided above.
REPLACEMENT
ENGINES: Upon the occurrence of an Event of Loss with respect to an
Engine, Lessee shall replace such Engine. In addition, Lessee
may at any time substitute an engine for any leased Engine.
The engine (the "REPLACEMENT ENGINE") replacing the replaced
or substituted Engine will be of the same make and model as
the replaced or substituted Engine or will be an engine of the
same or another manufacturer of a comparable or improved model
which is suitable for installation and use on the Airframe and
will have value and utility at least equal to (but in any
event without regard to
9
the number of hours or cycles) the Engine so replaced or
substituted (assuming that such Engine was of the condition
and repair required by the terms hereof immediately prior to
the occurrence of such Event of Loss). In addition, such
Engine replacement or substitution will be subject only to the
following conditions: Lessee will (A) furnish Lessor with a
warranty (as to title) bill of sale (which warranty will
except Permitted Liens) with respect to such Replacement
Engine, (B) cause a Lease Supplement, subjecting such
Replacement Engine to this Lease, to be delivered to Lessor
for execution to be filed for recordation pursuant to the
Transportation Code, or, if necessary, pursuant to the
applicable laws of such jurisdiction other than the U.S. in
which the Aircraft is registered and (C) furnish Lessor with
such evidence of compliance with the insurance provisions of
this Lease with respect to such Replacement Engine as Lessor
may reasonably request.
If Lessor is an owner trustee, Owner Participant hereby
authorizes and directs Owner Trustee to, and Owner Trustee
hereby agrees that it will, take such actions reasonably
requested by Lessee to subject a Replacement Engine to this
Lease; provided that such Engine replacement complies with the
paragraph above.
INSURANCE: Lessee will maintain liability and hull insurance with respect
to the Aircraft as set forth in Annex C.
INSPECTION: At all reasonable times during the Lease Term, but upon at
least 15 days' prior notice to Lessee, Lessor and Owner
Participant, if any, or their authorized representatives may
at their own expense and risk (including, without limitation,
any risk of personal injury) conduct a visual walk-around
inspection of the Aircraft and any Engine that may include
going on board the Aircraft and examining the contents of any
open panels, bays or other components of the Aircraft (but
shall not include the opening of any unopened panels, bays or
other components) and may inspect the books and records of
Lessee relating thereto; PROVIDED that (i) Lessor, Owner
Participant, if any, or their authorized representatives, as
the case may be, shall provide, prior to conducting any such
inspection, assurances reasonably satisfactory to Lessee that
it is fully insured with respect to any risks incurred in
connection with any such inspection; (ii) any such inspection
shall be subject to the safety, security and workplace rules
applicable at the location where such inspection is conducted
and to the requirements of any applicable law; and (iii) in
the case of an inspection during a maintenance visit, such
inspection shall not in any respect interfere with the normal
conduct of such maintenance visit or extend the time required
for such maintenance visit.
All information obtained in connection with any such
inspection shall be Confidential Information and shall be held
by Lessor and Owner Participant, if any, in accordance with
Section 9 of this Lease.
EVENTS OF
DEFAULT: There will be no cross-collateralization, cross-acceleration
or cross-default provisions. The Events of Default and
remedies available to Lessor under this Lease are specified in
Annex D. There will be no Default or Event of Default for any
act or omission of TWA at any time or for any act, claim,
event, circumstance or condition existing, accruing, arising
or occurring at any time at or prior to the Commencement Time
or for any TWA Liability.
INVESTMENT OF
SECURITY
FUNDS: Any moneys held by Lessor or required to be paid to or
retained by Lessor which are not required to be paid to Lessee
pursuant to the last paragraph of the Section captioned
"REQUISITIONS" or Annex C solely because an Event of Default
or Specified Default shall have occurred, or which are
required to be paid to Lessee pursuant to the Section
captioned "REQUISITIONS" or Annex C or
10
after completion of a replacement to be made pursuant to
"REPLACEMENT ENGINES" shall, until paid to Lessee, be invested
in Permitted Investments by Lessor from time to time as
directed in writing by Lessee. There shall, so long as no
Event of Default or Specified Default shall have occurred and
be continuing, be promptly remitted to Lessee any gain
(including interest received) realized as the result of any
such investment (net of any fees, commissions and other
expenses, if any, incurred in connection with such
investment), and Lessee will promptly pay to Lessor, on
demand, the amount of any loss realized as the result of any
such investment (together with any fees, commissions and other
expenses, if any, incurred in connection with such
investment).
"SPECIFIED DEFAULT" means an event that with the giving of
notice or the lapse of time or both would constitute an Event
of Default under clause (A), (G), (H) (I) or (J) of Annex D.
"PERMITTED INVESTMENT" means each of: (i) direct obligations
of the U.S., and agencies thereof; (ii) obligations fully
guaranteed by the U.S.; (iii) certificates of deposit issued
by, or bankers' acceptances of, or time deposits with, any
bank, trust company or national banking association
incorporated or doing business under the laws of the U.S. or
one of the states thereof having combined capital and surplus
and retained earnings of at least $100,000,000, and having a
rating of A, its equivalent or better by Moody's Investors
Service, Inc. ("MOODY'S") or Standard & Poor's Ratings
Services, a division of The McGraw-Hill Companies, Inc.
("S&P") (or if neither such organization shall rate such
institution at any time, by any nationally recognized rating
organization in the United States); (iv) commercial paper of
any holding company of a bank, trust company or national
banking association described in CLAUSE (iii); (v) bearer note
deposits with, or certificates of deposit issued by, or
promissory notes of, any subsidiary incorporated under the
laws of Canada (or any province thereof) of any bank, trust
company or national banking association described in CLAUSES
(iii), (viii) or (ix); (vi) commercial paper of companies
having a rating assigned to such commercial paper by Moody's
or S&P (or, if neither such organization shall rate such
commercial paper at any time, by any nationally recognized
rating organization in the United States) equal to either of
the two highest ratings assigned by such organization; (vii)
U.S. dollar-denominated certificates of deposit issued by, or
time deposits with, the European subsidiaries of (A) any bank,
trust company or national banking association described in
CLAUSE (iii) or (B) any other bank described in CLAUSE (viii)
or (ix); (viii) U.S.-issued Yankee certificates of deposit
issued by, or bankers' acceptances of, or commercial paper
issued by, any bank having combined capital and surplus and
retained earnings of at least $100,000,000 and headquartered
in Canada, Japan, the United Kingdom, France, Germany,
Switzerland or The Netherlands; (ix) U.S. dollar-denominated
time deposits with any Canadian bank having a combined capital
and surplus and retained earnings of at least $100,000,000 and
having a rating of A, its equivalent or better by Moody's or
S&P (or, if neither such organization shall rate such
institution at any time, by any nationally recognized rating
organization in the United States); (x) Canadian Treasury
Bills fully hedged to U.S. dollars; and (xi) repurchase
agreements with any financial institution having combined
capital and surplus and retained earnings of at least
$100,000,000 collateralized by transfer of possession of any
of the obligations described in CLAUSES (i) through (x) above.
INDEMNITY: Lessee will indemnify Lessor and Owner Participant, if any,for
Claims and Taxes arising out of Lessee's possession, use and
operation of the Aircraft following the Commencement Time,
solely as provided in Annex E and Annex F. There will be no
indemnity for loss of tax benefits.
QUIET ENJOYMENT;
LIEN LIFTING: Except as expressly permitted by this Lease following an Event
of Default, none of Lessor, Owner Participant, if any, or any
Person claiming through or under Lessor or Owner Participant
will take
11
or cause to be taken any action inconsistent with Lessee's
right to quiet enjoyment of, or otherwise interrupt or
interfere in any way with Lessee's continuing possession, use
or operation of, the Aircraft, Airframe, or any Engine by
Lessee or any sublessee, assignee or transfer under any
sublease, assignment or transfer then in effect and permitted
by this Lease.
Each of Lessor and if Lessor is an owner trustee, Bank and
Owner Participant, if any, will promptly, at its own expense,
discharge any Lessor's Lien attributable to it with respect to
the Airframe or any Engine, or any interest therein or in this
Lease, and will indemnify Lessee from and against any cost or
expense resulting from the failure by Lessor, Bank or Owner
Participant, as the case may be, to discharge such Lessor's
Lien.
Lessee's obligation to pay Rent will be absolute and
unconditional and will not be affected by any circumstance;
PROVIDED Lessee shall not be required to pay Rent, and no Rent
shall accrue, during any period during which Lessee has been
deprived of possession of the Aircraft resulting from any
failure of Lessor or Owner Participant, if any, to comply with
its obligations in the preceding two paragraphs.
"LESSOR'S LIENS" means any Lien on or relating to or affecting
the Aircraft, the Engines or any part thereof arising as a
result of (1) Claims against or affecting Lessor or Owner
Participant, as applicable, not related to the ownership of
the Aircraft or the transactions contemplated by this Lease;
(2) acts or omissions of Lessor or Owner Participant, as
applicable, not related to the transactions contemplated by
this Lease or any other agreement entered into with the
written consent of Lessee in connection therewith or not
expressly provided for under the terms of this Lease or any
such agreement; (3) Taxes or Claims imposed against Lessor or
Owner Participant, as applicable, which are not indemnified
against by Lessee pursuant to this Lease; or (4) claims
against Lessor or Owner Participant, as applicable, arising
out of the voluntary transfer (other than pursuant to certain
voluntary transfers permitted by this Lease) by Lessor of its
interest in the Aircraft or this Lease including, without
limitation, by means of granting a security interest therein.
OWNER PARTICIPANT
TRANSFER; ASSIGNMENT;
RESTRUCTURING: Lessor or Owner Participant, if any, may transfer its interest
to a transferee corporation, provided that (A) the transferee
satisfies the requirements for FAA registration eligibility
described in the Section captioned "REGISTRATION" and has (or
has its obligations guaranteed, pursuant to a guaranty
agreement satisfactory to Lessee, by a parent that has) a
tangible net worth of at least $50,000,000; provided that if
the tangible net worth of the proposed transferee or its
parent, as the case may be, is less than $50,000,000, such
transfer shall require Lessee's consent, such consent not to
be unreasonably withheld; (B) such transferee is not an
airline or other commercial operator of aircraft or any
affiliate of any thereof; (C) the transfer does not violate
the Securities Act of 1933 (the "SECURITIES ACT") or any other
law, as the case may be, or require registration under the
Securities Act; (D) the transferee assumes all obligations of
Lessor or Owner Participant, as the case may be, and the risk
of adverse consequences to any party to this Lease pursuant to
an agreement reasonably satisfactory to Lessee; and (E) Lessor
or Owner Participant, as the case may be, pays all reasonable
expenses of the other parties to this Lease in connection with
such transfer. If Lessor is an owner trustee, Lessor will not
transfer or assign its right, title and interest in the
Aircraft or this Lease without Lessee's consent, such consent
not to be unreasonably withheld.
12
Lessor will be permitted to grant a security interest in this
Lease or "back-leverage" the transaction to a third party,
PROVIDED that (1) no such transaction will require any
participation by Lessee or American (if Lessee is not
American), (2) such third party agrees to preserve Lessee's
quiet enjoyment of the Aircraft, (3) Lessor or Owner
Participant, as the case may be, pays all reasonable expenses
of the other parties to this Lease in connection with such
grant or "back-leveraging", (4) such grant or
"back-leveraging" does not violate the Securities Act or any
other law, as the case may be, or require registration under
the Securities Act or, without Lessee's consent (such consent
not to be unreasonably withheld), involve a Rule 144A/Reg S or
other capital markets transaction, (5) at Lessor's request and
with Lessee's consent (such consent not to be unreasonably
withheld), Lessor's lenders shall be added as additional
insureds under the aircraft liability policies and as
indemnities under the general (but not the general tax)
indemnity, and (6) none of the obligations, liabilities and
risks of Lessee in the use and operation of the Aircraft or
under or in respect of this Lease shall be increased, and none
of Lessee's rights and benefits in respect thereof shall be
diminished, as a result of any such grant or
"back-leveraging", and Lessor or Owner Participant, as the
case may be, agrees to indemnify Lessee and American (if
Lessee is not American) for any such adverse consequences
resulting from such grant or "back-leveraging".
Except as described in the preceding paragraph, Lessor will
have no other rights to restructure or refinance the
transaction, including without limitation to include a
"head-lease" structure, without Lessee's consent, such consent
not to be unreasonably withheld.
NO FINANCIAL
COVENANTS OR
GUARANTY; MERGER
COVENANT: There will be no financial, negative-pledge or "event risk"
covenants of any kind and no guaranty of the obligations of
Lessee or American (if Lessee is not American) by any Person,
except in the event that Lessee is a wholly owned subsidiary
of American, Lessee's obligations under this Lease will be
guaranteed by American pursuant to the American Guaranty as
described in Section 4(b) of this Lease.
Except as described in the preceding sentence, each of Lessee
and American hereby agrees that it will not consolidate with
or merge into any other corporation, or convey, transfer or
lease all or substantially all of its assets as an entirety to
any Person, unless:
(1) the Person formed by such consolidation or into which
Lessee or American, as the case may be, is merged or the
Person that acquires by conveyance, transfer or lease all
or substantially all of the assets of Lessee or American,
as the case may be, as an entirety (the "SUCCESSOR"):
(a) in the case of a Successor of Lessee, shall, (A)
if and to the extent required under Section 1110
of the U.S. Bankruptcy Code in order that Lessor
continue to be entitled to any benefits of
Section 1110 with respect to the Aircraft, be a
Citizen of the United States and a Certificated
Air Carrier, and (B) shall execute and deliver to
Lessor an agreement in form reasonably
satisfactory to Lessor containing an assumption
by such Successor of the due and punctual
performance and observance of each covenant and
condition of this Lease to be performed or
observed by Lessee; or
13
(b) in the case of a Successor of American (unless
American is the Lessee), shall execute and
deliver to Lessor an agreement in form reasonably
satisfactory to Lessor containing an assumption
by such Successor of the due and punctual
performance and observance of each covenant and
condition of the American Guaranty to be
performed or observed by Lessee; and
(2) except in the case of a Lessee consolidation with or
merger into, or conveyance, transfer or lease of all or
substantially all of its assets as an entirety to
American, immediately after giving effect to such
transaction, no Event of Default shall have occurred and
be continuing; and
(3) Lessee or American, as the case may be, shall have
delivered to Lessor an officer's certificate and an
opinion of counsel (which may be American's general
counsel), each stating that such consolidation, merger,
conveyance, transfer or lease and the assumption agreement
described in clause (1) above comply with these
requirements and that all conditions precedent provided
for in this Lease relating to such transaction have been
complied with (except that such opinion need not cover the
matters referred to in clause (2) above and may rely, as
to factual matters, on an officer's certificate of Lessee
or American, as the case may be) and, in the case of such
opinion, that such assumption agreement has been duly
authorized, executed and delivered by the Successor,
constitutes its legal, valid and binding obligation and is
enforceable against such Successor in accordance with its
terms , except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the rights of creditors generally
and by general principles of equity.
Upon any consolidation or merger, or any conveyance, transfer
or lease of all or substantially all of the assets of Lessee
or American, as the case may be, as an entirety in accordance
with the requirements above, the Successor will succeed to, be
substituted for, and may exercise every right and power of,
and will assume every obligation and liability of, Lessee
under this Lease or American under the American Guaranty, as
the case may be. No such conveyance, transfer or lease of all
or substantially all of the assets of Lessee or American will
have the effect of releasing Lessee, American or any Successor
which shall theretofore have become such in the manner
prescribed above from its liability under this Lease or the
American Guaranty, as the case may be.
FINANCIAL
INFORMATION: American agrees to furnish Lessor and Owner Participant, if
any (A) within 60 days after the end of each of the first
three quarterly periods in each fiscal year of American,
either (x) a consolidated balance sheet of American and its
consolidated subsidiaries prepared by it as of the close of
such period, together with the related consolidated statements
of income for such period, or (y) a report of American on Form
10-Q in respect of such period in the form filed with the
Securities and Exchange Commission; (B) within 120 days after
the close of each fiscal year of American, either (x) a
consolidated balance sheet of American and its consolidated
subsidiaries as of the close of such fiscal year, together
with the related consolidated statements of income for such
fiscal year, as certified by independent public accountants,
or (y) a report of American on Form 10-K in respect of such
year in the form filed with the Securities and Exchange
Commission; (C) within 120 days after the close of each fiscal
year of American a certificate of American signed by a
responsible officer of American, to the effect that the signer
has reviewed the relevant terms of this Lease and has made, or
caused to be made under his or her supervision, a review of
the transactions and condition of Lessee during the accounting
period covered by the financial statements referred to in (B),
and that such review has not disclosed the existence during
such accounting period, nor does the signer have knowledge of
the existence as of the date of such
14
certificate, of any Event of Default or, if any such Event of
Default exists or existed, specifying the nature and period of
existence thereof and what action Lessee has taken or is
taking or proposes to take with respect thereto; and (D) such
other non-confidential information readily available to
American without undue expense as Lessor shall reasonably
request.
The items required to be furnished pursuant to (A) and (B)
above shall be deemed to have been furnished on the date on
which such item is posted on the SEC's website at www.sec.gov,
and such posting shall be deemed to satisfy the requirements
of (A) and (B); PROVIDED, that American shall deliver a paper
copy of any item referred to in (A) or (B) above if Lessor so
requests.
SECTION 1110: There are no assurances that Lessor or Owner Participant, if
any, will be entitled to the benefits of Section 1110, and
Lessee shall have no obligations of any kind with respect to
the preservation of Section 1110 benefits for Lessor or Owner
Participant, if any, except as may be expressly provided in
this Lease. Lessee shall, for as long as and to the extent
required under Section 1110 in order that Lessor be entitled
to the benefits of Section 1110 with respect to the Aircraft
(if any), remain a Certificated Air Carrier.
LESSOR RIGHT
TO PERFORM
FOR LESSEE: If Lessee fails to make any payment of Rent required to be
made by it under this Lease or fails to perform or comply with
any of its agreements contained in this Lease and such failure
can be cured with the payment of money, Lessor may, on behalf
of Lessee and upon prior notice to Lessee, itself make such
payment. The amount of any such payment and the amount of the
reasonable expenses of Lessor incurred in connection with such
payment shall be deemed Supplemental Rent immediately due and
payable as of and when such payment is made by Lessor.
LESSOR
DISCLAIMER: NONE OF LESSOR, BANK OR OWNER PARTICIPANT (IN EACH CASE, IN
ITS CAPACITY AS SUCH) MAKES OR SHALL BE DEEMED TO HAVE MADE IN
THIS APPENDIX B ANY REPRESENTATION OR WARRANTY, EXPRESS OR
IMPLIED, AS TO THE AIRWORTHINESS, VALUE, CONDITION,
WORKMANSHIP, DESIGN, OPERATION, MERCHANTABILITY OR FITNESS FOR
USE FOR A PARTICULAR PURPOSE OF THE AIRCRAFT OR ANY ENGINE, AS
TO THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT
DISCOVERABLE, AS TO THE ABSENCE OF ANY INFRINGEMENT OF ANY
PATENT, TRADEMARK OR COPYRIGHT, OR AS TO THE ABSENCE OF
OBLIGATIONS BASED ON STRICT LIABILITY IN TORT, OR ANY OTHER
REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED,
WITH RESPECT TO THE AIRCRAFT OR ANY ENGINE OR ANY PART
THEREOF.
The disclaimer above shall not be construed as a waiver of any
warranty or other claim against any manufacturer, supplier,
dealer, contractor, subcontractor or other Person.
CONCERNING
LESSOR: If Lessor is an owner trustee, the Owner Trustee is entering
into this Lease solely in its capacity as Owner Trustee under
the TWA Trust Agreement and not in its individual capacity
(except as expressly stated in this Lease) and in no case
shall Owner Trustee (or any entity acting as successor Owner
Trustee under the TWA Trust Agreement) be personally liable
for or on account of any of the statements, representations,
warranties, covenants or obligations stated to be those of
Lessor under this Lease; PROVIDED, HOWEVER, that Owner Trustee
(or any such successor Owner Trustee) shall be personally
liable under this Lease for its own gross negligence or
willful
15
misconduct or for its breach of its covenants, representations
and warranties contained in this Lease, to the extent
covenanted or made in its individual capacity.
REVOCATION OF
TRUST; SUCCESSOR
OWNER
TRUSTEE: If Lessor is an owner trustee, Owner Participant agrees not to
amend, terminate or revoke the trust created by the TWA Trust
Agreement without the prior written consent of Lessee and,
which consent shall not be unreasonably withheld. Owner
Participant further agrees not to remove the institution
acting as Owner Trustee, and not to replace the institution
acting as Owner Trustee in the event that such institution
resigns as Owner Trustee, unless Owner Participant shall have
consulted in good faith with Lessee prior to such removal or
replacement as to the identity, location and fee schedules of
the proposed successor trustee.
EXPENSES: Each party will be responsible for its own costs and expenses
incurred in connection with the negotiation and documentation
of the transaction contemplated by this Lease, including the
fees and disbursements of its counsel. Lessee agrees to pay
the fees and expenses of Crowe & Dunlevy, special FAA counsel.
If Lessor is an owner trustee, Lessee agrees to pay the
ongoing fees and expenses of Bank with respect to the Lease
Term in amounts that are reasonably satisfactory to Lessee.
EVIDENCE OF
AUTHORITY: Upon request from Lessor, Lessee shall provide Lessor
on the Closing Date with evidence of the authority of the
person or persons executing this Assumption and Lease
Agreement and, if applicable, the Lessee Assignment and
Assumption Agreement and the American Guaranty, in each case
on behalf of Lessee and American (if American is not the
Lessee).
16
ANNEX A
POSSESSION
So long as no Event of Default has occurred and is continuing, Lessee will be
permitted, without any need for consent of Lessor or Owner Participant, if any,
to:
(i) subject the Airframe to normal interchange agreements or any Engine to
normal interchange or pooling agreements or arrangements in each case
customary in the airline industry and entered into by Lessee in the
ordinary course of its business with any Certificated Air Carrier or
with any "FOREIGN AIR CARRIER" (as such term is defined in the
Transportation Code) as to which there is in force a permit issued
pursuant to 49 U.S.C. ss.ss.41301-41306 (any such Certificated Air
Carrier and any such foreign air carrier, a "PERMITTED AIR CARRIER");
PROVIDED that (A) no transfer of the registration of such Airframe will
be effected in connection therewith, (B) no such agreement or
arrangement contemplates or requires the transfer of title to the
Airframe and (C) if Lessor's title to any such Engine would be divested
under any such agreement or arrangement, such divestiture will be deemed
to be an Event of Loss with respect to such Engine, and Lessee will
comply with the Event of Loss provisions contained in this Lease;
(ii) deliver possession of the Airframe or any Engine to any organization for
testing, service, repair, maintenance, overhaul work or other similar
purposes or for alterations, modifications or additions to the Airframe
or such Engine to the extent required or permitted by the terms of this
Lease;
(iii) transfer possession of the Airframe or any Engine to the U.S. government
pursuant to a sublease, contract or other instrument, a copy of which
will be furnished to Lessor; PROVIDED that the term of such sublease
(including, without limitation, any option of the sublessee to renew or
extend) or the term of possession under such contract or other
instrument will not continue beyond the end of the Lease Term or any
Renewal Term then in effect or any Renewal Term that Lessee has
irrevocably notified Lessor that it will exercise;
(iv) subject the Airframe or any Engine to the Civil Reserve Air Fleet
("CRAF") Program or transfer possession of the Airframe or any Engine at
any time to the U.S. or any instrumentality or agency thereof in
accordance with applicable laws, rulings, regulations or orders
(including, without limitation, the CRAF Program), PROVIDED that Lessee
(x) will promptly notify Lessor upon transferring possession of the
Airframe or any Engine pursuant to this clause (iv) and (y) in the case
of a transfer of possession pursuant to the CRAF Program, within 60 days
thereof, will notify Lessor of the name and address of the responsible
Contracting Office Representative for the Military Airlift Command of
the United States of America or other appropriate person to whom notice
must be given;
(v) install an Engine on an airframe owned by Lessee free and clear of all
Liens except (A) Permitted Liens and those which apply only to the
engines (other than Engines), appliances, parts, instruments,
appurtenances, accessories, furnishings and other equipment (other than
Parts) installed on such airframe (but not to the airframe as an
entirety) and (B) the rights of third parties under normal interchange
agreements or pooling or similar arrangements that would be permitted
under clause (i) above;
(vi) install an Engine on an airframe leased to Lessee or purchased or owned
by Lessee subject to a lease, conditional sale or other security
agreement; PROVIDED that (A) such airframe is free and clear of all
Liens except (1) the rights of the parties to the lease or conditional
sale or other security agreement covering such airframe and (2) Liens of
the type permitted by clause (v) above and (B) either (1) Lessee will
have obtained from the lessor or secured party of such airframe a
written agreement (which may be the lease or conditional sale or other
security agreement covering such airframe), in form and substance
satisfactory to Lessor (it being understood that an agreement from such
lessor or secured party substantially in the form of the last sentence
of this clause (vi) will be deemed to be satisfactory to Lessor) whereby
such lessor or secured party expressly agrees that it will not acquire
or claim any right, title or interest in any Engine by
Annex A to Appendix B
reason of such Engine being installed on such airframe at any time while
such Engine is subject to this Lease or title thereto is held by Lessor
or (2) such lease, conditional sale or other security agreement
effectively provides that such Engine will not become subject to the
Lien of such lease, conditional sale or other security agreement at any
time while such Engine is subject to this Lease or title thereto is held
by Lessor, notwithstanding the installation thereof on such airframe;
(vii) install an Engine on an airframe owned by Lessee, leased to Lessee or
owned by Lessee subject to a conditional sale or other security
agreement under circumstances where neither clause (v) nor clause (vi)
above is applicable; PROVIDED that such installation will be deemed an
Event of Loss with respect to such Engine, and Lessee will comply with
the Event of Loss provisions in this Lease in respect thereof, if such
installation will divest Lessor's title to such Engine; and
(viii) sublease any Engine or the Airframe and Engines orengines then installed
on the Airframe to any Permitted Sublessee (as defined below); PROVIDED
that (x) the term of such sublease (including, without limitation, any
option of the sublessee to renew or extend) will not continue beyond the
end of the Lease Term or any Renewal Term then in effect, unless Lessee
has agreed to purchase the Aircraft or renew this Lease in accordance
with the terms of this Lease at the end of the Lease Term or such
Renewal Term, as the case may be, to a date beyond the end of the term
of such sublease (assuming that all options to renew or extend such
sublease will be exercised); and (y) such sublease will provide that the
sublessee will not sub-sublease the Aircraft except in connection with
an integrated transaction involving a sub-sublease to a Permitted
Sublessee commencing at the inception of such sublease. "PERMITTED
SUBLESSEE" means, (A) in the case of a Lease with a Lease Expiry Date on
or prior to December 31, 2007, any Certificated Air Carrier and (B) in
the case of a Lease with a Lease Expiry Date after December 31, 2007,
(1) any Certificated Air Carrier, (2) any foreign air carrier that is
principally based in and a domiciliary of any of Argentina, Australia,
Austria, Belgium, Canada, Denmark, Finland, France, Germany, Iceland,
Ireland, Italy, Japan, The Netherlands, New Zealand, Norway, Singapore,
Spain (including Canary Islands), Sweden, Switzerland, and the United
Kingdom (each, a "PERMITTED COUNTRY"), or (3) any foreign air carrier
not described in clause (2) above, if, at the time Lessee enters into a
sublease with such foreign air carrier, Lessor receives an opinion from
Lessee's counsel (which counsel shall be reasonably satisfactory to
Lessor) to the effect that (x) there exist no possessory rights in favor
of such s ublessee under the laws of such sublessee's country which
would, upon bankruptcy or insolvency of or other default by Lessee and
assuming that at the time of such bankruptcy, insolvency or other
default by Lessee, such sublessee is not insolvent or bankrupt, prevent
the return of an Engine or the Airframe and each Engine or engine
subject to such sublease to Lessor in accordance with and when permitted
by the terms of this Lease upon Lessor's exercise of its remedies and
(y) the terms of this Lease are legal, valid, binding and enforceable in
the country in which such foreign air carrier is principally based
(subject to customary exceptions); PROVIDED that in the case of any such
foreign air carrier referred to in clause (2) or (3) above (other than a
foreign air carrier principally based in Taiwan), the U.S. maintains
full diplomatic relations with the country in which such foreign air
carrier is principally based at the time such sublease is entered into;
PROVIDED that the rights of any transferee who receives possession by reason of
a transfer permitted by this Annex (other than the transfer of an Engine which
is deemed an Event of Loss) will be, during the period of such possession,
subject and subordinate to, and any sublease permitted by this Annex will be
made expressly subject and subordinate to, all the terms of this Lease,
including, without limitation, Lessor's rights to repossession and to avoid and
terminate such sublease upon such repossession, and Lessee will in all events
remain primarily liable under this Lease for the performance and observance of
all the terms and conditions of this Lease to the same extent as if such
sublease or transfer had not occurred, and that any such sublease will include
appropriate provisions for the maintenance and insurance of the Aircraft. No
interchange agreement, pooling agreement, sublease or other relinquishment of
possession of the Airframe or any Engine will in any way discharge or diminish
any of Lessee's obligations to Lessor under this Lease. Lessee will, prior to or
within 15 days after entering into a sublease of the Airframe or Engines, notify
Lessor and Owner Participant, if any, of the identity of the sublessee and the
term of
Annex A to Appendix B
2
such sublease, and, upon Lessor's written request, provide Lessor and Owner
Participant , if any, with a copy of the sublease, PROVIDED that the identity of
the sublessee and the existence and terms of such sublease shall be Confidential
Information and shall be held by Lessor and Owner Participant, if any, in
accordance with the provisions of Section 9 of this Lease. Lessor agrees, for
the benefit of the lessor or secured party of any airframe or any engine leased
to Lessee or purchased or owned by Lessee subject to a lease, conditional sale
or other security agreement, that Lessor will not acquire or claim, as against
such lessor or secured party, any right, title or interest in any engine or
engines owned by the lessor under such lease or subject to a security interest
in favor of the secured party under such conditional sale or other security
agreement as the result of such engine or engines being installed on the
Airframe at any time while such engine or engines are subject to such lease or
conditional sale or other security agreement.
Any obligation imposed on Lessee in this Lease shall require only that Lessee
perform or cause to be performed such obligation, even if stated in this Lease
as a direct obligation, and the performance of any such obligation by a
permitted assignee, sublessee or transferee under an assignment, sublease or
transfer agreement then in effect shall constitute performance by Lessee and to
the extent of such performance discharge such obligation by Lessee. Except as
otherwise expressly provided in this Lease, any right granted to Lessee in this
Lease shall grant Lessee the right to exercise such right or permit such right
to be exercised by such assignee, sublessee or transferee.
Any "wet lease" or other similar arrangement under which Lessee maintains
operational control of the Aircraft will not constit ute a delivery, transfer or
relinquishment of possession for purposes of this Annex. No "wet lease" will
extend beyond the Lease Term or any Renewal Term then in effect.
In connection with a foreign sublease, Lessee at any time, upon notice to Lessor
and Owner Participant, if any, may cause the Aircraft to be registered under the
applicable statutes of any other country in which a Permitted Sublessee could be
based in the name of Lessor or, if required by applicable law, in the name of
any other Person, and Lessor and Owner Participant, if any, will cooperate with
Lessee's reasonable requests in effecting such foreign registration. Such
foreign registration is subject to the satisfaction of the conditions below or
waiver thereof by Lessor and Owner Participant, if any:
(i) no Event of Default shall have occurred and be continuing at the
date of such request or at the effective date of the change in
registration, PROVIDED that it shall not be necessary to comply
with this condition (i) if the change in registration involves
the registration of the Aircraft under the laws of the U.S.;
(ii) Lessor shall have received a legal opinion addressed to it from
counsel to Lessee reasonably satisfactory to Lessor (A) to the
effect that (I) after giving effect to such change in
registration, all filing, recording or other action necessary to
perfect and protect Lessor's rights and interests in and to the
Aircraft and this Lease has been accomplished (or if such opinion
cannot be given at the time by which Lessor has been requested to
consent to a change in registration, (x) the opinion shall detail
what filing, recording or other action is necessary and (y)
Lessor shall have received a certificate from Lessee that all
possible preparations to accomplish such filing, recording and
other action shall have been done, and such filing, recording and
other action shall be accomplished and a supplemental opinion to
that effect shall be delivered to Lessor on or prior to the
effective date of such change in registration), (II) the terms of
this Lease are legal, valid and binding and enforceable in such
jurisdiction (subject to customary exceptions), and (III) it is
not necessary for Lessor or Owner Participant, if any, to qualify
to do business in such jurisdiction or otherwise satisfy any
other applicable law, rule or regulation existing at the date of
such request (or if such opinion cannot be given, the opinion
shall detail what other existing law, rule or regulation must be
satisfied by Lessor or Owner Participant, as the case may be)
solely as a result of the proposed re-registration, and (B) in
addition, if such country is not, at the time of re-registration,
the U.S. or a Permitted Country, to the effect that there exist
no possessory rights in favor of Lessee under the laws of such
country that would, assuming at such time Lessee is not insolvent
or bankrupt, prevent the return of
Annex A to Appendix B
3
the Aircraft in accordance with and when permitted by the terms
of this Lease upon the exercise by Lessor of its remedies under
this Lease;
(iii) Lessor shall have received assurances reasonably satisfactory to
Lessor that the insurance provisions of this Lease shall have
been complied with after giving effect to such change in
registration;
(iv) such re-registration will not result in the imposition by such
country of any Taxes on Lessor or Owner Participant, if any, for
which Lessee is not required to indemnify Lessor or Owner
Participant, as the case may be, unless Lessee agrees to
indemnify Lessor or Owner Participant, as the case may be, for
any Taxes imposed by such country in connection with or relating
to the transactions contemplated by this Lease that would not
have been imposed but for such re-registration; PROVIDED that it
shall not be necessary to comply with the conditions contained in
this clause (iv) if such change in registration results in the
re-registration of the Aircraft under the laws of the U.S.,
except to the extent that the provisions of the tax
indemnification provisions relating to Lessor or Owner
Participant, as the case may be, were amended in effecting a
previous foreign registration;
(v) such re-registration will not divest Lessor of title to the Air-
craft; and
(vi) Lessee shall have paid or made provision for the payment of all
reasonable out-of-pocket expenses (including reasonable
attorneys' fees) of Lessor in connection with such change in
registration; PROVIDED FURTHER that Lessee shall not cause the
Aircraft to be registered under the laws of any foreign
jurisdiction without the prior written consent of Lessor or Owner
Participant, if any, if (1) the civil aviation laws of such
foreign jurisdiction impose unusual requirements on lessors of
civil aircraft, and (2) Lessor or Owner Participant, as the case
may be, would be required to comply with such unusual
requirements upon the registration of the Aircraft in such
foreign jurisdiction, and compliance therewith by Lessor or Owner
Participant, as the case may be, would result in a material
burden on the business activities of Lessor or Owner Participant,
as the case may be.
Annex A to Appendix B
4
ANNEX B
EVENTS OF LOSS
"EVENT OF LOSS" with respect to any property means any of the following
events with respect to such property:
(1) loss of such property or the use thereof due to theft,
disappearance, destruction, damage beyond repair or rendition of such
property permanently unfit for normal use for any reason whatsoever;
(2) any damage to such property which results in an insurance
settlement with respect to such property on the basis of a total loss
or a compromised or constructive total loss;
(3) the condemnation, confiscation or seizure of, or
requisition of title to or use of, such property (other than a
requisition for use of the Aircraft by the U.S. government or any
agency or instrumentality thereof which shall not have resulted in a
loss of possession of such property for a period continuing beyond the
end of the Lease Term or any Renewal Term then in effect);
(4) as a result of any rule, regulation, order or other action
by the FAA, the Department of Transportation or other governmental body
of the U.S. or other country of registry of the Aircraft having
jurisdiction, the use of such property in the normal course of
passenger air transportation will have been prohibited for a period of
six consecutive months, unless such rule, regulation, order or other
action will have prohibited such use with respect to all aircraft of
such make and model registered in the applicable jurisdiction, unless
Lessee (or any Permitted Sublessee), prior to the expiration of such
six-month period, shall have undertaken and shall be diligently
carrying forward all steps which in its judgment are necessary or
desirable to permit the normal use of such property by Lessee (or any
Permitted Sublessee) or, in any event, if such use has been prohibited
for a period of twelve consecutive months; or
(5) the operation or location of the Aircraft, while under
requisition for use by the U.S. government, in any area excluded from
coverage by any insurance policy in effect with respect to the Aircraft
required by the terms of this Lease, if Lessee shall be unable to
obtain indemnity or insurance in lieu thereof from the U.S. government;
PROVIDED that if such property is returned to Lessee in usable condition after
the occurrence of an event described in clause (1), (3) or (5) above but prior
to the date upon which Stipulated Loss Value is required to be paid, then such
event will, at the option of Lessee, not constitute an Event of Loss.
Annex B to Appendix B
ANNEX C
INSURANCE
(a) AIRCRAFT LIABILITY INSURANCE. (i) Except as provided in clause (ii)
of this subsection (a) and subject to the rights of Lessee to establish and
maintain self-insurance in the manner and to the extent specified in subsection
(c), Lessee will carry, or cause to be carried, at no expense to Lessor or Owner
Participant, if any (collectively, the "SPECIFIED PERSONS"), aircraft liability
insurance (including, but not limited to, bodily injury, personal injury and
property damage liability, exclusive of manufacturer's product liability
insurance) and contractual liability insurance with respect to the Aircraft (A)
in amounts that are not less than the aircraft liability insurance applicable to
similar aircraft and engines in Lessee's fleet on which Lessee carries insurance
(PROVIDED that such liability insurance will not be less than the amount
certified in the insurance report delivered to Lessor at the Commencement Time)
[Report to specify $500,000,000], (B) of the type usually carried by
corporations engaged in the same or similar business, similarly situated with
Lessee and owning or operating similar aircraft and engines and covering risks
of the kind customarily insured against by Lessee and (C) that is maintained in
effect with insurers of recognized responsibility. Any policies of insurance
carried in accordance with this subsection (a) and any policies taken out in
substitution or replacement for any of such policies will (A) name the Specified
Persons as additional insured, (B) subject to the condition of clause (C) below,
provide that, in respect of the interests of the Specified Persons in such
policies, the insurance will not be invalidated by any action or inaction of
Lessee and will insure the interests of the Specified Persons as they appear,
regardless of any breach or violation of any warranty, declaration or condition
contained in such policies by Lessee, (C) provide that, if such insurance is
canceled for any reason whatever, or if any change is made in the policy that
reduces the amount of insurance or the coverage certified in the insurance
report delivered to the Specified Persons at the Commencement Time or if such
insurance is allowed to lapse for nonpayment of premium, such cancellation,
change or lapse will not be effective as to any Specified Person for 30 days
(seven (7) days, or such other period as is customarily available in the
industry, in the case of any war risk or allied perils coverage) after receipt
by such Specified Person of written notice from such insurers of such
cancellation, change or lapse, (D) provide that the Specified Persons will not
have any obligation or liability for premiums, commissions, assessments or calls
in connection with such insurance, (E) provide that the insurers will waive any
rights of (1) set-off, counterclaim or any other deduction, whether by
attachment or otherwise, in respect of any liability of the Specified Persons to
the extent of any moneys due to the Specified Persons and (2) subrogation
against the Specified Persons to the extent that Lessee has waived its rights by
its agreements to indemnify Specified Persons pursuant to this Lease, (F) be
primary without right of contribution from any other insurance that may be
carried by any Specified Person with respect to its interests as such in the
Aircraft and (G) expressly provide that all of the provisions thereof, except
the limits of liability, will operate in the same manner as if there were a
separate policy covering each insured. In the case of a lease or contract with
the U.S. government in respect of the Aircraft or any Engine, or in the case of
any requisition for use of the Aircraft or any Engine by the U.S. government, a
valid agreement by the U.S. government to indemnify Lessee, or an insurance
policy issued by the U.S. government, against the risks that Lessee is required
under this Lease to insure against will be considered adequate insurance for
purposes of this subsection (a) to the extent of the risks (and in the amounts)
that are the subject of such indemnification or insurance.
(ii) During any period that the Airframe or an Engine, as the
case may be, is on the ground and not in operation, Lessee may carry or cause to
be carried as to such non-operating Airframe or Engine, in lieu of the insurance
required by clause (i) above, and subject to self-insurance to the extent
permitted by subsection (c), insurance otherwis e conforming with the provisions
of said clause (i) except that: (A) the amounts of coverage will not be required
to exceed the amounts of airline liability insurance from time to time
applicable to airframes or engines owned or leased by Lessee of the same type as
such non-operating Airframe or Engine and that are on the ground and not in
operation and (B) the scope of the risks covered and the type of insurance will
be the same as from time to time applicable to airframes or engines owned or
leased by Lessee of the same type as such non-operating Airframe or Engine and
that are on the ground and not in operation.
(b) INSURANCE AGAINST LOSS OR DAMAGE TO AIRCRAFT. (i) Except as
provided in clause (ii) of this subsection (b), and subject to the rights of
Lessee to establish and maintain self-insurance in the manner and to
Annex C to Appendix B
the extent specified in subsection (c), Lessee will maintain, or cause to be
maintained, in effect with insurers of recognized responsibility, at no expense
to any Specified Person, all-risk aircraft hull insurance covering the Aircraft
and all-risk coverage with respect to any Engines or Parts while removed from
the Aircraft (including, without limitation, war risk insurance if and to the
extent the same is maintained by Lessee or any permitted sublessee with respect
to other aircraft owned or operated by Lessee or such permitted sublessee, as
the case may be, on the same routes) that is of the type and in substantially
the amount usually carried by corporations engaged in the same or similar
business and similarly situated with Lessee; PROVIDED that (A) such insurance
(including the permitted self-insurance) will at all times while the Aircraft is
subject to this Lease be for an amount not less than the Stipulated Loss Value
for the Aircraft from time to time and (B) such insurance need not cover an
Engine while attached to an airframe not owned, leased or operated by Lessee.
Any policies carried in accordance with this subsection (b) and any policies
taken out in substitution or replacement for any such policies will (A) provide
that any insurance proceeds up to an amount equal to the Stipulated Loss Value,
payable for any loss or damage constituting an Event of Loss with respect to the
Aircraft, and any insurance proceeds in excess of $[ ],1 up to the amount of the
Stipulated Loss Value, for any loss or damage to the Aircraft (or Engines) not
constituting an Event of Loss with respect to the Aircraft, will be paid to
Lessor, and that all other amounts will be payable to Lessee, unless the insurer
shall have received notice that an Event of Default exists, in which case all
insurance proceeds for any loss or damage to the Aircraft (or Engines) up to the
Stipulated Loss Value will be payable to Lessor, (B) subject to the conditions
of clause (C) below, provide that, in respect of the interests of the Specified
Persons in such policies, the insurance will not be invalidated by any action or
inaction of Lessee and will insure their interests as they appear, regardless of
any breach or violation of any warranty, declaration or condition contained in
such policies by Lessee, (C) provide that, if such insurance is canceled for any
reason whatsoever, or if any change is made in the policy that reduces the
amount of insurance or the coverage certified in the insurance report delivered
to the Specified Persons at the Commencement Time or if such insurance is
allowed to lapse for nonpayment of premium, such cancellation, change or lapse
will not be effective as to any Specified Person for 30 days (seven days, or
such other period as is customarily available in the industry, in the case of
any war risk or allied perils coverage) after receipt by such Specified Person
of written notice from such insurers of such cancellation, change or lapse, (D)
provide that the Specified Persons will not have any obligation or liability for
premiums, commissions, assessments or calls in connection with such insurance,
(E) provide that the insurers will waive any rights of (1) set-off, counterclaim
or any other deduction, whether by attachment or otherwise, in respect of any
liability of the Specified Persons to the extent of any moneys due to Specified
Persons and (2) subrogation against Specified Persons to the extent that Lessee
has waived its rights by its agreements to indemnify such party pursuant to this
Lease and (F) be primary without right of contribution from any other insurance
that may be carried by any Specified Person with respect to its interests as
such in the Aircraft. In the case of a lease or contract with the U.S.
government in respect of the Aircraft or any Engine, or in the case of any
requisition for use of the Aircraft or any Engine by the U.S. government, a
valid agreement by the U.S. government to indemnify Lessee, or an insurance
policy issued by the U.S. government, against any risks that Lessee is required
under this Lease to insure against will be considered adequate insurance for
purposes of this subsection (b) to the extent of the risks (and in the amounts)
that are the subject of such indemnification or insurance.
(ii) During any period that the Airframe or Engine is on the
ground and not in operation, Lessee may carry or cause to be carried as to such
non-operating Airframe or Engine, in lieu of the insurance required by clause
(i) above, and subject to self-insurance to the extent permitted by subsection
(c), insurance otherwise conforming with the provisions of said clause (i)
except that the scope of the risks covered and the type of
__________________
1 Amount varies according to aircraft type:
MD80 - $4,000,000
B757 - $7,000,000
B767 - $10,000,000
DC9 - TBD
Annex C to Appendix B
2
insurance will be the same as from time to time applicable to airframes or
engines owned or leased by Lessee of the same type as such non-operating
Airframe or Engine and that are on the ground and not in operation; provided
that, subject to self-insurance to the extent permitted by subsection (c),
Lessee will maintain insurance against risk of loss or damage to such
non-operating Airframe in an amount at least equal to the Stipulated Loss Value
during such period that such Airframe is on the ground and not in operation.
(c) SELF-INSURANCE. Lessee may from time to time self-insure, by way of
deductible, self-insured retention, premium adjustment or franchise or otherwise
(including, with respect to insurance maintained pursuant to subsection (a) or
(b) above, insuring for a maximum amount that is less than the amounts set forth
in subsection (a) and (b)), the risks required to be insured against pursuant to
subsection (a) and (b), but in no case will the self-insurance with respect to
all of the aircraft and engines in the aggregate fleets of Lessee and American
(if American is not Lessee) (including, without limitation, the Aircraft) exceed
for any 12-month policy year 1% of the average aggregate insurable value (for
the preceding policy year) of all aircraft (including, without limitation, the
Aircraft) on which Lessee and American (if American is not the Lessee) carries
insurance; PROVIDED that, if AMR Corporation's senior unsecured long-term debt
is rated BB or below by S&P and Ba2 or below by Moody's, then, upon not less
than 30 days' notice from Lessor to Lessee, Lessee will, until AMR Corporation's
senior unsecured long-term debt is rated BB+ or better by S&P or Ba1 or better
by Moody's, reduce the self-insurance permitted under this Lease to such
reasonable amount as Lessor may require; and PROVIDED, FURTHER, that a
deductible per occurrence that, in the case of the Aircraft, is not in excess of
the amount customarily allowed as a deductible in the industry or is required to
facilitate claims handling will be permitted in addition to the above-mentioned
self-insurance.
(d) APPLICATION OF INSURANCE PAYMENTS. All losses will be adjusted by
Lessee with the insurers. As between Lessor and Lessee it is agreed that all
insurance payments received under policies required to be maintained by Lessee
under this Lease, exclusive of any payments received in excess of the Stipulated
Loss Value for the Aircraft from such policies, as the result of the occurrence
of an Event of Loss with respect to the Airframe or an Engine will be applied as
follows:
(i) if such payments are received with respect to the Airframe
(or the Airframe and any Engines installed on the Airframe), so much of
such payments remaining after reimbursement of Lessor for its costs and
expenses will be applied (A) in reduction of Lessee's obligation to pay
the Stipulated Loss Value required to be paid by Lessee pursuant to the
Section captioned "EVENT OF LOSS", if not already paid by Lessee, or,
if already paid by Lessee, will be applied to reimburse Lessee for its
payment of such Stipulated Loss Value, and (B) the balance, if any, of
such payment remaining thereafter will be paid over to, or retained by,
Lessee; and
(ii) if such payments are received with respect to an Event of
Loss with respect to an Engine under the circumstances contemplated by
the Section captioned "REPLACEMENT ENGINES", such payments will be paid
over to, or retained by, Lessee; PROVIDED that Lessee shall have fully
performed the terms of such Section with respect to the Event of Loss
for which such payments are made.
As between Lessor and Lessee the insurance payment for any
loss or damage to the Aircraft in excess of the Stipulated Loss Value for the
Aircraft will be paid to Lessee.
As between Lessor and Lessee the insurance payments for any
loss or damage to the Airframe or an Engine not constituting an Event of Loss
with respect to the Airframe or such Engine will be applied in payment (or to
reimburse Lessee) for repairs or for replacement property, and any balance
remaining will be paid to Lessee. Any amount referred to in the preceding
sentence or in CLAUSE (i) or CLAUSE (ii) of the second preceding paragraph which
is payable to Lessee shall not be paid to Lessee (or, if it has been previously
paid directly to Lessee, shall not be retained by Lessee) if at the time of such
payment an Event of Default or Specified Default shall have occurred and be
continuing, but shall be paid to and held by Lessor pursuant to the Section
captioned "INVESTMENT OF SECURITY
Annex C to Appendix B
3
FUNDS", as security for the obligations of Lessee under this Lease, and at such
time as there shall not be continuing any such Event of Default or Specified
Default, such amount shall, to the extent not theretofore applied as provided
herein, be paid to Lessee, PROVIDED that if any such amount has been so held by
Lessor as security fo r more than 90 days after any such Event of Default or
Specified Default shall have occurred and during which period (i) Lessor shall
not have been limited by operation of law or otherwise from exercising remedies
hereunder and (ii) Lessor shall not have exercised any remedy available to it
under Annex D, then such amount shall be paid to Lessee.
(e) REPORTS, ETC. At or before the Commencement Time, and
annually upon renewal of Lessee's insurance coverage, Lessee will furnish to
Lessor a report signed by a firm of independent aircraft insurance brokers
appointed by Lessee (which broker may be in the regular employ of Lessee),
stating the opinion of such firm that the insurance then carried and maintained
on the Aircraft complies with the terms hereof; PROVIDED that all information
contained in such report will be Confidential Information and will be treated by
Lessor and its Affiliates and their respective officers, directors, agents and
employees in accordance with the confidentiality provisions of this Lease.
Lessee will cause such firm to advise Lessor in writing of any default in the
payment of any premium or of any other act or omission on the part of Lessee of
which such firm has knowledge and that might invalidate or render unenforceable,
in whole or in part, any insurance on the Aircraft. Lessee will also cause such
firm to advise Lessor writing as promptly as practicable after such firm
acquires knowledge that an interruption of any insurance carried and maintained
on the Aircraft pursuant to this Annex will occur.
(f) SALVAGE RIGHTS; OTHER. All salvage rights to the Airframe
and each Engine will remain with Lessee's insurers at all times. Nothing in this
Annex will limit or prohibit Lessor or Lessee from obtaining insurance for its
own account with respect to the Airframe or any Engine, and any proceeds payable
under such insurance will be payable as provided in the insurance policy
relating thereto; PROVIDED that no such insurance may be obtained which would
limit or otherwise adversely affect the coverage or amounts payable under, or
increase the premiums for, any insurance required to be maintained pursuant to
this Annex or any other insurance maintained by Lessee (or any permitted
sublessee) with respect to the Aircraft or any other aircraft in the fleet of
Lessee or American (if American is not Lessee).
Annex C to Appendix B
4
ANNEX D
EVENTS OF DEFAULT AND REMEDIES
The following events shall constitute "EVENTS OF DEFAULT" (whether any
such event will be voluntary or involuntary or come about or be effected by
operation of law or pursuant to or in compliance with any judgment, decree or
order of any court or any order, rule or regulation of any administrative or
governmental body), and each such Event of Default shall be deemed to exist and
continue so long as, but only so long as, it shall not have been remedied:
(a) Lessee shall fail to make any payment of Basic Rent or Stipulated
Loss Value within five Business Days after the same shall have
become due; or
(b) Lessee shall fail to make any other payment of Supplemental Rent
(including, without limitation, indemnity payments) under this
Lease (other than those described in subsection (a) above) at the
times required to be paid thereunder, and any such failure shall
continue unremedied for a period of 15 Business Days after notice
of such failure by Lessor; or
(c) Lessee shall fail to carry and maintain insurance on or with
respect to the Aircraft in accordance with the provisions of Annex
C; PROVIDED, that in the case of insurance with respect to which
cancellation, change or lapse for nonpayment of premium shall not
be effective as to Lessor or Owner Participant, if any, for 30
days (seven days, or such other period as may from time to time be
customarily obtainable in the industry, in the case of any war
risk coverage) after receipt of notice by Lessor or Owner
Participant, as the case may be, of such cancellation, change or
lapse, no such failure to carry and maintain insurance shall
constitute an Event of Default until the earlier of (I) the date
such failure shall have continued unremedied for a period of 20
days (five days in the case of any war risk coverage) after
receipt by Lessor or Owner Participant, as the case may be, of the
notice of cancellation, change or lapse referred to subsection (a)
or (b) of Annex C or (II) the date on which such insurance is not
in effect as to Lessor; or
(d) Lessee shall operate the Aircraft when neither the aircraft
liability insurance required by Annex C nor the indemnification
described in the Section captioned "OPERATION" shall be in effect;
or
(e) Lessee shall fail to perform or observe any other covenant,
condition or agreement not specified elsewhere in this Annex to be
performed by it under this Lease, and such failure in any such
case shall continue unremedied for a period of 30 days after
written notice thereof by Lessor, PROVIDED that, if such failure
is capable of being remedied, no such failure shall constitute an
Event of Default under this Lease for a period of 180 days after
such notice so long as Lessee is diligently proceeding to remedy
such failure; or
(f) any representation or warranty made by Lessee in this Lease or in
any document or certificate furnished by Lessee to Lessor in
connection therewith shall prove to have been incorrect in any
material respect at the time made, and such incorrectness shall be
material and shall continue to be unremedied for a period of 30
days after written notice thereof by Lessor; or
(g) Lessee or Guarantor shall consent to the appointment of a receiver
trustee or liquidator of itself or of a substantial part of its
property or Lessee or Guarantor shall admit in writing its
inability to pay its debts generally as they come due, or shall
make a general assignment for the benefit of creditors; or
(h) Lessee or Guarantor shall file a voluntary petition in bankruptcy
or a voluntary petition or an answer seeking reorganization in a
proceeding under any bankruptcy laws (as now or hereafter in
effect) or any answer admitting the material allegations of a
petition filed against Lessee or
Annex D to Appendix B
Guarantor in any such proceeding, or Lessee or Guarantor shall by
voluntary petition or answer, consent to or seek relief under the
provisions of any other now existing or future bankruptcy or other
similar law providing for the reorganization or winding-up of
corporations, or providing for an agreement, composition,
extension or adjustment with its creditors; or
(i) an order, judgment, or decree shall be entered by any court of
competent jurisdiction appointing, without the consent of Lessee
or Guarantor, a receiver, trustee or liquidator of Lessee or
Guarantor or of any substantial part of its property, or
sequestering any substantial part of the property of Lessee or
Guarantor, and any such order, judgment or decree of appointment
or sequestration shall remain in force undismissed, unstayed or
unvacated for a period of 90 days after the date of entry thereof;
(j) a petition against Lessee or Guarantor in a proceeding under the
Federal bankruptcy laws or other insolvency laws, as now or
hereafter in effect, shall be filed and shall not be withdrawn or
dismissed within 90 days thereafter, or under the provisions of
any law providing for reorganization or winding-up of corporations
which may apply to Lessee or Guarantor, any court of competent
jurisdiction shall assume jurisdiction, custody or control of
Lessee or Guarantor or of any substantial part of its property and
such jurisdiction, custody or control shall remain in force
unrelinquished, unstayed or unterminated for a period of 90 days;
or
(k) Guarantor shall fail to make any payments under the American
Guaranty;
PROVIDED that, notwithstanding anything to the contrary contained in this Lease,
any failure of Lessee to perform or observe any covenant, condition, or
agreement in this Lease shall not constitute an Event of Default if such
observance is prevented solely by reason of an event referred to in the
definition of "EVENTS OF LOSS" so long as Lessee is continuing to comply with
the applicable terms of the Section captioned "EVENT OF LOSS".
Upon the occurrence of an Event of Default and at any time thereafter
so long as the same shall be continuing, Lessor may, at its option, declare this
Lease to be in default by a written notice to Lessee (PROVIDED that this Lease
shall be deemed to have been declared in default without the necessity of such
written notice upon the occurrence of any Event of Default described in clause
(h), (i) or (j) above); and at any time thereafter, so long as Lessee shall not
have remedied all outstanding Events of Default, Lessor may do one or more of
the following, as Lessor shall elect, to the extent permitted by, and subject to
compliance with any mandatory requirements of, applicable law; PROVIDED that
during any period the Aircraft is subject to the CRAF Program in accordance with
the provisions of Annex A and in the possession o f the U.S. government or an
instrumentality or agency thereof, Lessee shall not, on account of any Event of
Default, be required to do any of the following in such manner as to limit
Lessee's operational control under this Lease (or any sublessee's operational
control under any sublease permitted by the terms of this Lease) of the Airframe
or Engines, unless at least 60 days' (or such lesser period as may then be
applicable under the Military Airlift Command Program of the U.S. government)
prior notice of default under this Lease shall have been given by Lessor by
registered or certified mail to Lessee (or any sublessee) with a copy addressed
to the Contracting Office Representative for the Military Airlift Command of the
U.S. Air Force under any contract with Lessee (or any sublessee) relating to the
Aircraft:
(1) cause Lessee, upon the written demand of Lessor and at Lessee's expense, to
return promptly, and Lessee shall return promptly, all or such part of the
Airframe and any Engines as Lessor may so demand, to Lessor in the manner
and condition required by, and otherwise in accordance with all of the
provisions of, the Return Conditions as if the Airframe or such Engines
were being returned at the end of this Lease Term; or Lessor, at its
option, after Lessee shall have failed to so return the Aircraft after such
demand, may enter upon the premises where the Airframe is or any or all
Engines are located or reasonably believed to be located and take immediate
possession of and remove such Airframe or Engines (together with any engine
which is not an Engine but which is installed on the Airframe, subject to
all of the rights of the owner,
Annex D to Appendix B
2
lessor, lienor or secured party of such engine; PROVIDED that the Airframe
with an engine (which is not an Engine) installed thereon may be flown or
returned only to a location within the continental U.S., and such engine
shall be held for the account of any such owner, lessor, lienor or secured
party or, if owned by Lessee, may, at the option of Lessor, be exchanged
with Lessee for an Engine in accordance with the provisions of the Return
Conditions), by summary proceedings or otherwise, all without liability to
Lessor for or by reason of such entry or taking possession or removal,
whether for the restoration of damage to property caused by such taking or
otherwise and without any duty to account to Lessee with respect to such
action or inaction or for any proceeds with respect thereto (except in
connection with the calculation of liquidated damages set forth in CLAUSE
(3) or CLAUSE (4) below and except to the extent such proceeds would
constitute, under applicable law, a mitigation of Lessor's damages suffered
or incurred as a result of the applicable Event of Default); or
(2) sell all or any part of the Airframe and any Engine at public or private
sale, whether or not Lessor shall at the time have possession thereof, as
Lessor may determine, or otherwise dispose of, hold, use, operate, lease to
others or keep idle all or any part of the Airframe or such Engine as
Lessor, in its sole discretion, may determine, free and clear of any rights
of Lessee (in which case Lessee shall deliver the Aircraft to the purchaser
of the Aircraft); or
(3) whether or not Lessor shall have exercised, or shall thereafter at any time
exercise, any of its rights under CLAUSE (1) or CLAUSE (2) above with
respect to all of any part of the Airframe or any Engine, Lessor, by
written notice to Lessee specifying a payment date (which date shall be
deemed to be a "Loss Payment Date" for purposes of computing Stipulated
Loss Value) which shall be not earlier than 30 days from the date of such
notice, may cause Lessee to pay to Lessor, and Lessee shall pay Lessor, on
the payment date specified in such notice, as liquidated damages for loss
of a bargain and not as a penalty (in lieu of the Basic Rent due for Lease
Period Dates occurring after the Stipulated Loss Value Determination Date
next preceding the payment date specified in such notice), any unpaid Basic
Rent due on or prior to the Stipulated Loss Value Determination Date next
preceding the payment date specified in such notice, plus whichever of the
following amounts Lessor, in its sole discretion, shall specify in such
notice: (I) an amount equal to the excess, if any, of the Stipulated Loss
Value for the Airframe or such Engine or part thereof, computed as of the
payment date specified in such notice, over the aggregate fair market
rental value (computed as provided below) of the Airframe or such Engine or
part thereof for the remainder of the remaining useful life of the Airframe
or such Engine or part thereof, after discounting such aggregate fair
market rental value to present worth as of the payment date specified in
such notice at the Prime Rate in effect at the time of determination; or
(II) an amount equal to the excess, if any, of Stipulated Loss Value for
the Airframe or such Engine or part thereof, computed as of the payment
date specified in such notice, over the fair market sales value of the
Airframe or such Engine or part thereof (computed as provided below) as of
the payment date specified in such notice;
(4) in the event Lessor, pursuant to CLAUSE (2) above, shall have sold all or
any part of the Airframe or any Engine, Lessor, in lieu of exercising its
rights under CLAUSE (3) above with respect to the Airframe or such Engine
or part thereof, may, if it shall so elect, cause Lessee, on the date of
such sale (which date shall be deemed a "Loss Payment Date" for purposes of
computing Stipulated Loss Value), as liquidated damages for loss of a
bargain and not as a penalty (in lieu of the Basic Rent due on Lease Period
Dates occurring after the date of such sale), any unpaid Basic Rent due on
or prior to the Stipulated Loss Value Determination Date next preceding
such date of sale, plus the amount of any deficiency between the net
proceeds of such sale (or, if such sale is a private sale to Lessor or
Owner Participant, if any, or any Affiliate of any thereof, the fair market
sales value of the Airframe or such Engine or part thereof, determined as
of the date of such sale) and the Stipulated Loss Value for the Airframe or
such Engine or part thereof, computed as of the date of such sale; or
Annex D to Appendix B
3
(5) rescind this Lease as to the Airframe and any or all Engines, or exercise
any other right or remedy which may be available to it under applicable law
or proceed by appropriate court action, either at law or in equity, to
enforce the terms or to recover damages for the breach hereof.
In addition, Lessee shall be liable, except as otherwise provided above, for any
and all unpaid Rent due under this Lease before, after or during the exercise of
any of the foregoing remedies and for all legal fees and other costs and
expenses incurred by reason of the occurrence of any Event of Default or the
exercise of Lessor's remedies with respect thereto, including all costs and
expenses incurred in connection with the return of the Airframe or any Engine in
accordance with the terms of the Return Conditions or in placing such Airframe
or Engine in the condition and airworthiness required by the Return Conditions;
PROVIDED that if Lessee returns or surrenders possession of all or any part of
the Airframe or any Engine in accordance with this Section and Lessor does not
within 180 days after the date of such return or surrender exercise its rights
under CLAUSE (3) or CLAUSE (4) above with respect to such Airframe or Engine or
part thereof, there shall be deducted from each payment of Basic Rent becoming
due after the expiration of such 180-day period an amount equal to the quotient
obtained by dividing the aggregate fair market rental value (computed as
provided hereafter in this Annex) of such Airframe or Engine or part thereof,
for the remainder of the Lease Term after the expiration of such 180-day period
(computed as of the date of such expiration), by the number of Basic Rent
installments remaining with respect to the Aircraft after the expiration of such
180-day period to the end of the Lease Term. For the purpose of CLAUSE (3) and
CLAUSE (4) above and the preceding sentence, the "aggregate fair market rental
value" or the "fair market sales value" of the Airframe or any Engine or part
thereof shall be as specified in an Independent Appraisal but shall be
determined on an "as-is, where-is and with all faults" basis, taking into
account customary brokerage and other reasonable out-of-pocket fees and expenses
that typically would be incurred in connection with a sale or re-lease of
equipment such as the Airframe, Engine or part thereof. At any sale of the
Airframe or an Engine or part thereof pursuant to this Annex, Lessor or Owner
Participant, if any, may bid for and purchase such property. Except as otherwise
expressly provided above, no remedy referred to in this Section is intended to
be exclusive, but each shall be cumulative and in addition to any other remedy
referred to above or otherwise available to Lessor at law or in equity; and the
exercise or beginning of exercise by Lessor of any one or more of such remedies
shall not preclude the simultaneous or later exercise by Lessor of any or all of
such other remedies.
Annex D to Appendix B
4
ANNEX E
GENERAL INDEMNITY
Subject to the exclusions stated below, Lessee agrees to indemnify,
protect, defend and hold harmless each Indemnified Person (as defined below) on
an After-Tax Basis (as defined below) against Claims (as defined below)
resulting from or arising out of (A) Lessee's use, possession and operation of
the Aircraft following the Commencement Time, including the lease, sublease,
possession, use, non-use, substitution, airworthiness, state of airworthiness,
control, maintenance, repair, replacement, operation, registration,
re-registration, condition, sale, storage, modification, alteration, return,
transfer or other disposition of the Aircraft, the Airframe, any Engine or any
Part (including, without limitation, any death or injury to passengers or
others, any damage to the environment, latent or other defects, whether or not
discoverable, and any Claim for patent, trademark or copyright infringement) and
(B) any breach of or failure to perform or observe, or any other non-compliance
with, any covenant, condition or agreement or other obligation to be performed
by Lessee under this Lease after the Commencement Time.
"AFTER-TAX BASIS", in the context of determining the amount of a
payment to be made on such basis, means the payment of an amount which, after
subtraction of the net increase, if any, in U.S. Federal, state and local income
tax liability incurred by the Indemnified Person or Tax Indemnitee (as defined
in Annex F) to whom the payment is made as a result of the receipt or accrual of
such payment (taking into account any Tax benefits realized or deemed to be
realized by such Indemnified Person or Tax Indemnitee as a result of the event
or circumstances giving rise to such payment), shall equal the amount that would
have been payable if no net increase in such tax liability had been incurred.
"CLAIMS" means any and all liabilities, obligations, losses, damages,
penalties, claims, costs, actions or suits of whatsoever kind and nature
(whether or not on the basis of negligence, strict or absolute liability or
liability in tort) which may be imposed on, incurred by, suffered by, or
asserted against an Indemnified Person, and, except as otherwise expressly
provided, shall include all reasonable costs, disbursements and expenses
(including reasonable legal fees and expenses) of an Indemnified Person in
connection therewith or related thereto.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"INDEMNIFIED PERSON" means Lessor and Owner Participant, if any, and
the respective officers, directors, servants, agents, successors and permitted
assigns of Lessor and Owner Participant, if any, but excluding any such Person
in its capacity as the manufacturer, supplier or subcontractor of the Aircraft,
Airframe, Engines or any Part thereof, and any officer, director, servant,
agent, successor, or permitted assign of such Person in such capacity.
"RELATED INDEMNITEE GROUP" with respect to Lessor or Owner Participant
(if any), in each case, in its capacity as an Indemnified Person, means each of
such Indemnified Person's officers, directors, servants, agents, successors and
permitted assigns.
"TRUST ESTATE" means all right, title, and interest of the Owner
Trustee in and to the Aircraft and this Lease.
All rights (including, without limitation, the right to receive any
indemnity payment under this Annex) of an Indemnified Person and any member of
such Indemnified Person's Related Indemnitee Group shall be exercised solely by
such Indemnified Person. If any Indemnified Person or any member of such
Indemnified Person's Related Indemnitee Group fails to comply with this Annex,
such Indemnified Person shall not be entitled to indemnity under this Annex with
respect to such Claim to the extent (but only to the extent) that Lessee shall
have been prejudiced by such failure and that such failure is not the result of
or otherwise attributable to the failure of Lessee to comply with any of its
duties or obligations under this Annex.
Annex E to Appendix B
The following are excluded from Lessee's agreement to indemnify under
this Annex:
(1) Any Claim attributable to any act or omission of TWA at any time or to
any act, claim, event, circumstance or condition existing, accruing,
arising or occurring at any time at or prior to the Commencement Time,
or any Claim attributable to any TWA Liability, PROVIDED that the
foregoing exclusion shall not apply to any Claim relating to any death,
personal injury or property damage occurring after the Commencement
Time;
(2) Any Claim attributable to acts or events occurring after the earlier of
(X) the return of the Aircraft pursuant to the Return Conditions or, if
the Aircraft is stored pursuant to the Return Conditions, the date of
the placement of the Aircraft in storage, and (Y) the expiration or
earlier termination of this Lease under circumstances not requiring the
return of the Aircraft, unless and to the extent such Claim is
attributable to the failure of Lessee to perform its obligations under
this Lease in full compliance with this Lease or occurring in
connection with the exercise of remedies pursuant to Annex D following
the occurrence and continuance of an Event of Default;
(3) Any Claim that is or is attributable to a Tax (including any Tax bene-
fits), whether or not Lessee is required to indemnify therefor under
Annex F, it being agreed that Annex F sets forth Lessee's entire
liability with respect to Taxes;
(4) Any Claim attributable to the gross negligence or willful misconduct of
such Indemnified Person or any of the Related Indemnitee Group of such
Indemnified Person (other than the gross negligence or willful
misconduct imputed as a matter of law to such Indemnified Person solely
by reason of its interest in the Aircraft);
(5) Any Claim to the extent attributable to the non-compliance by such
Indemnified Person or any of the Related Indemnitee Group of such
Indemnified Person with any of the terms of, or any misrepresentation
by, such Indemnified Person or any of the Related Indemnitee Group of
such Indemnified Person contained in this Lease or any other Operative
Document to which such Indemnified Person or any of the Related
Indemnitee Group of such Indemnified Person is a party or any agreement
relating hereto or thereto;
(6) Any Claim that constitutes a Permitted Lien;
(7) Any Claim to the extent attributable to the offer, sale, disposition or
participation (voluntary or involuntary) by or on behalf of such
Indemnified Person of any interest in the Aircraft, Rent, this Lease,
the Trust Estate or the TWA Trust Agreement (in the case of an Owner
Participant), or any similar interest or security, other than a
transfer by such Indemnified Person of its interests in the Aircraft or
this Lease pursuant to "VOLUNTARY TERMINATION", "EVENT OF LOSS" or "END
OF LEASE TERM PURCHASE OPTIONS" or the exercise of remedies pursuant to
Annex D;
(8) If Lessor is an owner trustee, any Claim to the extent attributable to
a failure on the part of Owner Trustee to distribute in accordance with
this Lease or the TWA Trust Agreement any amounts received and
distributable by it thereunder;
(9) Any Claim that relates to a cost, fee or expense payable by a Person
other than Lessee pursuant to the Agreement (other than any thereof to
the extent Lessee is liable therefor in the event such Person fails to
pay the same);
(10) Any Claim that is an ordinary and usual operating or overhead expense
other than such expenses caused directly by (X) the occurrence of an
Event of Default or (Y) circumstances beyond the scope of routine
portfolio administration (such routine portfolio administration to be
deemed to include tax preparation and other normally occurring
administrative tasks);
Annex E to Appendix B
2
(11) Any Claims resulting from a violation of ERISA or Section 4975 of the
Code;
(12) Any Claim to the extent caused by the authorization or giving or
withholding by such Indemnified Person of any future amendments,
supplements, waivers or consents with respect to this Lease and the
other Operative Documents, other than such as have been requested by
Lessee, or such that occur as a result of an Event of Default that
shall have occurred and is continuing, or such as are expressly
required by this Lease;
(13) If Lessor is an owner trustee, any Claim that would not have arisen but
for the appointment of a successor or additional Owner Trustee without
the consent of Lessee unless such successor or additional Owner Trustee
has been appointed in connection with the exercise or remedies pursuant
to Annex D following the occurrence and continuance of an Event of
Default;
(14) Any Claim attributable to, or that would not have arisen but for, any
indebtedness, head lease or other financing arrangements of any
Indemnified Person relating to the Aircraft or this Lease; and
(15) Any Claim attributable to the failure of the Owner Participant or the
Lessor to be a Citizen of the United States.
In the case of any Claim indemnified by Lessee which is covered by a policy of
insurance maintained by Lessee pursuant to Annex C, each Indemnified Person
agrees to cooperate, at Lessee's expense, with the insurers in the exercise of
their rights to investigate, defend or compromise such Claim as may be required
to retain the benefits of such insurance with respect to such Claim.
An Indemnified Person shall promptly notify Lessee of any Claim as to which
indemnification is sought; PROVIDED that the failure to give notice promptly
shall relieve Lessee of its indemnity obligations under this Annex only to the
extent such obligations are increased as a result of such failure. Any amount
payable by Lessee to any Indemnified Person pursuant to this Annex shall be paid
within 30 days after receipt of a written demand therefor from such Indemnified
Person accompanied by a written statement describing in reasonable detail the
Claims which are the subject of and basis for such indemnity and the computation
of the amount so payable.
Subject to the rights of insurers under policies of insurance maintained by
Lessee, Lessee shall have the right to investigate, and the right in its sole
discretion to defend or compromise, any Claim for which indemnification is
sought under this Annex (provided that in no event shall the right of any
Indemnified Person under this Annex be adversely affected thereby), and the
Indemnified Person shall cooperate with all reasonable requests of Lessee in
connection therewith; PROVIDED that Lessee shall reimburse such Indemnified
Person for all reasonable costs and expenses incurred by it in connection
therewith. Where Lessee or the insurers under a policy of insurance maintained
by Lessee undertake the defense of an Indemnified Person with respect to a
Claim, no additional legal fees or expenses of such Indemnified Person in
connection with the defense of such Claim shall be indemnified under this Lease
unless such fees or expenses were incurred at the request of Lessee or such
insurers; PROVIDED, HOWEVER, that if in the written opinion (a "CONFLICT
OPINION") of counsel to such Indemnified Person an actual or potential material
conflict of interest exists where it is advisable for such Indemnified Person to
be represented by separate counsel, the reasonable fees and expenses of such
separate counsel shall be borne by Lessee. Subject to the requirements of any
policy of insurance, an Indemnified Person may participate at its own expense in
any judicial proceeding controlled by Lessee pursuant to the preceding
provisions; PROVIDED that such party's participation does not, in the opinion of
the independent counsel appointed by Lessee or its insurers to conduct such
proceedings, interfere with such control; and such participation shall not
constitute a waiver of the indemnification provided in this Annex.
Notwithstanding anything to the contrary contained in this Lease, Lessee shall
not under any circumstances be liable for the fees and expenses of more than one
counsel for all Indemnified Persons except in the case of a delivery to Lessee
of a Conflict Opinion.
Annex E to Appendix B
3
To the extent that a Claim indemnified by Lessee under this Annex is in fact
paid in full by Lessee and/or an insurer under a policy of insurance maintained
by Lessee, Lessee and/or such insurer, as the case may be, shall be subrogated
to the rights and remedies of the Indemnified Person on whose behalf such Claim
was paid (other than rights of such Indemnified Person under insurance policies
maintained at its own expense) with respect to the transaction or event giving
rise to such Claim. So long as no Event of Default shall have occurred and be
continuing, should an Indemnified Person receive any payment from any party
other than Lessee or its insurers, in whole or in part, with respect to any
Claim paid in full by Lessee or its insurers under this Lease, such Indemnified
Person shall promptly pay the amount so received (but not an amount in excess of
the amount Lessee or any of its insurers has paid in respect of such Claim) over
to Lessee.
The indemnities and other obligations of Lessee (subject to CLAUSE (2) above),
and the obligations of each Indemnified Person, under this Annex E shall survive
the expiration or other termination of the Operative Documents.
Annex E to Appendix B
4
ANNEX F
GENERAL TAX INDEMNITY
(a) "CODE" means the U.S. Internal Revenue Code of 1986, as currently
in effect or hereafter amended.
"TAX" or "TAXES" means all governmental or quasi-governmental fees
(including, without limitation, license, filing and registration fees) and all
taxes (including, without limitation, franchise, excise, stamp, value added,
income, gross receipts, sales, use, property, personal and real, tangible and
intangible taxes), withholdings, assessments, levies, imposts, duties or
charges, of any nature whatsoever, together with any penalties, fines, additions
to tax or interest thereon or other additions thereto imposed, levied or
assessed by any country, taxing authority or governmental subdivision thereof or
therein or by any international authority, including any taxes imposed on any
Person as a result of such Person being required to collect and pay over
withholding taxes.
"TAX INDEMNITEE" means Lessor, Owner Participant, if any, The Provident Bank, as
lender, and the respective succes sors and permitted assigns of each of the
foregoing Persons, but excluding any such Person in its capacity as the
manufacturer, supplier or subcontractor of the Aircraft, Airframe, Engines or
any Part thereof, and any officer, director, servant, agent, successor, or
permitted assign of such Person in such capacity.
(b) (i) Subject to CLAUSE (ii) below, Lessee agrees to indemnify, pro-
tect, defend and hold harmless on an After-Tax Basis each Tax Indemnitee against
any and all Taxes imposed with respect to any period after the Commencement Time
on any Tax Indemnitee, Lessee, the Aircraft, the Airframe, any Engine or any
Part, upon or with respect to (A) the Aircraft, the Airframe, any Engine or any
Part, (B) the lease, sublease, possession, use, non-use, substitution,
airworthiness, state of airworthiness, control, maintenance, repair,
replacement, operation, registration, re-registration, condition, sale, storage,
modification, alteration, return, transfer or other disposition of the Aircraft,
the Airframe, any Engine or any Part, (C) any Basic Rent or Supplemental Rent
payable by Lessee or (D) the exercise of remedies pursuant to Annex D in
connection with an Event of Default that shall have occurred and be continuing.
(ii) Lessee shall have no obligation under this Lease with respect to
Taxes described in any one or more of the following clauses; PROVIDED that
CLAUSES (B) and (G) below shall not apply in determining the additional amount
necessary to make any payment under Annex E or this Annex F on an After-Tax
Basis:
(A) Taxes imposed on or with respect to TWA, or attributable to any act
or omission of TWA at any time or to any act, claim, event, circumstance or
condition existing, accruing, arising or occurring at any time at or prior to
the Commencement Time, or attributable to, or constituting, a TWA Liability;
(B) Taxes imposed by any government or taxing authority on, based on,
measured by or with respect to capital, net worth, doing business, retained
earnings, tax preferences, gross or net income or gross or net receipts or that
are franchise Taxes; PROVIDED that there shall not be excluded by this CLAUSE
(B) (X) any such Taxes imposed by any government or taxing authority located
outside the United States to the extent such Taxes would have been imposed had
the sole connection between the Tax Indemnitee and such government or taxing
authority been (I) the location, use, operation or presence of the Aircraft, the
Airframe, any Engine or any Part in such jurisdiction, (II) the presence,
activity or other connection of Lessee in or with such jurisdiction, or (III)
Lessee's making a payment from or through such jurisdiction or (Y) any sales,
use, license, value added, property or rental Taxes (or Taxes in the nature
thereof) imposed by any government or taxing authority;
(C) Taxes imposed on any Tax Indemnitee to the extent such Taxes result
from, or would not have been imposed but for (W) a Lessor's Lien, (X) the
willful misconduct or gross negligence of such Tax Indemnitee, (Y) the breach or
inaccuracy of any representation, warranty or covenant of such Tax Indemnitee in
the Operative Documents, or (Z) the failure of such Tax Indemnitee to comply
with any certification, information, documentation, reporting or other similar
requirement, if such compliance is necessary or appropriate to claim any relief
from such Taxes for which such Tax Indemnitee was eligible, unless such failure
to comply is due to the failure of Lessee to comply with its obligations under
CLAUSE (VI) below;
Annex F to Appendix B
(D) Taxes imposed on any Tax Indemnitee in excess of the Taxes that
would have been imposed and indemnified against had there not been a transfer
(whether voluntary or involuntary) (X) by a Tax Indemnitee of any interest in
the Aircraft, the Airframe, any Engine, any Part, the Trust Estate, or any
interest arising under any Operative Document (other than such a transfer
pursuant to "VOLUNTARY TERMINATION", "REPLACEMENT ENGINES", "EVENT OF LOSS" or
"END OF LEASE PURCHASE OPTIONS" or the exercise of remedies pursuant to Annex D)
or (Y) of any interest (direct or indirect) in a Tax Indemnitee;
(E) Taxes imposed on any Tax Indemnitee on or with respect to a
transfer (whether voluntary or involuntary) (X) by a Tax Indemnitee of any
interest in the Aircraft, the Airframe, any Engine, any Part, the Trust Estate,
or any interest arising under any Operative Document (other than such a transfer
pursuant to "VOLUNTARY TERMINATION", "REPLACEMENT ENGINES", "EVENT OF LOSS" or
"END OF LEASE PURCHASE OPTIONS" or the exercise of remedies pursuant to Annex D)
or (Y) of any interest (direct or indirect) in a Tax Indemnitee;
(F) Taxes to the extent imposed with respect to any period commencing
after the earlier of (X) the return of the Aircraft to Lessor pursuant to the
Return Conditions or, if the Aircraft is stored pursuant to the Return
Conditions, the date of the placement of the Aircraft in storage and (Y) the
expiration or earlier termination of this Lease under circumstances not
requiring the return of the Aircraft; PROVIDED that there shall not be excluded
by this CLAUSE (F) any Taxes to the extent (I) attributable to events occurring
or matters arising prior to or simultaneously with the earlier of such times,
any failure of Lessee to perform its obligations under this Lease in full
compliance therewith, or the exercise of remedies pursuant to Annex D in
connection with an Event of Default that shall have occurred and be continuing
or (II) imposed with respect to any payment by Lessee under the Operative
Documents after such date;
(G) Taxes imposed on any Tax Indemnitee by any government or taxing
authority to the extent such Taxes would not have been imposed but for a present
or former connection between such Tax Indemnitee and such government or taxing
authority unrelated to the transactions contemplated by the Operative Documents;
(H) Taxes to the extent such Taxes would not have been imposed but for
an amendment to any Operative Document without the prior written consent of
Lessee, unless such amendment is requested by Lessee, is expressly required by
this Lease or is made as a result of an Event of Default that shall have
occurred and be continuing;
(I) Taxes for so long as such Taxes are being contested in accordance
with the provisions of CLAUSE (V) below, except to the extent a payment by
Lessee is required pursuant to such clause;
(J) Taxes imposed on any Tax Indemnitee in excess of the Taxes that
would have been imposed if such Tax Indemnitee at all times had been a United
States person for U.S. federal income tax purposes;
(K) value added Taxes imposed in lieu of income Tax by the United
States or any state or local government or taxing authority thereof or therein;
(L) Taxes resulting from a violation of ERISA or Section 4975 of the
Code;
(M) if Lessor is an owner trustee, Taxes to the extent imposed by
reason of the trust of which Lessor is owner trustee not being treated as a
"grantor trust" or otherwise being disregarded for U.S. federal income tax
purposes, except to the extent such Taxes would have otherwise been imposed on
another Tax Indemnitee and been subject to indemnification by Lessee under this
SUBSECTION (B);
(N) if Lessor is an owner trustee, Taxes on, based on, measured by or
with respect to any consideration payable for services rendered by Lessor as
owner trustee; and
Annex F to Appendix B
2
(O) Taxes attributable to, or that would not have been imposed but for,
any indebtedness, head lease or other financing arrangements of any Tax
Indemnitee relating to the Aircraft or this Lease.
(iii) If, by reason of any Claims or Taxes paid or indemnified against
by Lessee pursuant to Annex E or this SUBSECTION (B), any Indemnified Person or
Tax Indemnitee (or any related Person) at any time realizes a net reduction in
any Taxes not indemnified against by Lessee and not taken into account
previously in computing the amount of any indemnity payable by Lessee under
Annex E or this SUBSECTION (B), such Indemnified Person or Tax Indemnitee shall,
subject to CLAUSE (X) below, promptly pay to Lessee an amount that, after
subtraction of any further Tax savings such Tax Indemnitee or Indemnified Person
realizes as a result of the payment thereof, is equal to the amount of such net
Tax reduction; PROVIDED that any subsequent loss of a Tax benefit for which a
payment has been made to Lessee under this CLAUSE (III) (or which was taken into
account in computing an amount payable by Lessee under this SUBSECTION (B))
shall be treated as an indemnifiable Tax hereunder without regard to the
exclusions set forth in CLAUSE (II) above. Each Tax Indemnitee shall in good
faith use diligence in filing its tax returns and in dealing with taxing
authorities to seek and claim any Tax benefit that would result in such a
reduction in Taxes and to minimize the Taxes indemnifiable by Lessee hereunder.
(iv) Lessee shall pay any Tax for which it is liable pursuant to this
SUBSECTION (B) directly to the appropriate taxing authority, if allowable, or if
not so allowable, directly to the relevant Tax Indemnitee. Any amount payable
directly to any Tax Indemnitee pursuant to this SUBSECTION (B) shall be paid to
such Tax Indemnitee on or prior to the later of (A) 30 days after receipt by
Lessee of a written demand therefor from such Tax Indemnitee accompanied by a
written statement describing in reasonable detail the Taxes that are the subject
of such indemnity and the computation of the amount so payable, (B) one Business
Day prior to the due date for the payment of such Taxes (including all
extensions) or (C) in the case of amounts which are being contested in
accordance with CLAUSE (V) below, the time such contest (including all appeals,
if any) is finally resolved; provided that Lessee shall pay any amounts due
pursuant to CLAUSE (V) below at the time or times required by such CLAUSE. If
requested by a Tax Indemnitee in writing, Lessee shall furnish to such Tax
Indemnitee the original or a certified copy of a receipt (if any is reasonably
available to Lessee) for Lessee's payment of any Tax directly to a taxing
authority pursuant to this SUBSECTION (B) or such other evidence of such payment
by Lessee as is reasonably acceptable to such Tax Indemnitee and reasonably
available to Lessee.
(v) If a written claim is made against any Tax Indemnitee for any Tax
for which Lessee may be obligated pursuant to this SUBSECTION (B), or if any Tax
Indemnitee shall determine that any Tax for which Lessee may be obligated
pursuant to this SUBSECTION (B) may be payable, such Tax Indemnitee shall notify
Lessee promptly in writing. If requested by Lessee in writing, such Tax
Indemnitee shall in good faith diligently contest through appropriate
administrative and judicial proceedings (including pursuing all judicial
appeals, but not to the United States Supreme Court) in the name of such Tax
Indemnitee (or, if requested by Lessee and permitted by applicable law, and
subject to the conditions set forth in the next sentence, permit Lessee to
contest in the name of Lessee or such Tax Indemnitee), the validity,
applicability and amount of such Tax by (X) resisting payment thereof, (Y) not
paying the same except under protest, if protest be necessary or proper, or (Z)
if payment be made, seeking a refund thereof in appropriate administrative and
judicial proceedings; PROVIDED that (A) prior to taking such administrative or
judicial action Lessee shall have agreed to pay such Tax Indemnitee on demand
all reasonable out-of-pocket costs and expenses which such Tax Indemnitee may
incur in connection with contesting such claim, including, without limitation,
all reasonable legal, accountants' and investigatory fees and disbursements, (B)
if such contest shall be conducted in a manner requiring the payment of the Tax,
Lessee shall advance to such Tax Indemnitee (on an interest-free basis) the
amount of such payment and shall agree to indemnify such Tax Indemnitee against
any adverse tax consequences to such Tax Indemnitee resulting from such
interest-free loan, (C) the action to be taken will not result in any material
danger of forfeiture, sale or loss of the Aircraft, the Airframe or any Engine
(unless Lessee shall have provided to Lessor a bond or other sufficient
protection against such risk reasonably acceptable to Lessor and such Tax
Indemnitee), (D) if an Event of Default shall have occurred and be continuing,
Lessee shall have provided security for its related tax indemnity obligation
reasonably acceptable to such Tax Indemnitee, and (E) prior to commencing any
judicial action (but not administrative action), if reasonably requested by the
Tax
Annex F to Appendix B
3
Indemnitee, Lessee shall have provided to such Tax Indemnitee an opinion of tax
counsel (who may be an employee of Lessee) selected by Lessee and reasonably
acceptable to such Tax Indemnitee to the effect that there is a reasonable basis
(consistent with ABA Opinion 85-352) for contesting such claim. Lessee shall not
be permitted to conduct such a contest in its name or in the name of the
relevant Tax Indemnitee, and the relevant Tax Indemnitee shall conduct such
contest, if such contest involves issues for which Lessee is not obligated under
this SUBSECTION (B) that can not be severed by reasonable efforts of the Tax
Indemnitee from all issues for which Lessee might be so obligated. In any
contest under this CLAUSE (V) conducted by Lessee, Lessee shall determine the
forum and manner in which such contest shall be conducted and, upon the written
request of the relevant Tax Indemnitee, will advise such Tax Indemnitee of the
status of such contest. In any contest under this CLAUSE (V) conducted by a Tax
Indemnitee, such Tax Indemnitee shall determine the forum for such contest and
the manner in which it shall be conducted; PROVIDED that such Tax Indemnitee
shall consult in good faith with Lessee and its counsel, and provide to Lessee
and its counsel any communications to or from the relevant taxing authority or
administrative or judicial body, with respect to the issues for which Lessee may
be obligated under this SUBSECTION (B).
If any Tax Indemnitee shall obtain a refund of all or part of any Tax
paid by Lessee or for which Lessee shall have reimbursed such Tax Indemnitee,
such Tax Indemnitee shall pay Lessee an amount equal to the amount of such
refund, including any interest received on such refund attributable to such Tax
that is properly attributable to the period subsequent to such payment or
reimbursement by Lessee, reduced by any Taxes payable by such Tax Indemnitee as
a result of the receipt or accrual of such refund and interest, and increased by
any Tax benefit realized by such Tax Indemnitee as a result of any payment by
such Tax Indemnitee pursuant to this sentence.
If a Tax Indemnitee elects not to contest any Tax that it is otherwise
required to contest in accordance with this CLAUSE (V), or elects to settle,
compromise or otherwise terminate any such contest without the consent of
Lessee, such election shall constitute a waiver by such Tax Indemnitee of any
right to any amount that might otherwise be payable by Lessee pursuant to this
SUBSECTION (B) with respect to such Tax (other than any expenses of the contest)
and, if Lessee has theretofore provided such Tax Indemnitee with an
interest-free loan to pay such amount, such Tax Indemnitee shall promptly repay
an amount which, after subtraction of any further net savings of Taxes actually
realized by such Tax Indemnitee as a result of such payment, shall be equal to
the amount of such interest-free loan, together with interest on the amount of
such loan from the date such loan was made to the date of repayment pursuant to
this sentence at the rate that would have been paid by the relevant taxing
authority had such contest resulted in a refund.
(vi) If any report or return is required to be filed with respect to
any property Tax (or any Tax in the nature of a property Tax) subject to
indemnification by Lessee under this SUBSECTION (B), Lessee shall, if permitted
by applicable law to do so, timely file such report or return (except for any
such report or return as to which Lessor has notified Lessee that Lessor intends
to file such report or return) so as to show ownership of the Aircraft in Lessor
and, if requested by Lessor, send a copy of such re port or return to Lessor;
PROVIDED that Lessor shall have furnished Lessee, at Lessee's request, with such
information, not within the control of Lessee, as is in the control of Lessor or
Owner Participant, if any, and is reasonably available to such Person and
necessary to file such report or return (it being understood that neither Lessor
nor Owner Participant shall be required to furnish copies of its actual tax
returns). If Lessee is not permitted by applicable law to file any such report
or return with respect to such Tax, or has insufficient information to do so,
Lessee will promptly notify Lessor of such requirement and prepare and deliver
to Lessor a proposed form of such report or return, within a reasonable time
prior to the time such report or return is to be filed. If any report or return
is required to be filed with respect to any Tax (other than a property Tax or
Tax in the nature thereof) for which Lessee is obligated under this SUBSECTION
(B), Lessee will notify the relevant Tax Indemnitee thereof upon Lessee's
obtaining actual knowledge of such requirement. In addition, Lessee will furnish
upon written request such data in its possession or otherwise reasonably
available to it as any Tax Indemnitee may reasonably request to enable such Tax
Indemnitee to comply with the requirements of any taxing authority arising out
of such Tax Indemnitee's participation in the transactions contemplated by this
Lease.
Annex F to Appendix B
4
Each Tax Indemnitee agrees to furnish from time to time to or as
directed by Lessee, upon Lessee's written request and at Lessee's expense, such
duly executed and properly completed forms, statements or certificates as may be
necessary or appropriate in order to claim any available reduction of any Tax
for which Lessee may be obligated under this SUBSECTION (B); PROVIDED that
Lessee shall have furnished such Tax Indemnitee with any information necessary
to complete such form, statement or certificate that is not otherwise reasonably
available to such Tax Indemnitee.
(vii) At the request of Lessee, any statement prepared by a Tax
Indemnitee pursuant to this SUBSECTION (B), and any amount payable by or to
Lessee pursuant to this SUBSECTION (B), shall be verified and certified by a
nationally recognized firm of independent accountants selected by the relevant
Tax Indemnitee and reasonably acceptable to Lessee. The costs of any such
verification and certification shall be borne by Lessee unless such firm
determines that any amount payable (A) by Lessee to a Tax Indemnitee is less
than 95% of the amount determined to be so payable by such Tax Indemnitee or (B)
by any Tax Indemnitee to Lessee is greater than the amount determined to be so
payable by such Tax Indemnitee by at least 5%, in either of which cases the cost
of such verification and certification shall be paid by the Tax Indemnitee. In
the event such firm shall determine that such amount or statement is incorrect,
then such firm shall determine what it believes to be the correct amount, and
such determination shall be binding upon the parties. Any Tax return of a Tax
Indemnitee provided to such firm shall be confidential and shall be used by it
only for purposes of such verification and certification and shall not be
disclosed to Lessee.
(viii) For purposes of this SUBSECTION (B), any reference to Lessor,
Owner Trustee, Owner Participant or a Tax Indemnitee shall, with respect to any
Tax imposed with respect to a combined, consolidated or affiliated group of
which such Person is a member, also include such group and any member thereof.
(ix) If, at the time any amount would otherwise be payable to Lessee
under this subsection (b), an Event of Default or Specified Default shall have
occurred and be continuing, such amount shall be held by the relevant Tax
Indemnitee as security for the obligations of Lessee under the Operative
Documents and invested in accordance with the Section captioned "INVESTMENT OF
SECURITY FUNDS" and, if Lessor declares this Lease to be in default pursuant to
Annex D, applied against Lessee's obligations under the Operative Documents as
and when due. At such time as there shall not be continuing any such Event of
Default or Specified Default, such amount shall be paid to Lessee to the extent
not previously applied under the preceding sentence; PROVIDED that if any such
amount has been so held as security for more than 90 days after any such Event
of Default or Specified Default shall have occurred and during which period (A)
Lessor shall not have been limited by operation of law or otherwise from
exercising remedies hereunder and (B) Lessor shall not have exercised any remedy
available to it under Annex D, then such amount shall be paid to Lessee.
(x) If a Tax Indemnitee is not a party to this Lease, Lessee may
require such Tax Indemnitee to agree in writing, in a form reasonably acceptable
to Lessee, to the terms of this SUBSECTION (B) prior to making any payments to
such Tax Indemnitee under this SUBSECTION (B).
(xi) The indemnities and other obligations of Lessee (subject to clause
(ii)(F)), and the obligations of each Tax Indemnitee, under this Annex F shall
survive the expiration or other termination of the Operative Documents.
Annex F to Appendix B
5
APPENDIX B-1
SUMMARY OF ECONOMIC TERMS
AIRFRAME
MANUFACTURER
AND MODEL McDonnell Douglas Corporation, MD-82
YEAR OF
MANUFACTURE: 1984
AIRFRAME
REGISTRATION
NUMBER: N913TW
AIRFRAME
MANUFACTURER
SERIAL NUMBER: 49184
ENGINE
MANUFACTURER
AND MODEL Pratt & Whitney Model JT8D-217A
ENGINE SERIAL
NUMBERS: P709733D and P709734D
LESSOR: First Security Bank, National Association
OWNER PARTICIPANT: Airlease, Ltd.
LEASE EXPIRY
DATE: January 1, 2009
BASIC MONTHLY For all Lease Period Dates through January 1,
RENT IN 2002: $90,000
ARREARS: For all Lease Period Dates thereafter: $100,000
STIPULATED
LOSS VALUES;
TERMINATION
VALUES: Attached as Schedule A hereto
MAXIMUM
VALUE OF
REMOVED
OBSOLETE PARTS: $500,000
DEPOSITS;
RESERVES: There will be no security deposits, maintenance
reserves or similar requirements, and under no
circumstances will Lessee or American (if Lessee is
not American) be required to provide additional
collateral, letters of credit or other credit support
for its obligations under this Lease.
PUT OPTION: Lessor shall have the right to exercise a put option
(the "PUT OPTION") requiring Lessee to purchase the
Aircraft from Lessor for a purchase price specified
herein (the "PURCHASE PRICE") on any date specified
by Lessor occurring on or after October 1, 2001 but
not later than March 31, 2002, PROVIDED that Lessor
may only exercise the Put Option by providing Lessee
with at least 60 days' prior written notice of the
date on which such purchase is to occur. The Purchase
Price shall be $9,000,000 if the Aircraft is to be so
purchased on a date occurring in 2001, and $8,900,000
if the Aircraft is to be so purchased on a date
occurring thereafter. If the Aircraft is to be so
purchased on a date that is not a Lease Period Date,
Lessee shall, on such date, pay to Lessor Basic Rent,
calculated on a pro-rata basis to, and including, the
date on which Lessee purchases the Aircraft in
accordance with the provision of this Lease. In the
event that Lessor does not exercise the Put Option,
the monthly rent payable in arrears by Lessee to
Lessor for the Aircraft shall be as specified in this
Summary of Economic Terms, effective for the period
of time commencing January 1, 2002 and terminating on
the Lease Expiry Date, except as the parties may
otherwise agree.
Upon payment by Lessee of the purchase price referred
to above and all other Supplemental Rent then due and
owing to Lessor and Owner Participant: (A) Lessor
shall transfer to Lessee, without recourse or
warranty (except as to the absence of Lessor's
Liens), all of Lessor's right, title and interest in
and to the Aircraft and (B) Lessor shall deliver to
Lessee or its FAA counsel an FAA standard Form 8050-2
Bill of Sale for the Aircraft (the "FAA BILL OF SALE"
and, together with the bill of sale referenced in
subsection (A) of this paragraph, the "BILLS OF
SALE") and such other documents of transfer, title
and registration as may be prescribed by the U.S.
Federal Aviation Administration FAA or as may
reasonably be requested by the Lessee.
END OF
LEASE TERM
PURCHASE
OPTIONS: Lessee shall have the option at the end of the Lease
Term or any Renewal Term to purchase the Aircraft at
a price equal to the fair market sales value of the
Aircraft. Such option to purchase shall be exercised
upon written irrevocable notice from Lessee to Lessor
given not less than 180 days prior to the last day of
the Lease Term or any Renewal Term, as the case may
be. If Lessee shall have so elected to purchase the
Aircraft, Lessor shall transfer without recourse or
warranty (except as to Lessor's Liens) the Aircraft
to Lessee, against payment by Lessee of the
applicable purchase price in immediately available
funds. Fair market sales value of the Aircraft shall
be determined not less than 210 days prior to the end
of the Lease Term or any Renewal Term by mutual
agreement of Lessor and Lessee or, if they shall be
unable to agree, by an Independent Appraisal.
RENEWAL
OPTIONS: Lessee shall have the option to renew this Lease for
up to two successive renewal terms (each, a "RENEWAL
TERM") having a duration of one year each, in each
case at an amount of renewal rent equal to fair
market rental value, upon written irrevocable notice
from Lessee to Lessor given not less than 180 days
prior to the end of the Lease Term or any Renewal
Term then in effect, as the case may be. If the
Lessee exercises its option to renew the
Lease, this Lease shall be extended for the
additional period of the Renewal Term on the same
conditions (other than the renewal rent) provided for
in this Lease, and upon such extension, the term
"Lease Term" whenever used in this Lease shall be
deemed to refer, unless the context otherwise
requires, to such Renewal Term. Fair market rental
value shall be determined not less than 210 days
prior to the end of the Lease Term or any Renewal
Term then in effect by mutual agreement between
Lessor and Lessee or, if they shall be unable to
agree, by an Independent Appraisal.
Lessor will have no rights to extend the Lease Term
or compel Lessee to renew the Lease Term.
VOLUNTARY
TERMINATION: Lessee shall have the right, at its option and upon
90 days' prior written notice to Lessor specifying a
date of termination (the "TERMINATION DATE"), to
terminate this Lease with respect to any Aircraft at
any time after the 8th year anniversary of the
Commencement Time if, in Lessee's good faith
determination (as evidenced by a certificate of a
responsible officer of Lessee to such effect), such
Aircraft is surplus to Lessee's requirements or
economically obsolete to Lessee. Lessee will have the
option to act as non-exclusive agent of Lessor in
selling the Aircraft.
Lessor shall give Lessee irrevocable notice of its
election to sell or retain the Aircraft no later than
45 days prior to the Termination Date. If Lessor
elects to sell the Aircraft, Lessee, if it has
elected to serve as non-exclusive agent for Lessor,
shall use its best efforts to obtain bids for the
Aircraft. Lessee shall promptly certify to Lessor in
writing the amount and terms of each bid received by
Lessee and the name and address of the Person (who
shall not be Lessee or any affiliate of Lessee)
submitting each such bid. Lessor may also, at its
expense, independently obtain bids for such purchase
and, in the event Lessor receives any such bid,
Lessor shall promptly, and in any event at least five
Business Days prior to the Termination Date, certify
to Lessee in writing the amount and terms of such bid
and the name and address of the Person (who shall not
be Lessee or any affiliate of Lessee) submitting such
bid. On the Termination Date (or such earlier date of
sale as may be agreed to in writing by Lessor and
Lessee, which date shall thereafter be deemed the
Termination Date) (X) Lessee shall, subject to
receipt (I) by Lessor of funds in an amount equal to
the Termination Value for the Aircraft as of the
Termination Date, and (II) by the Persons entitled
thereto of all unpaid Supplemental Rent due on or
before the Termination Date, deliver the Aircraft to
the bidder, if any, which shall have prior to such
date submitted the highest cash bid that would result
in the highest net proceeds and of which notice shall
have been given, and shall duly transfer to Lessor
title to any engines installed on the Aircraft but
not owned by Lessor in accordance with the Return
Conditions, and (Y) Lessor shall, without recourse or
warranty (except as to Lessor's Liens),
simultaneously therewith sell the Aircraft for cash
to such bidder. The total selling price realized at
such sale shall be retained by Lessor and, in
addition, on the Termination Date, Lessee shall pay
to Lessor or, in the case of Supplemental Rent, to
the Persons entitled thereto, an amount equal to the
sum of (1) the excess, if any, of (A) the Termination
Value for the Aircraft as of the Termination Date,
over (B) the proceeds of the sale of the Aircraft
after deducting the reasonable expenses incurred by
Lessor, plus (2) all Supplemental Rent due and owing
on the Termination Date. If on or prior to the
scheduled Termination Date no sale of the Aircraft
shall have occurred and if Lessor shall not have
elected to retain the Aircraft, Lessee's notice of
termination shall be deemed to be withdrawn as of
such scheduled Termination Date and this Lease shall
continue in full force and effect. Upon any such sale
of the Aircraft, Lessor will transfer to Lessee,
without recourse or warranty (except as to Lessor's
Liens), all of Lessor's right, title and interest in
and to any Engines constituting part of the Aircraft
but which are not then
installed on the Aircraft.
If Lessor shall have elected to retain the Aircraft,
on the Termination Date specified in Lessee's
termination notice (I) Lessee (X) shall deliver the
Aircraft to Lessor, and shall duly transfer to Lessor
title to any engines installed on the Aircraft but
not owned by Lessor in accordance with the Return
Conditions, and (Y) shall pay to Lessor or to the
Persons entitled thereto, all Supplemental Rent due
and owing on the Termination Date, and (II) Lessor
shall transfer to Lessee, without recourse or
warranty (except as to Lessor's Liens), all of
Lessor's right, title and interest in any to any
Engines constituting part of the Aircraft but which
are not then installed on the Aircraft.
Upon the sale or retention of the Aircraft, as the
case may be, in compliance with this Section, this
Lease, Lessee's obligation to pay Basic Rent on any
Lease Period Date occurring subsequent to the
Termination Value Determination Date with respect to
which Termination Value is determined (it being
agreed that if the Termination Value Determination
Date is a Lease Period Date, Lessee shall be required
to pay the Basic Rent installment falling due on such
Termination Value Determination Date), and Lessee's
obligation to pay Supplemental Rent (other than
payments of Supplemental Rent for indemnities
surviving pursuant to Annex E or Annex F or to be
made by Lessee in respect of liabilities and
obligations of Lessee which have accrued but not been
paid or which are in dispute as of the Termination
Date) shall terminate.
"TERMINATION VALUE" with respect to the Aircraft as
of the Termination Date means the amount set forth in
the Summary of Economic Terms opposite the
Termination Value Determination Date next preceding
the Termination Date (or, if the Termination Date
occurs on a Termination Value Determination Date, the
amount opposite such Termination Value Determination
Date) plus interest at the Prime Rate for the period
from and including such Termination Value
Determination Date to but excluding such date of
determination.
Except as set forth in this Summary of Economic
Terms, Lessor shall not otherwise have any right to
"put" the Aircraft to Lessee, to unwind or otherwise
in any way terminate this Lease or to compel Lessee
to terminate or unwind this Lease (except pursuant to
the exercise of Lessor's remedies in this Lease
following an Event of Default).
ASSIGNMENT: Lessee shall be permitted to assign its rights and
obligations under this Lease with Lessor's prior
written consent, such consent not to be unreasonably
withheld; provided that (i) if Lessee is American, it
may assign its rights and obligations under this
Lease to any of its affiliates and (ii) if Lessee is
an affiliate of American, it may assign its rights
and obligations under this Lease to American or to
any other affiliate of American, in each of the
foregoing cases at any time without Lessor's prior
written consent and, with respect to any assignment
to an affiliate of American, subject to the execution
and delivery by American to Lessor and the Owner
Participant, if any, of a guaranty, substantially in
the form of the American Guaranty with respect to any
such affiliate assignee. Upon any such assignment to
an affiliate of American, and immediately prior to
the execution of an American Guaranty with respect to
such affiliate assignee, any other American Guaranty
in effect at such time shall automatically terminate
without any further action by American and American
shall have no further obligations thereunder.
SCHEDULE A TO SUMMARY OF ECONOMIC TERMS
AIRLEASE LTD. - N913TW
STIPULATED LOSS VALUE STIPULATED LOSS VALUE
DETERMINATION DATE
1-Mar-01 $11,100,000
1-Apr-01 $11,035,106
1-May-01 $10,970,213
1-Jun-01 $10,905,319
1-Jul-01 $10,840,426
1-Aug-01 $10,775,532
1-Sep-01 $10,710,638
1-Oct-01 $10,645,745
1-Nov-01 $10,580,851
1-Dec-01 $10,515,957
1-Jan-02 $10,451,064
1-Feb-02 $10,386,170
1-Mar-02 $10,321,277
1-Apr-02 $10,256,383
1-May-02 $10,191,489
1-Jun-02 $10,126,596
1-Jul-02 $10,061,702
1-Aug-02 $9,996,809
1-Sep-02 $9,931,915
1-Oct-02 $9,867,021
1-Nov-02 $9,802,128
1-Dec-02 $9,737,234
1-Jan-03 $9,672,340
1-Feb-03 $9,607,447
1-Mar-03 $9,542,553
1-Apr-03 $9,477,660
1-May-03 $9,412,766
1-Jun-03 $9,347,872
1-Jul-03 $9,282,979
1-Aug-03 $8,218,085
1-Sep-03 $9,153,191
1-Oct-03 $9,088,298
1-Nov-03 $9,023,404
1-Dec-03 $8,958,511
1-Jan-04 $8,893,617
1-Feb-04 $8,828,723
1-Mar-04 $8,763,830
1-Apr-04 $8,698,936
1-May-04 $8,634,043
1-Jun-04 $8,569,149
1-Jul-04 $8,504,255
1-Aug-04 $8,439,362
1-Sep-04 $8,374,468
1-Oct-04 $8,309,574
1-Nov-04 $8,244,681
1-Dec-04 $8,179,787
1-Jan-05 $8,114,894
1-Feb-05 $8,050,000
1-Mar-05 $7,985,106
1-Apr-05 $7,920,213
1-May-05 $7,855,319
The amounts which are payable during any such Renewal Term in respect of
Stipulated Loss Value with respect to the Aircraft shall be determined on the
basis of the fair market sales value of the Aircraft as of the commencement of
such Renewal Term, amortized on a straight-line basis over such Renewal Term to
the fair market sales value of the Aircraft as of the expiration of such Renewal
Term, as such fair market sales value in each case be determined prior to the
commencement of such Renewal Term by mutual consent of Lessor and Lessee or, if
they shall be unable to agree, as determined by an independent Appraisal.
SCHEDULE A TO SUMMARY OF ECONOMIC TERMS
AIRLEASE LTD. - N913TW
STIPULATED LOSS VALUE STIPULATED LOSS VALUE
DETERMINATION DATE
1-Jun-05 $7,790,426
1-Jul-05 $7,725,532
1-Aug-05 $7,660,638
1-Sep-05 $7,595,745
1-Oct-05 $7,530,851
1-Nov-05 $7,465,957
1-Dec-05 $7,401,064
1-Jan-06 $7,336,170
1-Feb-06 $7,271,277
1-Mar-06 $7,206,383
1-Apr-06 $7,141,489
1-May-06 $7,076,596
1-Jun-06 $7,011,702
1-Jul-06 $6,946,809
1-Aug-06 $6,881,915
1-Sep-06 $6,817,021
1-Oct-06 $6,752,128
1-Nov-06 $6,687,234
1-Dec-06 $6,622,340
1-Jan-07 $6,557,447
1-Feb-07 $6,492,553
1-Mar-07 $6,427,660
1-Apr-07 $6,362,766
1-May-07 $6,297,872
1-Jun-07 $6,232,979
1-Jul-07 $6,168,085
1-Aug-07 $6,103,191
1-Sep-07 $6,038,298
1-Oct-07 $5,973,404
1-Nov-07 $5,908,511
1-Dec-07 $5,843,617
1-Jan-08 $5,778,723
1-Feb-08 $5,713,830
1-Mar-08 $5,648,936
1-Apr-08 $5,584,043
1-May-08 $5,519,149
1-Jun-08 $5,454,255
1-Jul-08 $5,389,362
1-Aug-08 $5,324,468
1-Sep-08 $5,259,574
1-Oct-08 $5,194,861
1-Nov-08 $5,129,787
1-Dec-08 $5,064,894
1-Jan-07 $5,000,000
The amounts which are payable during any such Renewal Term in respect of
Stipulated Loss Value with respect to the Aircraft shall be determined on the
basis of the fair market sales value of the Aircraft as of the commencement of
such Renewal Term, amortized on a straight-line basis over such Renewal Term to
the fair market sales value of the Aircraft as of the expiration of such Renewal
Term, as such fair market sales value in each case be determined prior to the
commencement of such Renewal Term by mutual consent of Lessor and Lessee or, if
they shall be unable to agree, as determined by an independent Appraisal.
Bank of America/Airlease
Aircraft Tail Numbers: N913TW
RETURN CONDITIONS ANNEX
RETURN CONDITIONS
The terms of this return conditions annex (this "Annex") shall apply
with respect to the return of the Aircraft to Lessor by or on behalf of Lessee
under the Lease, either at the expiration of the Lease Term or upon exercise of
Lessor's remedies following an Event of Default.
Capitalized terms used but not defined in this Annex shall have the
respective meanings ascribed in the Lease.
A. RETURN OF AIRCRAFT
Except as otherwise provided in the Lease or in this Annex, upon the
termination of the Lease at the end of the Lease Term (including any Renewal
Term) or upon exercise of Lessor's remedies following an Event of Default,
unless Lessee shall have exercised its option (if any) to purchase the Aircraft
pursuant to the terms of the Lease, Lessee will return the Aircraft to Lessor by
delivering the same, at its own expense, to any one of Lessee's or American's
(if American is not Lessee) maintenance facilities in the 48 contiguous United
States which is on Lessee's or American's (if American is not Lessee) route
system, as selected by Lessee, or, if Lessor has requested storage pursuant to
Section H of this Annex, to the location determined in accordance with such
Section H. The Aircraft, at the time of return to Lessor, shall be in a
configuration suitable for commercial passenger service and shall be fully
equipped with two Engines (which may be Replacement Engines owned by Lessee)
duly installed thereon. At the time of the return of the Aircraft to Lessor,
Lessor and Lessee shall execute a Return Acceptance Supplement in the form of
Exhibit A attached hereto.
B. RETURN OF MANUALS AND DATA
At the time of the return of the Aircraft, Lessee shall deliver or
cause to be delivered to Lessor all logs, manuals, certificates and data, and
inspection, modification, overhaul and repair records required to be maintained
with respect thereto following the Commencement Time under applicable rules and
regulations of the FAA (the "Records"), which shall be in such condition as to
demonstrate compliance with the obligations of the Lessee under the maintenance
provisions of the Lease. At the time of delivery of the Records pursuant to this
Annex, Lessor and Lessee shall execute an Aircraft Documentation Return Receipt
in the form of Exhibit B attached hereto.
Notwithstanding anything to the contrary contained in this Annex or the
Lease, Lessee's return obligation under this Annex shall be limited to returning
all such
equipment, manuals and other property as were delivered to Lessee at the
Commencement Time or were developed by Lessee or were used by Lessee in respect
of the Aircraft during the Lease Term.
C. MODIFICATION KITS
Lessor may request and Lessee shall provide any modification kits or
other such items that are on order for the Aircraft, and Lessor shall reimburse
Lessee for the cost of such kits. Lessee shall be responsible for ordering all
no charge kits and, if not incorporated, shall return them to Lessor with the
Aircraft at no charge to Lessor.
D. CONDITION OF AIRCRAFT AT RETURN
At the time of return of the Aircraft to Lessor hereunder:
(1) REGISTRATION; CERTIFICATION. The Aircraft will be registered under
the laws of the United States with the FAA in the name of Lessor or its
designee, PROVIDED that Lessee shall be relieved of its obligation to register
the Aircraft with the FAA if such registration is prohibited by reason of the
failure of Lessor, an owner participant or Lessor's designee to comply with the
citizenship or other eligibility requirements for registration of aircraft under
the Transportation Code.
The Aircraft shall have a currently effective certificate of
airworthiness issued by the FAA and shall be in full compliance with the
provisions of Part 121 of the U.S. Federal Aviation Regulations and U.S.
regulations applicable to the Aircraft's operations for noise, emissions and
environment and be eligible for continued registration and operation in the
United States under the provisions of such Part 121 with no restrictions,
waivers or exemptions.
(2) COMPLIANCE WITH MAINTENANCE PROGRAM. The Aircraft shall be in
compliance with the Maintenance Program (including the associated corrosion
prevention and control program).
(3) REPAIRS. All repairs that were performed since delivery of the
Aircraft to the Lessee at the Commencement Time and that then exist on the
Aircraft shall be permanent and shall have FAA approval if required. All such
repairs shall be provided with data and documentation necessary to verify and
substantiate their certification and methods of compliance. Lessee shall keep
and maintain a complete summary listing of all repairs performed after the
Commencement Time.
(4) MODIFICATIONS. All modifications to the Aircraft made after the
Commencement Time that have not been removed by Lessee at or prior to the return
of the Aircraft shall be in accordance with FAA-approved data. All such
modifications shall be provided with data and documentation necessary to
substantiate their certification,
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approval and methods of compliance. Lessee shall keep and maintain a complete
summary listing of all modifications performed after the Commencement Time (it
being understood and agreed that nothing set forth in this Annex shall derogate
from Lessee's rights and obligations with respect to the alteration and
modification of the Aircraft as set forth in the Lease).
(5) AIRWORTHINESS DIRECTIVES AND MANDATORY REGULATIONS. Subject to
provision in the Lease concerning the sharing of costs between Lessor and Lessee
with respect to compliance with airworthiness directives, if any, all FAA
airworthiness directives and U.S. Federal Aviation Regulations applicable to the
Aircraft (including its systems and components) requiring compliance or
terminating compliance on or prior to the expiration of the Lease Term shall be
accomplished in compliance with the issuing company or agency's specific
instructions without regard to any alternate means of compliance, waiver or
operator exemptions that delay compliance with such FAA airworthiness directives
or U.S. Federal Aviation Regulations. Lessee shall provide a current and
accurate status report and all hard copy records evidencing, when accomplished,
times and cycles and methods of accomplishment with the appropriate signatures
or stamps.
(6) RETURN STATUS.
(i) OPERATING CONDITION. At the expiration of the Lease Term,
the Aircraft shall be in good operating condition, ordinary wear and
tear excepted, and all modifications and maintenance of the Aircraft
after the Commencement Time shall have been performed in such a manner
as to demonstrate compliance with the obligations of Lessee under the
maintenance provisions of the Lease.
(ii) "C" CHECK TIME REMAINING. The Airframe shall have 100%
remaining time (i.e., a full "C" check interval) until its next
scheduled "C" check under the Maintenance Program, as measured by hour,
cycle or calendar day, whichever is applicable and most limiting.
Notwithstanding the immediately preceding sentence, the Aircraft may be
returned with less time remaining to the next scheduled "C" check. If
the Aircraft is returned with less time remaining than 100%, Lessee
shall pay to Lessor, for each hour, cycle or calendar day below 100%, a
U.S. dollar amount computed by dividing (I) Lessee's U.S. dollar cost
of completing a "C" check in accordance with the Maintenance Program
(at Lessee's internal rates with no mark-up) at the time of return of
the Aircraft by (II) the total number of hours, cycles or calendar
days, as applicable, in the applicable "C" check interval.
(iii) "HEAVY C" CHECK TIME REMAINING. The Airframe shall
have at least 25% remaining time until its next scheduled most
comprehensive structural overhaul ("Heavy C" check) under the
Maintenance Program, as measured by
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hour, cycle or calendar day, whichever is applicable and most limiting.
Notwithstanding the immediately preceding sentence, the Aircraft may be
returned with more or less time remaining to the next scheduled "Heavy
C" check. If the Aircraft is returned with less time remaining than
25%, Lessee shall pay to Lessor, and if the Aircraft is returned with
more time remaining than 25%, Lessor shall pay to Lessee, for each
hour, cycle or calendar day below or above 25%, as applicable, a U.S.
dollar amount computed by dividing (I) Lessee's U.S. dollar cost of
completing a "Heavy C" check in accordance with the Maintenance Program
(at Lessee's internal rates with no mark-up) at the time of return of
the Aircraft by (II) the total number of hours, cycles or calendar
days, as applicable, in the applicable "Heavy C" check interval.
(iv) LANDING GEAR TIME REMAINING. The installed nose and main
landing gears and components of the Aircraft and their associated
actuators, side braces and parts (the "Landing Gear") shall have at
least 25% remaining time until the next scheduled Landing Gear overhaul
under the Maintenance Program as measured by hour, cycle or calendar
day, whichever is applicable and most limiting. Notwithstanding the
immediately preceding sentence, the Aircraft may be returned with more
or less time remaining to the next scheduled Landing Gear overhaul. If
the Aircraft is returned with less time remaining than 25%, Lessee
shall pay to Lessor, and if the Aircraft is returned with more time
remaining than 25%, Lessor shall pay to Lessee, for each hour, cycle or
calendar day below or above 25%, as applicable, a U.S. dollar amount
computed by dividing (I) Lessee's U.S. dollar cost of completing a
Landing Gear overhaul in accordance with the Maintenance Program (at
Lessee's internal rates with no mark-up) at the time of return of the
Aircraft by (II) the total number of hours, cycles or calendar days, as
applicable, in the applicable Landing Gear overhaul interval.
(v) ENGINE LIFE-LIMITED PART CYCLE LIFE REMAINING.Each engine
life-limited part shall have at least 25% remaining of its total cycle
life until such part's next scheduled replacement or refurbishment
under the Maintenance Program. Notwithstanding the immediately
preceding sentence, the Aircraft may be returned with more or less
cycle life remaining to the next scheduled replacement or refurbishment
of any such part. If the Aircraft is returned with less cycle life
remaining than 25% for any such part, Lessee shall pay to Lessor, and
if the Aircraft is returned with more cycle life remaining than 25% for
any such part, Lessor shall pay to Lessee, for each cycle below or
above 25%, as applicable, a U.S. dollar amount computed by dividing (I)
Lessee's U.S. dollar cost of replacing or refurbishing such part in
accordance with the Maintenance Program (at Lessee's internal rates
with no mark-up) at the time of return of the Aircraft by (II) the
total number of cycles in such part's total cycle life.
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(vi) ENGINES TIME REMAINING. Each Engine returned with the
Aircraft shall have at least 25% remaining time until its next required
performance restoring overhaul under the Maintenance Program (based on
Lessee's mean time between such overhauls for engines of the same type
operated by Lessee) as measured by hour, cycle or calendar day,
whichever is applicable and most limiting. Notwithstanding the
immediately preceding sentence, the Aircraft may be returned with more
or less time remaining to the next required performance restoring
overhaul of any such Engine. If the Aircraft is returned with less time
remaining than 25% for any such Engine, Lessee shall pay to Lessor, and
if the Aircraft is returned with more time remaining than 25% for any
such Engine, Lessor shall pay to Lessee, for each hour, cycle or
calendar day below or above 25%, as applicable, a U.S. dollar amount
computed by dividing (I) Lessee's U.S. dollar cost of completing a
performance restoring overhaul of such Engine in accordance with the
Maintenance Program (at Lessee's internal rates with no mark-up) at the
time of return of the Aircraft by (II) the total number of hours,
cycles or calendar days, as applicable, in the applicable performance
restoring overhaul interval for such Engine.
(vii) ENGINE BORESCOPE INSPECTION. A full cold and hot section
video borescope inspection in accordance with the Maintenance Program
and a full on-wing power assurance run in accordance with the
Maintenance Program shall have been performed by Lessee for each Engine
in the presence of a representative of Lessor prior to return of the
Aircraft, and Lessee shall have corrected, at Lessee's expense,
discrepancies found during such inspections that are determined to be
outside the limits permitted by the Maintenance Program.
(viii) APU. The auxiliary power unit of the Aircraft ("APU")
shall be in serviceable condition.
(7) DEFERRED MAINTENANCE. There shall be no deferred maintenance items,
scheduled or unscheduled, or watch items or items requiring repetitive
inspections against the Aircraft, including those identified in pre-delivery
inspections or test flights, that are outside of the limits established by the
Maintenance Program.
(8) GENERAL APPEARANCE. The Aircraft shall be clean and shall be in
suitable condition to be placed into U.S. scheduled revenue airline operations
under Part 121 of the U.S. Federal Aviation Regulations.
(9) FUEL. Lessee shall have no obligation with respect to the amount of
fuel or oil contained in the Aircraft and all fuel or oil remaining on board the
Aircraft at the time of its return hereunder shall be the property of Lessor
without charge.
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(10) SPECIAL MARKINGS. All internal and external airline designation
markings appearing on the Aircraft shall have been removed or painted over in a
workmanlike manner (in accordance with Lessee's customary practice).
F. PRE-RETURN INSPECTIONS
Immediately prior to the redelivery of the Aircraft, Lessee shall make
the Aircraft available to Lessor for an inspection that shall include ground
functional checks to verify compliance with the return conditions set forth in
this Annex and, at Lessor's request, a one-hour demonstration flight of the
Aircraft, conducted by Lessee using Lessee's usual test flight procedures.
Lessor shall be permitted to have up to two representatives to be direct
observers of the demonstration flight. The cost of the demonstration flight
shall be paid by Lessee. In the event that the demonstration flight reveals any
operational discrepancies that are determined to be outside the limits permitted
by the Maintenance Program or other items or conditions that would prevent the
Aircraft from meeting the return conditions specified in this Annex, Lessee will
correct, at Lessee's expense, such discrepancies, items or conditions. Lessor
and such Lessor's representatives shall execute and deliver to Lessee prior to
such demonstration flight releases and waivers of liability in form and
substance reasonably satisfactory to Lessee. Any inspection or demonstration
flight shall be subject to the confidentiality provisions set forth in the Lease
with respect to inspections of the Aircraft.
G. NO LIENS
At the time of return of the Aircraft, it shall be free and clear of
all Liens other than Lessor's Liens and Permitted Liens referred to in clause
(i) or (viii) of the definition thereof.
H. STORAGE UPON RETURN
Upon written request of Lessor received at least 30 days prior to the
end of the Lease Term, Lessee will provide Lessor with storage facilities and
maintenance services for the Aircraft for a period not exceeding 90 days at such
location in the continental United States as selected by Lessee. Any storage
facilities provided by Lessee for the Aircraft pursuant to this Section H shall,
in all cases, be at the cost to Lessor of insurance and at Lessor's risk of
loss. In exchange for the maintenance and storage services described in this
Section H, Lessee will charge Lessor, and Lessor will pay to Lessee, Lessee's
rates customarily charged to third parties for similar maintenance and storage
services.
I. REPLACEMENT ENGINES
In the event that any engine not owned by Lessor shall be delivered
with the Airframe at the time of return, Lessee, concurrently with such
delivery, will furnish
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Lessor with a warranty (as to title) bill of sale (which warranty shall except
Lessor's Liens and Permitted Liens of the type described in clause (viii) of the
definition thereof) with respect to such engine, and Lessor will transfer to
Lessee, without recourse or warranty (except as to Lessor's Liens), all Lessor's
right, title and interest in and to an Engine constituting part of the Aircraft
but not installed on the Airframe at the time of the return of the Airframe.
J. PAYMENT MECHANICS
Any payments required to be made pursuant to this Annex shall be made
in U.S. dollars in immediately available funds to such bank account as is
designated by the payee.
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Bank of America/Airlease Aircraft
Tail Numbers: N913TW
EXHIBITS TO RETURN CONDITIONS ANNEX
Exhibit A: Return Acceptance Supplement
Exhibit B: Aircraft Documentation Return Receipt
EXHIBIT A TO RETURN CONDITIONS
ANNEX
RETURN ACCEPTANCE SUPPLEMENT
Dated ___________________
to Lease No. ______
Relating to Model ____ Aircraft
between
___________________________________
(LESSOR)
and
___________________________________
(LESSEE)
This Return Acceptance Supplement is executed by the parties hereto to
confirm that on the date of this Return Acceptance Supplement at _____________
[time] the following described Aircraft:
Manufacturer ..............................
Model.........................................
Manufacturer's Serial No. ....................
Aircraft Hours and Cycles .................... (See Attachment 1)
including the following described Engines installed thereon:
MANUFACTURER MAKE AND MODEL MANUFACTURER'S SERIAL NO.
was delivered by Lessee to Lessor.
This Return Acceptance Supplement is intended to be delivered by Lessor
to Lessee in _____________________.
IN WITNESS WHEREOF, the parties hereto have caused this Return
Acceptance Supplement to be executed by their duly authorized representatives as
of the day and year first above written.
___________________________ _____________________________
(LESSEE) (LESSOR)
By _______________________________ By ______________________________
Its ______________________________ Its _____________________________
ATTACHMENT 1: "Aircraft Hours and Cycles"
2
ATTACHMENT 1 TO
RETURN ACCEPTANCE SUPPLEMENT
AIRCRAFT HOURS AND CYCLES
AS OF ________________
MODEL _____ AIRCRAFT
REGISTRATION MARKINGS ______________ SERIAL NUMBER _______
A. AIRFRAME:
Aircraft Total Time (Hours)............................... ______________
Aircraft Total Landings (Cycles).......................... ______________
Aircraft (and Engine) "C" Check--
Hours/Cycles/Days since last check .................... ______________
Aircraft (and Engine) "Heavy C" Check--
Hours/Cycles/Days since last check .................... ______________
B. ENGINES--MODEL:
HOURS/CYCLES/DAYS CYCLES
SINCE LAST TO NEXT
TOTAL PERFORMANCE REPLACEMENT OF
SERIAL ENGINE TOTAL RESTORING LOWEST LIFE
POSITION NUMBER CYCLES TIME OVERHAUL LIMITED PART
1
2
3
ATTACHMENT 1 TO
RETURN ACCEPTANCE SUPPLEMENT
C. APU - MODEL: __________________________
SERIAL NUMBER TOTAL
HOURS/CYCLES
D. LANDING GEAR:
HOURS/CYCLES/DAYS
SERIAL NUMBER HOURS/CYCLES SINCE LAST OVERHAUL
Nose Landing Gear
Left Main Gear
Right Main Gear
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EXHIBIT B TO RETURN CONDITIONS
ANNEX
AIRCRAFT DOCUMENTATION RETURN RECEIPT
_________________ ("Lessee"), a [Delaware] ______________, and
____________________ ("Lessor"), a _______________________________, hereby
confirm the return delivery by Lessee and receipt by Lessor of the Aircraft
Documentation listed on Attachment 1 hereto and made a Part hereof, on
___________, in _________________, at _______________________local time. [Lessor
is executing this return receipt pursuant to the instructions of
___________________, a ______________ ("Owner Participant"), such instructions
attached hereto as Attachment 2.]
_____________________________ ___________________________
(LESSEE) (LESSOR)
By _______________________ By ___________________________
Its _______________________ Its ___________________________
ATTACHMENTS (2)
EXHIBIT B TO RETURN CONDITIONS
ANNEX
ATTACHMENT 1
AIRCRAFT DOCUMENTATION
IDENTIFICATION
TITLE NUMBER QUANTITY
2
APPENDIX C
[Letterhead of TWA]
[Date]
TO THE PERSONS LISTED ON SCHEDULE A ATTACHED HERETO:
ASSIGNMENT, ASSUMPTION AND AMENDMENT AGREEMENT
Ladies and Gentlemen:
American Airlines, Inc., a Delaware corporation ("AMERICAN"), and Trans
World Airlines, Inc., a Delaware corporation (together with any predecessors or
affiliates, "TWA") have entered into an Asset Purchase Agreement (as amended
from time to time, the "ASSET PURCHASE AGREEMENT"), dated as of January 9, 2001,
pursuant to which American has agreed with TWA, subject to certain terms and
conditions, to enter into a leasing transaction at the Commencement Time (as
defined below) with respect to the aircraft (the "AIRCRAFT") specified in
Schedule A attached hereto. One such condition is that this Agreement shall have
been entered into. All capitalized terms used but not defined herein shall have
the respective meanings given them in Appendix A hereto. This Assignment,
Assumption and Amendment Agreement, together with all annexes, schedules and
other attachments hereto, is referred to collectively as this "AGREEMENT".
The person listed on Schedule A hereto as lessor (the "LESSOR") has
agreed to lease the Aircraft to TWA Airlines LLC, a wholly-owned subsidiary of
American (the "LESSEE") (such leasing transaction, the "TRANSACTION"). The
Transaction has the terms (the "TRANSACTION TERMS") separately agreed by
American and each other person who is a party to, or who has consented to, an
Assumption and Lease Agreement (as may be amended, modified or assigned from
time to time, the "ASSUMPTION AND LEASE AGREEMENT") relating to the Aircraft
and, if entered into, more extensive leasing documents incorporating all of the
Transaction Terms (such leasing documents, the "SUBSTITUTE TRANSACTION
DOCUMENTS").
TWA and the other parties hereto (such other parties other than
American and the Lessee, the "EXISTING TWA PARTIES") hereby agree as follows:
SECTION 1. AMENDMENT, ASSIGNMENT AND ASSUMPTION.
(a) Effective immediately prior to the Commencement Time, subject to
the occurrence of the Commencement Time, the Existing TWA Parties hereby amend
and restate and, to the extent necessary, terminate, effective at the
Commencement Time, each TWA Lease Document, such that the terms and conditions
of the TWA Lease Documents are replaced, deleted and superseded in their
entirety by the Assumption and Lease Agreement; PROVIDED, HOWEVER, that the TWA
Trust Agreement, if any, and the
FORM OF ASSIGNMENT, ASSUMPTION AND AMENDMENT AGREEMENT (GENERAL)
TWA Purchase Agreement Assignment, if any, listed in Schedule B shall not be so
amended and restated or terminated, but shall only be amended to the extent
necessary to make their respective terms consistent with the Transaction Terms.
(b) Effective at the Commencement Time, subject to the occurrence of
the Commencement Time, TWA hereby assigns to the Lessee all of the rights of the
"Lessee" under the TWA Lease Documents, as amended, restated and/or terminated
as provided herein (and only as so amended, restated and/or terminated) and the
Lessee hereby assumes all of the obligations of TWA under the TWA Lease
Documents, as so amended, restated and/or terminated (and only as so amended,
restated and/or terminated); PROVIDED that (A) neither American nor the Lessee
will have any responsibility or liability for any act or omission of TWA at any
time or for any act, claim, event, circumstance or condition existing, accruing,
arising or occurring at any time at or prior to the Commencement Time (any of
the foregoing, a "PRIOR CLAIM"); (B) neither American nor the Lessee assumes or
agrees to pay, satisfy, discharge or perform, and will not be deemed for any
reason whatsoever to have assumed, or agreed to pay, satisfy, discharge or
perform, any liability, obligation or indebtedness of TWA with respect to the
Aircraft, Airframe or Engines, or otherwise, whether primary or secondary,
direct or indirect, including without limitation any and all liabilities and
obligations of TWA resulting from, caused by or arising out of, directly or
indirectly, any act or omission of TWA, the conduct of its business or ownership
or lease of any of its properties or assets (including the Aircraft) or any
properties or assets used by TWA at any time, including without limitation such
of the foregoing as constitute, may constitute or are alleged to constitute a
tort, breach of contract or violation of requirements of any law; (C) neither
American nor the Lessee will be responsible for any rental or other payments
arising or accruing at any time at or prior to, or in respect of any period at
or prior to, the Commencement Time, even if the payment date therefor under the
TWA Lease Documents would have occurred after the Commencement Time; and (D)
neither American nor the Lessee shall have any liability for any Prior Claim
that results or arises from the execution or performance of this Agreement, the
Assumption and Lease Agreement or any Substitute Transaction Document.
(c) Each of the Lessor and the Owner Participant, if any, hereby
consents to the assignment and assumption contained in paragraph (b) of this
Section 1.
(d) Each Lessor Party agrees that, effective at (and subject to the
occurrence of) the Commencement Time, such Lessor Party waives any right and
relinquishes any claim it may have against TWA or against any collateral
securing any such claim with respect to any difference between its rights,
including the amounts to be received, hereunder and its rights, including the
amounts that would be received, under the TWA Lease Documents prior to their
amendment or that arises out of the amendment effected hereby. It is understood
that the Lessor Parties do not, under this Agreement, waive (I) the right they
may have to receive payment from TWA of amounts owed by TWA under the TWA
2
FORM OF ASSIGNMENT, ASSUMPTION AND AMENDMENT AGREEMENT (GENERAL)
Lease Documents at any time prior to the Commencement Time or (II) any rights or
remedies they may have against TWA with respect to events or circumstances
arising or occurring before the Commencement Time (including rights or remedies
arising under Section 1110 of the Bankruptcy Code (11 U.S.C. ss. 1110) or with
respect to Retained Liabilities (as defined in the Asset Purchase Agreement)).
Each Lessor Party acknowledges that it has no right or claim against American,
the Lessee or any of American's other affiliates with respect to any of the
foregoing.
(e) At or prior to the Commencement Time, the parties will execute and
deliver such additional documents as may be necessary or appropriate to be filed
for recordation with the FAA to consummate the transaction contemplated hereby.
SECTION 2. LIMITATION ON TWA LIABILITY OTHER THAN RETAINED LIABILITIES.
Notwithstanding any provision to the contrary in the Transaction Terms,
the Assumption and Lease Agreement, or this Agreement, TWA shall not have any
liability after the Commencement Time other than Retained Liabilities (as
defined in the Asset Purchase Agreement).
SECTION 3. INSTRUCTION.
If Schedule A lists an owner participant (the "OWNER PARTICIPANT"), the
Owner Participant hereby authorizes and directs the Lessor to execute and
deliver this Agreement.
Unless otherwise expressly specified or permitted by the terms hereof,
all notices required or permitted under the terms and provisions hereof shall be
in English and in writing, and any such notice may be given by U.S. mail,
courier service, telegram, cable or facsimile (confirmed by telephone or in
writing in the case of notice by telegram, cable or facsimile) or any other
customary means of communication, and any such notice shall be effective when
delivered to the recipient thereof in accordance with the provisions of this
Section, (I) if to TWA, American or the Lessee, to its respective address
(including facsimile number) set forth below its signature at the foot of this
Agreement, or (II) if to any other party hereto, to its respective address set
forth on Schedule A to this Agreement.
SECTION 4. SEPARATE COUNTERPARTS.
This Agreement may be executed in any number of counterparts (and each
of the parties hereto shall not be required to execute the same counterpart).
Any counterpart may be executed by facsimile signature and such facsimile
signature shall be deemed an original. Each counterpart of this Agreement
including a signature page executed by each of the parties hereto shall be an
original counterpart of this Agreement, but all of such counterparts together
shall constitute one instrument.
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FORM OF ASSIGNMENT, ASSUMPTION AND AMENDMENT AGREEMENT (GENERAL)
SECTION 5. ENTIRE AGREEMENT.
This Agreement, including all the schedules, exhibits and annexes
hereto, the Assignment, Assumption and Amendment Agreement (when executed and
delivered) and the Substitute Transaction Documents (when executed and
delivered) constitute the entire agreement and supersede all prior agreements
and understandings, both written and oral, between the parties with respect to
the subject matter hereof.
SECTION 6. HEADINGS.
The headings of the various sections herein are for convenience of
reference only and shall not define or limit any of the terms or provisions
hereof.
SECTION 7. BINDING EFFECT.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, successors and permitted assigns and
no other person.
SECTION 8. AMENDMENTS.
The provisions of this Agreement may be modified or amended only by an
instrument or instruments in writing signed by each party hereto and consented
to by American.
SECTION 9. GOVERNING LAW.
THIS AGREEMENT IS BEING DELIVERED IN THE STATE OF NEW YORK AND SHALL IN
ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE,
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW
YORK AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK.
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FORM OF ASSIGNMENT, ASSUMPTION AND AMENDMENT AGREEMENT (GENERAL)
The parties hereto have signed this Agreement as of the date first written
above.
Sincerely yours,
TRANS WORLD AIRLINES, INC.
By: ________________________
Name:
Title:
Address:
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FORM OF ASSIGNMENT, ASSUMPTION AND AMENDMENT AGREEMENT (GENERAL)
ACKNOWLEDGED AND AGREED
AMERICAN AIRLINES, INC.
By: _________________________
Name:
Title:
Address: 4333 Amon Carter Boulevard
Mail Drop 5662
Ft. Worth, Texas 76155
Attn: Treasurer
Fax: (817) 967-4318
Tel: (817) 963-1234
TWA AIRLINES LLC
By: _________________________
Name:
Title:
Address: One City Centre
515 North Sixth Street
St. Louis, Missouri 63101
Attn:
Fax:
Tel:
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FORM OF ASSIGNMENT, ASSUMPTION AND AMENDMENT AGREEMENT (GENERAL)
[NAME OF LESSOR/OWNER TRUSTEE]
By: ________________________________
Name:
Title:
[NAME OF OWNER PARTICIPANT]
By: ________________________________
Name:
Title:
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FORM OF ASSIGNMENT, ASSUMPTION AND AMENDMENT AGREEMENT (GENERAL)
SCHEDULE A
AIRCRAFT AND LESSOR PARTIES
FORM OF ASSIGNMENT, ASSUMPTION AND AMENDMENT AGREEMENT (GENERAL)
SCHEDULE B
TWA LEASE DOCUMENTS
FORM OF ASSIGNMENT, ASSUMPTION AND AMENDMENT AGREEMENT (GENERAL)
APPENDIX A
DEFINITIONS
"COMMENCEMENT TIME" means the time on the Closing Date when (i) TWA,
American and the Lessor Parties shall have executed and delivered the
Assignment, Assumption and Amendment Agreement and (ii) the closing under the
Asset Purchase Agreement shall have occurred.
"FAA" means the Federal Aviation Administration of the U.S. and any
successor governmental authority.
"TWA LEASE DOCUMENTS" means all leases, mortgages, loan agreements,
notes, indentures, trust agreements, participation agreements, purchase
agreement assignments, security agreements, letter agreements and all other
agreements with respect to the Aircraft, in each case, to which TWA is a party
or by which TWA is bound or by which TWA's rights are affected, including,
without limitation, the documents listed in Schedule B hereto but excluding any
purchase agreement with a manufacturer of the Aircraft, the Engines (as defined
in the Assumption and Lease Agreement) or any Parts (as defined in the
Assumption and Lease Agreement).
FORM OF ASSIGNMENT, ASSUMPTION AND AMENDMENT AGREEMENT (GENERAL)
APPENDIX D
[FORM OF LESSEE ASSIGNMENT AND ASSUMPTION AGREEMENT]
[Letterhead of American Airlines, Inc.]
To: [AA Subsidiary]
Re: Assumption and Lease Agreement, dated ___________, _____, regarding the
Aircraft bearing U.S. registration number _____________
Ladies and Gentlemen:
We refer to the Assumption and Lease Agreement specified above (as
amended hereby and from time to time, the "ASSUMPTION AND LEASE AGREEMENT"). All
capitalized terms used but not defined herein shall have the respective meanings
given them in the Assumption and Lease Agreement.
American Airlines, Inc., a Delaware corporation, ("AMERICAN") hereby
assigns to you all of its rights under the Assumption and Lease Agreement, and
you hereby assume all of the obligations of American under the Assumption and
Lease Agreement. For the express benefit of the Lessor Parties, you and American
each agrees that the execution, delivery and performance of this Lessee
Assignment and Assumption Agreement does not release American from any of its
obligations under the Assumption and Lease Agreement; PROVIDED that performance
of any such obligation by you shall constitute performance by American (and, to
the extent of such performance, discharge such obligation by American).
For the express benefit of the Lessor Parties, today and at the
Commencement Time:
(1) you make the representations set forth in paragraphs 1(b) - (d) of
Appendix F of the Assumption and Lease Agreement as if (a) such representations
were applicable to you, (b) such representations were fully set forth herein,
and (c) such representation and warranties explicitly related to this Agreement
and the Assumption and Lease Agreement, and
(2) you also represent that you are an entity duly formed or
incorporated and validly existing in good standing under the laws of the State
of Delaware, are a Certificated Air Carrier, are a Citizen of the United States,
have the corporate or company power and authority to own or hold under lease
your properties and to enter into and perform those obligations undertaken by
American under the Assumption and Lease Agreement and assumed by you hereby and
are duly qualified to do business as a foreign
corporation in good standing in each state in which you have intrastate routes
or have a principal office or a major overhaul facility (other than failures to
so qualify that would not have a material adverse effect on the consolidated
financial condition of you and your subsidiaries, considered as a whole), and
your chief executive office (as such term is used the Uniform Commercial Code as
in effect in your state of formation or incorporation) is located in Texas.
THIS AGREEMENT IS BEING DELIVERED IN THE STATE OF NEW YORK AND SHALL IN
ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE,
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW
YORK AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK.
The parties hereto have signed this Lessee Assignment and Assumption
Agreement as of the date written below.
Sincerely yours,
American Airlines, Inc.
By:____________________________
Name:
Title:
ACKNOWLEDGED AND
AGREED
[AA Subsidiary]
By:____________________________
Name:
Title:
Dated as of: _______________, ______
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APPENDIX E
[Form of American Guaranty]
[Letterhead of American Airlines, Inc.]
To: The Lessor Parties named in the Assumption and Lease Agreement referred
to below.
Re: Lessee Assignment and Assumption Agreement between American Airlines,
Inc. a Delaware Corporation ("American") and _______ (the "Assignee")
relating to
Assumption and Lease Agreement, dated ___________, _____, regarding the
Aircraft bearing U.S. registration number _____________
Ladies and Gentleman:
We refer to the Lessee Assignment and Assumption Agreement referred to
above (the "LESSEE ASSIGNMENT"), which relates to the Assumption and Lease
Agreement specified above, as amended by the Lessee Assignment (and as further
amended from time to time, the "ASSUMPTION AND LEASE AGREEMENT"). All
capitalized terms used but not defined herein shall have the respective meanings
given them in the Assumption and Lease Agreement.
American agrees and confirms for the benefit of the Lessor Parties that
its execution, delivery and performance of the Lessee Assignment and Assumption
Agreement does not release American from any of its obligations under the
Assumption and Lease Agreement; PROVIDED that performance of any such obligation
by the Assignee shall constitute performance by American (and, to the extent of
such performance, discharge such obligation by American).
In furtherance of the agreement and confirmation by American made in
the previous paragraph, American hereby unconditionally and irrevocably
guarantees to each Lessor Party the performance of and compliance with all
obligations, representations, covenants and undertakings of the Assignee in the
Assumption and Lease Agreement and the Substitute Transaction Documents, if any,
in accordance with each of their respective terms, and agrees that its
obligations hereunder are absolute, unconditional and irrevocable, are not
subject to any defense based on suretyship, and will not be discharged by any
change in the structure or ownership of the Assignee or any of its affiliates or
any insolvency, bankruptcy, reorganization, arrangement, composition,
liquidation, dissolution, or similar proceedings with respect to the Assignee or
any of its affiliates or any other occurrence whatsoever (including any
occurrence which might
otherwise constitute a legal or equitable defense or discharge of the
liabilities of a guarantor or surety or which might otherwise limit recourse
against the undersigned), except to the extent of performance of all obligations
of the Assignee in accordance with the terms of the Assumption and Lease
Agreement and the Substitute Transaction Documents, if any. This guaranty is a
guaranty of payment and not of collectibility.
For the express benefit of the Lessor Parties, today and at the
Commencement Time: American makes and confirms the representations set forth in
paragraphs 1(a) - (d) of Appendix F of the Assumption and Lease Agreement as if
(a) such representations were fully set forth herein and (b) such
representations and warranties explicitly related to this Agreement.
THIS GUARANTY IS BEING DELIVERED IN THE STATE OF NEW YORK AND SHALL IN ALL
RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK
AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK.
American has signed this American Guaranty as of the date written
below. This American Guaranty may be executed by facsimile or mechanical
signature, and such facsimile or mechanical signature shall be deemed an
original.
Sincerely yours,
American Airlines, Inc.
By:________________
Name:
Title:
Dated as of: _______________, ______.
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APPENDIX F
REPRESENTATIONS AND WARRANTIES
1. REPRESENTATIONS AND WARRANTIES OF AMERICAN
American represents and warrants that as of the date of this Agreement and as of
the Commencement Time:
(a) American is a corporation duly incorporated and validly existing in
good standing under the laws of the State of Delaware, is a Certificated Air
Carrier, has the corporate power and authority to own or hold under lease its
properties and to enter into and perform its obligations under this Agreement
and is duly qualified to do business as a foreign corporation in good standing
in each state in which it has intrastate routes or has a principal office or a
major overhaul facility (other than failures to so qualify that would not have a
material adverse effect on the consolidated financial condition of American and
its subsidiaries, considered as a whole);
(b) the execution, delivery and performance by American of this
Agreement have been duly authorized by all necessary corporate action on the
part of American, do not require any stockholder approval or approval or consent
of any trustee or holder of any indebtedness or obligations of American, except
such as have been duly obtained and are in full force and effect, and do not
contravene, conflict with any law, governmental rule, regulation, judgment or
order binding on American or the Certificate of Incorporation or By-Laws of
American or contravene or result in a breach of, or constitute a default under,
or result in the creation of any Lien upon the property of American under, any
indenture, mortgage, contract or other agreement to which American is a party or
by which it or any of its properties are bound or affected, PROVIDED that
American makes no representation or warranty with respect to compliance with or
absence of conflicts with, any of the TWA Lease Documents, any requirement of
the U.S. Bankruptcy Code with respect to TWA or any judgment or order entered in
connection with the bankruptcy proceedings involving TWA;
(c) neither the execution and delivery by American of this Agreement,
nor the consummation by American of any of the transactions contemplated hereby,
requires the consent or approval of, the giving of notice to, the registration
with or the taking of any other action in respect of the Department of
Transportation, the FAA or any other Federal, state or foreign governmental
authority or agency, except for (I) such consents, approvals, notices,
representations and actions as have already been obtained, given, made or
completed, and (II) any other consent, approval, notice, registration or action
that may be required under the TWA Lease Documents, or in connection with the
bankruptcy proceedings involving TWA; and
(d) this Agreement has been duly executed and delivered by American and
constitutes the legal, valid and binding obligation of American enforceable
against American in accordance with its terms, except as the same may be limited
by bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the rights of creditors generally and by general principles of equity.
2. REPRESENTATIONS AND WARRANTIES OF OWNER PARTICIPANT
The Owner Participant represents and warrants that as of the date of
this Agreement and as of the Commencement Time:
(a) The Owner Participant is a limited partnership duly organized and
validly existing in good standing under the laws of jurisdiction of its
organization, is a Citizen of the United States, has the power and authority to
own or hold under lease its properties and to enter into and perform its
obligations under this Agreement and is duly qualified to do business as a
foreign corporation in good standing in each state where the nature of the
business conducted by it or the properties owned or leased by it requires
qualification (other than failures to so qualify that would not have a material
adverse effect on the consolidated financial condition of the Owner Participant
and its subsidiaries, considered as a whole;
(b) Airlease Management Services, Inc. ("AMSI"), the general partner
of Owner Participant, is a corporation duly incorporated and validly existing
and in good standing under the laws of the jurisdiction of its organization.
(c) the execution, delivery and performance by the Owner Participant of
this Agreement have been duly authorized by all necessary corporate action on
the part of AMSI and all necessary partnership action on the part of the Owner
Participant, do not require any stockholder approval or approval or consent of
any trustee or holder of any indebtedness or obligations of AMSI or the Owner
Participant, except such as have been or will be prior to the Commencement Time
duly obtained and are in full force and effect, and do not contravene any law,
governmental rule, regulation, judgment or order binding on AMSI or the Owner
Participant or the Certificate of Incorporation or By-Laws of AMSI or the
partnership agreement of the Owner Participant or contravene, conflict with or
result in a breach of, or constitute a default under, or result in the creation
of any Lien upon the property of AMSI or the Owner Participant under, any
indenture, mortgage, contract or other agreement to which AMSI or the Owner
Participant is a party or by which it or any of its respective properties may be
bound or affected;
(d) neither the execution and delivery by the Owner Participant of this
Agreement, nor the consummation by the Owner Participant of any of the
transactions contemplated hereby, requires the consent or approval of, the
giving of notice to, the registration with or the taking of any other action in
respect of the Department of
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Transportation, the FAA or any other Federal, state or foreign governmental
authority or agency or any other Person, except for such consents, approvals,
notices, representations and actions as have been or will be prior to the
Commencement Time obtained, given, made or completed;
(e) this Agreement has been duly executed and delivered by the Owner
Participant and constitutes the legal, valid and binding obligation of the Owner
Participant enforceable against the Owner Participant in accordance with its
terms, except as the same may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the rights of
creditors generally and by general principles of equity;
(f) other than the TWA Lease Documents listed on Schedule B hereto and
the corresponding purchase agreements with the manufacturers of the Aircraft,
there are no leases, mortgages, loan agreements, notes, indentures, trust
agreements, participation agreements, purchase agreement assignments, security
agreements or other agreements with respect to the Aircraft; all parties to the
TWA Lease Documents have been listed on Schedule A to this Agreement; and
(g) the Trust Estate is free of Lessor's Liens attributable to the
Owner Participant.
3. REPRESENTATIONS AND WARRANTIES OF THE BANK
The Bank represents and warrants that as of the date of this Agreement
and as of the Commencement Time:
(a) The Bank is a national banking association duly organized and
validly existing in good standing under the laws of the United States, is a
Citizen of the United States, has the corporate power and authority to own or
hold under lease its properties and to enter into and perform its obligations
under this Agreement;
(b) the execution, delivery and performance by the Owner Trustee of
this Agreement have been duly authorized by all necessary corporate action on
the part of the Owner Trustee, do not require any stockholder approval or
approval or consent of any trustee or holder of any indebtedness or obligations
of the Owner Trustee, except such as have been duly obtained and are in full
force and effect, and do not contravene any federal banking law, governmental
rule, regulation, judgment or order binding on the Owner Trustee or the Articles
of Association or By-Laws of the Bank or contravene or result in a breach of, or
constitute a default under, or result in the creation of any Lien upon the
property of the Owner Trustee under, any indenture, mortgage, contract or other
agreement to which the Owner Trustee is a party or by which it or any of its
properties may be bound or affected;
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(c) neither the execution and delivery by the Owner Trustee of this
Agreement, nor the consummation by the Owner Trustee of any of the transactions
contemplated hereby, requires the consent or approval of, the giving of notice
to, the registration with or the taking of any other action in respect of any
federal banking, Utah state or local governmental authority or agency governing
it; and
(d) the Trust Estate is free of any Lessor's Liens attributable to the
Bank.
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